SAP puts Salesforce in its sights with major CRM play

SAP CEO Bill McDermott appears to be readying the company to lock horns with the cloud CRM incumbent Salesforce with a new product launch in June

SAP sign
Peter Sayer/IDG

SAP is preparing to launch a new cloud CRM product at its upcoming Sapphire event in June, in a bid to overtake the current market leader Salesforce.

Speaking on an earnings call for Q1 2018 last week, SAP CEO Bill McDermott fired the first shots in what could become a heated war of words between the two major vendors.

"So called cloud CRM is nothing more than overpriced software running on first generation SaaS architecture," he said. "This is probably why so many have responded so eagerly to SAP's recent statement about a new vision for CRM. They know, change is coming, we are coming."

This move comes in the wake of an indirect access scandal which has seen customers like Diageo effectively punished for using Salesforce software on top of their SAP ERP systems. It also follows the recent acquisitions of Callidus Cloud and Gigya, which at the time were referenced as useful assets for SAP to enhance its customer relationship management (CRM) software offering.

Going further McDermott responded to an analyst question by stating: "Basically we are going to rebrand the whole CRM category, it’s going to be a massive movement at Sapphire and we're going to show every customer that they can be a best run business by running SAP and no longer do they have to be relegated to an outdated sales platform with complex integration layers trying to get that data out of the ERP system."

SAP is already the second placed vendor in terms of CRM market share, according to some 2016 Gartner research, but is seemingly not content with second place. Other major players in the market are Microsoft with Dynamics 365 and Oracle.

It's difficult to say how much of SAP's position here is remaining on-premise CRM, and its cloud CRM is confusingly branded as SAP Hybris Cloud For Customer, so expect the relaunched product to be heavily cloud-leaning. 

"There was a time when a market leader was dominating in CRM. It was said that they couldn't be disrupted. Well, let's be clear once again, we want CRM," he said.

Indirect access

These comments come at a time when SAP customers are creating a stink over being charged for 'indirect access' to SAP systems when using SaaS applications, like Salesforce CRM, on top of data sitting in SAP systems. 

McDermott made it clear on his earnings call that he would rather wash his hands of indirect licensing. "So what has changed was the indirect access pricing model to allow for that customer satisfaction to take place and take away any anxiety from the equation," he said. "Before doing so, we had carefully modelled the revenue impact that such a change would have and essentially the way we reconfigured the pricing methodology, it’s a wash." 

"So customers are much happier, no more noise on the pricing, the access is simple, the pricing basically breaks even. So a non-issue."

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