S/4 vs. C/4 - Is SAP finally getting CRM right?

It has been a while since I last mused about things S/4HANA and C/4HANA (or Customer Experience Suite) at SAP. So, it is time to have a look at what happened since.

Last year I concluded that “the differentiation between the old world transactional systems and the systems of engagement is more and more being sorted out” and that the “modularization of the various clouds into ‘Micro’-Services would allow for a seamless recombination of systems that allow for the definition of functional scope according to customer needs as opposed to only offering pre-packaged systems”.

Has there been any change, since?

Let’s go along the questions that I asked in my previous post.

·      How reliable is the roadmap, or rather, are the roadmaps? At the end of the day there is the eternal dilemma between flexibility and stability.

·      How to go ahead with multiple back end systems?

·      How are engines and industry solutions dealt with?

·      How is the differentiation between S4 including customer management and the C4 offerings?

All these questions continue to be relevant, as they are touching the core of SAP’s strategy. What is the current answer to them?

Let me give my take on them, as I see it evolving. Just to be sure, this is my observation and me listening to customers, not an official word of SAP. Just my interpretation. After all I am not on the distribution list of SAP’s internal strategy discussions.

Being a CRM guy and a suite guy, for me the last question is the elephant in the room. The answer to where SAP sees the boundary between S4 and C4 is absolutely crucial to customers and partners alike. There simply should not be too much grey space here. Lets tackle this one last … as the sequence of bullets suggests.

So, let’s start from the beginning. Some answers, and well, some recommendations.

Roadmaps …

… are just that, roadmaps: Plans that are based on information available and priorities at a certain point in time. They exist to provide guidance to customers.

Of course, priorities can change and customers with enough negotiation power can ask for an adaptation. As a consequence, what has been too rigid in the good ole times of on premise software with release cycles of 12 months or more, has become very flexible. This basically means that customers will not receive any strongly worded answer – let alone a promise – about high level functionality that extends the current release in work.

Even that one has a big disclaimer. 

On one hand, this approach appropriately answers customer demand for flexibility and being able to influence releases with a near term impact. On the other hand, this flexibility deprives SAP and its customers of longer term stability in the roadmap.

Having said that, and considering the roadmaps that I mainly look at, SAP is quite consistent. Of course the longer the outlook is the more the variance is, but in general the next two releases seem to be pretty steady – although sources tell me that detailed planning is done only for the next upcoming release.

I am sure that SAP is fixing a good part of the development portfolio of upcoming releases. If not, the recommendation would be to do, to balance out strategic and customer necessities. Of course, if roadmap promises are given to customers, these need to be honoured, too. And if promises are given, priorities are changed, then the published roadmap should be adapted – as it it needs to be after each release, when a promise has become reality.

I know that this is a hard balancing act, but it is one that a world class portfolio management of a world class company can shine with.

Multiple Back Ends

This is the same as before. CRM Middleware is still a part of the package. Different systems can communicate via it. And then there is the SCP. I still need to validate it, but connecting via CRM Middleware seems to be a good way to keep customer data in synch while offering wide ranging sales and service functionalities. All in all there is not much change since last year. There needs to be a leading system for each real world entity, and landscape complexity needs to stay in check doing so.

Multiple back end stays complex. Especially so, when order taking and/quotation management via C4 comes into the picture. Especially more complex scenarios like support of variant configuration are difficult. Variant configuration in particular, an SAP strength, needs the Configuration and Pricing Service – CPS – that resides in the SCP. Now, this service can connect to only one ERP, and there is no infrastructure yet to support multiple back ends, even if data and number ranges are harmonized between them. So, again, while things are improving there is still some way to go. And in this particular example I do know two things: It is necessary as many customers are having a multiple backend scenario and second, SAP is very interested in and actively working on improving the situation here.

There is a technical and a commercial challenge here: Technically CPS is single tenant, i.e. can support only one single backend. Which is a good start and SAP is thinking of how to feasibly improve this. And there are some very smart people who know their stuff working on it. So, check here! Then there is a commercial challenge. SAP customers pay for CPQ. This tool is powerful, offers a lot of value, especially integrated into a landscape. So, given its value, customers will arrive at a fair price. Customers also pay for variant configuration in ERP. The same argument as before applies.

But then they also need to pay (handsomely) for the CPS, which resides in the SAP Cloud Platform, SCP – another entity that is paid for. I acknowledge that CPS has been a piece of work but I think it is worthwhile considering to deliver it free of charge as part of the solution. This would appear so much better.

Engines and Industry solutions

Another sore point.

Well, actually two of them.

But points that I will treat only shortly.

Industry solutions can only be appropriately addressed after enough of the horizonal functionality is available. Now, this seems to be largely the case in both, S4 as well as C4. This is indicated by SAP showing an increasing focus on industry solutions, especially in the S4 area. Is SAP there yet? Not by a wide margin, compared to ECC 6. But then ECC 6 has a few years of advantage.

Engines are a similar topic. Many of them have been coded into existing applications. Those, that have been made part of CRM like e.g. TPM or loyalty management are a challenge that needs to get addressed (TPM) or already are in process of being addressed (loyalty management). Others are too deeply ingrained into the ERP system (solution configuration? Condition technique?) and too heavily used to be morphed into standalone engines. Existing customers create a factual basis here.

All in all, I do see work in progress, but work that might need to be sped up in order to fend off the competition.

S4 vs. C4

Where does S4 end and C4 start? This is the 1,000 dollar question. The official SAP answer is that whatever is transactional is in S4 and whatever is customer facing is in C4. If it is customer experience, then it is C4 (which is likely not a perfect decision criteria).

Marketing is completely in C4.

This answer still leaves a lot of grey space as there is considerable overlap between ‘transactional’ and ‘customer facing’. Order taking can happen in both systems. S/4 has the original CIC and now the SAP Contact Center 365 that runs on top of it; C/4 has a service center.

Even worse, if you ask S4 guys or C4 guys, you still get non matching answers.

On one hand, C4 is strategic. This is also evidenced by the fact that for the first time ever these days SAP shows CRM – or rather customer experience – related software revenues.

On the other hand S/4 is strategic. And there are plenty of SAP CRM customers who are deeply invested into this software. And reputation or no, SAP CRM is a good and powerful solution. So, although SAP investment into the CM part of SAP is significantly lower than the investment into C/4, it is a straightforward and very good idea to deliver Customer Management (CM, formerly known as CRM Add On) as part of the S/4 license.

For more than one reason

Which is exactly what SAP has just done.

You are asking what other reasons are?

Well, how about these two:

·      SAP has plenty of ERP and CRM customers who need some kind of sales and service solution and who do not need as much as C/4 offers. Still, they do want to (or need to) migrate to S/4. With CM as part of S/4 these customers get a powerful sales and service solution without the immediate need of buying another solution. These existing customers can take advantage of the package while having the additional benefit of not needing to maintain a middleware as CM is an integral part of S/4. According to SAP the investments into customizing and custom code can be reused to an extent of more than 90 per cent. This is real value.

All that at no additional cost and probably even at a lower license fee as customers do not need SAP CRM anymore. On top of this, the necessary knowledge is already available.

·      There are also many new customers with either another CRM product or none at all (yeah, these still exist). Both groups can benefit from using the CRM that is built in to S/4; for similar reasons as the first group: There is a good CRM and integrated solution available ‘for free’ that just needs to get used.

In conclusion

SAP works hard to improve on these topics. Let me try to formulate three praises and three recommendations for further improvement.

As it is no good style to end with criticism, even constructive one, I start with some recommendations.

·      It should be interesting to improve on the solution thought again. Take the example of variant configuration. There are too many pricing entities and, well, too many product groups that one needs to talk to, if things are getting serious. Customers do variant configuration. They do it in a sales system. Try to harmonize responsibilities around this, using a one face to the customer approach. This could facilitate things for you and your customers.

·      The boundary between S4 and C4 needs to be clarified. Currently it is not and there is a lot of confusion in the market. Customers need more guidance. They are first looking at their implementation partners – who need guidance, too – and then at SAP. So, please sharpen the picture, that is pretty blurred here.

·      SAP has a lot of engines. That is great. Somehow many of them are built into applications, which is not so great. Think TPM. Think loyatlty management. Think configuration. There are many more examples of functionalities that can be better exposed as engines, offering advantages for customers and hence for SAP

Now, let me finish with some great points that I see

·      It is a fantastic move to offer CM as part of S4. This offers lots of benefit to existing as well as new customers – and therefore to SAP.

·      SAP shows quite some customer orientation when it comes to improving the C4 suite. I have only limited examples but these are very laudable and encouraging. More of this can change images

·      I think that SAP does a good job at communicating roadmaps. Yes, it can get improved, but overall, continue on this path

Overall SAP is on a good way, perhaps not the one that is perfect for every customer, but it is. Final recommendation: Show it. Learn some lessons from the competition, adopt them to match them also in the impressions department.