Marketing Foundations Analysis Tool: Gap Analysis, Recommendations, and Benchmark for Your Marketing Systems

Way back in January, I began working with SAP on a set of worksheets to help marketers assess their customer management systems. The much-evolved fruits of that effort were released today as the Marketing Foundations Analysis Tool, a fully automated system that asks users a series of questions about their current systems, marketing programs, and company background, and returns recommendations for system changes and how to manage the transition. Survey-takers will also be shown how their current systems compare with everyone else who answered the questions.

The key insight powering this project was that there are relatively few types of marketing programs and systems.  That may not sound very important (or surprising), but it means the problem is simple enough to address with a relatively small amount of user input and business logic.  Specifically, it's practical for a survey to ask marketers which programs they want and what their current systems look like.  From there, it's fairly easy to specify the system capabilities required to run each program, to aggregate these into a consolidated set of requirements, and to compare the requirements with existing capabilities for a gap analysis.  This can be combined with information about the company to generate recommendations for what to do next.

In fact, if anything surprised me during this project, it was how much information could be derived from a relatively small amount of user input. The Analysis Tool asks about:
- nine types of marketing programs, ranging from customer profiling to real time interactions to loyalty programs to marketing measurement.  Users specify whether they currently run each program, want to run it in the future, or have no interest.

- thirteen types of customer-facing systems, ranging from email and Web sites to display ads, retail point of sale, and customer account management. These are rated on a spectrum of integration capabilities, from being totally isolated to allowing real time interactions.

- seven types of shared customer data processes, ranging from single customer view to predictive modeling to treatment selection to advanced analytics. Each process is rated on different capabilities, such as calculating scores for predictive modeling and handling unstructured data within the single customer view.

That's it -- just 29 items, although some do have subitems.  Based on those inputs, the Analysis Tool produces recommendations covering:

- general architecture (integrated suite, shared customer data platform, or application-based) and change strategy
- industry-specific issues to address, such as regulatory concerns
- opportunities to improve business results by running more marketing programs
- coordinating changes to marketing programs with changes to systems
- changes to customer-facing systems (over-all and whether to keep, enhance, or replace individual systems)
- changes to shared customer data processes (over-all and process-by-process)

That's a lot of information, and it doesn't even include the benchmark comparing your answers to everyone else's.  Not bad for free.  Thanks, SAP!


So how does this all work?  To peel back the covers just a bit, the recommendations are made by first classifying results into general categories such as “few active applications” or “mostly simple systems”, and then applying rules to select pre-written answers.  For example, a company with "few active applications" and "many desired applications" is told:

Assessment: Your company is running relatively few current marketing applications but wants to add many more. This could be a challenge given your relatively limited experience.

Recommendation: Prioritize the new applications so you don’t make too many changes at once. Start with applications that require relatively little change but also offer significant rewards. These should add capabilities that will also be used for subsequent new applications. Measure results carefully and prove success before moving on to make more changes.

Obviously I’m biased, but I think that level of advice is specific enough to be useful. It can’t replace the insight of a human analyst who can assess the situation in more detail and may see connections that simple rules will miss. But it certainly provides a starting point for discussions and a base of data to work with. Well worth a ten minute investment of your time.

Again, you can try the tool here.  You can take it anonymously and view the results on screen, or give SAP your email and have them send you a copy of the report.  Either way, give it a shot and let me know what you think.

Salesforce + ExactTarget vs. SAP + hybris: Two Paths to Customer Management

Fresh on the heels of Tuesday's blockbuster ExactTarget / Salesforce.com deal, SAP Wednesday announced acquisition of e-commerce vendor hybris software.  Since Salesforce said that other companies also wanted to buy ExactTarget, it seemed possible that SAP had lost the deal and purchased hybris as a second choice. After listening to the analyst conference call (available at (303) 590-3030 passcode 4623918), I still can't say.

The SAP and hybris managers unfairly implied during their call that ExactTarget does nothing but email (without mentioning Salesforce.com or ExactTarget by name).  But as Salesforce.com made clear in its own call yesterday, they were most attracted by ExactTarget's multi-channel marketing capabilities.  It's possible SAP wanted ExactTarget for the same reasons and would have described it differently had they been the winning bidder.

In any case, SAP did tell a good story: real-time interactions seamlessly presenting customers with consistent information, dialogues, and purchases across all channels, with a central role for the Web.  This is certainly the long term goal for most marketers, although few are close to delivering it.  As SAP pointed out, it's a customer-centric view of the world, quite different from the operational focus of traditional CRM.  SAP does have some unique assets to support this vision, including back-office systems with sales, inventory, costs, and other data needed to fully inform customer treatments, and the in-memory HANA database to make this data immediately available for real-time interactions.  I haven't done enough research to judge whether SAP can effectively combine these pieces, but they're making the right promises.

I still wouldn't be as dismissive of the Salesforce / ExactTarget combination as the SAP managers.  People integrate CRM with back-office systems all the time.  You can also build great customer experiences with little or no back office integration.  ExactTarget does have some Web personalization features (from its iGoDigital acquisition), although I don't know how well they're integrated with the rest of the system.  Similarly, it has claimed to support real-time interactions in its Interactive Marketing Hub, but I don't know how well that works.  What I do know is that Salesforce and ExactTarget have a reasonable idea of what's needed and the resources to build it.  How well and how quickly they execute remains to be seen -- but you can say the same for SAP.

Incidentally, the common thread for these acquisitions is that both vendors are moving into direct B2C marketing.  It's a big new market for each of them, and makes both much more interesting competitors to IBM, Oracle and Adobe.  Perhaps that's the most important news here.

It would be misleading to give the impression that SAP and Salesforce are equivalent.  The two deals highlight some very fundamental differences:

- SAP is a full enterprise system; Salesforce is about CRM. The SAP managers made the point most clearly when they discussed that their appeal is targeted at the boardroom level: they are selling to companies who want to build their entire infrastructure on SAP's system.  Salesforce is now, finally, adding serious marketing to its CRM system (although there are still some gaps such as media buying), but even so its vision is still limited to customer management, and it is selling at the level of sales, service, and marketing departments -- rarely in the boardroom.  Note that the original concept of CRM already encompassed those departments, so this is less an expansion than a filling of gaps.

- SAP is a suite; Salesforce is a platform.  Indeed, SAP is the ultimate suite: every enterprise function running on a single, tightly integrated system.  I've long argued that the fundamental rule of software marketing is that "suites win", meaning most companies will choose an integrated suite over multiple best-of-breed point solutions.  SAP's success is Exhibit A in my evidence for this, but you could argue it's actually so large that companies might be just as happy with several smaller suites instead (e.g., one for CRM and one for back-office).   This would still let them avoid doing most of the integration work, while not forcing them to commit totally to one vendor's system. 

Salesforce is also an integrated suite, although limited to CRM.  But it has also embraced (and I think invented) the idea of an open platform: a foundation system that can be supplemented by attaching other vendors' products.  This provides easy integration without limiting users to capabilities provided by the suite vendor.  The model has been tremendously successful for Salesforce, particularly at letting it offer advanced functions to its clients without having to pay for developing those functions.  ExactTarget has embraced a similar model, incidentally.

- SAP is largely on-premise software; Salesforce is Software as a Service (SaaS).  It's true that SAP now offers SaaS options, but it was built as on-premise software and its large enterprise clients still mostly run it that way.  hybris also offers both options but runs mostly on-premise (typical for Web content management).  Salesforce of course is the granddaddy of all SaaS companies.

- hybris runs Web sites; ExactTarget is still primarily about email.  The obvious point of this is that Salesforce still needs serious Web site management to provide comprehensive customer treatments.

But the difference goes deeper.  Web sites are inherently real-time systems, while email is inherently batch processing.  This was the essence of SAP's comments today, and while they may understate ExactTarget's abilities, there is a kernel of truth.  Web systems are engineered from the start for high-speed processing, and the e-commerce features of hybris also mean it was engineered from the start to interact with individual customers, not just serve generic Web pages.  Email systems were originally engineered for batch processing, not individual interactions.  Mobile and social messages, which ExactTarget also supports, can also be handled quite well in batch.  I don't know to how far ExactTarget has evolved towards supporting real-time interactions, but its heritage lies elsewhere.

- hybris has 500 customers; ExactTarget has 6,000.  The revenue difference is much less: $100 million for hybris and nearly $400 million for ExactTarget.  What this reflects is that hybris' clients are mostly large enterprises, while ExactTarget has a broad mix of large and small companies.  Each each a good match for the core business of its new owner: SAP also focuses on large enterprises, while Salesforce sells to pretty much everyone. The broad reach of ExactTarget was certainly part of the reason that Salesforce wanted it, but Salesforce already has well over 100,000 clients, so the net increase isn't all that important.

What all this means, I think, is that SAP and Salesforce represent very different approaches to customer management: SAP proposes a single, tightly integrated, highly responsive real-time system where everything is connected and optimized.  Salesforce offers a looser set of connections with less control but more room for variety, change, and innovation.  SAP will sell more to the boardroom while Salesforce will sell to sales and marketing departments.  I frankly expect that both will succeed; it's a big market and each approach will appeal to different customers.  What I really hope is that both will show the market how to do integrated, cross-channel customer management: that way, everybody wins.

Circling back to the original question: I still don't know whether SAP tried to buy ExactTarget.  Based on the what I wrote above, hybris was a better fit.  But the SAP managers spent so much time disparaging email in their call that I thought I smelled sour grapes. Or was it just competitive vitriol?