Category: Customer Experience

Which Call Center Agent Model is Right for Your Business During and After COVID-19? | Blog

Today, most companies have staff working from home due to the pandemic. Although customer experience management (CXM) agents aren’t essential workers in the truest sense, consumers sheltering in the safety of their homes for months on end have relied on them so heavily for wide-ranging reasons that they might as well have considered them so. What those consumers probably don’t know is that the call center agents assisting them are most likely working from home. In fact, our recent research report, Customer Experience Management (CXM) State of the Market Report 2021, found that the percentage of CXM FTEs working at home grew from less than 10 percent in 2019 to as much as 80 percent during the health crisis. While we expect that there will be some movement back towards the brick and mortar model in the coming months and years, many service providers and in-house contact centers will continue to utilize Work at Home Agents (WAHA) as a key component of their service delivery strategy.

Two WAHA models are currently in use. One is employee-based (E-WAHA), wherein the agents are on the service provider’s or company’s payroll. The other is contract-based (C-WAHA), wherein contractors are leveraged and only paid for the time they work for the organization.

In recent years, GigCX has emerged as an alternate approach to CXM staffing and is being utilized by the likes of organizations such as eBay and Microsoft. GigCX includes the use of freelance or self-employed workers to handle specific interaction types, leveraging an AI-powered technology platform. They are recruited for their existing knowledge and passion for the product and service.

Initially, GigCX was utilized for very simple work; however, those interactions are increasingly being eliminated or automated. Now, growing use of this model is for more complex query types that require a level of brand affinity and awareness, which can be a differentiator many GigCX providers are publicizing.

GigCX, which is often seen as another strain of the WAHA model, should not be confused with WAHA, as there are some fundamental differences in how the models operate.

When considering which approach is best to meet a set of business requirements, organizations should understand the following differences in the two models:

GigCX

While we have seen both WAHA and GigCX being effective models for handling customer interactions, there are some stark differences in their operation. Any company considering using either model should assess the positives and negatives of the approaches and factor them into their operating model design. Both models are highly effective when utilized appropriately to handle the right interaction types, especially if all the limitations and dependencies are considered early in the design process.

For more information, please feel free to contact me at [email protected].

 

Integrating Customer Support Call Centers With Artificial Intelligence | Blog

Companies currently invest a lot of money in target markets to generate potential customers’ interest in products and services. But after they achieve a sale, they often frustrate customers by not providing effective customer service support. A poor customer experience can erode the company’s brand and reputation and destroy the company’s opportunities to increase revenue through new purchases by those existing customers. Obviously, these are significant problems, especially in today’s highly competitive environment with customers’ quick pace in buying decisions. Let us now explore the solution.

Read more in my blog on Forbes

Why Retirement Plan Defined Contribution Recordkeepers Need to Modernize Their Plan Administration Systems | Blog

The retirement savings gap in the US – meaning the difference between the amount of money people should have and actually do have to retire on – stands at around US$40 trillion currently. To put this number into perspective, it is roughly 187 percent of the US GDP and 124 percent of US retirement asset holdings. Dwindling revenues for retirement plan administrators due to fee compression, high costs for servicing retirement plan participants, and the COVID-19 crisis are exacerbating the gap. And participant experience has degraded over the years, leading to inadequate savings for retirement and making the shortfall grow continuously.

Recordkeeping businesses in the Defined Contribution (DC) space are particularly struggling in the current environment. They’re facing multiple challenges, including: an influx of regulatory requirements involving fiduciary responsibilities; sustained low interest rates; pandemic-induced uncertainty; legacy technology systems; increasing costs; and the lack of agility to respond to customer demands and compliance requirements.

Our recently-published report, Making a Business Case for Modernizing Core Systems for the US Retirement Industry: Value Beyond Cost Savings from a Cloud-enabled Recordkeeping System, identified that the root cause behind profitability and customer experience issues for recordkeepers is the high incidence of home-grown, legacy, and mainframe-based recordkeeping systems. Eight of the top 10 US DC recordkeepers, which hold 73 percent of the total DC assets and serve 66 percent of plan participants, are on custom-built recordkeeping systems that are predominantly mainframe-based. The high cost of running and maintaining these systems has bulked up recordkeepers’ total cost of ownership and squeezed their operating margins. Additionally, these systems have not been able to respond quickly to constantly evolving and complex compliance mandates such as ERISA, Section 404(C), Secure Act, and the Department of Labor’s (DOL) fiduciary rule. These challenges are causing a host of fines, lawsuits, and sanctions from the Internal Revenue Service and DOL. Further, there is an acute talent crunch in servicing these systems for recordkeepers.

What should recordkeepers do to combat these challenges?

They need to design cogent strategies to modernize their plan administration systems. A cloud-first core platform is at the heart of this modernization. From a cost savings standpoint, taking a cloud-first core platform approach can effectively halve the technology and operations cost base. On an annual basis, this change results in a cost yield of roughly 20 percent.

The benefits of modernization extend far beyond cost savings as it entails use of a combination of technology levers to improve the plan participant experience. Modernization:

  • Enables migration to the cloud, which enables adoption of analytics tools for plan providers to better identify each participant’s financial wellness needs, optimize plan management, and redesign plans to deliver competitive retirement options. And analytics can help maximize the return on investment through predictive trend analysis of investment options
  • Helps recordkeepers integrate automation solutions to improve retirement applications processing speed, enhance efficiency in managing participant transactions, and reduce manual interventions in plan administration tasks
  • Allows recordkeepers to employ agile solutions for better and quicker compliance with regulations, to quickly meet participants’ needs, and improve the agility of recordkeeping applications
  • Lets recordkeepers offer self-service tools to manage contributions and investment allocations, AI-based robo-advisory solutions to address plan participant questions quickly and drive personalized plan recommendations, and a digital UI/UX to simplify the participant enrollment process while improving customer experience
  • Enables recordkeepers to expand services scope in the investment advisory and asset management space, which can unlock new revenue sources and lets them subsidize their recordkeeping costs through provision of these ancillary services.

The benefits of modernization of recordkeeping systems to a microservices-based, data-driven, cloud-first core platform cannot be overemphasized. Driving down costs and improving the participant experience will play a critical role in helping recordkeepers survive the pandemic and thrive in the next normal. Using the pandemic as a catalyst to modernize plan administration systems will not only make recordkeeping businesses resilient for the future, but also help support the nation’s retirement readiness and narrow the retirement savings gap.

To learn more about the dire need for transformation in the retirement industry, please see our new report titled “Making a Business Case for Modernizing Core Systems for the US Retirement Industry: Value Beyond Cost Savings from a Cloud-enabled Recordkeeping System.” And to drill down even further, please reach out to the report authors, [email protected], [email protected], and [email protected].

The Need to Consolidate the Vendor Ecosystem to Deliver Great Customer Experience | Blog

Delivering new customer experiences has become the centerpiece of many enterprises’ strategies to achieve sustainable growth. In fact, our research indicates that 89% of enterprises are using digital technologies to redefine customer experience, allocating as much as 30-35% of their marketing budget to experience design. And this share is expected to increase to 50-55% by 2022.

Enterprise approach to experience design

Designing a successful customer experience is an intricate play of many enabling factors, including a well-planned strategic roadmap, a well-defined organizational structure, strong creative execution, the right mix of technology solutions, and use of the right channels, as illustrated in the exhibit below.

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Given this complex interplay of multiple factors, enterprises are actively engaging with service/technology providers, such as design agencies, consultancies, IT service providers, and technology providers, to deliver an enhanced customer experience. However, the number and range of providers involved in delivering the desired experience are creating an extremely fragmented vendor ecosystem; our research shows that an enterprise might work with as many as 100 design agencies across various customer experience initiatives globally. While the aim is to partner with players best suited to deliver on a particular aspect of an engagement, a fragmented ecosystem results in a siloed, disconnected approach to design and lack of success metrics ownership.

Let’s take a look at the area of website design, where one service provider could be responsible for User Interface (UI) design (including user research, defining user flows, creating wireframes, etc.), another for content creation (animations, text, videos),  and a third IT service provider for platform selection and development. A website’s key success metrics are as closely linked to UI as to the underlying technology and a persuasive content strategy. Thus, if the website does not bring these aspects together seamlessly and does meet user expectations (in terms of the bounce rate and time spent per page, among others), which service provider should be held accountable?

Thus, defining and owning the success metrics are the key to any experience engagement’s success.

How are service providers – and enterprises – responding?

Realizing that they can no longer cater to just one aspect of the value chain, both design agencies and IT service partners are bolstering their design and technology portfolios to deliver business value and act as strategic, one-stop partners to their customers. Thus, design agencies are ramping up their technology expertise to build data, analytics, and platform capabilities, while IT service partners are actively acquiring design agencies to build UI/UX, content, digital media design/execution, and design consulting capabilities. To take an example, over the last six years, Ireland-based digital agency Accenture Interactive has carried out 30+ acquisitions to boost its media, digital, and creative credentials across the globe. Another example is the London-based design agency WPP, which appointed its first-ever CTO in October 2018, committing itself to build a robust technology and data strategy.

However, even as service partners rush to build end-to-end capabilities, buyers remain largely unconvinced. They are continuing to partner with individual service partners for their experience engagements. Some doubt the ability of their IT service partners to deliver a strong creative impact, while others believe that design agencies cannot truly understand underlying platforms/technology solutions to deliver viable solutions.

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Is a solution in sight?

It is imperative for enterprises to understand that experience design is KPI-led design. Hence, they must push service providers to define and own KPIs that reflect the overall engagement’s success. Moreover, buyers should engage with service providers that possess robust end-to-end experience management capabilities. Service providers can acquire such capabilities by offering a broad solutions portfolio (either developed in-house or through a partnership network) across creative and technology execution. Doing this will pave the way to successful experience design, consolidation of the vendor portfolio, and higher service provider accountability.

What has your journey been? Share your thoughts on designing experiences for your customers with me at [email protected].

Customer Experience During COVID-19 | Blog

This is one blog of many that explore a range of topics related to COVID-19 issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

Every day, new and more rigid social distancing and quarantining measures are put in place to address growing global concerns over COVID-19. The rising number of people under lockdown around the world is leading to huge shifts in customer demand, behavior, and expectations.

Some industries are being hit harder than others. For example, travel and hospitality is struggling with huge drops in revenue while trying to meet skyrocketing customer service demands for cancellations and date changes. Demand for luxury goods is declining as consumers cut back their consumption. E-commerce is booming with in-store shoppers moving to home delivery. Supply chains are under pressure, and healthcare is transforming with increasing adoption of telemedicine.

Near the end of 2019, we conducted a market survey on key enterprise issues and enterprises’ global services plans for 2020. As you see, survey participants believed customer experience (CX) would be their top priority investment area even if the economy weakened.

The top investment priority for enterprises is customer experience – even in an economic downturn

It’s true that the severity and impact of COVID-19 is higher than what organizations expected when they thought about a possible economic downturn. But we believe that enterprises that continue to focus on their customers and invest in CX have an opportunity to emerge after this crisis abates with a running start.

And one of the key levers they should pull to help satisfy their customers’ needs and expectations is their customer-facing talent.

Work-at-home agents

With the health and safety of the agent workforce top of mind, organizations and their contact center leaders, across industries and geographies, are leveraging the work-at-home agent (WAHA) model as an immediate response to the COVID-19 crisis. Social isolation edicts mean that agents can no longer report to work at brick and mortar centers, so enterprises and service providers alike are scrambling to ramp up their work-at-home capacities, asking their existing brick and mortar agents to keep the lights on by working from home. Understandably, they’re facing multiple challenges while ramping up, including procuring laptops and headsets, moving desktop computers from centers to agents’ homes, ensuring security and compliance measures, and training and upskilling agents for a work-at-home environment.

Enterprises and contact center providers that are outperforming their peers in transitioning their agent workforce to a work-at-home model are excelling in three areas:

  • Level of preparedness: Organizations with experience and protocols around WAHA operations, access to prospective agents, and requisite technologies have been able to cope with the transition better than others
  • Foresight and planning: Organizations that reviewed the COVID-19 outbreak statistics regularly and worked with their partners to understand agent availability, technology, and environmental constraints were much better positioned to react appropriately and plan for the transition
  • Speed of execution: Organizations that have been able to make the swift decision to migrate to a work-at-home delivery model (even if the model did not exist in their business previously), work with government agencies to obtain necessary sign-offs and waivers, and develop out-of-the-box solutions to challenges during the transition have had greater success in delivering CX consistently during these uncertain times

Accessing more talent

Organizations may well need more agents to help them deliver the best CX during this pandemic. And because the economic downturn is displacing a lot of people, particularly in service-oriented jobs, there’s an opportunity to access a large pool of newly available talent. This gig economy-oriented model matches the needs of millennial customers and employees who are digitally-savvy and belong to the ”anywhere, anytime” philosophy toward which the world seems to be moving rapidly.

While global economies are grinding to a halt, some businesses will come out of this crisis better than others. During this period of extreme uncertainty, companies that take speedy action to adopt flexible staffing models and shift to newer ways of working are more likely to succeed.

In subsequent blogs, we’ll be discussing other levers that organizations need to adopt to drive sustained success, such as digital channels, self-service, and chatbot solutions.

In the meantime, take a look at a replay of our recent webinar “Coronavirus – Beyond Hand Sanitizer: Mitigating Business Impact and Uncovering the Positive.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Digital Experience Platforms: An Idea Whose Time Has Come | Blog

In today’s increasingly competitive environment, enterprises need to package their offerings with superior and memorable experiences to remain relevant. They need to streamline their efforts to deliver a unified and seamless digital experience to stakeholders. While they’ve attempted to achieve this with point solutions such as CRM platforms, campaign management tools, and other experience management solutions, their disjointed and incompatible portfolios have often created more problems than solutions.

Enter the Digital Experience Platform (DXP)

In response to an obvious need, vendors including Adobe, IBM, Oracle, and Salesforce have created a digital experience platform or DXP. We define a DXP as a comprehensive suite of solutions enabling enterprises to deliver a content-rich, stakeholder-driven digital experience (DX), encompassing all digital touchpoints.

Its main function is to digitally enable the three pillars or modules of DX – content management, brand engagement, and digital e-commerce – so enterprises can create business value through a well-structured and unified experience.

The Digital Experience Platform (DXP)

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  • Content management: A DXP offers various services across the content management lifecycle, such as dynamic templates for designers, a library of frequently used content, and widgets and tools for reviewing and publishing content to multiple platforms, which help enterprises effectively and centrally manage the content they publish.
  • Brand engagement: A DXP unlocks numerous aspects of brand engagement across functions including marketing, advertising, sales, and experience management. With capabilities like end-to-end campaign automation and drag-and-drop tools to design customer journey maps, a DXP enables experience-as-a-service for enterprises.
  • Digital e-commerce: A DXP activates different facets of digital e-commerce with solutions like AI-enabled merchandising, visual merchandising, automated management and maintenance of product data, and central dashboards to manage all websites.

In addition, a DXP has tools to help deliver a data-driven experience across the customer experience value chain by enabling functions such as sales, marketing, merchandising, and content publishing via different modules.

Beyond the basics

Most of the DXPs in today’s market provide the same basic services. But the leading DXP providers also provide ancillary, value-add services on top. Some of the most popular are omnichannel services, API-integration, and tools for improved developer experience.

Per our recently released research report, BigTech Battle: Digital Experience Platforms (DXP) Assessment – Rise of the Digital Experience Platform, the leading players are adding more functionality to the DXP to enhance its features and functionality. For instance, they are helping make the development process less technical with the help of services such as What You See Is What You Get (WYSIWIG) interfaces, drag and drop functionality, and templates to create new experiences. This significantly reduces the creative team’s dependency on the technical team and improves the overall efficiency of the experience delivered. The top providers also have tools for end-to-end omnichannel customer journey mapping and enable the use of “win scores” to prioritize sales opportunities and probability metrics to measure the experience delivered.

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These players are also using technology to enhance the functionality of the different solutions they offer, such as AI for content creation, event-based automation (cart abandonment), and advanced analytics solutions.

Simply put, a DXP is a more efficient way for an enterprise to manage its DX. In today’s increasingly competitive market, enterprises need to leverage a platform-based approach to deliver a compelling and sticky experience.

For more insight on the DXP market and a detailed analysis of current vendors, please read our report: BigTech Battle: Digital Experience Platforms (DXP) Assessment – Rise of the Digital Experience Platform.

Please share your experiences with the digital experience platform and the overall experience ecosystem with us at [email protected] and [email protected].

Digital Productivity Tools are Probably Hurting Your Employees’ Experience | Blog

Most enterprises today have implemented digital tools to increase their employees’ productivity and give them a better workplace experience. For example, some have a health insurance chatbot to give employees easy 24/7/365 access to basic plan information. Others have made their intranets mobile friendly. And still others use advanced mobility solutions to allow their employees to work from anywhere.

Yet, despite the employee-centric intent of the tools, our discussions with enterprises revealed that they’re actually having the opposite effect.

During our research for our recently published report, Digital Workplace Services PEAK Matrix™ Assessment 2019: Enterprises, It is Time to Humanize the Workplace Experience, we set out to determine what was going on.

We came to two conclusions.

Conclusion #1: the employee experience plummets after digital tool novelty wears off

Our research team created the digital employee experience continuum to look at how the proliferation of tools affect employee productivity and experience. As you see below, when new productivity-focused tools and technologies are implemented in the workplace, users enter the zone of “digital awe”; because of the novelty of the tools, employee productivity and experience are high.

But after time, and following the introduction of more digital tools, although employee productivity continues to improve, employee morale and enthusiasm start dropping off. Ultimately, employees may outrightly reject new digital tools.

Digital Employee Experience Continuum

Let’s look at this phenomenon by considering the example of an employee who provides remote training sessions leveraging immersive communication tools. Elimination of the daily commute pushes the trainer into the zone of enhanced productivity, as he or she has more time to deliver additional training sessions. But the toll of creating even more digital content, documenting the whole process, and feeding the details into an analytics system for continuous improvement can quickly drive the trainer to the point of digital aversion.

The above scenario showcases how an enterprise may fail to identify that while digital tools can improve business productivity, they may do little to nothing to improve the user experience. Indeed, they may worsen it.

Conclusion #2: service providers may have sold their enterprise clients a productivity-centric solution camouflaged as human experience-centricity

Many service providers still view employees as users, rather than humans. So, when they design and deliver a digital solution, they only consider the things that impact user productivity, such as software preference, network bandwidth constraints, device compatibility, and tool knowledge. They fail to take into account employees’ human attributes such as user location, mood, and context.

To avoid creating a digitally-toxic workplace, here are some questions enterprises should discuss with service providers before entering into an agreement. They’re based on our HUMANEX – or Hyperconnectivity, Ubiquity, Measurability, Assurance, Novelty, Empowerment, eXtendability – framework, which outlines the attributes of a true human experience-centric workplace.

The answers to these questions help enterprises understand which of their short-listed providers are capable of and committed to delivering on real employee experience-centricity.

Attribute

What to check for

Hyper-connectivity
  • Does the service provider have credible immersive communication and collaboration offerings, including integration experience with multiple stacks?
  • Does it have capabilities and proof points around integrating social collaboration / gig collaboration platforms/stacks?
  • Can its solution be integrated with HR systems to accommodate changes in policy control and governance across the employee life cycle?
Ubiquity
  • Can the service provider demonstrate capabilities across multiple mobility stacks enabling work from anywhere, any device, anytime philosophy?
  • Can it build a workplace design for users independent of physical location?
Measurability
  • Is the service provider offering “skin in the game” for avoidance-focused KPIs rather than cost-centric metrics?
  • Is it committing to true user experience measures based on operations data beyond periodic surveys?
  • Does it offer AI/ML solutions to analyze system data and improve real-time user experience?
Assurance
  • Does the service provider have a comprehensive approach to security policy definitions across endpoints and devices and user identities?
  • Does it have credible proof points for implementing and running cloud security solutions?
Novelty
  • Does the service provider proactively offer UI/UX design expertise as part of its workplace solutions?
  • Does it have credible proof points for implementing innovative service use cases leveraging IoT, AR/VR, AI, ML, and social?
  • Does it have experience in integrating consumerized solutions such as smart offices, real-time anomaly detection, and proactive resolution?
Empowerment
  • Can the service provider help build a BYOD design, governance, and management model?
  • Does it offer multiple channels of service (e.g., personalized enterprise application stores, walk-in tech cafes, self-service kiosks, and social platforms) as opposed to pushing personas and limited self-service use cases?
  • Does it integrate virtual and human agents seamlessly within the service delivery?
extendability
  • Does the service provider have credible governance and service integration experience in multi-vendor environments?
  • What is its level of commitment to investing in a technology ecosystem comprised of traditional players and startups?

To learn more about creating a human-experience focused workplace in your organization, and how the service providers in this space stack-up, please read our report named, “Digital Workplace Services PEAK Matrix™ Assessment 2019: Enterprises, It is Time to Humanize the Workplace Experience.

For more details, please contact us directly at [email protected] or [email protected].

AI for Experience: From Customers to Stakeholders | Sherpas in Blue Shirts

Everest Group’s digital services research indicates that 89 percent of enterprises consider customer experience (CX) to be their prime digital adoption driver. But we believe the digital experience needs to address all stakeholders an enterprise touches, not just its customers. We touched on this topic in our Digital Services – Annual Report 2018, which focuses on digital operating models.

Indeed, SAP’s recent acquisition of Qualtrics and LinkedIn’s acquisition of Glint indicates the growing importance of managing not only CX, but also the digital experience of employees, partners, and the society at large.

AI Will Usher in the New Era of the Digital Experience Economy

Given the deluge of data from all these stakeholders and the number of parameters that must be addressed to deliver a superior experience, AI will have to be the core engine powering this digital experience economy. It will allow enterprises to build engaging ecosystems that evolve, learn, implement continuous feedback, and make real time decisions.

 

Exhibit experience economy AI blogAI’s Potential in Transforming CX is Vast

Today, most enterprises narrowly view the role of AI in CX as implementing chatbots for customer query resolution or building ML algorithms on top of existing applications to enable a basic level of intelligence. However, AI can be leveraged to deliver very powerful experiences including: predictive analytics to pre-empt behaviors; virtual agents that can respond to emotions; advanced conversational systems to drive human-like interactions with machines; and even to deliver completely new experiences by using AI in conjunction with other technologies such as AR/VR, IoT, etc.

Digital natives are already demonstrating these capabilities. Netflix delivers hyper personalization by providing seemingly as many versions as its number of users. Amazon Go retail stores use AI, computer vision, and cameras to deliver a checkout free experience. And the start-up ecosystem is rampant with examples of cutting-edge innovations. For instance, HyperSurfaces is designing next-gen user experiences by using AI to transform any object to user interfaces.

But focusing just on the customer experience is missing the point, and the opportunity.

 AI in the Employee Experience

AI can, and should, play a central role in reimagining the employee journey to promote engagement, productivity, and safety. For example, software company Workday analyzes 60 data points to predict attrition risk. Humanyze enables enterprises to ascertain if a particular office layout supports teamwork. If meticulously designed and tested, AI algorithms can assist in employee hiring and performance management. With video analytics and advanced algorithms, AI systems can ensure worker safety; combined with automation, they can free up humans to work on more strategic tasks.

AI in the Supplier and Partner Experience

Enterprises also need to include suppliers and other partners in their experience management strategy. Using predictive analytics to automate inventory replenishment, gauge supplier performance, and build channels for two-way feedback are just a few examples. AI will play a key role in designing systems that not only pre-empt behaviors/performance but also ensure automated course correction.

AI in the Society Experience

Last but not least, enterprises cannot consider themselves islands in the environment in which they operate. They must realize that experience is as much about reality as about perception. Someone who has never engaged with an enterprise may have an “experience” perception about that organization. Some organizations’ use of AI is clearly for “social good.” Think smart cities, health monitoring, and disaster management systems. But even organizations that don’t have products or services that are “good” for society must view the general public as an important stakeholder. For example, employees at Google vetoed the company’s decision to engage with the Pentagon for use of ML algorithms for military applications. Similarly, employees at Microsoft raised concerns over the company’s involvement with Immigration and Customs Enforcement in the U.S.  AI can be leveraged to predict any such moves by pre-empting the impact that a company’s initiatives might have on society at large.

Moving from Customer to Stakeholder Experience

As organizations make the transition to an AI-enabled stakeholder experience, they must bear in mind that a piecemeal approach will not work. This futuristic vision will have to be supported by an enterprise-wide commitment, rigorous and meticulous preparation of data, ongoing monitoring of algorithms, and significant investment. They will have to cover a lot of ground in reimagining the application and infrastructure architecture to make this vision a distinctive reality.

What has been your experience leveraging AI for different stakeholders’ experiences? Please share with us at [email protected] and [email protected].

 

SAP Accelerates Experience Pivot with a $8 billion Bet on Qualtrics | Sherpas in Blue Shirts

Just days before 16-year old Qualtrics was due to launch its IPO, SAP announced its acquisition of the customer experience management company in an attempt to bolster its CRM portfolio. Qualtrics, one of the most anticipated tech IPOs of the year, and oversubscribed 13 times due to investor demand, adds to SAP’s arsenal of cloud-based software vendor acquisitions.

Delving into SAP’s Strategic Intent

Seeking transformational opportunities, the acquisition will allow SAP to sit atop the experience economy through the leverage of “X-data” (experience data) and “O-data” (operational data). Moreover, the acquisition will enable SAP to cash in on a rather untapped area that brings together customer, employee, product, and brand feedback to deliver a holistic and seamless customer experience.

SAP had multiple reasons to acquire Qualtrics:

  • First, it combines Qualtrics’ experience data collection system with SAP’s expertise in slicing and dicing operational data
  • Second, it sits conveniently within SAP’s overarching strategy to push C/4 HANA, its cloud-based sales and marketing suite.

SAP’s acquisition history makes it clear it seeks to achieve transformative growth by bolting in capabilities from the companies it acquires. It has garnered a fine reputation when it comes to onboarding acquired companies and realizing increasing gains out of the existing mutual synergies. Its unrelenting focuses on product portfolio/roadmap alignment, cultural integration, and GTM with acquired companies have been commendable.

Here is a look at its past cloud-based software company acquisitions:

SAP blog

SAP has taken a debt to finance the Qualtrics acquisition, making it imperative to show business gains from the move. With Qualtrics on board, it seems SAP’s ambitious cloud growth target (€8.2-8.7 billion by 2020) will receive a shot in the arm. However, the acquisition is expected to close by H1 2019, implying that the investors will have to wait to see returns. Moreover, SAP’s stock price in the past 12 months has dropped by 10.6 percent versus the S&P 500 Index rise of 3.4 percent. While SAP has seen revenue growth, its bottom-line results have been disappointing with a contraction in operating margins (cloud revenues have grown but tend to have a lower margin profile in the beginning.) This is likely to be further exacerbated given the enterprise multiple for this deal.

SAP Blog image 2

Fighting the Age-old Enterprise Challenge

Having said that, SAP sits in a solid location to win the war against the age-old enterprise conundrum of integrating back-, middle-, and front-office operations and recognize the operational linkages between the functions. Qualtrics’ experience management platform, known for its predictive modeling capabilities, generating real-time insights, and decentralizing the decision-making process, will certainly augment SAP’s value proposition and messaging for its C/4 HANA sales and marketing cloud. In fact, the mutual synergies between the two companies might put SAP at an equal footing with Salesforce in the CRM space.

While it may seem that SAP has arrived a bit early to the party, given that customer experience management is still a niche area, the market’s expected growth rate and SAP’s timely acquisition decision may allow it to leap-frog IBM and CA Technologies (now acquired by Broadcom), the current leaders in the space. Indeed, over the last couple of years, Qualtrics has pivoted beyond survey and other banal customer sentiment analysis methods to create a SaaS suite capable of:

  • Analyzing experience data to derive insights about employees, business partners, and end-customers
  • Democratizing and unifying analytics across the back-, middle-, and front-office operations
  • Delivering more proactive and predictive insights to alleviate experience inadequacy.

Cognitive Meets Customer Experience Management – The Road Ahead

SAP’s Intelligent Enterprise strategic tenet, enabled by its intelligent cloud suite (S/4 HANA, Fiori), digital platform (SAP HANA, SAP Data Hub, SAP Cloud Platform), and intelligent systems (SAP Leonardo, SAP Analytics Cloud), has allowed customers to embed cutting edge technologies – conversational AI, ML foundation, and cloud platform for blockchain. SAP is already working towards the combination of machine learning and natural language query (NLQ) technology to augment human intelligence, with a vision to drive business agility. Embedding the experience management suite within next-generation Intelligent Enterprise tenet will play a key role in achieving the exponential growth targets by 2020.

Please share your thoughts on this acquisition with us at: [email protected] and [email protected].

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