Tag: customer experience

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].

Enterprise Adoption of Digital Customer Experience (CX) Capabilities Soars, Expected to Grow at 25% CAGR—Everest Group | Press Release

Demand for CX services is disrupting the Contact Center Outsourcing market, pitting traditional models based on labor arbitrage and scale with digital-first strategies.

Customer experience (CX) is king, dominating the strategic focus of a growing number of enterprises seeking to build a loyal customer base. These enterprises are taking a digital-first approach, aggressively shopping for service providers with next-generation, digital capabilities that can help them gain in-depth customer understanding, deliver personalized CX and establish highly qualified talent pools for managing CX. According to new research from Everest Group, digital CX, which currently represents 4-6 percent of the overall contact center outsourcing (CCO) market, is expected to grow at a compound annual growth rate of 20-25 percent for the next five years.

“Traditional CCO approaches are rapidly evolving to those focused on delivering customer experience services,” said Skand Bhargava, practice director of Business Process Services at Everest Group. “In fact, the digital outsourcing drivers for enterprises—such as CX consulting, omnichannel platforms and digital capabilities such as automation and analytics solutions—are increasingly becoming more important than in the past. Enterprise buyers expect their service providers to be customer-centric and to provide innovative solutions that can help them meet and exceed the expectations of digital-native customers.”

These findings and more are discussed in “Contact Center Outsourcing Annual Report 2018 – Transforming Customer Experience Through a Digital-First Approach.” This report provides an overview of the CCO market, evolving buyer expectations, market size, adoption trends, key solution characteristics, and the outlook for 2018-2019.

Other key findings:

  • The global contact center spend stands at US$320-350 billion, of which third-party outsourcing accounts for approximately 26 percent. The global CCO market grew at approximately 4 percent in 2017 to reach US$81-83 billion, driven by the growing interest among new buyers for outsourcing and the emerging growth avenues for service providers around consulting and digital CX solutions. The CCO market is expected to grow further at a rate of 4-5 percent to reach US$91-93 billion by 2020.
  • The adoption of chat and social media has increased significantly over the past two years, compared to email and voice; chat has become the most preferred channel among millennials.
  • Robotic process automation (RPA) and rule-based chatbots are increasingly adopted across multiple use cases in contact centers to solve key business problems such as longer average handle time (AHT), average waiting times, and navigating through multiple systems and applications. Artificial intelligence (AI) is largely leveraged to unlock customer insights, predict customer actions, and make personalized recommendations.
  • The operational analytics solutions such as desktop analytics and agent performance analytics have witnessed high adoption in contact centers. The adoption of business analytics solutions that include customer analytics, sentiment analytics, and Voice of Customer Analytics (VoCA) is expected to increase over the next few years.
  • The delivery model for customer service management (CXM) services is evolving with a balanced mix of onshore, offshore, and nearshore agents, augmented with the Work-at-Home Agent (WAHA) model and next-generation technology solutions. The WAHA model continues to grow in CXM services, with around 93 percent of the total WAHA agents based out of the United States.

Digital Initiatives Yielding Sour GRAPES? Gaps in Reality and Promises | Sherpas in Blue Shirts

GE’s search for a buyer of GE Digital, its apparent “non-core” business, and UBS’ sale of its Smart Wealth digital wealth management platform are causing the old guard to rejoice and claim that digital businesses are bogus and hogwash. Even Everest Group’s research suggests that 78 percent of enterprises fail to scale their digital initiatives, and don’t realize the benefits they envision.

It is easy to naysay the naysayers. But these developments do merit a discussion. Many enterprises are investing in digital transformation initiatives, and they have a lot to lose if they don’t do it well.

So, what is plaguing enterprises’ digital transformation agenda?

Not Moving the Revenue Needle

Most of the industrial enterprises we engage with as part of our research believe that, even in the coming two decades, 80-90 percent of their business will come from their so called “core” products. Though they acknowledge that their core products are not static and continue to be increasingly connected, software-driven, and service oriented, the incremental impact on revenue is not yet clear. Their business modeling and simulations provide numbers that are sufficient to fund digital initiatives, but are insufficient to move the revenue needle.

Digital Fatigue

Enterprises are realizing they have overdone some of their digital initiatives. Because business impact continues to be hazy, leadership is asking difficult questions. Our research suggests that 45 percent of enterprises fail to get funding for digital projects as the decision makers and purse string holders consider them vanity pursuits. Moreover, even strategic initiatives are struggling as the return on investment horizon is becoming longer as time progresses. Leadership is losing patience.

Challenges in CX to Business Attribution

Our research suggests that 89 percent of enterprises believe digital initiatives improve customer experience (CX). However, they struggle to attribute this improvement to business success. Therefore, business success becomes a secondary metric for such initiatives. Moreover, many enterprises confuse customer service – e.g., contact centers – with customer experience, which thwarts their ability to drive meaningful digital transformation.

We discuss another major reason for the gaps in digital promises versus reality in our research on digital operating models. Various enterprises assumed that digital transformation would create completely different businesses or business models for them. A prime example for comparison was about Google, a search and advertising company, getting into autonomous vehicles. Another was Amazon, an online retailer, getting into cloud services. These enterprises also assumed that they would disrupt their entrenched competition in their own and allied industries, just as Uber and Airbnb did.

Related: Important Lesson For Companies Undertaking Digital Transformation

However, I believe enterprises need such a dose of reality in order to separate the chaff from the wheat. As tech vendors, consultants, and system integrators brand everything digital, enterprises need a solid business case for digital transformation lest they spend precious money on worthless pursuits.

Enterprises’ needs of the hour are to develop a realistic digital transformation plan, rely on incubating multiple projects, be willing to fail fast, and leverage broader industry ecosystem. They must also remember that technology disruption always come with high risks.

Not acting is not an option, as the cost of doing nothing significantly outweighs the initial failures your enterprise may experience. Failing today is better than becoming irrelevant tomorrow.

What has been your digital journey experience? Please share it with me at [email protected].

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