The Leap to SAP C/4HANA is Bigger Than You Think

Choosing to adopt C/4HANA is an invitation for SAP to become even more deeply ingrained in your organization.  Here we take a look at why C/4HANA is much more than a single platform decision.

What is SAP C/4HANA CX?

SAP C/4HANA is SAP’s cloud-based customer experience platform that consists of the following applications:

  • SAP Customer Data Cloud
  • SAP Marketing Cloud
  • SAP Commerce Cloud
  • SAP Sales Cloud (Hybris Cloud for Customer, Hybris Revenue Cloud, CallidusCloud)
  • SAP Service Cloud

The release of C/4HANA followed multiple key acquisitions that SAP made in an effort to compete in the CRM market (such as Gigya, CallidusCloud, and Coresystems).  The “C” in C/4HANA reportedly stands for “customer” and “4” stands for “4th generation CRM”.

Then CEO, Bill McDermott, announced C/4HANA at SAP’s 2018 SAPPHIRE NOW conference, presenting it as the CRM that would revolutionize the market by combining front-office marketing automation applications with back-end transactional ERP systems, and business applications such as SAP S/4HANA.

The C/4HANA solution is intended to prevent customers from looking at other best-in-breed CRM solutions (like Salesforce).  SAP has always been hypersensitive to how its performance compared to Salesforce’s and though Salesforce wasn’t named outright in the announcement, it’s clear that SAP was taking aim at the CRM leader with C/4HANA.  In the announcement, McDermott stated that “The legacy CRM systems are all about sales; SAP C/4HANA is all about the consumer.  We recognize that every part of a business needs to be focused on a single view of the consumer.”

SAP C/4HANA is Not a Single Platform Decision

SAP wants you to think that it’s just as easy to deploy as any other cloud provider but there are reasons to be skeptical.  If you are considering the move to C/4HANA, you should know that you’re making more than a single product/platform decision.  You are potentially making a holistic CRM business suite decision as well as a core ERP platform decision.  You can no longer just dip in your toes.  SAP wants you all in and they will find ways to incent (or extort) you to do so.

For instance, SAP does not typically allow customers to move a single application into their cloud platform where they already market a suite of products.  They will propose/incent/require you to adopt and/or purchase the adjacent C/4 products in the suite such as the customer information management capability of Gigya or the eCommerce capability of Hybris.  SAP will couch this in terms of “maximizing the functional capability” of your migrating product, but in the end, it’s a strategy to maximize a revenue opportunity and lock you into their full C/4 suite.

Also, by choosing to move a strategic business function such as C/4 into SAP’s cloud, you should expect SAP to make a full-court press to move your core ERP to the cloud on S/4HANA.  Again, in the guise of leveraging the full functional capability of C/4, SAP will propose/incent/require that the only way you’ll obtain the largest business benefit of your SAP solutions is to have them on S/4HANA in the cloud.  This not only secures an additional revenue stream but will effectively starve any competing platforms and reduce a customer’s ability to seek alternative solutions in the future.

Don’t Forget About Digital Access/Indirect Access

If their bundled suite of solutions wasn’t enough to prevent you from considering the competition, be prepared for SAP to raise the issue of Digital Access/Indirect Access.  Connecting your SAP solutions to third-party applications like Salesforce would increase the risks of finding yourself out-of-compliance if you are still on the Indirect Access model.  If you’ve moved on to the Digital Access model, SAP will attempt to prevent you from adopting competing solutions by warning you of the increased Digital Access costs that you would incur by doing so.  Given the still evolving maturity of this model and customer’s challenges to validate SAP’s position, the risk and cost could be significant.

What Can Organizations Do?

We’ve assisted several clients through this journey and found that you are most likely to be successful if you take the following steps:

  1. Get educated on SAP’s products, go to market strategy, and business practices.
  2. Understand your future state technology platform and roadmap and where SAP fits (or doesn’t).
  3. Internally align on expectations and timing as to when and how you will make technology investments related to SAP or competing solutions.
  4. Address the short-term transaction, but first ensure you have transparency, flexibility, and predictability into your commercial relationship with SAP now and over time.

Being educated and prepared is critical to any negotiation. When it comes to a robust suite of solutions like C/4HANA, it’s even more important to consider all of the potential platforms and solutions SAP will attempt to push on you as a means of taking full advantage of the suite.

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