Us by the webcast. I'm Jim Dever from SAP. We are very pleased to come before you today so quickly after the close of SAP's acquisition of Hybris, just four working days ago, last Thursday, and very excited to share with you some more information about what this means for the future of the customer experience. Joining us today will be Jonathan Becher, the Chief Marketing and Communications Officer from SAP. Also, Ariel Luedi, the Chief Executive Officer of Hybris, Mark Ferrer, the Chief Operating Officer of SAP Global Customer Operations. We will also be joined by Suzy Sapsara, the Global eBusiness Manager of MSA, Erik Larson, the Managing Director, Digital, Data and Analytics of Accenture, and Steven Kramer, the Executive Vice President for the Americas of Hybris. We will have some presentations from our execs, shed some information.
We will also have a panel session for you, and then we will conclude with an open Q&A session. We will encourage everyone here in the room to ask questions at that time. We will also invite anyone participating through the web to submit questions either to press@sap.com, that's press@sap.com, or on Twitter. Today's hashtag for the event is omni commerce. That's one word, omni commerce, O-M-N-I C-O-M-M-E-R-C-E. Thank you. We encourage you also to tweet throughout with thoughts, comments, anything that is of interest to you about today's event. Having taken care of that, without further ado, gives me great pleasure to introduce Jonathan Becher.
Thanks, Jim. I'd like to add my welcome to all of you here in New York City, and those of you online joining us from around the world. I'm going to start with a very simple statement. Bringing SAP and Hybris together redefines the future of commerce. It'll change how every company around the world engages with their customers. Now, you notice I used the word engage. Some of you who came to this press conference today or attending online might have had a different frame of reference in your head. You might have thought about customer relationship management. But to us, it's not about managing relationships with customers, and I'll talk more about this. It's about how do you provide a consistent, unified, and compelling experience for consumers.
The phrase I'd like you to think about is customer engagement, and I'm going to resist turning that into an acronym, but I'm sure somebody will do that. I'll check Twitter when I sit down, and that'll turn into some kind of three-letter acronym. What does that really mean? How do I think about that? Well, we know that the way consumers engage with companies, the way they engage with brands, has fundamentally changed in the last couple of years. Consumers are digitally empowered. They want self-service in how they find products, how they research products, yes, even how they buy products. They want to do it by themselves. They want to do it digitally, often without a salesperson. Sorry, Mark, no offense.
In fact, research has shown that nearly 80% of the people report that they go through most of the buyer's journey, from discovering what they want to actually purchasing it, without talking to a single human being. When they do research things, when they try to find out more about products, they really don't go to vendors anymore. They don't really read vendor brochures, and they don't often go to vendor websites. What do they do? They crowdsource their research. They go to alleged experts. I say alleged because you never really know online. They go to social, and they ask them for their opinion. This is why more than 50% of consumers have said they changed their mind about buying a product and canceled it instead after reading a negative review. They were going to purchase something, they changed their mind. What does this mean for companies?
What does it mean for brands? It means that we have to listen and respond to a whole host of digital signals across the web, not just the signals that are on our own website, because we've gotten pretty good at that, but signals that are across digital properties that we don't own and we don't control. Certainly those that include the social sphere as well. It also means, and I think this is maybe even more important, we have to change our mindset from thinking about controlling customer relationships and automating them, which has been the mindset of the market for the last decade or more, to thinking about how to provide that holistic experience. That mindset shift shows up in study after study.
A recent study of retailers showed that the number one concern a retailer had was how to provide a consistent experience across all the interaction points to their consumers, from the call center to the physical store, to the online store, to the social world. All retailers knew that that was the number one consideration, and yet more than half of them said they couldn't even identify a consumer across all those channels. They didn't know that somebody on the call center was the same person in the social sphere and the same person in their store. Big challenge, tough issue. As a CMO myself, I know this is not just a retail phenomenon.
Almost every marketer I talk to in almost every industry has the exact same challenge, creating a unified customer experience, along with the challenge of big data, are almost always the top two things I hear when I talk to CMOs around the world. We know that this is a problem. We know that this is the heart of the issue, what you've got is essentially the rationale for the acquisition in a nutshell. Thinking about the customer experience. What SAP and Hybris together are doing is allowing our joint customers to solve the omnichannel commerce challenge. Now, I know that was a bit of a mouthful, so I'll say it again more slowly. The omnichannel commerce challenge. Or as we sometimes say it for short, and that was the hashtag you heard Jim say early, omni commerce.
If you solve that problem, you can finally tackle the unified customer experience problem and increase engagement. Most of you probably think this is a B2C problem, a business to consumer problem, because that's what we hear about all the time. The most popular phrase that I see in the press around this topic is showrooming. If you don't know the phrase showrooming, that's when consumers research a product online, let's say in their home, and they go to a physical store to check it out IRL, in real life, to feel what the product really looks like. Often when they're in that store, that showroom, they use a mobile device to see whether the price there is the best price or maybe is better someplace else. They don't buy it necessarily in the store. They go back home and buy it online.
To add insult to injury, if they end up not liking it, they might return it to the store that they checked it out but didn't buy. This is the fundamental problem that we show, it's not just a B2C problem. It's a B2B problem, because business consumers or business people want the same consumer-grade experience that B2C has. In fact, you might be surprised to learn that the market for B2B commerce, business commerce, is three to four times bigger than the market for consumer commerce. I thought I'd give you a couple examples from the SAP Hybris joint customer base. The first one I want to give you is Grainger. Maybe not everybody who's attending today's press event knows Grainger, they're a large distributor of industrial supplies, things that maybe most of you don't actually buy.
They do already today more than EUR 2 billion of commerce on the Hybris platform, nearly 25% of their overall revenue. To give you a sense of the total scale here, Grainger has more than 1 million products in their product catalogs. 1 million, servicing more than 2 million people. This is a huge deployment. On a good day, there are about 500,000 orders that go through the system, those orders are connected from Hybris to SAP CRM and SAP ERP. It's a wonderful deployment. That's clearly B2B and not B2C. Another example is Nespresso. Some of you may have heard about Nespresso if you were at SAP Sapphire in Orlando or listened online. Nespresso are the makers of those little coffee capsules and coffee espresso as well. It's also an extraordinarily large deployment.
More than 8 million, that's right, 8 million consumers use Nespresso, about 200,000 orders per day. To me, what's really compelling about this particular deployment is the fact that they use the exact same platform for the consumer side, B2C, as they do for the business side, B2B. Most companies have a different set of deployment depending on whether it's B2C or B2B. It's a fundamentally different approach and one that I think we're quite proud of that Hybris has been able to do. Regardless of whether you're B2C or whether you're B2B, you can do that on one single platform. Which brings me to a simple statement again. To me, as a marketer, I'm extraordinarily excited about it. This is a great example of an acquisition of a coming together of SAP where one plus one equals three.
I know I didn't really fail first-grade math. One plus one really does equal three. That's what happens when the sum of the parts, the total is even more. I don't want to steal Ariel's thunder. He's going to talk a lot more about the technology behind, but I do want to give you three simple examples of how it's better together. The first is, Hybris was quite successful in Europe and in North America, but we think as part of the SAP family, we see tremendous interest in emerging markets. China alone is the second largest market for commerce, for e-commerce, and largely untapped by the Hybris family, although they have some initial wins there as well because the system is completely available in Chinese and Mandarin and double-byte, et cetera. That's the first, untapped markets and emerging markets.
The second is when we take our technology, SAP HANA, and embed it inside Hybris, we've already started to do, Ariel, I promise I will allow you to talk more about it in a moment, and essentially turbocharge that environment. We've all heard a lot about the zero moment of truth, and we know that inside commerce, you need to worry about real-time interactions, real-time recommendations, and real-time marketing. With HANA and Hybris coming together, that is no longer just academic. That is reality. The final point I'll make of bringing the two together is imagine what happens when you take the leader in commerce and put it together with the Ariba Business Network. There are already more than 1 million companies on the Ariba Business Network conducting almost a half a trillion EUR of commerce.
Those are waiting buyers and sellers now can be connected together with your system as well. Fundamental opportunity. As a CMO and as a marketer, I'm extraordinarily excited about this acquisition. I know that every single customer interaction with every single customer matters. I can't wait to see SAP and Hybris together fundamentally change because we have the insight on what customers are expecting and the execution to cause that to happen. The future has actually already arrived. Commerce and the customer experience have been reinvented. Thank you. With that, I'll ask Ariel, who's CEO of Hybris, to come up and talk us a little bit more about the Hybris architecture and what he sees from his point of view.
Morning, everybody. As you can hear, I'm not a native American. I'm a Swiss, and they told me I have to stand here. I would like to talk a little bit about Hybris, not about technical architecture, I don't think that's of much interest, but about where the market is going and how we can achieve synergies between SAP and Hybris. Commerce Now, Jonathan said it. We're talking about commerce, so we're talking about the revenue-generating processes within a corporation, which is a new topic more or less for SAP. SAP traditionally talked about efficiencies of internal processes, costs, cost savings, time savings, or savings in terms of supply chain management through the acquisition of Ariba. Actually, the relationship with the customer and the support of the processes where you make money as a corporation, that was usually left to other companies.
With the combination of Hybris and SAP, we have now an end-to-end story to offer to our joint customers. That's Commerce Now. That's all we do at Hybris. We have done this for the last 15 years, it says commerce. It doesn't say e-commerce. E-commerce is one channel, as you know, our customers are using many channels. What is the problem that we can solve with our customers? We have customers being globally deployed. We have customers in retail, in manufacturing, in telcos, in digital, whatever. Most of them face this problem here, that they cannot control the behavior of their customers. We behave differently than they expect. In the past, it used to be a linear process: TV ad, stores, order, done. Now we have all these choices.
Retailers, for instance, say, "Oh, we would like to have this single view of customer." That's already the wrong approach. That's the inside-out approach. You have to think about customers having the single view of a brand or the single view of a retailer. That's how things have to turn around, and we have to make it easy for our customers, consumers, or business customers, to actually interact with ourselves. The expectations of us, because we are all customers, are very simple. We want three things, they sound very simple, but they're hard to do. One is, whenever we touch one of these channels, we expect to get the same answer. Sounds simple. It's not happening. There's different availabilities, different pricing I get. They don't know where the product is, what the order status is.
The technical specifications are different on the print catalog than what the call center guy tells me, or the person in the store or the web. I'm getting confused. I'm not buying. I would like to get the same answer. Even if it's the wrong answer, at least it's the same answer. Otherwise, I get confused. The second thing that we all want is, if I start a communication, a dialogue with a brand, a retailer, whatever, I choose in this process to change the channel, please, I would like to continue this dialogue without having to start from scratch. Happening all the time if these channels are not integrated. I do something on the web. I get stuck. I call the call center, they have to start from scratch. Who I am? What am I interested in, and so on. That should not be.
They should know what I have done and help me to finish actually this process. The third part, probably many more, that's the three I could think of is, I would like to get treated the same way on all of these channels. Everybody's focusing on the digital channels because it's easy. When you go to the web, "Oh, Ariel, great to hear that you're back. You're best friend," "How is the T-shirt that we sold you last week?" So on. I think really I have a friend for life. On the weekend, I'm shaving with my old jeans. If I go into a store, they look at me as a potential shoplifter, because they don't know who I am. We have to connect these dots, I want to be treated the same.
Especially if you have been treated well, if all of a sudden information chain breaks down, you're treated differently, it hurts the most. Just think about your frequent flyer status. I'm a HON member at Lufthansa, and I'm very proud of it, that I get treated like a king. Sometimes this thing is breaking down. I'm treated like a common economy flyer, and that really is tough to step down and stand in line. If you talk about commerce, you have to talk about two things, and Jonathan mentioned one of them. One is infrastructure, technology, and the other one is customer experience. Infrastructure is what we all talked about, the expectations that we all have. It's really hard to do because most of the companies have these infrastructures on the technology side. They're organized by channels, and the applications are by channels. The databases are by channels.
There's nothing horizontal. They connect these things mostly with people. Even all the big retailers you read in the press, how great they are, we talk to them. When we open up the curtain, look behind it's madhouse. Okay. There's nothing really organized, many manual processes. What you need actually is, in order to have these unified channels, is you have to have a single source of truth for data, for content, meaning about the product. One source for product information. Doesn't matter if it's on the mobile, then on the tablet, in the print catalog or the store clerk on the web, whatever, one source. They always get the same answer. The same source about product, about customer, about inventory, about pricing, about order status, one source. That's what has to be done.
It's an infrastructure project, and that's where Hybris and SAP can help. That's managing this data complexity. The much even more difficult part is managing the process complexity. This madhouse started when they connected digital channels with the real world. The problem is nobody had a strategy of multi-channel or omnichannel whatsoever. We invented this. Our customer, Toys 'R' Us , is doing online in the U.K. with us. Somewhere in the world, in one year, somebody ordered something online, let's say, Toys 'R' Us , and went into the store at Toys 'R' Us because he wanted to return it. The person almost fainted because they didn't know what to do. You ordered it online. What does it have to do with me? If you purchase something from me, then you can return it. This integration of channels didn't happen because somebody had a great strategy.
We forced it onto these industries, and retail was the first to be forced into this omni-commerce thingy. That's why you have these crazy processes, order online, pick up in store, order online, return it in store, or order online or reserve online, pick up in store, go into the store for ordering for home shipment. There's so many processes all of a sudden possible, and it's very hard to manage. We have a process complexity. The nirvana to solve this is what Hybris can offer together with SAP. No, the ideal solution is something horizontal, something integrating all these channels, both from a data layer point of view, but also from a process layer of view, and also from a business logic. These are these yellow pieces or pieces where we can provide software to support these commerce things.
Single source of truth, managing the process complexity, reusing logic. Why should you have promotion logic for each channel? You should have a promotional vouchers or cross-sales or personalization logic, and you can use it in all the channels. That's what we can provide, and that's how we can help our customers. What we see is that these customer-facing processes are slowly coming all together. There is a new software category being created, and you see this through with all these acquisitions and consolidations going on. In the past, you had companies there just doing search and navigation on websites. You had companies only doing personalization. That's all going to be commodity as part of a commerce platform like Hybris. This new enterprise. Okay, we don't have a name. Jonathan tried one name. I don't know what the name is.
One is back office, maybe it's front office, maybe it's enterprise commerce, maybe it's What's it called? In customer engagement? We don't know. There are no analysts out there yet who have named this space, but we believe, like ERP. What was the story before ERP? I'm old enough to remember. You had PPS systems and HR systems and general ledger and accounts receivables. You had companies in all these different markets, and it all came together because it made sense. The same thing is happening now in this front office. Obviously, we as Hybris want to be the leader together with SAP, the leader in this space. We provide these functionalities to increase or make this customer experience better. Talking about customer experience, that's the second part. We believe that our competition of companies out there define customer experience way too narrow.
They're only looking at the paint of a building or at the screen of a TV. Nice pictures, great search or personalization, whatever. This is not customer experience. That does not help you to be successful. It has to be much, much wider and much deeper to actually have a good customer experience, and I'll tell you why. First, Amazon. Morgan Stanley says Amazon will have 26% of global e-commerce market in 2016. Why? I mean, this is a terrible website. This is so '90s. Products all over left and right. A very, very old personalization technology. I even wrote a white paper about it 20 years ago about collaborative filtering. Very simple.
When I ordered a book for my godchild, "Winnie-the-Pooh," I ordered a book for IPO because we used to be planned to do IPO before we met SAP, they want to be clever and think, "Oh, this must be a pedophile investment banker," and try to recommend me something. That's very, very old technology, but they are doing really well. Why? Because it works. It works. The customer experience is terrible, but it works. That's why I'm talking about end-to-end and deep customer experience and not just the paint. Amazon is a proof that you can be successful with a bad customer experience, but good execution. They're actually more a fulfillment company than anything else. If you do it the other way around, a great customer experience on the touchpoint, but bad execution, you will fail.
Just imagine if Amazon also would have a great touchpoint customer experience. Customer experience is end-to-end. You have to fulfill all these issues. The returns management has to work. You have to give the customers options how to order things and how to consume product and so on. That means you need a deep integration in the back-office systems, and that's why we're so interested with SAP. We can deeply integrate it into SAP, make sure these processes end-to-end really work, plus a great customer experience at the top end. We might even connect, like Jonathan said, the supply chain with the demand chain. Just imagine the new business model we could provide there. What's next here? Hello. Thank you. We believe mastering this data and process complexity is actually the key point to a great customer experience.
Most of the companies out there talking about customer experience, they look at the wallpaper, and we look at the building, the foundation of the building, the walls, the insulation, the fixture, everything, plus the wallpaper on top of it. That's what our customers are doing, and Jonathan gave you a few examples like Grainger and Nespresso. B2B actually is bigger. Just imagine, Grainger has 1 million products and 2 million customers, companies buying. In B2B, mostly they negotiate every price. Every customer has, for every product, usually different prices. Multiply 1 million products by 2 million, you get 2 trillion or something. Really, it's a lot of pricing you have to keep track of. That's why it's much more complex to do these things, and that's why there's hardly any competition. There's a huge runway for Hybris and SAP.
Everybody's focusing on B2C because it's easy, or so they think it is. H&M, the second-largest fashion retailer in 42 countries, doing great work. Nikon, again, a customer using B2C and B2B in one installation in Europe and the U.S. You also have other business models. We support B2C, we support B2B, we support customers doing both, like you see there. You have customers having marketplaces. Don't get confused. Marketplace, sell-side marketplaces. DHL, for instance, has a marketplace with Hybris in Germany selling 1 million SKUs, having thousands of merchants that actually want to compete against an Amazon in certain markets. You have Kalahari, the largest marketplace in Africa, with 20 million products on Hybris competing against Amazon, because in certain markets, Amazon is not there. Like in Russia, our customer is Ozon, and Amazon is not really there. The same in Asia.
Many business models we can support there. The other interesting piece, and that's why, for closing, why we think we have a huge runway, is how deep and wide this is being used. We can address many verticals. Retail is a big one. We're working on manufacturing, digital, wholesale, telco. We're working on large companies, on smaller companies. We provide the solution on-prem, we provide the solution on-demand or in a hybrid model. We provide it with the SAP backend integration, but also non-SAP customers. 70% of our customers are non-SAP. Even our SAP customers have maybe multiple ERPs because they acquire companies around the world. We will be agnostic on the ERP side because the market demands it, the customers demand it, but we will be the best-integrated solution if a customer has SAP, and you will see some announcement in this respect very quickly.
To close, that's the picture. That's the world now. We wanted to make it very simple. I can't get it any simpler than that. The customer-facing piece is Hybris managing these devices, these touchpoints, managing sales and marketing-related content and processes, and sales-related logic, integrating into the ERP, managing all these internal processes, and maybe even into the supply chain. That's why it's like a hand in a glove. There's hardly any overlap, and that's why we were able, after four days, to start talk about it. I used to work at Oracle or salesforce.com after an acquisition at Oracle. It took them months and months of infighting before they could actually have a strategy, what is going to survive and how this is going to work out. It's so clear how this works together. That's why we could talk about it after four days.
With this, I would like to close. Thank you very much. We're showing now a little video about Hybris. Thank you.
At Hybris, we believe technology works when it connects things. When we can make those connections ourselves, that's even better. The best experience we have with technology is when it disappears, gets out of the way, when it becomes invisible. When us users, we feel as if we're interacting directly with a service, because then it feels like magic. Let's watch what happens when Dina, Clara, and Ellie combine some Hybris commerce functionality, Facebook, and their phones to enhance the shopping experience. Using a gesture-based product navigator, Dina finds some shoes that are perfect for a special date. Sadly though, the store is closed for the day, and as you can see, she's pretty disappointed. Luckily though, Clara notices an NFC tag in the window. In no time, Dina's added the shoes to her wish list and shared them on Facebook. Everyone's happy.
Our story hasn't ended just yet. A few days later, Dina's walking near the store when she receives a geofenced alert. She sees that those shoes are on sale and just around the corner. Offline, online, social, mobile. With Hybris, everything's connected. It's the future of commerce now.
I know it. I feel like I'm back in the 3 grade. Suzy, Erik, thank you very much for joining us today. We really appreciate you being here for our launch event. Steve, welcome to the team.
Thank you.
We're very excited to have you on board. When you take the assets that Hybris brings to the table and combine them with our mobile products, our analytic products, our cloud products, it really provides a robust offering to our client base. You look at 40,000-plus ERP customers, and what we're able to offer them, whether you're in the Middle East and you're a retailer, you're in China, or you're in the U.K., I think it clearly was a hand-in-glove relationship. We're very excited to have you on board, and I know our teams are as well. With that, I'm going to run a little bit of a panel here, and I'm going to ask a few questions of our panelists and get their feedback on the relationship between Hybris and SAP.
Suzy, it always starts with the customer, so we're going to start with you. I'd like to get your perspective, being both a SAP customer as well as a Hybris customer, what's this mean for MSA?
It was interesting to hear the previous two presentations. It's actually really exciting for us. We are a heavy SAP user, both CRM and our overall ERP system, and we've implemented Hybris using PCM globally on 40 websites in 20 languages, and it's heavily integrated with our SAP system. We just rolled out commerce in the U.S. for our B2B customers. The integration with SAP was critical. Absolutely all of the data that we use on the B2B commerce piece comes directly out of SAP real-time. It's exciting to look forward to, as we keep rolling out these commerce sites, there are plans to roll that piece of our interaction with our partners globally over the next several years in different locations. As we move forward with that, it'll be exciting to see how that integration gets better.
That's great. Tell us a little bit about MSA and why did you start with PCM? As you looked at the offering, what was the intent to start there?
MSA is one of the premier manufacturers of safety products. Our primary industries are oil, gas, and petrochemical, the fire service, and construction in the energy market. We are a global organization. Like I said, we have 40 websites now, locations all around the world. The challenge with our industry is that the industries that are important are different in different regions, right? In the U.S., we're very big in fire service, and in certain parts of Europe, also big in fire service, but not so much in other parts of the world, right? The challenge is we have a huge global catalog with a variety of different products that we manufacture, but we sell different products in different parts of the world, too.
Yep.
The biggest attraction with Hybris for us was that PCM concept, where we could have a global portfolio of products and then just deliver a different catalog to each part of the world.
Wow. That's great. Clearly, customer intimacy for you has got to be important as you drive the relationship in that business.
It is. It's challenging for us because of the diversity of our customers. We really just started getting SAP CRM implemented, and we're really looking forward to
That's great.
kind of how that will integrate with our Hybris platform, too.
Great. Erik, as a strategic partner of both companies, particularly running the digital practice at Accenture, why don't you give us a perspective of the SAP Hybris relationship and what that could mean for clients?
I'll just extend the hand-in-glove analogy and the hand that we've been using this morning. Two hands are better than one. We've had a hand-in-glove relationship with SAP that's well documented with over 30,000 practitioners doing SAP work around the globe. What's a little less known, perhaps, is our relationship with Hybris, which started out very strong in an organic way in Europe. Through our recent acquisition of Acuity Group here in North America, have become the largest provider of Hybris related services. Together, that coordinated effort can be really impactful as we start to see this shift to much more energy around the B2B space being treated with the same kid gloves that the B2C space has enjoyed for so many years.
As you look across, because you cover a spectrum of industries in your global role, as you look across, what industries are you focusing on as you look at this relationship going forward?
Several of our client examples today were actually Accenture clients. Grainger is a great example of a client that's come on board through our Acuity acquisition, also Nespresso is a substantial client for us doing that work with the Hybris and SAP stack. I don't know that there's any one industry, certainly the resources industry is going to come on over time with a big SAP base. We see a lot of companies in the natural resources space looking at this now that hadn't been spending as much energy. Retail and consumer goods will continue to be very strong as well.
As you look at markets between mature markets and growth markets, do you see one being more important than the other, or do you think it's pretty much a broad stretch?
With my global hat on, I'm not allowed to play favorites. We certainly are spending energy growing in Asia Pacific. We just recently went live with some Hybris implementations there in China in particular. We've been experiencing a lot of strength across Europe and North America as well.
That's great. Steve, give us a perspective. We announced the intent to purchase back a couple of months ago now. We've closed transactions. I'm sure you've gotten a lot of commentary from your client base running the Americas for Hybris. What are you hearing back from clients as you talk to them about this relationship?
It's a good question. Hybris is a very customer-centric organization. I think that one of the things that was most interesting to us as we were evaluating various options was that SAP shares the same strong commitment to customers and people as Hybris did. We share those same values. I think the industry knows that as well. Certainly our SAP customer base felt as though it was just a matter of time. It was two pieces of a puzzle that just had to be put together.
You changed the glove analogy, huh.
Sorry about that. Our non-SAP customers were quite excited as well. SAP is an extremely innovative company. I think they view this as a way for us to accelerate our vision of omni-commerce and to provide a lot more value to their organizations. Jonathan and Ariel were right, the future of commerce is now. What we're also doing is we're future-proofing our company's businesses through our open architecture and the level of R&D that we do, and the new functionality and modules that we bring to market. I think that the customer base, the industry has seen this as a positive move, simply because we're able to move the needle a lot quicker.
Yep. That's great. As you look at coming on board with SAP, we're a very large organization, and you are a large organization, but nowhere near substantial as we are. What are you hearing from your team. Are they excited. Are they nervous. Being the sales guy, I got to ask that question.
I haven't heard any negative feedback. The team is just totally energized, with the size of the SAP customer base, with the opportunity we have, the opportunity is just enormous. Everybody is really energized about continuing to deliver our vision to the industry. We have an opportunity right now with SAP, with the integration of HANA, to change businesses, to change industries, to change people's lives, and to fulfill this vision that we've been educating people on and working on over the last 15 years.
On that point around HANA, maybe I'll ask Erik and Suzy, and maybe Suzy, you can comment first. As you now, all the collection of this data from social to what you're getting as far as the interaction on your commerce platform, how do you see that data being leveraged, and how are you going to change the knowledge side of this thing for MSA?
We have, in the past, spent a lot of time gathering a lot of data like a lot of companies and not using it. People spend tons of time getting leads or trying to capture some reporting with our customer call center and things like that, information just sat there. For something, I'll take a very simple example. We have a product registration process that is in place globally for our products, it helps us to get the initial intention, because of our industry, because it's all around safety and people's lives was so that if we had an issue with a product, we would be able to push out communication around that to make sure people stayed safe.
Well, I'm a marketer, I said, "Well, wait, we could use that for a lot more things to sell products." We have a lot of products that have sensors in them or things like that have a short lifespan, a couple of years, three years, whatever, they just get replaced. Something as simple as that with, if it was more automated and didn't have to have as many hands on it and data issues, we could leverage that a lot better.
We've got something to help you there.
Yeah.
We'll have to talk later.
I'm sure you do.
Erik, we have a strategic relationship with Accenture being SAP, particularly around SAP HANA, where we've gotten into some very deep co-innovation with Accenture, particularly around the customer experience and the knowledge that we can provide back. Can you comment from your perspective of what this data can mean for all the industries that you talked about before?
Yeah. Well, with the addition of Hybris in particular, it gets really interesting because for so many years, we've talked about getting the right information to the right people at the right time, right? It makes sense, yet now there's the best excuse ever to do that, which is the bottom line.
Yep.
With the financial transaction being tied up directly towards that customer journey and having all of that infrastructure and knowledge engine there, we now have the opportunity to do that and for it to be rewarded by the board or whomever else is measuring the company's performance.
All in real time.
All in real time.
As we look at this future relationship between us and Hybris, I can tell you personally from our sales force feedback, and we started the education about five days ago as we closed the transaction, I couldn't anticipate the amount of excitement that our field has of what they now can go, particularly in the industries that we talked about, retail, CPG, wholesale distribution, telco, manufacturing. Across those segments of what we can deliver as a value statement to our clients with the assets and the relationships that we already have. Steve, very excited to have you and your team on board and working with you closely. Erik, Suzy, thank you very much for taking the time to come and share your thoughts with us today. With that, we're going to close with a short video, and then we'll start with a Q&A.
Thank you very much.
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Okay, we're going to start our Q&A session. As Mark, Jonathan, and Ariel to join us on stage here. We will ask the people in the audience to raise your hand if you have a question, and we will remind everyone who's joining us by the web that, again, you can submit questions to press@sap.com, or you can submit questions on Twitter at the hashtag Omnicommerce. Do we have a question in the room up front here?
Hi, good morning.
Morning.
Rich Van Foll with IT.
CMO Advisory. Now it's working.
It's a press briefing, so I have one of those great two-part questions set.
We'd think no less of you, Rich, if you didn't have a two-part question. Go ahead.
Suzy on the previous panel, e-commerce manager, my question is, since these applications are obviously more than the e-commerce, I'd like to understand more about who the customer is within the vendor organization, CMO or others. Maybe you can talk around the complexity of the buying team. I'd like to hear a bit about that for this application. The second part of the question is, it seems to me that in this purchase and deployment, you've now got a lot of the channels, whether they're physical or virtual, that need to be sort of wired in and then buy-in to these deployments.
I'm wondering how that also impacts the purchase process and the extent to which you need to now to sort of sell this, quote-unquote, "into all the channels that are going to be using these applications." You have to respond so that an English major can understand it.
Maybe start with who you sold to historically, and then we can add some commentary on what might happen in the SAP world.
Okay.
Yep. Going a couple of years back, we usually sold to somebody in charge of a channel. That was the old days of e-commerce. There was somebody in charge doing e-commerce. It was the easy days. Sometimes this person actually purchased Hybris with the intent of doing actually more across other channels, but we were not allowed to talk it. For instance, Henkel, a German company, we called it a web application. In the end, everybody was using this application across all the different channels. At that time, it was single channel, and we were talking to each of those single channels. Because I said it's commerce, it was always people who are in charge of the business who actually owned the number. Somebody in charge of sales, marketing, somebody in charge of a channel like Suzy is.
This has changed dramatically because of how the market changed, the organizations have changed as well within the companies. We actually have now counterparts in large companies who are in charge of omnicommerce, for instance. For us, it's actually much easier. We still have both types of deals going on, just a one or a two-channel application or a transformational project. These are the ones obviously we're most interested in and Accenture is most interested in. We have a counterpart to talk about it, and they have the charter to actually make sure that this goes across horizontally in the organization. In many times, as you said, it's accompanied with a change, organization change within those companies. It's sometimes tough because this technology actually creates a change within how these companies are organized.
It's getting easier and easier because we have somebody who actually carries the title
Of omnichannel commerce
Rich, I might just add, I think you've written about this yourself, it's not new news, that there's a rise of a new title, whether you call it the Chief Experience Officer, which kind of conflicts with CEO, we won't try to term it. Increasingly, companies are naming somebody whose job it is, even if they don't own all the resources, to make sure that they marshal the head of consumer or customer experience. In retail, that's increasingly moving from merchandising to marketing. In other industries, it's going to the Chief Revenue Officer. It doesn't really matter, there's often somebody that you can find whose job it is to create the unified customer experience. That's the ideal candidate for most of our projects.
The only thing that I would add to that, though, is when you combine that with things like customer loyalty, you're going to have multiple buyers in the SAP ecosystem, right? As you combine these things, it can be marketing, it can be the brand management team, it can be the Chief Operating Officer in these clients, I can name retail clients right now that we're having those conversations with. It's a broader set of conversations. Because in a lot of cases, to the real CEO, this becomes a CEO agenda item.
Exactly right.
Thank you very much. Makes a lot of sense. few years ago when the customer experience title sort of came on the horizon, I don't think a lot of the management teams really knew what that was supposed to be. Is this the head of customer service? With your discussion today, I think it's clear what a Customer Experience Officer needs to be in charge of. Thank you very much.
No problem.
Okay, looking for the next question in the room here.
I think we had a second, was the wiring.
Okay, I'm sorry.
So-
Thank you, Mark
The question on the wiring, I think we've already done a lot of work very quickly. I'll turn some of this back over to Ariel. A piece of this is they're database agnostic, they're ERP agnostic, they connect to a lot of other back-end systems, they're used to having that open infrastructure and making those connections. Bringing that experience in with our development team, we're very encouraged by what we're going to be able to do. I know, Ariel, you've been working with them as well.
Yeah. Not much to add, actually. For us, for instance, it was quite easy to port Hybris on HANA because we're not using any native functionality of relational databases, for instance. Also because we had so much experience on working with SAP customers. You're right, these horizontal systems, there's so many touch points into the organization, you need to have a very flexible framework. That's why companies or CIOs were thinking about, once they do have this horizontal solution, where should I put the logic? Should I actually expand an ERP system that I have and put it in there, the data? Should I use something that's more agile? The result usually was it has to be in a much more agile technology layer because these customer-facing processes change all the time. I used to be a mainframe developer.
When I built something at IBM, we didn't touch it for two, three years. An ERP process, maybe we don't touch for a year as well, if you don't have to. The customer-facing processes, we have customers that do a deployment of Hybris every day. That means a new version of Hybris is being applied to production every day because they want to try out new things and introduce new processes, it has to be much more flexible.
Good. Okay. Do we have another question from the room?
Hi, I'm Michael Schultz with SAP. Run the North American retail practice. Very excited for this combination of two titans in the space and really excited to begin working with your team. Just a question, Ariel. As you work with customers, from the first time that your team meets them, how long does it take them to typically see that aha moment when they can really realize that, boy, this is really bigger than we thought it was going to be and can impact us? The second part of this easy two-part question is how long does it take them to see the value once they start to work with the solutions?
Did I telepath this question?
No.
No. Usually when we get the chance, that's where SAP can help us tremendously, once we get the chance to have face-to-face with a customer and show them what's possible, usually in the first meeting, we actually show them their data and their processes, not just some abstract PowerPoint or whatever, we usually show them their process, they cannot believe it. If we can show them and tell them, then the probability that this aha is happening is very high. Our closing probability in this moment is about 80%. We have to get there, that's why we're so hopeful on the SAP field organization.
They bring us there, so we can have this face-to-face moment because if you see that stuff working and not a canned demo, whatever, we actually import their data, their websites, and their mobile application, that really does it. The other part is time to revenue, whatever you want to call this, and that's, again, something we have an edge on compared to our competition in commerce. Competition in commerce for us is Oracle and IBM. We are just one or two generations younger as technology stack than they are, and that means it's much easier and more flexible to implement. Usually, and you can ask Accenture, their experience with all the platforms there, usually our time to go live is much shorter than with our competition. And like I said, it's not like you build something for two years and then you switch it on live.
It's usually you build a good enough product and then continuously start improving on it. Like I said, Nikon, for instance, the camera company, they do a deployment every two days. In their case, every two days, some new functionality is being deployed on the Hybris x. It goes away from these old ways of building projects Wait two years, and then maybe you see something. It's to do something quick and improve on it.
Okay. We're going to take one from the web right now. We actually got this one from Twitter and the SAP mailbox, I think that's multi-channel or omnichannel in its own way.
Are they buying anything? Then it would be commerce.
Question is about how does Hybris fit in SAP's cloud strategy. Do you see more customers asking for cloud-based solutions, and how does this influence the combined technology roadmap with SAP?
I'll take the first shot at it. I think the beauty of Hybris is, just like they're omnichannel, they're omni-deployment as well. They don't care whether they're on-premise, in the cloud, or a hybrid model. We'll have integration with the traditional SAP CRM and also SAP Cloud for Sales. It's up to the customer to choose what's best for them.
Exactly. I really like the on-demand model. Before Hybris, I built and worked for, ran Europe for salesforce.com at the time. That was before IPO, when nobody believed in this model. I really like it. The question is: Is it applicable for all the situations? We waited now for nine years here with Hybris, we waited a long time to actually offer an on-demand solution. One reason was we needed the big fat checks for on-prem licenses, and couldn't wait every month to get a little bit, we wanted more money. That's one piece. The other piece is customer-facing processes are hard to do in a multi-tenant SaaS on-demand infrastructure. Why was Salesforce successful with CRM? That's an internal process. Who cares how it looks like? As soon as it touches the customer, everybody wants to be involved.
To do this in a real controlled way, still give enough freedom for the brands to express themselves, that's hard to do. We had to upgrade our internal stack to make this possible, we launched our on-demand version second half last year because I didn't want to build two stacks. Now with Hybris, the customer can say, "Okay, this piece I would like to have on demand or as managed service, like for in order management. The more customer-facing piece, I would like to have in-house because I want to customize it a lot because it's something I want to control." The customer decides how they want to consume it. It's one stack, the customer says which part is on demand, which part is on-prem.
Thank you. We will look for the next question from the room.
Hi, Chris Fletcher with Gartner. What's your biggest challenge going to be?
Ariel, I think that question is for you.
Me.
We both looked at each other.
It's actually swallowing or not drowning in tsunami of incoming interest. That's what we're preparing ourselves the last 2 months, because once this machine starts to talk about it, we are 700 people. In the field, we may be 100 people. That's going to be the hard part. That's one. The other one, having the partner ecosystem ready to actually deliver on the stuff you're selling. The selling part is actually the easier part, to be honest. We have to have partners who actually implement high-quality projects. We will have to grow the partner ecosystem or the workbench, the Hybris workbench, for instance, within Accenture dramatically. Please, keep on cross-training your guys. I think that's the biggest challenge.
The other challenges you would expect from an acquisition actually did not happen because we discussed them before the fact, because it was a decision from our team to actually join SAP. We were not forced to do this. We had other options, even financially more interesting options. The way they offered us an integration scenario, the culture that we have seen at SAP, the lack of overlap. We didn't have to explain, again, who is the leader of commerce, whatever. They told us, "You're the expert. You run with this topic." This is really helping. The only challenge is delivery and managing inbound interest.
The-
Oh, go ahead, Mark.
Yeah. The only thing that I would add to that is, we've gotten a lot of experience now from Sybase to BusinessObjects to Ariba, SuccessFactors, running companies independently because we want to absorb that DNA, as he talked about. There's not a lot of overlap, that DNA of 700 people is very important to us in making sure that we allow that to filter into the rest of SAP. We're going to be managing this very carefully. I think your point on the ecosystem of really developing our services partners to get that time to value, building those skill sets so that we can do the connect tissue that makes this stuff real is going to be a key focus area for us over the next 6 months, is really build out those skills within our partners.
Also, that's what I was going to say. All right. We'll go for the next question from the room. I'm going to look to the east side here.
You mentioned overlap. I believe SAP had a SAP Web Channel Experience Management solution. Can you talk about what happens with that and what happens with those people, those technologies that SAP customers have? Where do they turn now? What's the path forward for that technology?
I'll take that since I guess I'm on the SAP side. The go-forward commerce solution is clearly Hybris. Therefore, over time, we'll give customers the option to consider migrating away from our web channel product that we have now into the Hybris solution. We're positioning Hybris as the right answer. That team is still intimately involved, and they're going to help with the integration, the deeper integration of Hybris with SAP ERP, because they have a lot of really good expertise of how that works.
Okay. We'll go over.
Michael Bazar with Bazar Solutions . Going back to what this category is or isn't named, at what point does all this stuff kind of just start to flow together and the customer looks at you guys and says, "You're showing up with 20 different SKUs and price points. It's too complicated." At what point do you shrink this into something that's a little more consumable and rational than it is at the moment?
Well, from the Hybris part, that's actually what we're doing. We have these suites, B2C, we go by business model, B2C suite, B2B suite, or omnicommerce suite. It's actually three SKUs, and they have maybe a couple of options for stuff that's not always requested in those platforms. We make it very easy for customers. It's a one-pager, our price list. It's not a book. It's very easy to do. I think there will be more SAP assets be added around it to make it easy to purchase from a customer point of view, right?
I think you'll see over time that there will be a consistent, there are products that automate processes, and that's a well-known market. There are products that allow you to have greater insight into what's going on. Those are in and around data analytics, there'll be products that are more, shall we say, engaging with customers. Those three market motions, I think you'll see companies settling on over the next couple of years. Whether that's three SKUs or 30 is less of the issue.
Jonathan, you were a big piece of this. Back in the fall of last year, we started Customer 360, right? Which was a bundle of an end-to-end processes, which came with a limited set of SKUs associated with them to make that buying easier.
Exactly right. Big focus at SAP.
Yes.
Simplifying.
Yep.
Simplifying.
We'll look for the next question in the room. Towards the back.
Hi, I'm Courtney Viorst from America's SAP User Group. I'm wondering how you see HANA playing out in the product roadmap and how that aligns with some of the major trends you're seeing in the space.
Oh.
Sorry.
Yeah, from our point of view, when I went to Sapphire and saw all these presentations and Vishal presenting, I was really excited. I'm a database guy, being from Oracle a long time ago.
You worked for everybody, didn't you?
I know. I'm old. Actually, just three companies.
Yeah.
Anyway. I saw huge potential. One is that this could be a platform just to replace RDBMSs, and improve the speed of these RDBMSs because the disk wait and so on adds time for response time. That was one asset. The other one, much more exciting one is changing the whole market in terms of CRM. The CRM system right now is totally outdated, the model. It's all batch-based and so on. With HANA, I just heard Hasso saying they took 10 years of the order data from Walmart. They have 380 million orders per day, and they took 10 years into the HANA database, and they asked questions about it, and the latest response time was six milliseconds or something like that.
Hey, if you then can collect data from the social networks, from the behavior of the customer on these different digital and physical channels, and make some decisions in real time using HANA, that's changing the game, and that's what made us really excited.
Let me just give you two potential examples that could happen with HANA and Hybris coming together. They're sort of the opposite end of the spectrum. I'll start with traditional sort of CRM focus, if you will. I saw a recent MIT study that said that leads that are followed up on in less than five minutes are 22 times more likely to close than ones that are followed on with half an hour. Almost every company today has a batch process, and they talk about best in class of two hours to respond. Two hours isn't real time, less than five minutes is. 22 times more likely to do. Bringing HANA in will change that equation. The other one is, remember the heart of HANA is actually an unstructured search text engine.
A lot of what we can do is, we talked about building a new website every day. Why not build a new website for each individual consumer every minute? When you actually do real-time personalization, when you actually don't do people who bought this also bought that in a small box to the right. You change the entire experience based on what they want. You can only do that when you're real time. That won't happen tomorrow and probably not next week, but that is the vision of what this is going to be.
Well, certainly as you look at what we're doing in big data, and you look at Hadoop, you look at the social sentiment, you look at all of that and bringing that into a place where you can make real-time decisions on your customer experience, it just changes the game. It not just changed the game for us. More importantly, it changes the game for our clients.
For instance, big data, it's not just big data like collecting customer context. That's one part of big data. The other one may be a little bit more boring, but very essential, is managing big data in your enterprise. If you take Grainger again as an example, like I said before, they have 1 million products, 2 million customers, and each customer has, for each product, a negotiated price, assuming. That's 1 trillion, 10 trillion, whatever, price rows you have to manage. What did Grainger do before Hybris? Can you imagine that? The whole order process, just before they said check, just buy, they didn't know what their price are. They did all the navigation, all the search based on list price. When they said, "Oh, that's about right. Okay, now show me net price.
Okay, I buy it." This is first is the customer experience. I'm just thinking on Amazon or whatever, you buy something, you don't know what you pay for until the very end. If you search for a product, show me this widget between EUR 400 and EUR 500, and it shows it is EUR 10. In the end, it costs EUR 250 because it's net price. You actually missed an opportunity to sell a higher priced product. Now, with Hybris and with SAP, they were able, within the search, this whole customer experience from the very beginning, to do search and navigation, faceted search, and so on, based on net prices. That means you have to handle about 6 trillion GB of data, 6 TB of data, which is order history and price rows within Grainger. You can only do this with a non-relational database, for instance, like HANA.
This whole B2B notion of creating a customer B2C-centric experience is only possible with an infrastructure to manage this size of data set.
Okay, we're going to take one from the web, and maybe we can use this opportunity to clear some confusion around commerce network, commerce platform. Can you explain the difference between Ariba and Hybris, and then maybe use this as an opportunity to talk about what the future looks like in the combination of
Mark, we should test Ariel, see how well he knows what Ariba is.
I can tackle it.
All right, go ahead.
It was on your slide, I think. Do you remember the thingy? The stuff underneath is Ariba. We're the stuff on top. No. It's very simple. We are sell side, they are buy side. They support processes to make the procurement more efficient and save costs for enterprises to buy products. We do the same thing on the sell side.
Do you care to talk about the future?
One of the beauties of bringing the two together is when you connect Hybris to the Ariba network, then you have all these people already there ready to buy. You have 1 million companies already in their network, half a trillion of transactions happening per year. If you're building a brand-new site, if you're building You've got some willing buyers and sellers already talking to each other. Instant fun.
Instant fun. We'll take our next question from the room.
Hi. I'm Debbie Hauss from Retail TouchPoints. I was wondering if we could hear a little bit more about Accenture's role in the partnership moving forward, and this might be a question for Erik. How does this announcement of becoming the full global strategic partner with Hybris affect Accenture's relationships with some of the other companies that they've worked with in the past?
Is Erik still mic'd? Can we allow You want to take a few steps back, Erik?
Yes.
For the camera?
Ariel was told to stand right here. We enjoy a lot of great alliances with different software providers. Those won't change. We're really excited about our work with Hybris both in Europe and North America, and it's rapidly expanding globally for us. We will continue to manage that ecosystem as we do in practically every sector of our business.
Thank you. Do we have another question from the room? Okay, take another one from the web. It has to do with, I'll combine a few of these, the SAP install base, the ERP install base, some of whom have already purchased some commerce solutions, maybe in the past decade. What's the opportunity there? I think the other one that we could address in this same question is, looking out across the customer base, but also across maybe geographies, where do we see the opportunities for SAP and Hybris coming together?
Okay, I'll take an initial shot on that. I think Mark Ferrer said roughly 40,000 ERP customers, some of which already have existing commerce solutions, but an awful lot of them do not, particularly on the B2B side. I think Ariel Luedi said early on, the customer overlap was about 70/30. About 70% of his customer base were not using SAP ERP, and only 30% or so, rough numbers, are actually using SAP ERP. First of all, just from the sheer numbers, there are thousands, tens of thousands of upside just by focusing on the install base. We also said that we don't want to do this. It is not a requirement to use SAP ERP. Open to any ERP vendor. Ariel Luedi, I think you said even among the SAP ERP base, because of acquisitions, you often see a hybrid, Hybris? A hybrid environment there as well.
One sort of point that I'll add here, though, is most of the Hybris customers were, in fact, within North America and in EMEA. Just the nature of a relatively small company, 700 employees, small compared to the 65,000. We expect a significant uptick in emerging markets, whether it's China that I mentioned, Brazil, Middle East, which I think Mark Ferrer mentioned. Russia is a big market for commerce as well. Part of the business problem that SAP will help with is how to get the Hybris brand better known in the markets where it's probably less well-known now. I think there's a tremendous upside in the SAP install base, but an even bigger upside, the global market for just B2B e-commerce technology.
Notice I've narrowed it down from B2B and B2C to just B2B, and I said e-commerce only, so that's a subset of the overall commerce market, is something like EUR 40 billion. There's plenty of opportunity out there. We're not going to want for opportunities. I think maybe you will have relationships with everybody at Accenture, but we'll keep you awfully busy.
We want 30,000 Hybris developers in two years.
I love that.
New KPI for the Accenture relationship, 30,000.
Excellent. We probably have time for one more. Do we have one more question from anyone in the room? All right, we're going to close it out with another from the web, and this has to do with, again, looking to the future, and if we look at SAP and Hybris and SAP's portfolio for customer experience, customer engagement, other things to be named.
Yes
does this complete the picture, or is there more to come?
The easy answer is to say more to come, somebody would be complaining that they didn't actually have a quote out of that. I'll say that I think of the market roughly in three pieces. There's the insight that you need about big data, both big data in your enterprise and big data that exists, where we're in pretty good shape based on the SAP HANA platform and a lot of the analytics that we have. You'll see that we've done work there in social sentiment analysis and a lot of engagement. There's the experience part, where Hybris is the linchpin of that. We have other assets there as well. There's the resource management piece, where we've done some work, you should see some more to come from SAP over the coming months and quarters there as well.
Have we done a lot? Yes. Are we done? Probably not.
All right. I think we'll close it out with that. I'd like to thank everyone for joining us in person. Thanks to those of you who have joined us on the web. If we didn't get your question in the session, we will come back to you by whatever channel you have sent that to us. Thanks, everyone, and so long.
Thanks.