Can Salesforce Overtake SAP?
Salesforce and SAP are two of the most popular customer relationship management (CRM) systems. Although SAP's yearly revenue of $23.7 billion is significantly higher than Salesforce, with revenue of more than $6.7 billion, Salesforce's growth has been remarkable.
The company spent almost half of its revenue, $3.2 billion, on sales and marketing last year. That's one of the major reasons Salesforce spends more than it makes. It lost $47.4 million in its last fiscal year. However, cloud software company Salesforce aims to overtake SAP in terms of sales even on the German company's home market in the coming years, the Europe chief of Salesforce, Joachim Schreiner, stated:
"We want to become the biggest software company in Germany by sales," without indicating exactly when U.S.-based Salesforce aimed to surpass its rival.
Also, Salesforce CEO Marc Benioff claims that Salesforce is the fastest growing enterprise software company ever, even promising to get to $10 billion in sales faster than any of his competitors. "Soon we will be the fourth-biggest software company in the world. When that happens, we are really targeting one company to surpass, which is SAP," Benioff said. "I am personally committed to making that happen. That’s my dream."
On the contrary, SAP's CEO Bill McDermott described Salesforce as having become "impaired" and "commoditized".
According to Steve Koenig, an analyst at Wedbush Securities Inc, growth in new areas such as marketing and services was sufficient to make up for a slowdown in the main customer relationship management business, where sales rose 9.3 percent, compared with growth rates of 29 percent to 38 percent for newer products. CRM sales are sluggish because many companies have already replaced legacy systems based on technologies such as Siebel.
On that note, Keith Block, Vice Chairman, President and COO at Salesforce, referred SAP and Oracle, warning investors he's "seeing a growing trend" of their customers coming to Salesforce looking to supplement those "legacy solutions."
Salesforce has recently had the World Tour event in Boston on April 7. Block stated: “Our culture is the strength of the company, and we have inspired hundreds of companies to adopt our 1:1:1 model.”
He announced neither a release nor any product updates, but he highlighted three components that have proven to enhance Salesforce’s customer engagement by noting that a company will see 23% more revenue per customer when engaged properly:
One-on-one Experiences: The key is to create an authentic one-on-one experience with every customer. In that way, a company could foresee issues beforehand, engage customers with the proper products, and ultimately change how they do business.
Actionable Analytics: Having the ability to analyze data in a quick and meaningful way enables companies to keep their customers at the center of everything, and ultimately allows them to deliver the best services on a consistent basis.
- Lightning-Fast Response Time: In order to keep up with demand, companies should be able to build apps faster, within a better UI.
Here are the highlights from the event:
Understanding the Differences between SAP & Salesforce
These two platforms were not really comparable until two years back as SAP CRM was mostly an on-premise system, a software was required to run the CRM whereas Salesforce is a SaaS-based CRM, it does not need a software. Since SAP launched its cloud-based CRM, they have been in a tough competition, although Salesforce is lagging SAP in terms of revenue lately.
Salesforce built a full suite of CRM solutions on the cloud which gives an advantage to the company. However, SAP has made a rapid progress in terms of making available of the functionalities in its cloud-based CRM. The most of the on-premise functionalities are now available in the cloud.
Let’s compare two companies based on the basic functionalities:
From the marketing perspective: Salesforce has acquired companies to build the solutions where they are lagging. Exacttarget.com, a cloud-based marketing solution company, was one of those acquisitions. Since then, Salesforce’s marketing cloud offerings around social media, email, and mobile marketing, marketing automation tool etc. are very successful and appealing. However, when it comes to an end-to-end marketing solution, SAP is preferable in the marketplace despite its poor user experience.
For those who are interested in budget planning, tracking marketing spending, funds management & tracking campaign ROI, SAP based system would be a better choice. On the other hand, according to many industry experts, Salesforce still delivers better user experience and better integration capability with other cloud based CRM.
Below, Amy Martyn from Falcon-Software explaining on the CMS-Connected Show where the Salesforce Marketing Cloud formerly ExactTarget sits in the marketplace:
From the sales perspective: SAP Cloud for Customer has an advantage when customers look for an end to end sales solution with an integrated SAPERP system. As most of the consumers use an ERP for their ordering and logistics, using an integrated Salesforce might cause trouble. When an organization is tapping into social selling, then this is where Salesforce comes into the game due to its easier user interface and configuration. Otherwise, many features such as leads, opportunities, activities etc. are very similar in both the CRM.
From the service perspective: SAP has an upper hand in customer service, as it provides a broad spectrum of solution, including work order management, parts allocation, warranty & claims, contracts, an integrated billing, and so many advanced features that put SAP in a better position than not only Salesforce, but also other CRM vendors. In addition to customer service, SAP’s call center solution is known for being extremely powerful.
From the collaboration perspective: Salesforce’s Chatter is one of the most successful collaboration capability in CRM world as the sharing and collaboration capabilities of chatter are very intuitive. SAP has SAP JAM instead, but first off, it is not free with C4C Sales or service cloud like Chatter and secondly, the chatter plus, a paid version, offers more upgraded social capabilities which mostly are not available in JAM.
From the partner channels perspective: SAP has a very strong partner channel management tool, but it is relatively expensive and mostly designed for complex partner processes beyond sharing of opportunities and leads with partners. In SFDC, a certain number of partner portals are free and enable users to configure and customize simply by clicks.
There are also some functionalities that SAP offers while Salesforce doesn’t. One of them is an e-commerce solution. After SAP acquired Hybris, it has multiplied its efficiency in both B2B and B2C CRM. Hybris’s offering of Omni-commerce is a game changer.
Scott Liewehr, the co-host with the CMS-Connected Show and CEO & Co-founder of Digital Clarity Group, gives us his inside scoop of how SAP Hybris shifts into a holistic customer experience:
Although 17-year-old San Francisco-based Salesforce pioneered Software-as-a-Service/cloud, SAP is quickly catching up with more functionality added to each release. It will be intriguing to see how this competition shapes the market in the coming years.