Introduction to Customer Relationship Management (CRM) in the Cloud for Customer

Introduction to Customer Relationship Management in the Cloud

Cloud Business Applications Overview

VERSION I
Prof. Dr. Carsten H. Hahn (University of Applied Science, Karlsruhe), Dr. Wolfgang Faisst
(SAP SE),
SAP
SAP
University
AlliancesIntroduction
Customer Relationship Management in the Cloud

Agenda

• CLOUD BUSINESS APPLICATIONS - INTRODUCTION
• CLOUD BUSINESS APPLICATIONS - THE MARKET PERSPECTIVE, FOCUS ON
  SOFTWARE-AS-A-SERVICE
• CLOUD BUSINESS APPLICATIONS - THE USER (CUSTOMER) PERSPECTIVE
• CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
• INTRODUCING CLOUD FOR CUSTOMER AS EXAMPLE FOR A CUSTOMER RELATIONSHIP
  MANAGEMENT SOLUTION IN THE CLOUD
• CRM EXERCISES WITH CLOUD FOR CUSTOMER
• CRM IMPLEMENTATION PROCESS STAGES

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2Definition of cloud

Service Characteristics of Clouds According to Forrester

“
A form of standardized IT-based capability - such as
Internet-based services, software, or IT infrastructure -
offered by a service provider that is accessible via Internet
protocols from any computer, is always available and scales
automatically to adjust to demand, is either pay-per-use or
advertising-based, has Web- or programmatic-based control
interfaces, and enables full customer self-service.“
FORRESTER
Source: Forrester
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3Definition of cloud

Layer Model of Cloud Computing

LAYER MODEL WHICH CONSISTS OF 3 LEVELS

• While "Cloud" was initially used for scalable computing resources offered
  on demand, it is now used to describe a new model: running, developing,
  providing
  Cloud consists out-of the three layers: IaaS, PaaS and SaaS

SaaS
Software-as-a-Service
Operated by the software vendor
Customer subscribes software usage contract,
Paas
Platform-as-a-service
Development environment offered "as-a-service"
building applications in a scalable way with low TCD
IaaS
Infrastructure as a Service
Computer infrastructure "as-a-service", billed on a
utility basis and consumption
Typically a virtualized environment
Source: SAP, Forrester
Public
4Cloud benefits

Game-Changing Nature for Customers and Vendors

GAME-CHANGING NATURE FOR CUSTOMERS AND VENDORS

Pricing Model
Benefits for customer
License Model
Subscription Model
Traditional
Software
Hybrid
On Premise
Always up-to-date application
with latest innovations
More user-friendly
applications driven by higher
vendor accountability
Benefits for software vendor
More direct feedback from
customers / end-users via
usage analysis, communities,
etc.
Faster innovation with
customers and partners
.
Efficiency gains owning the
complete stack and delivery
platform
Only two releases: One in
development, one in
operations
Deployment Model
Hybrid (ASP)
Software-as-a-
Service
Hosted
Low up-front costs and more
predictable costs
Higher agility & faster time-to-
value
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5Cloud benefits

Change of ISV Business Model

CHANGE OF ISV BUSINESS MODEL

Traditional licensed ISV
· License revenue
- Bookings
. License type (perpetual,
term, etc.)
· Maintenance fee (as % of
license)
· Maintenance renewal rate
- Inflation escalator, etc.
· Selling costs (% of
revenue, % of license)
. Support and maintenance
costs
SaaS ISV
· Subscription/recurring
revenue (annual,
quarterly, monthly)
- Total contract value
- Average pre-pay term
· Average recurring
revenue (or ASP)
- Average annual upsell
· Churn (annual, monthly)
· Customer lifetime value
. Support and service costs
(% of revenue, per
customer)
- Gross margins
Source: Chaotic Flow SaaS blog (Joel York); Bain experience
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6Cloud benefits

Lower Total-Cost-of-Ownership

LOWER TOTAL-COST-OF-OWNERSHIP

Sample deployment of customer-relationship-management (CRM) software (200-seat license)
Total cost of ownership. $ thousand

Software on
premises
Software as
a service
Sources of savings with
software as a service

Implementation, deployment
Customization, integration
108
72
· Reduced deployment time, limited
customization, self-service through
on-boarding scripts

Basic infrastructure testing,
deployment
54
0

Application infrastructure
testing, deployment
30
0

Ongoing operations
Training
101
34
· Lowers training requirements through
-Simpler user interfaces
-Self-training, service capabilities

Management, customization of
business process change
94
0
. Does not require ongoing business
process change management
- Vendors monitor customer usage
to enhance offering
- Customers provide feedback to
influence feature functionality

Data center facilities rental, operations;
security, compliance; monitoring of
incident resolution
750
0
. Includes vendor's costs to serve in
subscription price (ongoing operations,
back-end hardware and software)

Software
User licenses, subscriptions;
maintenance
480
1,500

Other
Unscheduled downtime
308
0
· Provides 99.9% general-server
availability vs 99%

Unused licenses
92
0
· Reduces unused licenses by 20%,
users added as needed

Total costs (including those
not shown here)
2,298
1,640
29% cost savings
Source: Mckinsey
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· Does not require infrastructure and
application testingCloud challenges

Adoption Barriers Around Security, Performance & Integration

ADOPTION BARRIERS AROUND SECURITY, PERFORMANCE & INTEGRATION

What do you believe are the top challenges or concerns your organization faces in
adopting a cloud environment?

44%
Security
Performance
29%
Difficulty integrating cloud
with existing systems
20%
IT governance
18%
Loss of control over data with respect
16%
to customers
Availability
15%
Measuring ROI
15%
Regulatory compliance
14%
Response time
13%
Lack of confidence in ability of cloud
13%
vendors to perform
Not sure the promise of a cloud
environment can be realized
13%
Difficulty making a business case
for adopting a cloud environment
12%
Lack of customization opportunities
9%
Dissatisfaction with
8%
offerings/pricing by vendors
2%
Other
-
-
0
10
20
30
40
50
Multiple responses allowed.
Source: KPMG International, 2011, Clarity in the Cloud
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8Cloud players

Key Players in the Cloud Industry

KEY PLAYERS ...
SOFTWARE AS A SERVICE
ENTERPRISE Cloud-INDUSTRY
LOB
B2B Cloud- CONTENT AND
BUSINESS NETWORKS
B2C Cloud - CONSUMER
Taleo ·X
Highfive
℮
Discaring
IBM.
SAP
A RIB A. Sterling Commerce
Enterprise and Consumer
applications
PLATFORM AS A SERVICE
CORE
EDGE
force.com
platform as a service
Windows Azure
AppFabric
amazon
webservices"
Google
App Engine
Cloud application
development
INFRASTRUCTURE AS A SERVICE
Cloud INFRASTRUCTURE
ANALYTICS INFRASTRUCTURE (AAS)
amazon
webservices"
rackspace
GOGRID
ORACLE
IBM TERADATA
hp
Microsoft
Core Infrastructure
platform
Source: SAP
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9

Broad Universe of Further Cloud Players

... BROAD UNIVERSE OF FURTHER PLAYERS BEHIND
SOFTWARE AS A SERVICE
ENTERPRISE Cloud-INDUSTRY /
LOB
B2B Cloud- CONTENT AND
BUSINESS NETWORKS
B2C Cloud - CONSUMER
Concur
Nex Expensify
Microsoft
Dynamics
(Emptoris
FINANCIAL
FORCE.COM
RightNow
Taleo X
workday.
Enterprise and Consumer
applications
PLATFORM AS A SERVICE
OrangeScape
Walls dnem Elisadi Brieswhere
redhat
ZOHO
vmware®
ITIBCO
The Power of Han/
Dis tools intuit
BUNGEEcorect
CORDYS
fore soft
GIGASPACES
Appletry
WSO2
M MORPHLABS
WOLF
Rollbase
MICRO
FOCUS
rackspace
TrackVia
caspio
LONGJUMP
Engine
apprenda"
aptana'
Qrimp
dotCloud
WORKXPRESS
@Joyent"
Cloud application
development
INFRASTRUCTURE AS A SERVICE
Cloud INFRASTRUCTURE
ANALYTICS INFRASTRUCTURE (AAS)
Exact
ACTUATE
VoltDB
TERADATA
MAPR Netezza
TECHNOLOG ET
INGRES
Greenplum.com
enomaly
zimory
going beyond.
PAR ACCEL.
T
TOT VS
cloudera
Core Infrastructure
platform
Source: SAP
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GXS
CREGEGATE
LAVANTE
mBloxSpring Usablenet
nitobi
EZOPEN VISION CHAIN
nielsen
Taleo X
SWIF
D&B
a appcelerator" aireweb
ANTENNA
HUBSPAN
SERVICE2MEDIA
net biscuits
3
maatG
CloudBees
7 terremark
at&t
EN SAVVISIntroduction
Customer Relationship Management in the Cloud

Market Perspective Agenda

• CLOUD BUSINESS APPLICATIONS - INTRODUCTION
• CLOUD BUSINESS APPLICATIONS - THE MARKET PERSPECTIVE, FOCUS ON
  SOFTWARE-AS-A-SERVICE
• CLOUD BUSINESS APPLICATIONS - THE USER (CUSTOMER) PERSPECTIVE
• CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
• INTRODUCING CLOUD FOR CUSTOMER AS EXAMPLE FOR A CUSTOMER RELATIONSHIP
  MANAGEMENT SOLUTION IN THE CLOUD
• CRM EXERCISES WITH CLOUD FOR CUSTOMER
• CRM IMPLEMENTATION PROCESS STAGES

Public
11Market perspective

SaaS Revenues Dominating the Public Cloud Market

SAAS REVENUES DOMINATING

$180
$160
BPaaS
$140
$120
Total
public cloud
markets
(US$ billions)
$100
SaaS
$80
$60
$40
$20
PaaS
$0
laaS
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
BPaaS ($)
0.15
0.23
0.35
0.53
0.80
1.26
1.95
2.93
4.28
6.00
7.66
9.08
10.02
SaaS ($)
5.56
8.09
13.40
21.21
33.09
47.22
63.19
78.43
92.75 105.49 116.39 125.52 132.57
PaaS ($)
0.05
0.12
0.31
0.82
2.08
4.38
7.39
9.80
11.26
11.94
12.15
12.10
11.91
laaS ($)
0.06
0.24
1.02
2.94
4.99
5.75
5.89
5.82
5.65
5.45
5.23
5.01
4.78
Source: Forrester
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12Market perspective

Worldwide SaaS Market (2012) - SaaS Penetration Estimated

WORLDWIDE SAAS MARKET (2012) - SAAS PENETRATION
ESTIMATED

SaaS revenue penetration
100%
8075%
3
Increased ability to focus on "managing the
business, not IT"
60-
4
Lower TCO (for many workloads) and better
capital efficiency
38%
40-
27%
32%
25%
22%
Key :
2011
2015F
T
8%
4%
3%
0-
Web CRM
Conf &
Team
PPM
SCM HR
Email
ECM
DCC
ERP
(excl HR)
BI
Office
suites
Other
11-15
S/W Rev. 15%
CAGR (%)
9%
9% 9%
8% 11%11% 9%
6%
7%
7%
5%
Source: Gartner; IDC; Forrester; Bain Analysis
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-
15%
18%
11% 1%
1726 17%
10%
8%
6%
6%
7%
6% 6% 6%
Share of business application revenue
SaaS value drivers
1
"Better in the cloud" features
2
Faster adoption and implementation
But ... yet to showcase ability to "run the
enterprise" on cloud/SaaS?
20-Market perspective

SaaS: Currently More Standardized Processes Covered

SAAS: CURRENTLY MORE STANDARDIZED PROCESSES COVERED

Large
1
On Premise
Supply Chain
1
Order Fulfillment
Logistics
Procurement
Financial Settlement
Company Size
On Demand / SaaS
Sales Force Automation
Talent Management
Payroll
Web conferencing
Small
Standardized
Customized
Business Processes
Source: Merril Lynch (2006)
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14Market perspective

SaaS: Shift to Core Operational Systems

SAAS: SHIFT TO CORE OPERATIONAL SYSTEMS

By 2012, spending on core / operationally-focused Cloud business solutions begins to rival -
and in some segments overtake - front-office and tactical solution demand.
By 2014, three-to-four category leaders emerge for each of the major Cloud / SaaS business
solution segments - more than half of which do not have a heritage as on-premise providers.

2008
2010
2012
2014
Knowledge Worker
Collaboration
Collaboration Early Cloud Market Leader
Google, Cisco/Webex, IBM and others help make Cloud
mainstream
Core Cloud Solution
Master Brands migrate collaboration suites to the cloud, e.g.,
Microsoft - as collaboration is cloud category with some of the
most significant rip & replace of traditional on-premise solutions
Gaining Traction
Finance / Analytics/
Planning/ Budgeting
Emerging
SMBs take lead
Early leaders include NetSuite, Intacct, and regional players
such as Twinfields (Netherlands)
Large Enterprise early-adopters begin to deploy. SAP along
with variety of core and niche financial start-ups gain traction
(Kyriba, Sabrix), along with niche CPM / BI players (Host
Analytics, Adaptive Planning)
Becoming Core
Single-vendor and de-facto
platform-driven suites emerge
Sales / Marketing /
Performance Mgmt.
CRM / SFA Early Cloud / SaaS Leaders
Core Cloud Solution
Salesforce and others (e.g., Xactly, Callidus, RightNow,
SugarCRM) help make SaaS mainstream, as well as a variety
of niche players (e.g., Prolifiq)
Beyond sales & marketing - becoming key solution around which
small and large enterprises are adding complimentary offerings,
especially finance
Rapidly Growing
Human Capital
Management
Emerging
Initially very tactical offerings.
Early market leaders Taleo,
Successfactors, ADP /
Employease
Rapidly expanding category - Talent Mgmt., HR/Benefits
Admin., Payroll, Time & Labor Mgmt. all "hot" segments -
Workday leading drive to gain traction in large enterprises,
along with regional players such as UK-based Patersons
Core Cloud Solution
Becoming lead solution
category for many large
enterprise SaaS portfolios
Procurement /
Expense Mgmt.
Emerging
Growing Nicely
An emerging segment that plays naturally to Cloud / SaaS
architecture. Concur early market leader.
A variety of direct & indirect procurement and sourcing providers
emerge, led by long-time market leader Ariba and smaller niche
providers.
Primarily Niche Deployments
Emerging
Manufacturing /
Supply Chain
Interesting innovation - e.g., shop floor (Plex), transport /
logistics (Descartes), fleet optimization (Xata), supplier
compliance (Trace One) - but still early
While not typically an early-adopter segment, it may move faster
than usual due to potential cost savings and supply chain
execution / collaboration needs
Source: Saugatuck
Source: Saugatuck Technology
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