SAP’s acquisition of Abakus: good, bad or ugly?

12 January 2017

Michael Bowell

Michael Bowell

Consultant

Whilst we were all busy filling ourselves with mulled wine and mince pies over the festive season, SAP Acquisitions was busy purchasing a company called Abakus. This adds yet another digital marketing-focused company to its ever growing portfolio. But has Santa Claus delivered an abundance of possibilities to SAP marketing customers, or a turkey? 

Who is Abakus? 

Good question… Abakus is a company specialising in ‘marketing attribution’ which is the process of identifying a set of marketing activities that contribute towards a desired outcome. Essentially, this is a fantastic process which identifies the effectiveness of marketing activities towards a given target group.

Abakus’s offering of marketing attribution also covers aspects of scenario planning or ‘what-if’ analysis based on previous marketing activity results. 

One interesting detail to note is the infancy of this company. It was only founded in 2013! However, this works to its advantage; having been established in an age where cloud computing is not only the norm, but expected. This is evidenced by the fact that its offered infrastructure resides entirely within Amazon Web Services. 

What does it mean for SAP Marketing customers? 

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The acquisition primarily impacts SAP’s Hybris Marketing Cloud offering. To date, there are aspects of marketing attribution in Hybris Marketing Cloud, such as the ‘Customer Journey’ functionality, however I’ve never felt that much actionable insight is delivered through its use.

Abakus can really add value by taking this to the next level. It can provide insight into what is actually working with its unique application of ‘Game Theory’ through ‘what-if’ analysis. In today’s marketing world, being able to answer confidently, “where should we spend the last $100,000?” is absolutely vital. Seeing this capability in Hybris would be truly exciting, adding huge worth to its offering. 

Something to note is that marketing attribution really comes into its own when it has huge data volumes to consume, so this kind of technology is perfect for an area which SAP Hybris is really trying to get its teeth into: “Digital” Marketing. What I mean by this is the Search, Social and Programmatic Marketing. 

As part of its portfolio, SAP has produced SAP XM which is tagged to be a platform for programmatic media buying. This, coupled with the acquisition of Abakus, illustrates that SAP is slowly encapsulating all channels and has the potential to bring this all together and offer a serious game-changing, digital, marketing platform.

However it is still missing one aspect: Marketing Mix Modelling (MMM). This needs to be a counter to one of the flaws of modern day marketing attribution which predominantly takes digital spend into account. T.V. media spend continues to be one of the largest areas of expenditure for large retail and consumer goods organisations. The problem is that its influence is omitted from the art of understanding (and measuring) how people purchase online.

Google is a great example; it credits 100% of the sale to the final advert click, when in reality it is important to understand that the consumer may have been exposed to a number of offline and online marketing activities which, combined, resulted in the end sale. The tech is more than capable of achieving this but are SAP customers ready?

Focusing on retail

One final positive that I liked about this acquisition is that it has lined up SAP to play in a really exciting arena in 2017: retail.

After Black Friday in 2016, a whole new set of records were set in retail and digital sales. According to Adobe, of the total $3.34 billion in sales that occurred on Black Friday, a massive $1.2 billion were made from mobile technology: a 33% increase from 2015.

Figures like this demonstrate that software solution providers and organisations need to keep a keen eye on retail and mobile as the competition is fierce but the market share huge. This is increasingly becoming true for B2B organisations, taking best practice from the B2C operating model. Abakus and its competitors all have one thing in common; they have vast experience in retail organisations. This provides SAP with extra cards to play in this aggressive space of digital sales in the retail sector.

Does the tech demand a change of marketing strategy?

I once had a lecturer at University that said “There is no point inventing something amazing today, if the target audience won’t be ready to adopt it tomorrow”. Taking a big step back from all these exciting changes with SAP Hybris Marketing Cloud, there is one issue: a huge number of large established organisations outsource their marketing.

I have worked with the marketing departments of some very large household names and to date, they consistently use agencies to execute their marketing. Why? Well, there is a large amount of expertise involved in media purchasing and placement and the marketing agencies claim to be the best in the business at it.

For SAP Hybris to be fully utilised, organisations need to be prepared to start bringing certain marketing activities back in house. The most logical way to do this is to start off small with something like search media and increment.

Moving to the holy grail

This recent acquisition is exciting in terms of what it will enable SAP to deliver with its marketing offering. SAP is getting closer to what digital marketing needs to really make a difference but there are a number of hurdles to overcome. The underlying factor in those hurdles is that in order to gain insight into marketing activities, all marketing data needs to reside within SAP Hybris Marketing Cloud, otherwise organisations are only getting insight into a percentage of what is actually going on. This defeats the object of trying to get a 360-degree view of your customer and your brand. 

 

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