ECommerce - Has SAP finally got it with Hybris?

25 July 2013

Thierry Crifasi

Thierry Crifasi

Global Head of C/4HANA CoE

SAP recently announced that it was buying Hybris, a Swiss ECommerce software company. After some large acquisitions over the last few years (BusinessObjects, Sybase, Syclo, SuccessFactors, Ariba), this is the first major addition to SAP CRM.

SAP has apparently decided recent internal efforts trying to beef up its SAP CRM ECommerce offering were not enough to sway large customers.

Who is Hybris?

Hybris is a Leader in this year's Gartner Magic Quadrant for ECommerce and is a rapidly growing company in this space.

According to Gartner,"Hybris offers an e-commerce solution with functionality including merchandising, order management, product information management, support for multiple languages and currencies, multisite and microsite capabilities, analytics and reporting, native support for iOS and Android devices, and social commerce. The business administration tools are available in seven languages. Hybris supports B2B and B2C e-commerce models, with approximately 40% of its business coming from customers with predominantly B2B requirements. Hybris offers scalable and flexible solutions that meet the needs of large and midsize enterprises, and more than 66% of Hybris customers generate more than $100 million in e-commerce revenue. Hybris supports a diverse set of vertical industries, including manufacturing, wholesale, retail and professional services, and recently announced new functionality and wins in telecom and media."

ECommerce is not new to SAP

SAP has been providing a B2C and B2B webshop capability within SAP CRM for a few years but it is fair to say customer adoption rate has not been spectacular in an otherwise booming ECommerce market. Mid 2012, SAP finally announced a major release called WCEM - for Web Channel Experience Management - which in effect was a complete rewrite with an architecture shift to JSF 1.0 and an MVC-based architecture. This "new product" has seen continuous investment from SAP in the last year as two further releases have come out since. I recommend reading my Jaime Wood's blog post on WCEM capabilities.

So why did SAP buy Hybris?

So far only vague and generic explanations have filtered out from the announcement. Since the acquisition won't be formally closed until Q3 this year, we will have to wait until SAP clarifies its intent. I will just throw in my own analysis.

1 - SAP CRM sales have been flat

SAP's sales from so-called customer relationship management software, or CRM, grew just 0.1 percent last year, dropping the German company to number two behind San Francisco-based Salesforce.com, which grew 26 percent, research firm Gartner Inc. said in April. Over the last 3 years it has been clear the online channel has been growing at the expense of brick and mortar retailing which explained why SAP pushed hard with WCEM. SAP sales numbers have nonetheless not added up and something had to be done to compete for large customers moving into ECommerce. As the old adage goes, "If you can't make it, buy it".

2- SAP wants to be a Leader in ECommerce

A comparison of the Gartner Magic Quadrant for ECommerce between 2010 and 2013 provides some clues to SAP strategic intent. I'm assuming being in the Leader Quadrant has to be a target for SAP as most large customers probably choose their ECommerce suite from there.

  • Despite its recent effort with WCEM, SAP has not managed to break out of his Challenger position. Acquiring Hybris will move SAP in the top Quadrant. Let's check back next year!
  • Oracle moved from a Challenger to a Leader position with the major acquisition of ATG ECommerce suite. This move put SAP firmly behind Oracle and IBM WebSphere in this critical market.
  • Hybris moved from a Niche player to a Leader position by acquiring iCongo
  • Venda, Demandware and NetSuite moved from a Niche Player to a Visionary position which shows the greater emphasis on SaaS offerings in the ECommerce space. Hybris brings this capability to SAP as it has been offering Cloud hosting capability for a year.

Hybris---SAP---Thierry-Crifasi

3- Integration into SAP HANA will allow for real-time data insight on customer activity

I have not taken the time to search for numbers but Retail has got to be the sector where Big Data is the most prominent: huge number of products, customers and transactions. Customer intimacy is also a major trend in Retail and therefore I can see near real-time analytics supported by SAP HANA as a big play for SAP. It's also a cutthroat industry where providing a truly multichannel experience to customers has become critical.

One feature of Hybris' software is that it allows customers to open an online shopping cart on one computer and then adjust an order later on another computer before closing a sale. Using its SAP HANA platform, SAP could let sellers see behaviours, then offer deals or companion offers before a sale is completed.

The big picture is that consumers want to connect with companies on a personal, individualized basis, online and offline. In an even bigger picture, deals like this are part of the broader move to create the immediacy and data-led insight of online retail with the high-touch experience of physical stores.

Beefing up its ECommerce offering and integrating it with SAP HANA has got to be high on the SAP agenda.

4-Hybris brings improved capabilities to SAP ECommerce effort

SAP WCEM has got some capability gaps which Hybris will plug.

  • It does not provide a content management platform to support dynamic content. Customers need to integrate with third party products like SAP-certified CoreMedia LiveContext to enable the following functionalities:
    • Personalized shopping experience
    • Marketing content supporting products and campaign
    • Contextualized recommendations by customers
    • Multimedia content, marketing images, galleries
    • Flexible layout content
  • Hybris has got a better Product Content Management solution compared with SAP MDM which is leveraged by WCEM (as per Gartner Magic Quadrant for PCM solutions)
  • WCEM does not truly provide a multichannel experience to customers. The user experience between Desktop web and mobile or even tablet is different. Currently, SAP offers cascading style sheets to present mobile variants of the online shop
  • There is no off the shelf integration with social media channels for WCEM. Customization is required for social media integration.

Conclusion

Nobody outside SAP can claim to know what the roadmap will look like for WCEM and Hybris once the acquisition is confirmed. I would strongly advise SAP and non SAP customers on the verge of choosing their next ECommerce platform to wait until then.

Whatever the roadmap looks like, I feel SAP has finally found the missing piece to seriously compete in the ECommerce space.

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