Introduction Slide Deck CRM in The Cloud

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

Customer
VERSION I
Prof. Dr. Carsten H. Hahn (University of Applied Science, Karlsruhe), Dr. Wolfgang Faisst
(SAP SE),
April 2015
Introduction
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
2015 SAP SE or an SAP affiliate company. All rights reserved.
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Definition 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.
Source: Forrester
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Definition of cloud
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
PaaS
IaaS
Software-as-a-Service
Operated by the software vendor
Customer subscribes software usage contract,
Platform-as-a-service
Development environment offered as-a-service
building applications in a scalable way with low TCD
Infrastructure as a Service
Computer infrastructure as-a-service, billed on a
utility basis and consumption
Typically a virtualized environment
Source: SAP, Forrester

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Cloud benefits
GAME-CHANGING NATURE FOR CUSTOMERS AND VENDORS
Pricing Model
On Premise
Traditional
Software
Hybrid (ASP)
Hosted
Deployment
Deployment Model
Model
License Model
Subscription Model
Hybrid
Software-as-aService
Benefits for customer

Low up-front costs and more
predictable costs
Higher agility & faster time-tovalue
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
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Cloud benefits
CHANGE OF ISV BUSINESS MODEL
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Cloud benefits
LOWER TOTAL-COST-OF-OWNERSHIP
29% cost savings

Source: McKinsey
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Cloud challenges
ADOPTION BARRIERS AROUND SECURITY, PERFORMANCE &
INTEGRATION
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Cloud players
KEY PLAYERS...
Source: SAP
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Cloud players
... BROAD UNIVERSE OF FURTHER PLAYERS BEHIND
Source: SAP
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Introduction
AGENDA

IN THE CLOUD
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Market perspective
SAAS REVENUES DOMINATING
Source: Forrester
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Market perspective
WORLDWIDE SAAS MARKET (2012) - SAAS PENETRATION
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Market perspective
SAAS: CURRENTLY MORE STANDARDIZED PROCESSES COVERED
Large
On Premise
Company Size
Supply Chain
Order Fulfillment
Logistics
Procurement
Financial Settlement
On Demand / SaaS
Sales Force Automation
Talent Management
Payroll
Web conferencing
...
Small
Standardized
Customized
Business Processes
Source: Merril Lynch (2006)
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Market perspective
SAAS: SHIFT TO CORE OPERATIONAL SYSTEMS
Source: Saugatuck
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Introduction
AGENDA

IN THE CLOUD
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User perspective
LOB IS MAIN DRIVER THROUGHOUT SAAS LIFECYCLE
Line of Business (LOB) is the main driver throughout the SaaS lifecycle.
The LOB focus is predominantly on achieving business needs and decreasing time to value. Many LOBs perceive their
needs as not being met by on-premise software and being underserved by IT. As a result the LOB has taken over
multiple software lifecycle tasks from IT in SaaS deployments.
IT plays a reactive and supporting role with their focus on managing more efficiently by minimizing complexity.
The tension between Agility & Time-to-Value vs. Integration is a common dynamic between the LOB and IT.
LOB prefer fast, good enough implementations as a starting point. While SaaS may not have lower overall TCO,
LOB prefer SaaS because the risks involved in getting up and running with the application, or the cost of
theoretically switching are lower.
IT is charged with integration between SaaS and on-premise ERP. In most cases complex integrations are not
prevalent, but relatively simple batch extracts and uploads are. SaaS-to-SaaS integrations are common and
relatively straight forward when sharing the same platform or when secondary vendors solve integration issues with
existing SaaS apps.
SAP is ITs strategic vendor of choice, primarily because of lower integration complexity and cost, but the LOB is
turning to SaaS vendors who are able to be involved throughout the lifecycle and are able to help LOB extract value
from their solution.
Agility understood as usability (ease and speed of executing a business process efficiently), configurability (ease
and speed of configuring an application), and upgradeability (ease and speed of expanding functionality)
Source: SAP analysis

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User perspective
MOTIVATION FOR CLOUD SERVICES (MERRILL LYNCH)
Low up-front costs: Other than the costs for a personal computer and a browser for each end-user, there are no software
or hardware costs that customers of an OnDemand solution need to pay. They may want to pay for user training to ensure
full adoption, or consulting, in order to customize the solution or import data, but these costs are generally much lower than
for traditional implementations.
Subscription payments: Customers usually commit to two-year contracts, with monthly payments. This pay-as-you-go
model lets them convert otherwise fixed costs into variable costs, and often moves them from the capital budget to the
operating budget.
Faster time-to-value: Most implementations take a matter of days or weeks, versus months or years for major OnPremise
implementations. Part of the reason is that OnDemand customers tend to have fewer users and have less data to import,
making the roll-outs much quicker. Its also because OnDemand solutions are built to be more easily customizable.
User-friendly applications: Its widely known that the user interfaces (UIs) of traditional software vendors are usually not
user-friendly. OnDemand vendors have designed their solutions with users in mind, and tend to be much more customerfocused. Their UIs borrow from the consumer-focused vendors like eBay, where usability is key to customer adoption.
Overall quality and performance are better than traditional software, in our view.
Vendor accountability: Customers of traditional software companies frequently complain that problems often go
unresolved. If the software doesnt work, or an implementation fails, there is often little incentive for the software vendor to
spend time and money fixing the problem instead of moving on to the next sale. However, if an OnDemand vendors
solution doesnt work, the customer can simply cancel the contract and stop making subscription payments. The need to
avoid customer churn provides a strong incentive for OnDemand vendors to make good on their promises.
Low switching costs: If customers are dissatisfied, its relatively easy for them to switch to a competing OnDemand
solution by signing a new contract, transferring data and retraining users. This is in stark contrast to customers of
OnPremise solutions, who tend to have a substantial investment in their customer system and are loathe to pay new license
fees or undergo another lengthy implementation.
Source: Merrill Lynch
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User perspective
CLOUD IS CREATING REAL BUSINESS VALUE
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User perspective
MOTIVATION FOR CLOUD SERVICES (FORRESTER)
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User perspective
MOTIVATION FOR CLOUD SERVICES (GOLDMAN SACHS)
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Introduction
AGENDA

IN THE CLOUD
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Customer Relationship Management

MOTIVATION FOR CRM
Peter Drucker: The Marketing Concept is the Business as Seen From The
Customers Point of View
The Customer Concept As Part Of The Marketing Concept:
The Customer Concept Is the conduct Of All Marketing Activities With The
Belief That The Individual Customer Is The Central Unit Of Analysis And
Action
Customer Relationship Management (CRM):
CRM is the practice of analyzing and using marketing databases and
leveraging communication technologies to determine corporate practices and
methods that maximize the lifetime value of each customer to the firm.
See Kumar, Reinartz, 2014, 3ff.
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THE DIFFERENT LEVELS OF CRM
1. FUNCTIONAL LEVEL
e.g. all the functions of Sales Force Automation like creating and tracking sales
activities
2. CUSTOMER-FACING FRONT-END LEVEL
e.g. to build a single view of customer across all contact channels and to distribute
customer intelligence to all customer-facing functions
3. STRATEGIC LEVEL
CRM as a process to implement customer centricity in the market and build
shareholder value
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THE BENEFITS OF THE CUSTOMER VALUE MANAGEMENT
APPROACH
A successful data-based CRM system, with customer value as its driving metric, empowers a
company to perform ten actions that will lead to strategic advantages:
1.
Integrate and consolidate customer information
2.
Provide consolidated information across all channels
3.
Manage customer cases (who is accountable for the customer?)
4.
Personalize the offerings
5.
Automatically and manually generate new sales opportunities
6.
Generate manage campaigns
7.
Yield faster and more accurate follow-up
8.
Manage all business processes
9.
Give top managers a detailed and accurate picture
10. Instantly react to changing market environments
See Kumar, Reinartz, 2014, 15.
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THREE DIFFERENT TYPES OF CRM
1. STRATEGIC CRM
3. ANALYTICAL CRM
2. OPERATIONAL
CRM
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4 key components of a successful CRM strategy in a

company
1. STRATEGIC CRM
3. ANALYTICAL CRM
2. OPERATIONAL CRM
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1. STRATEGIC CRM
3. ANALYTICAL CRM
The Operational CRM deals with the execution of

the strategy. What is needed to fulfill the strategy
and achieve the goals the company has defined.
Three Dimensions are important to execute the
CRM strategy:
1. Software Tools and Dashboards
2. Loyalty Programs
3. Campaign Management
2. OPERATIONAL CRM
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1. STRATEGIC CRM
3. ANALYTICAL CRM
2. OPERATIONAL CRM
Customer Value Management rests on the idea of

allocating resources differently to different
customers.
The basis of this differential resource allocation is
the economic value of the customer to the firm.
Thus, before one can start to manage customers,
one must have a thorough understanding of how to
compute the value contribution each customer
makes to a firm
The analytical CRM distinguishes between:
1. Traditional Marketing Metrics like market share,
sales growth
2. Customer-Based Metrics like customer lifetime
value, acquisition Rate, Retention Rate
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Introduction
AGENDA

IN THE CLOUD
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Cloud applications CRM in the cloud

WHAT DOES A SALES REPS WEEK REALLY LOOK LIKE?
KEY
Unplanned customer
call/meeting
Planned customer
call/meeting
Data entry into CRM
Internal department
meeting
Support activity for
customer account
Email activity
Pricing and contracts
activity
Source: SAP
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FEED, THE NEW WAY TO INTERACT
Opportunities
Data updates
Sales team member
updates
Employees
Accounts
Data updates
ERP-related
updates
Me
Contacts
Data updates
Follow team,
mentors
Direct Message
Leads
Source: SAP
SAP Confidential
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Introduction to Customer Relationship Management using Cloud for

Customer
INTRODUCING CLOUD FOR CUSTOMER
INTRODUCING CLOUD FOR CUSTOMER AS EXAMPLE FOR AN CRM SOLUTION
IN THE CLOUD
Cloud for Customer

is integrated across sales, service, marketing &
commerce
provides a single view of the customer
is focusing on a Mobile-first approach with full
offline capabilities
offers industry specific occurence
Industries prioritized based on CRM trends,
SAPs strengths, and customer demand
Cloud for Customer consists of the following moduls
Cloud for Sales
Cloud for Marketing
Cloud for Service /Social Engagement
Cloud for E-Commerce
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KEY CAPABILITIES (SAP CLOUD FOR CUSTOMER AS AN EXAMPLE)
People-Centric Application Designed for the Way Sales People Really Work
User Experience
User
Experience
Sales Productivity
Collaboration
Analytics
Sales Automation
ERP Integration
Sales OnDemand
Source: SAP
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Introduction to Customer Relationship Management using Cloud for

Customer
INTEGRATION
INTEGRATION OF CLOUD FOR CUSTOMER WITH SAP ERP/CRM
RELEVANCE
To protect the investment of a company, it is important to offer
different options on how to integrate Cloud for Customer with
the installed SAP ERP/CRM solution.
There are three different models on how to integrate
Cloud for Customer with SAP ERP / CRM, as follows:
Cloud + CRM: Leveraging the existing investments
and business processes in SAP CRM Sales, Service
and Marketing, while giving the frontline sellers an
easy-to-use, modern cloud sales application.
TWO-TIER CRM: Leveraging the SAP CRM
deployments at existing locations and deploy SAP
Cloud for Customers at subsidiaries, recently acquired
divisions, etc.
Cloud + ERP: Leverage SAP Cloud for Customers for
all of CRM selling needs and tap into pre-built
integration to SAP ERP for pricing, quotes, orders,
master customer data and more
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CLOUD /ONPREMISE INTEGRATION: CLOUD + ERP
Note: SAP Sales on Demand is the former name of SAP Cloud for Customer
Source: SAP
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Introduction
AGENDA

IN THE CLOUD
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Exercises Session 3, Part I

LEAD MANAGEMENT, BUSINESS PROCESS OVERVIEW
Inside Sales
or Marketing
representative
Creates or uploads leads
Sales
representative
Converts lead to an
opportunity
Inside Sales or
Marketing
representative
Qualifies and assigns a hot

lead to a Sales
representative
Sales
representative
Follows up on the lead
Sales
representative
Receives the hot lead; checks

and accepts it
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Exercises Session 3, Part II

OPPORTUNITY MANAGEMENT, BUSINESS SCENARIO OVERVIEW
Business Intelligence
Sales
representative
Creates a new Opportunity

or converts it from a Lead
.
Sales
representative
Close: Creates Sales Order
Sales
representative
Sales
Cycle
Qualification: Collaborates
with her team to move the
opportunity further in the
sales cycle
Sales
representative
Negotiation: Creates Sales

Quotation
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Exercises Session 3
OPPORTUNITY MANAGEMENT, SALES CYCLE
Sales Phase
Qualify
Exchange of information
Understand the requirements
Customer meeting
Develop Value
Proposition
Discussion of solution
Prove capability
Pricing
Pricing
Quotation
Demonstration, presentation
and Negotiation
Quotation
Decision
Closing the deal
Close
From visit to providing

customer reference
ERP
Opportunity
Identify
Activities
Won
Order
Lost
Win/loss analysis
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Introduction
AGENDA

IN THE CLOUD
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1.
2.
3.
4.
5.
6.
Establish a common CRM vision and strategy across

the enterprise
Identify the required capabilities to execute the vision
(organizational structure, corporate culture, business
processes, IT)
Develop a roadmap of prioritized activities (the
ultimate goal should be: Creating/Increasing customer
Value)
Manage end-to-end change process (change
management, end-user support, training, early
involvement of users)
Implement in phases, with broad initial deployment of
each CRM application
Adopt a comprehensive deployment methodology
(coordination framework for all project teams)
(These stages are the result of a company-wide

implementation of CRM at IBM Corporation)
See Kumar, Reinartz, 2014, 47
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Literature
Kumar, Reinartz, Customer Relationship Management, 2014, Second Edition,

Springer.
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2015 SAP SE or an SAP affiliate company.

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Introduction to Customer Relationship

Management (CRM) in the Cloud using Cloud for

CLOUD BUSINESS APPLICATIONS - INTRODUCTION

2015 SAP SE or an SAP affiliate company. All rights reserved.

A form of standardized IT-based capability such as

Source: SAP, Forrester

2015 SAP SE or an SAP affiliate company. All rights reserved.

Benefits for customer

2015 SAP SE or an SAP affiliate company. All rights reserved.

29% cost savings

2015 SAP SE or an SAP affiliate company. All rights reserved.

CLOUD BUSINESS APPLICATIONS - INTRODUCTION

2015 SAP SE or an SAP affiliate company. All rights reserved.

2015 SAP SE or an SAP affiliate company. All rights reserved.

CLOUD BUSINESS APPLICATIONS - INTRODUCTION

2015 SAP SE or an SAP affiliate company. All rights reserved.

Source: SAP analysis

2015 SAP SE or an SAP affiliate company. All rights reserved.

2015 SAP SE or an SAP affiliate company. All rights reserved.

2015 SAP SE or an SAP affiliate company. All rights reserved.

CLOUD BUSINESS APPLICATIONS - INTRODUCTION

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

See Kumar, Reinartz, 2014, 3ff.

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

See Kumar, Reinartz, 2014, 4ff.

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

Integrate and consolidate customer information

Provide consolidated information across all channels

Manage customer cases (who is accountable for the customer?)

Personalize the offerings

Automatically and manually generate new sales opportunities

Generate manage campaigns

Yield faster and more accurate follow-up

Manage all business processes

Give top managers a detailed and accurate picture

10. Instantly react to changing market environments

See Kumar, Reinartz, 2014, 15.

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

See Kumar, Reinartz, 2014, 15.

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

4 key components of a successful CRM strategy in a

See Kumar, Reinartz, 2014, 37.

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

The Operational CRM deals with the execution of

See Kumar, Reinartz, 2014, 177ff.

2015 SAP SE or an SAP affiliate company. All rights reserved.

Customer Relationship Management

Customer Value Management rests on the idea of

See Kumar, Reinartz, 2014, 89ff.

2015 SAP SE or an SAP affiliate company. All rights reserved.

CLOUD BUSINESS APPLICATIONS - INTRODUCTION

2015 SAP SE or an SAP affiliate company. All rights reserved.

Cloud applications CRM in the cloud

Cloud applications CRM in the cloud

Introduction to Customer Relationship Management using Cloud for

Cloud for Customer

2015 SAP SE or an SAP affiliate company. All rights reserved.