Bill McDermott
The scene at the Orange County Convention Center in Orlando, Fla. for last week's SAPPHIRE NOW. PHOTO: Dom Nicastro

SAP needs to turn its customer empathy promise into action if it wants to regain customer trust. 

Jarret Pazahanick, SAP/SuccessFactors consultant, SAP mentor alumni and managing partner of Houston-based EIC Experts, shared those thoughts with CMSWire on the heels of the SAPPHIRE NOW conference last week. 

Pazahanik said the company needed to come up with a concrete plan to simplify licensing, educate customers and have a clear and consistent internal approach towards customers if it really wanted to deliver on this promise. 

CMSWire caught up with Pazahanik and other SAP analysts after the company’s customer conference at the Orange County Convention Center in Orlando, Fla.

Pricing Matters

The crux of the empathy promise for many lies in how Walldorf, Germany-based SAP bills its customers.

Pazahanick challenged the empathy promise in light of lawsuits SAP filed against major longtime customers (Diageo and InBev) for more than $670 million combined for unpaid fees.  

The Diageo matter involved third party systems accessing data generated by SAP systems, often referred to as "indirect access." The court ruled in SAP's favor against Diageo. The InBev suit is ongoing.

“Not too many empathetic companies,” Pazahanick told CMSWire, “are suing major longtime customers over a very grey and outdated licensing model especially one that SAP has repeatedly promised and claimed to be fixing for years.”

'Full Transparency'

SAP CEO Bill McDermott addressed the licensing and pricing story in his day one keynote at SAPPHIRE NOW, promising "full transparency" of data center uptime, reliability in user experience and simplified pricing models.

SAP last week announced it was “modernizing” its pricing approach.

“Our objective was to make pricing predictable, linked to unit of value, transparent and consistently applied,” Hala Zeine, SAP corporate development officer, wrote in the blog post.

Pazahanick called the policy details “very sparse,” adding, “the dirty secret is that SAP has been using the threat of indirect licensing for years.”

‘Good Step Forward’

Some see the change in tone from SAP as a move in the right direction.

Joachim Paulini, SAP solutions technical architect at Solna, Sweden-based Snow Software, which helps enterprises with SAP systems, contracts, licensing and audit processes, told CMSWire “indirect access” is the “majority driver” of the customer empathy pledge. 

“SAP,” he said, “has traditionally been bullish around licensing in general. However, they have never talked publicly about licensing prior to this, probably because they haven’t felt enough pressure on their side from lost sales. It indicates that SAP is now being affected significantly and they must act.”

SAP needs to be “far more transparent about common licensing scenarios and the associated costs,” Paulini added, calling SAP’s licensing changes and SAPPHIRE NOW empathy pledge a “good step forward.”

But, he cautioned, “it remains to be seen how committed SAP is to its theme around empathy. The proof of this will be played out between SAPPHIRE NOW '17 and SAPPHIRE NOW '18.”

Liz Herbert
Liz Herbert

Cambridge, Mass.-based Forrester analyst Liz Herbert would like to see more real customer success stories by next year’s conference.

“SAP has a great story related to the digital core highly relevant for the era of digital disruption and now even better with its Leonardo story,” Herbert told CMSWire. “However, SAP still focuses too much on the technology and not enough on showing inspirational stories of real customers who have transformed business models based on SAP.” 

Transforming Brand Perception

Ray Wang, principal analyst and founder of Cupertino, Calif.-based Constellation Research, sees SAP’s customer empathy promise going beyond just licensing issues. He called empathy the “key to transforming the brand perception of SAP in the field.”

“Customers,” Wang said, “have had a tough time working with SAP in the past as sales folks are compensated on growth in total account value — and that’s led to some really bad practices. Should the empathy promise translate in the field, then we will see less shakedowns on items such as audits, indirect access and fiery renewal conversations. Overall, this is a good start and hopefully sets the tone on improving the brand promise and value of SAP at the field level.”

Ray Wang
Ray Wang

CMSWire shared Wang’s comments about SAP sales tactics with an SAP spokesperson. In response, she shared a SAP “Walking the Talk: Customer Empathy” infographic, which led with a McDermott quote from his 2017 SAPPHIRE NOW keynote: “Everything has to start with empathy for the end user.”

In the infographic, SAP promised to:

  • Provide customers with more prescriptive guidance and roadmaps
  • Deliver a better buying experience
  • Improve the end-to-end user experience

McDermott: We're Listening

“This idea of listening to the customer is a pretty important thing to do,” McDermott said in an executive press briefing at SAPPHIRE NOW. “We go out of our way with our user groups and also many other groups that exist in the local information tech industry to meet with and listen to our customers.”

SAP is not “walking past” problems, he added. 

Last year McDermott noted, customers wanted clarity on the roadmaps and a more integrated SAP to the S4/HANA nucleus with the line of business and the network assets that SAP owns. 

“We’re making sure when we keep a promise we deliver a promise and we’re really good for it,” he said. “That’s what empathy is about. Because we can say whatever we want, but if the customer doesn’t feel it, if they don’t see it, it doesn’t matter.”