International giants fight China's enterprise software market: CRM enters the fast lane

International giants fight China's enterprise software market: CRM enters the fast lane

Author: Li Zhenghao

With Salesforce's market capitalization exceeding $100 billion this year, and acquiring MuleSoft for $6.5 billion, extending its reach into ERP, the original global ERP hegemony, Germany's SAP, has stepped up its counter-offensive.

Based on the acquisition of Gigya, a customer identity management startup, and Callidus Cloud, a cloud sales performance management company, SAP formally launched its C RM (customer relationship management) platform, SAP C/4 HANA, in June 2018 and September 2018, respectively, to "declare war" on Salesforce.

"We want CRM," SAP CEO Bill McDermott said on the Q1 earnings call in fiscal year 2008. "We have established a clear CRM strategy," Ann Ruishan, president of SAP Customer Experience Global, said publicly in China this year. "CRM is the biggest growth opportunity for SAP," Moritz Zimmermann, chief technology officer of SAP Customer Experience, reiterated in a recent interview with China Business News.

Developers of domestic software companies told reporters that companies generally need CRM as a bridge between internal OA systems, ERP systems and external social media channels. To meet these needs, CRM systems should not only be open enough, but also allow enterprises to customize application plug-ins or integrate other business systems. "Customization", "connectivity" and "platform" will be the key to the success of all CRM systems.

CRM enters the fast lane

Established in March 1999, Salesforce started as a cloud CRM tool and was previously unknown in the enterprise software market, but its market value has risen from $50 billion to $100 billion since 2016 in less than three years.

Is the fast growing Salesforce stimulating SAP? No It is the CRM market with high speed.

Earlier, Anruishan told China Business News that SAP entered the CRM market mainly because the CRM market will be no less than ERP. Moritz Zimmermann in an interview with our reporter detailed analysis, "From the global market for a variety of enterprise software, CRM surpassed the ERP market 2 to 3 years ago, and last year exceeded the database market, has become the largest enterprise software market. By 2020, the CRM will be 3 times larger than ERP. "

Research reports from Gartner show that global CRM software revenue reached $39.5 billion in 2017, surpassing the $36.8 billion of the database management system (DBMS), making it the largest segment of all software markets in the world. Gartner also predicted that "CRM software revenue will continue to dominate all software markets in 2018 and become the fastest growing segment with a growth rate of 16%.

IDC reports show that in the global CRM software market in 2017, Salesforce ranked first with 35.2% market share, followed by Oracle, SAP and Microsoft. IDC data show that by 2021, the global CRM market will be as high as $45 billion.

Behind this, more companies "want to avoid information islands, all-round understanding of customers, which makes CRM systems more efficient." A Gartner analyst told reporters that the strong growth of CRM is mainly driven by business opportunity management, customer voice and on-site service management and other segments of the market, CRM these segments of the annual growth of more than 20%.

The analyst believes that the global CRM is a large-scale market dominated by Salesforce, SAP and other small and medium-sized manufacturers, but as the global CRM enters the giant harvest stage, merger and acquisition activities increase, the global CRM market competition, especially the high-end market competition is intensifying.

End-to-end integration is the key.

Since CRM is the bridge between internal systems such as enterprise OA, ERP and external social media channels, the key to dominate the CRM market lies in the ability to penetrate enterprise front-end and back-end IT.

As a result, Salesforce, a rising star, will pay $6.5 billion in March 2018 to acquire integrated software maker MuleSoft. The industry believes that the acquisition of MuleSoft is mainly to connect Salesforce to potential traditional enterprise systems, especially ERP. That is to say, Saleforce takes the road of integration from the front end to the back end.

Contrary to Salesforce, SAP is on the road of integration from the back end to the front end, because SAP has a greater advantage in ERP.

"We have to build a modern customer-oriented system -- some developed by SAP itself, some acquired, integrated components, reshaped the system, and then based on HANA memory data to form a new SAP C/4 HANA." At the SAP China Summit in September, Anruishan stressed in an interview with our reporter that SAP C/4 HANA is the next generation of CRM system, because it has opened the front-end and back-end platform, which is also the core competitiveness of SAP into the CRM market.

Why is it important to get through the front and rear ends? "For example, when an enterprise encounters a problem in project execution, the front end is the team doing the website, the back end is the team doing the order management and delivery, the front end throws all the requirements to the back end, but just the order status, there may be hundreds of different situations. So having end-to-end process knowledge is very important. " Moritz Zimmermann indicates.

It is also widely believed that the difficulty of SAP moving from the back-end ERP to the front-end CRM may not be too great once it is determined to rely on the original huge group of ERP enterprise users. For example, Cao Yongping, assistant general manager of Shanghai Zhenhua Heavy Industries Group Terminexus, told reporters that Zhenhua Heavy Industries and SAP began to cooperate on the ERP construction. Now Zhenhua Heavy Industries is speeding up the transformation from equipment suppliers to service providers. It is necessary to timely understand the specific situation of front-end customers, such as the inventory of port operators, or choose. Continue to cooperate with SAP on CRM.

SAP has made some progress on CRM. 2018 fiscal year Q3 earnings report shows that SAP's cloud business revenue increased 41% in the quarter. The core of business transformation is that SAP is accelerating the sale and deployment of cloud based S/4HANA business suite.

Value Chinese market

Compared with the global CRM market, the prospect of China's CRM market is also quite attractive.

China's SAAS CRM market is expected to reach 5.73 billion yuan in 2018 and 6.79 billion yuan in 2019, respectively.

The aforementioned insiders of domestic software companies said that the domestic CRM market is in a very delicate stage, many domestic and foreign manufacturers and products are surging in the dark tide, the emergence of a new technology and a new product is enough to ripple the entire market, or even subvert or reshape the entire market pattern.

Anruishan said that SAP has been rooted in China for more than 20 years and regards China as the second home country. The Chinese market is crucial to SAP. Today, China has established standards for customer experience. Anyone who has been in China can see, especially in the field of e-commerce, that China has outlined a blueprint for the customer experience of many customers in other parts of the world over the next few years.

At the same time, Anruishan believes that many CRM solutions on the market now focus more on the automation of sales teams and sales functions. SAP puts forward a different value orientation, to help start from the end-customer experience, to transform the future system, SAP provides a new perspective of value creation, not just automation, but to achieve customer experience needs with the enterprise operation of the connection, the realization of a truly intelligent enterprise.

Moritz Zimmermann said that SAP's competitive advantage lies in the integration of end-to-end solutions from order delivery to supply chain. In the low-end market with many manufacturers, SAP may face many competitors, but will gradually win the high-end market.

An analyst from Yi Guan believes that the key for those enterprises to do the platform is to build their own ecosphere, similar to the APPStore, and thus to provide more diversified, personalized and differentiated services. Multinational companies do a better job in this respect, which is worth learning from Chinese enterprises.

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