Cloud Wars
  • Home
  • Top 10
  • CW Minute
  • CW Podcast
  • Categories
    • AI and Copilots
    • Innovation & Leadership
    • Cybersecurity
    • Data
  • Member Resources
    • Cloud Wars AI Agent
    • Digital Summits
    • Guidebooks
    • Reports
  • About Us
    • Our Story
    • Tech Analysts
    • Marketing Services
  • Summit NA
  • Dynamics Communities
  • Ask Copilot
Twitter Instagram
  • Summit NA
  • Dynamics Communities
  • AI Copilot Summit NA
  • Ask Cloud Wars
Twitter LinkedIn
Cloud Wars
  • Home
  • Top 10
  • CW Minute
  • CW Podcast
  • Categories
    • AI and CopilotsWelcome to the Acceleration Economy AI Index, a weekly segment where we cover the most important recent news in AI innovation, funding, and solutions in under 10 minutes. Our goal is to get you up to speed – the same speed AI innovation is taking place nowadays – and prepare you for that upcoming customer call, board meeting, or conversation with your colleague.
    • Innovation & Leadership
    • CybersecurityThe practice of defending computers, servers, mobile devices, electronic systems, networks, and data from malicious attacks.
    • Data
  • Member Resources
    • Cloud Wars AI Agent
    • Digital Summits
    • Guidebooks
    • Reports
  • About Us
    • Our Story
    • Tech Analysts
    • Marketing Services
    • Login / Register
Cloud Wars
    • Login / Register
Home » Salesforce-SAP Showdown: SAP Exits Mainstream CRM for ‘Focused’ Segments
Cloud

Salesforce-SAP Showdown: SAP Exits Mainstream CRM for ‘Focused’ Segments

Bob EvansBy Bob EvansSeptember 11, 2020Updated:April 13, 20238 Mins Read
Facebook Twitter LinkedIn Email
Share
Facebook Twitter LinkedIn Email

Two years after former CEO Bill McDermott vowed that SAP would take the CRM market by storm and spent $8 billion on Qualtrics to help do so, SAP is conceding the broad mainstream CRM market to Salesforce and will pursue only certain specific segments.

That revelation came earlier this week from SAP CFO Luka Mucic during a Q&A session at a virtual investors conference put on by Citi. (On my Cloud Wars Top 10 rankings, Salesforce is #3 and SAP is #5.)

While Mucic did not use the words I’ve employed above—“exits” and “concedes”—and while he did his very best (which is quite good) to put the best shine on the story, there’s no doubt in my mind that my analysis of what SAP is doing is right on the mark.

I’ll offer detailed examples below of Mucic’s verbatim comments to support my analysis, but first I want to emphasize that I don’t think this pullback by SAP is a bad thing. In fact, I think it’s smart. Here’s why:

  • Look at how dramatically and pervasively our world has changed in the past 6 months. Is it really outlandish to think that in light of that massive disruption, as well as other factors, that the world’s largest maker of enterprise applications would decide to refocus its energies on categories where it has the best chance to succeed? In my mind, that’s a smart move.
  • In SAP’s past two earnings calls, CEO Christian Klein has repeatedly cited the need for SAP to be disciplined and focused to allow it to pursue high-growth opportunities in a rapidly changing world. Klein has decided that perhaps its best for SAP to be aggressively all-in on two of the three key enterprise-app pillars—ERP and HCM—while being less aggressive and more precise in CRM, picking and choosing only subsegments in which it knows it can do well.
  • Over the past two years since McDermott issued his blunt challenge to category king Salesforce, Marc Benioff and company have never faltered. In fact, through the ongoing growth of its primary SaaS clouds but also through its stellar acquisitions of first MuleSoft and then Tableau, Salesforce has expanded not only its data-analytics and integration capabilities but also the very size and boundaries of CRM itself.
  • “Focus” is always a good thing, and in turbulent times can be essential. During that Aug. 25 earnings call, Benioff contrasted his strategy for Salesforce—going all-in on only one of the 3 big enterprise-apps categories—versus that of SAP and Oracle, which have been pursuing all  three subsegments for several years: ERP, HCM, and CRM. Here’s how Benioff put it from my article called The Magic of Marc Benioff: 10 Key Drivers Behind Salesforce Q2 Surge: “A lot of our competitors are everywhere. They’re in every market. Some of them are in enterprise and consumer. They’re not just in CRM, they’re also in HCM. They’re in ERP. They’re public cloud. I mean, we’re not—we’re singularly focused.”

Okay—so against that backdrop, what exactly did SAP CFO Mucic say about his company’s future plans around CRM?

In the middle of a 50-minute online Q&A session, Citi analyst Amit Harchandani asked Mucic, “What does this mean for the whole strategy around C/4HANA and in particular the customer relationship market? How should we think about that versus what we have heard from SAP in the past?”

Here’s Mucic’s response, with some perspective from me interlaced throughout portions of his lengthy response.

SAP wants to be a “significant” player but only in certain categories of CRM

“So, first of all, customer experience is absolutely a key market in which we want to be a significant player but with a focus on those categories where we clearly see that there is potential for SAP to be a strong #1 or #2 player.” Okay, that all makes sense—but notice that at the very top of his answer, Mucic clearly states that SAP will pursue a targeted approach to CRM rather than a full frontal assault.

For example, SAP’s #1 in Experience Management with Qualtrics

“There is a very obvious one in which we are leading the market and that’s the whole area of experience management, where we have Qualtrics, which is the category leader and that we are truly excited about and we are obviously looking at a partial IPO of Qualtrics to even further exemplify and magnify our growth opportunities.” Again, this makes sense.

SAP also will continue investing in the e-commerce category via Hybris

“The other area as I mentioned before is e-commerce, where we have with Hybris a very strong cloud fit that is growing in the high double-digits and that is in huge demand these days in particular with the challenges introduced by COVID. We think this is one of the core investment priorities for many companies around the globe.” Legitimate answer—but bear in mind that for Salesforce, e-commerce is one of its smaller clouds, way behind its franchise Service Cloud and Sales Cloud.

Is “customer data cloud” truly CRM? 

Mucic continued: “And then also areas like customer data cloud, for example, where we also have a leading solution that can help customers manage the GDPR and triggers a digital sales motion in a way that is conducive to consumer preferences.” I give Mucic an “A” grade for effort, but so far this has not exactly been a bright star in the SAP constellation.

Trying to slip past the elephant—the very BIG elephant—in the room

Mucic then attempted a bit of sleight of hand by obliquely referring to “market leadership by others” in what he bizarrely called “commodity markets.” 

Referring back to his comments about Qualtrics, e-commerce, and customer data cloud, Mucic said, “And so in those areas we absolutely continue to invest and we see great growth opportunities.” 

And then things got tricky

“In others that from our perspective more translate into commodity markets where the growth rates are coming down and admittedly there is clear market leadership by others, we might look also at one or the other partnership opportunities. And in the meantime of course we see that the rising tide lifts many boats [a clear reference to Salesforce’s blockbuster Q2 results and the immediate 25% surge in its stock price to almost $250 billion] in many of those areas and so we will continue to look practically at an opportunity to participate in this growth.” Again, I give Mucic credit for doing his level best to try to ignore or somewhat dismissively address the undeniable market dominance by Salesforce. But maybe someone should tell Marc Benioff that big chunks of the CRM business are “commodity markets”—that would be news to him after his company posted growth of 29% to $5.15 billion for the 3 months ended Aug. 31. 

It’s critical and it’s wonderful but do NOT expect us to go all-in

“But we don’t necessarily see it as an area in which we would dramatically double down on our investments. But clearly, CX remains a critical pillar of our cloud strategy, just in a little bit more of a focused sense.” Mucic is a very smart man, and at the end of the call he said that next year will mark his 25th anniversary at SAP. So he’s seen a lot of market gyrations and he knows that while he should never say never, he also knows that one of his primary jobs is to help manage the expectations of investors and the marketplace.

And so in spite of all the declarations about how vital the CRM market is to SAP, the truth is that Mucic was telling the world that SAP has zero intention of taking Salesforce head-on, and will instead focus its attentions and energies and resources elsewhere.

So in this Cloud Wars battle, I’d score this one a huge win for Salesforce but also at least a partial win for SAP because, outside the realm of CRM, SAP has some huge opportunities that will now receive more of the company’s focus, resources, and love.

RECOMMENDED READING

The Magic of Marc Benioff: 10 Key Drivers Behind Salesforce Q2 Surge

How Salesforce Plans to Beat Oracle and SAP While Scaling to $35 Billion

Marc Benioff: The Extraordinary Ascendancy of a Global Leader

Best Software Acquisition of All Time Was Salesforce Buying Tableau: Marc Benioff

As Salesforce Blows By SAP and Oracle, Cloud Wars Top 10 Market Cap Hits $5.66 Trillion

Salesforce Beats SAP, Oracle, Microsoft, Adobe—Combined!—in 2019 CRM Share

Cloud Wars: Why Microsoft Is #1, Amazon #2, Salesforce #3, Google #4

Salesforce Shocker: Its #1 Revenue Business Is “Platform and Other”

Marc Benioff Delivers: “The Best I’ve Ever Seen Salesforce Perform”

Workday Says Limitations of Legacy Systems (SAP & Oracle) Boosted Q2 Growth

Disclosure: at the time of this writing, SAP was among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.

 

Subscribe to the Cloud Wars Newsletter for in-depth analysis of the major cloud vendors from the perspective of business customers. It’s free, it’s exclusive and it’s great!

Cloud Wars Cloud Wars Archive CRM Latest Articles Salesforce SAP
Share. Facebook Twitter LinkedIn Email
Founderuser

Bob Evans

Founder
Cloud Wars

Areas of Expertise
  • AI
  • Cloud
  • Digital Business
  • Innovation
  • Leadership
  • LinkedIn

Cloud Wars Founder Bob Evans actively analyzes the Cloud and AI categories through video reports, in-depth analyses, and interviews with the Cloud and AI market’s leaders and innovators. He’s also the creator of the Cloud Wars Top 10, a ranking and ongoing analysis of the world's most influential tech companies driving digital business and the digital economy. Bob is recognized as a world-class strategic communicator focused on emerging business strategy, disruptive innovation, and forward-looking leadership.

  Contact Bob Evans ...

Related Posts

C-Suite Perspective: What the AI-Powered Org Looks Like, Today and in The Future

May 15, 2025

AI Maturity Declines Year Over Year, But Leaders Push Ahead on Innovation, AI Skills

May 15, 2025

Microsoft’s Mission to Make Your Company AI First

May 14, 2025

Parisa Tabriz on Google Chrome Enterprise Security and AI Innovation | Cloud Wars Live

May 14, 2025
Add A Comment

Comments are closed.

Recent Posts
  • C-Suite Perspective: What the AI-Powered Org Looks Like, Today and in The Future
  • AI Maturity Declines Year Over Year, But Leaders Push Ahead on Innovation, AI Skills
  • Microsoft’s Mission to Make Your Company AI First
  • Parisa Tabriz on Google Chrome Enterprise Security and AI Innovation | Cloud Wars Live
  • Snowflake Expands AI Data Cloud to Revolutionize Automotive Manufacturing and Data Integration

  • Ask Cloud Wars AI Agent
  • Tech Guidebooks
  • Industry Reports
  • Newsletters

Join Today

Most Popular Guidebooks

Accelerating GenAI Impact: From POC to Production Success

November 1, 2024

ExFlow from SignUp Software: Streamlining Dynamics 365 Finance & Operations and Business Central with AP Automation

September 10, 2024

Delivering on the Promise of Multicloud | How to Realize Multicloud’s Full Potential While Addressing Challenges

July 19, 2024

Zero Trust Network Access | A CISO Guidebook

February 1, 2024

Advertisement
Cloud Wars
Twitter LinkedIn
  • Home
  • About Us
  • Privacy Policy
  • Get In Touch
  • Marketing Services
  • Do not sell my information
© 2025 Cloud Wars.

Type above and press Enter to search. Press Esc to cancel.

  • Login
Forgot Password?
Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.