Research Note
`Events
`R Desisto, J. Golterman
`SAP's CRM Field Sales Strategy: Big Freeze or Benefits?
`
`SAP has announced its CRM strategy, called FOCUS. Users Vrill fmd FOCUS' sales force
`application functionality limited, while front-office application vendors will now find they
`have a more dangerous competitor.
`
`Core Topic
`Business Applications: Technology-Enabled Selling and Relationship Management ·Market Dynamics
`Key Issue
`Which vendors will thrive, despite the marketplace tunnoil, to emerge as leaders in technology-enabled selling and
`technology-enabled relationship management by 2002?
`At Sapphire '98, SAP atmounced its Front Office CUstomerS (FOCUS), which is positioned as a set of offerings for
`sales, marketing, and .customer service. Other facts related to these announcements include first customer shipment
`(FCS) in 4Q98, with general availability in 2Q99 (R/3 release 3.1 i,h and 4.Sa). SAP anticipates 20 worldwide FCS
`customers through 4Q99. SAP has fully absorbed Kiefer & Veittinger GmbH, a Germany-based sales force
`automation (SFA) software provider (see Note 1). Additionally, SAP has stated its strategy is to support directly the
`initial FCS SFA FOCUS customers, and eventually tum these resources to educating and training external service
`providers (ESPs) for SFA FOCUS implementations. SAP states that it plans to market FOCUS as not just an add-on
`to R/3, but also as a stand-alone set of offerings. Pricing was not announced. SAP has announced no plans to alter
`Business Application Programming Interface (BAPI)-certified partner shipments previously established among
`front-office enterprise players.
`Note 1
`Related SLS Research
`See Research Notes E-03-4129, E-04-2968, and E-981-343, 26 September 1997.
`While users will like its Microsoft Outlook-emulating graphical user interface, SAPs FOCUS field sales
`functionality falls into the category of a third-generation (see Note 2), technology-enabled selling (TES) solution.
`SAP's key competitors vary from one to two generations ahead, depending on vertical industry (see Note 3), and it is
`important to note that third-generation TES solutions lack a significant contribution to return on investment, as
`compared to fourth and above TES generation solutions. Functionality within SAP (see Note 4) field sales is best
`described as an account/opportunity/contact management system, a marketing encyclopedia system, order entry,
`calendaring, and sales configuration (see NoteS).
`Note 2
`TES Generations
`See SLS Research Notes M-060-246, M-060-247 and M-060-248, 1 July 1996.
`Note 3
`SAP Focus Vertical Functionality
`For the targeted industries of consumer goods and pharmaceuticals, SAP field sales functionality lacks key
`functionality, such as retail call reporting, team selling, trade promotions management, category management,
`sample management, complex physician targeting, contracts management, campaign management, and workflow.
`The system administration tools and customization tools will be reviewed in future research.
`Note4
`SAP Focus Functionality for FCS
`Supported in tFCS, the SAP FOCUS offering includes a proprietary data synchronization engine for remote users
`and support for networked users. Due to a lack of production sites, these functions will be reviewed in future
`research. SAP has demonstrated front-end functionality that will give R/3 users access to back-office data, and an
`untethered field sales client through which users can input data into R/3 from the field. The market value for FCS
`functionality is below $1,200 per user; and revenue contribution from initial functionality deliverables will be low
`through 4Q99.
`NoteS
`SAP's Sales Configuration Functionality
`SAP's sales configuration engine is SAP's next generation of its product configuration functionality, has been under
`development since 1996, and has less than three production references. Prospective SAP clients have cited
`functionality gaps to support sales organizations and poor system administration tools as the primary reasons for
`selecting other SCS vendor alternatives. SAP's pricing configuration engine is equivalent to the functionality found
`
`CONFIDENTIAL- ATIORNEYS' EYES ONLY
`
`VERSATA EXBffiiT 2022
`SAP v. VERSATA
`CASE CBM20 12-00001
`
`

`

`Research Note
`Events
`R. Desisto, J. Golterman
`SAP’s CRM Field Sales Strategy: Big Freeze or Benefits?
`
`SAP has announced its CRM strategy, called FOCUS. Users will fred FOCUS’ sales force
`application functionality limited, while front-office application vendors will now find they
`have a more dangerous competitor.
`
`Core Topic
`Business Applications: Technology-Enabled Selling and Relationship Management - Market Dynamics
`Key Issue
`Which vendors will thrive, despite the marketplace turmoil, to emerge as leaders in technology-enabled selling and
`technology-enabled relationship management by 2002?
`At Sapphire ’98, SAP announced its Front Office CUstomerS (FOCUS), which is positioned as a set of offerings for
`sales, marketing, and customer service. Other facts related to these announcements include first customer shipment
`(FCS) in 4Q98, with general availability in 2Q99 (R/3 release 3.1 i,h and 4.5a). SAP anticipates 20 worldwide FCS
`customers through 4Q99. SAP has fully absorbed Kiefer & Veittinger GmbH, a Germany-based sales force
`automation (SFA) software provider (see Note 1). Additionally, SAP has stated its strategy is to support directly the
`initial FCS SFA FOCUS customers, and eventually turn these resources to educating and training external service
`providers (ESPs) for SFA FOCUS implementations. SAP states that it plans to market FOCUS as not just an add-on
`to R/3, but also as a stand-alone set of offerings. Pricing was not announced. SAP has announced no plans to alter
`Business Application Programming Interface (BApI)-certified partner shipments previously established among
`front-office enterprise players.
`Note 1
`Related SLS Research
`See Research Notes E-03-4129, E-04-2968, and E-981-343, 26 September 1997.
`While users will like its Microsoft Outlook-emulating graphical user interface, SAP’s FOCUS field sales
`functionality falls into the category of a third-generation (see Note 2), technology-enabled selling (TES) solution.
`SAP’s key competitors vary from one to two generations ahead, depending on vertical industry (see Note 3), and it is
`important to note that third-generation TES solutions lack a significant contribution to return on investment, as
`compared to fourth and above TES generation solutions. Functionality within SAP (see Note 4) field sales is best
`described as an account/opportunity/contact management system, a marketing encyclopedia system, order entry,
`calendaring, and sales configuration (see Note 5).
`Note 2
`TES Generations
`See SLS Research Notes M-060-246, M-060-247 and M-060-248, 1 July 1996.
`Note 3
`SAP Focus Vertical Functionality
`For the targeted industries of consumer goods and pharmaceuticals, SAP field sales functionality lacks key
`functionality, such as retail call reporting, team selling, trade promotions management, category management,
`sample management, complex physician targeting, contracts management, campaign management, and workflow.
`The system administration tools and customization tools will be reviewed in future research.
`Note 4
`SAP Focus Functionality for FCS
`Supported in fFCS, the SAP FOCUS offering includes a proprietary data synchronization engine for remote users
`and support for networked users. Due to a lack of production sites, these functions ~vill be reviewed in future
`research. SAP has demonstrated front-end functionality that will give R/3 users access to back-office data, and an
`untethered field sales client through which users can input data into R/3 from the field. The market value for FCS
`functionality is below $1,200 per user; and revenue contribution from initial functionality deliverables will be low
`through 4Q99.
`Note 5
`SAP’s Sales Configuration Functionality
`SAP’s sales configuration engine is SAP’s next generation of its product configuration functionality, has been under
`development since 1996, and has less than three production references. Prospective SAP clients have cited
`functionality gaps to support sales organizations and poor system administration tools as the primary reasons for
`selecting other SCS vendor alternatives. SAP’s pricing configuration engine is equivalent to the fimetionality found
`
`CONFIDENTIAL - ATTORNEYS’ EYES ONLY
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`VSAP_01837951
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`PX 1132
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`

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`in SAP’s R/3 Sales and Distribution module executing in a disconnected environment. It still falls short of pricing
`configuration features and user interface capabilities found in leading products such as Trilogy Development
`Group’s SC Pricer.
`From a strategic perspective, the FOCUS initiative announcement puts SAP in direct competition with the leading
`TES vendors, such as Siebel, Sales Technologies/Walsh, Dendrite, and Baan/Aumm, and further competes with the
`likes of Trilogy, Concentra, Calico Technology, Firepond (formerly CWC), and other sales configuration system
`(SCS) providers. Additionally, the customer service and support offerings put SAP in direct competition with the
`leading customer service system providers, such as Clarify, Siebel, and Vantive. At Sapphire ’98, none of the front-
`office vendors was in the exposition hall, with Trilogy taking demonstration space in a building opposite the Los
`Angeles Convention Center, where Sapphire ’98 was held. This was in contrast to Sapphire ’97, where several of the
`vendors in the customer relationship management (CRM) space were allowed to exhibit. Trilogy sponsored a
`simultaneous event nearby in Los Angeles called Soft~vorld, ~vhich included such Trilogy partners as Baan, Symix,
`JBA, SSA, and other software companies and ESPs. The SAP FOCUS initiative will make it more difficult for other
`CRaM vendors to gain cooperation from SAP to integrate with R/3.
`Bottom Line: At this time, SAP’s FOCUS initiative for SFA can best be described as being in alpha stage. SAP has
`not demonstrated to GartnerGroup a working system administration and customization environment. SAP will find it
`difficult to compete on functionality with SFA competitors, such as Siebel, Aurttm, Sales Technologies/Walsh,
`Dendrite, Trilogy, CWC, Calico, and others in the first tier, as well as against second-tier leaders, such as Pivitol and
`Onyx, through 2Q00 (0.8 probability). Users should not freeze field sales automation project decisions due to SAP’s
`FOCUS announcements. Instead, users seeking third-generation and below field sales automation functionality
`willing to take the risk of supplementing functionality through customization and R/3 customers should evaluate
`SAP field sales automation functionality, along with alternatives, under the following conditions: if they are Type A
`users (which generally would not consider a third-generation offering), when SAP field sales has proven successful
`in beta testing in similar production environments; and if they are Type B and C users, when a significant number
`(i.e., five to six) of customers have moved past pilot and into rollout, which is anticipated in 2Q00 (0.6 probability).
`Users making fourth-generation and above field sales automation solutions through 4Q99, regardless of R/3
`
`customer status, should evaluate alternatives.
`SLS: E-06-1067
`
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`materials to achieve its intended results. The opinions expressed herein are subject to change without notice.
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`CONFIDENTIAL - ATTORNEYS’ EYES ONLY
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`VSAP_01837952
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