hybris Software

The company is a veteran of the e-commerce age, being founded back in 1997, which for e-commerce timelines is like centuries ago. But hybris has been able to grow by adding functionality way beyond the original e-commerce scope and expanding the enterprise.

Over time hybris has grown way beyond the original scope of e-commerce - out of the necessity to support the customer base. Customers were working on more channels, well that requires some MDM capability - which suits also to integrate with various ERP back ends.  Customers wanted mobile commerce - well that required hybris to support mobile shopping carts. Multiple channels and systems - here comes order orchestration... and so on.

hybris has shown long breath and staying power on the topic, no doubt. But it's recent success of close to 90% YoY growth was also aided by reduced competitive pressure from IBM's Sterling Commerce acquisition and even closer to home, Oracle's acquisition of ART technology. That left hybris as the only dedicated e-commerce vendor standing from the 2011 Gartner e-commerce leader's quadrant. A void into which hybris executed very well, so congrats to their management team on that.


SAP Whitespace

As stated before - SAP - like their competitors - are under enormous revenue pressure to produce the results expected by the markets. With a significant over-licensing situation - it's getting tougher to find new areas of business automation to sell to customers. And one area that was under-penetrated by SAP since the dot com boom and post the markets pseudo boom phase - has been e-commerce.

One ironic example of this has been the poster child customer on the call, Grainger, which sells office equipment in the US. Around 1999 already Grainger was the customer to demo for SAP as they had a great vision of selling micro-targeted and priced products and where a showcase for SAP on the back end (back then under the MRO hype mantle). And while they still use the SAP back end, their e-commerce automation had moved to... hybris.

So SAP has no good, complete electronic interaction and commerce platform for customers, especially consumers. And competitors like Oracle and salesforce are providing the front ends to the customer interactions where SAP provides the back ends  This should make scary late 90ies scenarios pop up in Walldorf, when SAP was in the same position, only it was Siebel that was getting big in the front office.

From all recent SAP acquisitions - hybris has the most white space from a SAP install base perspective. More SAP customers had Business Objects, Ariba and SuccessFactors than having hybris. The 80 or so common customers are a drop in the ocean for the 240k+ SAP customer pool. So most likely - this is the largest potential for SAP to address post an acquisition - ever.

Where will hybris go?

As standard by now - hybris will remain a separate entity - which on paper is always good to preserve culture and dynamics - but eventually unravels at SAP. Unusual for a 2B+ (speculated) acquisition, the hybris CEO does not become part of the board (as did John Schwartz, Lars Dalgaard and Bob Calderoni). Or maybe the co-CEOs thought it's not again time for a top level re-org (my take on the last re-org here).

This may even accelerate the integration of hybris further, as SAP will have to push looking for cross-sell opportunities into their install base. The big questions is - what appetite does the average SAP account manager have to sell e-commerce solutions - something the veterans got burned on - and more junior members of the salesforce may not see the sweet spot in. But then HANA based products are not directly around the corner either - so I would expect some account managers to do crash courses on how to sell e-commerce.

Integration matters

SAP knows by now, that when they acquire another vendor, SAP customers expect an integrated solution. This has been a steep learning curve recently, as Business Object as a BI vendor provided integration tools. Same for Ariba. This alleviate the need for newly created integration options.

But on the SuccessFactors acquisition it became clear, that the thin type integration SuccessFactor offered, was ok with customers when they bought from a separate company, but this would not work once SAP and SuccessFactors were a combined entity.

The challenge for SAP' is, that it does not have a viable integration platform. HANA Cloud Platform is too young and faces many other challenges. NetWeaver PI is coming around these quarters - but the main question is - where to integrate to - the Business Suite classic or any brand new HANA based products. 

On the press call there was even the hint that hybris maybe re-platformed on HANA. But putting hybris on HANA maybe straightforward for hybris - but will create even more integration needs for SAP - as the data to run a multi channel e-commerce system like hybris - will have to come out of the Business Suite. Which technically could run on HANA -- but even in that case data needs to be accessible for hybris, and not only will data flow to hybris, it ill also need to be written back. 

And I doubt the SAP salesforce will want to limit the cross-sell potential to customers only, that have based their Business Suite on HANA. Which creates additional integration work in regards of getting the relevant ERP content exchanged between hybris and Business Suite in classic deployment.

Last but not least - hybris announced their integration to SAP - only a short 3 weeks ago at Sapphire - and while it runs at Grainger, Levi's, Phonak etc - it seems to be a pretty new offering. 

The good news for SAP is - integration needs are so vast - that they may raise the bar for competitors to sell into the SAP install base, but only once SAP integrates well enough.

The (biggest) missing pieces

SAP still has a few missing piece for the overall B2B2C strategy - and that's the orchestration of customer relationships and business across channels. This job falls to market segmentation and relationship automation via campaign management. Both functionalitiey exist in the Marketing module of SAP CRM - but they are not up to 21st centrury best practices. 

Equally SAP lacks functionality for another key component in the consumer space, sentiment analysis. The former Business Object Inxight is doing text well - but cannot process the signals a consumer leaves as an electronic interaction trail. And the partnerhship with NetBase - well iyt is a partnership. Not enough to counter and compete salesforce's Radian and Oracle's Vitrue and Collective Intellect capabilities. 

So expect SAP to take out the checkbook soon again.

Implication for SAP customers

SAP customers that are thinking about their e-commerce presence and automation should pause their efforts and see what SAP will come up with in a reasonable timeframe. hybris capabilities are advanced enough to justify a reasonable timeout.

Implication for hybris only customers

You need to get assurance from SAP that you will be supported down the road. I just spoke to a customer of SAP today - who simply got forgotten because of being on a not go forward platform. Extract the concesssions in the next weeks when there is still attention from SAP top management on this matters.

Implication for SAP partners

This is good news for partners since most likely there will be a lot of time and labor to be spend - at least for a transition period - which will help SI revenues. If Bill McDermott is right, that CEOs want this - then except lucrative budgets. 

Increase your staff expertise on e-commerce in general and hybris in particular. Polish HANA skills and assess  likeliness of integration going towards HANA. Likewise for NetWeaver PI - it's new - get trained and get experience under your belt.

Implication for SAP

This is a very good acquisition for SAP, securing revenue potential for years to come and only creating insignificant product overlap questions, unlike the SuccessFactors buy. How many customers are still on the venerable SAP Store these days? I guess they will be happy to move to the hybris offering. But SAP will need to do a better job on communicating and executing the integration plans than recently with SuccessFactors.

Implication for competitors

Depending on how well SAP will address integration - there is a differently timed remaining window of opportunity. Most likely hybris will slow down with creating new leading functionality - even though no one from SAP and hybris would admit to this - so this creates an opportunity to claim functional leadership with hard to sell away differentiation points.


This acquisition makes much more sense for SAP than e.g. the SuccessFactors acquisition. Though both will alleviate / have alleviated competitive pressures, the hybris acquisition sees pretty much no functional overlap with existing SAP offerings - so much less explaining to do externally and internally. And  moving hybris to e.g. HANA is a simpler scope than  moving SuccessFactors. I bet if SAP wanted, hybris could run on HANA before SuccessFactors.
But SAP needs to address the integration roadmap quickly and execute on it. 

Once more like all things product at SAP these days - it's all about execution.