Clarify is a steady, solid, profitable CRM player that built a comfortable niche in front-office software, focused largely on customer service and call center operations. Nortel Networks acquired Clarify earlier this year in a multi-billion dollar stock deal.
SAP is among the world's largest software firms, and one of the undisputed leaders in back-office software for manufacturing and financial management. But the last couple of years have been less than stellar, between a generally depressed post-Y2K ERP market and analyst concerns that the company
hasn't capitalized on the potential of the Internet.
In May, the two companies announced they would form a partnership to incorporate Clarify CRM components into the MySAP.com line. How does this affect SAP's CRM strategy, and what does it mean for Nortel's CRM business unit? CRM writer Jason Compton talked with Clarify's point man for the deal, Dennis Cunningham, senior vice president of strategic alliances of the Clarify e-business applications unit of Nortel Networks, to help make sense of the announcement.
CRM: Please detail exactly what the SAP/Clarify agreement covers.
Dennis Cunningham: The initial agreement includes everything except the sales and marketing functionality of Clarify. SAP felt that their sales and marketing product line was fairly strong. What they were really looking for was call center/contact center functionality that could scale.
CRM: You use the term "initial agreement"... does that mean it can be expanded in the future?
DC: It is very much the intention for this to be a living agreement. We are going to react to what our customers and partners tell us in terms of how they think the marketplace will benefit from further combinations of our products.
CRM: What is SAP looking to create with your call center technology?
DC: Basically, they're looking at a multimedia contact center that would provide unified information regardless of the point of contact by the user, be it e-mail, fax, in person or telephone.
CRM: Why did you make the decision to partner with SAP in particular?
DC: From time to time, there are opportunities that present themselves for Clarify. The first was Nortel Networks. As you look at the marketplace and how it is changing, you see that there are opportunities to provide virtual solutions, and partnering, I think, is very critical to the future. When you look at the massive installed base of SAP, its strength in particular verticals and the rich data repository they have in terms of their ERP systems, it seemed like working together we could bring their customer base a very rich solution.
CRM: SAP has a large installed base, but this initial agreement specifically only covers MySAP.com. What does that mean?
DC: The agreement covers a concept where we embed our capability, as appropriate, into the MySAP portal strategy. As we understand it, the MySAP portal is backwards-compatible [with earlier SAP versions] in terms of CRM. We have considered and will continue to consider how our products can best serve customers if they are not ready to move to the MySAP.com strategy. Those will be looked at on a one-off basis. SAP's strategy is obviously to move customers to the MySAP concept.
CRM: Did you find SAP? Did SAP find you? Was this deal in the works before the Nortel acquisition?
DC: They [SAP] have had a long customer relationship with Nortel Networks. Upon acquisition of Clarify by Nortel and looking at what Nortel was thinking of doing in terms of its utilization of Clarify in-house, SAP became aware that there might be an opportunity on a broader basis. They asked to set up a meeting with our executive vice president. We did that in the beginning of December '99 and explored what possibilities there might be to look at the marketplace as partners instead of as competitors. It's a perfect example of the benefits that derive to both Nortel and Clarify of the union.
CRM: Your non-exclusive arrangement with SAP is for three years. What happens at the end of the three years? Is there anything that would keep SAP from shutting off the Clarify components if the agreement ends?
DC: The agreement is renewable. What we do in three years depends on the success of the partnership. The contract obviously protects both parties from someone just waking up and walking away. Certainly, nobody would have the intent of leaving the customer hanging because they decided to pull the plug.
CRM: In July, CRM magazine published an article about the CRM strategies of ERP companies, and there was a consensus in the industry that SAP was slow coming to market with CRM functionality. You're saying that SAP is keeping its own sales and marketing functionality. Is there something in that area you think you could help them with?
DC: We are going to be looking at the needs of the marketplace. There are competitors in the marketplace we would like to beat and take market share from. To the extent that merging more of our product line will help us do that, I think we will. This is a cultural shift for SAP in terms of how they've gone to market historically. Theirs had not been a partnering culture.
CRM: Interesting that you mention that. Has SAP changed its mind?
DC: All I can say is that SAP senior management has looked at the CRM marketplace, evaluated the needs of the marketplace, listened to their customers and has seen that it makes sense to provide a combined offering for its customer base. To the extent that changes the past ... I applaud them for having the strength to make the right turn in terms of their business strategy.
CRM: Some analysts have been of the opinion that integration in the CRM and CRM/ERP market hasn't done anything to bother Siebel, and in fact may have made that company stronger. Do you think this announcement might initially lead to some confusion as to what Clarify's stand-alone business strategy will be? Does this affect Siebel?
DC: I disagree with the observations that this does nothing to Siebel. When Tom Siebel made his recent earnings announcement, he said he could see this announcement [SAP/Clarify partnership] impacting, or delaying, his sales. For Tom to in any way admit that is indicative that he's not ignoring the fact that we are coming to market together. I think we can be combative with Siebel in the marketplace. Clarify is coming to market strongly as a stand-alone offering, as a partnered offering with SAP, and to the extent that it makes sense to partner with others, we're going to do that.
CRM: Any final thoughts?
DC: We think there's real value in the fact that it is a Nortel/Clarify/SAP combination. It's pretty hard to find an equivalent offering in the marketplace: It's the likes of an Oracle/Cisco/Siebel combination, and I don't think that's too likely.