SAP cus­tomers have heard a lot about Qualtrics and Expe­ri­ence Man­age­ment (XM) since SAP acquired the Utah-based expe­ri­ence man­age­ment plat­form. But you may find your­self still won­der­ing how Qualtrics fits in with SAP’s com­pre­hen­sive prod­uct port­fo­lio, or how it could enhance the data you’re already ana­lyz­ing from your ERP system.

A Human-Dri­ven Mindset

Expe­ri­ence Man­age­ment — known at SAP as XM — turns out to be more of a mind­set than a prod­uct. It’s a way to ana­lyze what’s hap­pen­ing across an orga­ni­za­tion from a human per­spec­tive. Where it becomes expo­nen­tial­ly more pow­er­ful is when you can pair it with the oper­a­tional data you have liv­ing as an asset with­in your SAP envi­ron­ment. That’s the mag­ic of what SAP refers to as X‑data, or expe­ri­ence data, com­bined with O‑data, or oper­a­tional data. No doubt, the vision for what that could even­tu­al­ly bring to cus­tomers may have been part of what drove SAP to acquire Qualtrics. 

What You Can See Through the XM Lens

ASUG had a con­ver­sa­tion with Bruce Temkin who heads up the XM Insti­tute at Qualtrics to demys­ti­fy some of the buzz­words around cus­tomer expe­ri­ence and to get to the heart of the true val­ue of orga­ni­za­tions look­ing at them­selves through the XM lens. We talked about the dif­fer­ent areas of an orga­ni­za­tion that can ben­e­fit from a human-cen­tered approach, best prac­tices in cus­tomer expe­ri­ence, and some quick wins to help SAP cus­tomers build a busi­ness case for using XM at their organizations. 

Ann Marie: You’ve gone from found­ing your own com­pa­ny, Temkin Group, to becom­ing part of Qualtrics. Can you tell us a bit about that? 

Bruce: We were acquired by Qualtrics about a month before Qualtrics was acquired by SAP. I like to say that my team went from sev­en peo­ple to 2,007, to 98,007 in a month. At Temkin Group, we were focused on help­ing large enter­pris­es go through cus­tomer expe­ri­ence trans­for­ma­tions — look­ing at every­thing from how you design expe­ri­ences, to how you use insights, to how you pre­pare your cul­ture for change. We were acquired by Qualtrics to build the XM Insti­tute. The XM Insti­tute is an exten­sion of what we were already doing. How do we help the world under­stand the approach­es and method­olo­gies of Expe­ri­ence Man­age­ment (XM)? How do we pro­vide the con­tent and train­ing so that prac­ti­tion­ers around the world can get the val­ue from the vision of XM?

Ann Marie: What does it mean to be a cus­tomer-first orga­ni­za­tion, and what are some of the steps an orga­ni­za­tion should take when embark­ing on a cul­ture change to become cus­tomer first?

Bruce: I’m going to give you an answer you’re not expect­ing. I think cus­tomer-first orga­ni­za­tions need to be employ­ee first. All the work we’ve done shows that the expe­ri­ence you deliv­er exter­nal­ly reflects who you are inter­nal­ly. You can’t real­ly be cus­tomer first exter­nal­ly if you’re not look­ing in and focus­ing on your employ­ees. Being cus­tomer first exter­nal­ly, to me, requires empa­thy for human beings. We have to remem­ber that our cus­tomers are peo­ple, our employ­ees are people. 

To me, empa­thy breaks down into three parts. It’s under­stand­ing who an indi­vid­ual is as a per­son and how they are respond­ing to the envi­ron­ment around them. The sec­ond part is a per­son­al reflec­tion on what you’re doing and how your actions are affect­ing how that indi­vid­ual feels about the world and them­selves. The third part of empa­thy is mak­ing deci­sions about how you were going to treat that indi­vid­ual dif­fer­ent­ly to change how they view them­selves in the world.

I think that enter­prise empa­thy looks like that. How do we under­stand how peo­ple are think­ing and feel­ing? How do we look at what we’re doing and how it’s influ­enc­ing their feel­ings, and then how do we make changes to affect how they feel? That’s the XM sto­ry too.

Being cus­tomer first is rec­og­niz­ing that you have an impact on human beings, and it’s like a super­pow­er that an orga­ni­za­tion is giv­en that they can use to affect both cus­tomers and employ­ees. You want to be a super­hero who rec­og­nizes that. You want to be like Cap­tain Mar­vel. You want to use those pow­ers effectively.

Ann Marie: Right, exact­ly. If your employ­ees are not feel­ing con­fi­dent or appre­ci­at­ed, that will show.

Bruce: Think about an employ­ee who doesn’t get the skills that they need to do the job. Like you said, that per­son doesn’t feel appre­ci­at­ed. Then we come out with this big pro­gram about how we’re going to be great to our cus­tomers. You can already pic­ture the atti­tude of that employ­ee: ​“Yeah, right. I’ll go out and treat the cus­tomer well. Sure.”

Ann Marie: You didn’t sur­prise me with your answer, but I think it’s a good one. I like your break­down of empa­thy, as well. I agree with you that’s become a buzz­word that’s almost lost its mean­ing. But you pre­sent­ed a very tech­ni­cal way of look­ing at it that’s real­ly helpful. 

Bruce: That’s been my career, even when I was at For­rester for 12 years. We take con­cepts and put togeth­er a sim­ple break­down of the ele­ments of the con­cept. It’s hard to learn about a con­cept that is ill-defined. It’s eas­i­er to learn when we break it into three or four elements. 

Ann Marie: Why is it impor­tant for orga­ni­za­tions that have been focused heav­i­ly on the oper­a­tional man­age­ment side to under­stand and adopt Expe­ri­ence Man­age­ment practices? 

Bruce: I’m going to give you Bruce’s view. If you think about the his­to­ry that got us here, SAP has been a big part of bridg­ing tech­nol­o­gy and oper­a­tions. We’re almost to the point where tech­nol­o­gy and oper­a­tions cov­ers the entire enter­prise. It also con­nects to cus­tomers and employ­ees and sup­pli­ers out­side the enter­prise. We’re now all con­nect­ed through tech­nol­o­gy and process.

This is why I think XM will become so impor­tant for the next cou­ple of decades. The entire sys­tem has been built as if the tech­nol­o­gy and the process­es are the pri­ma­ry ele­ment and that human beings are mere­ly there to par­tic­i­pate in those pre­de­fined oper­a­tions. We’re see­ing more peo­ple now under­stand the impor­tance of the human being — that human beings are not just cogs to par­tic­i­pate in a set of process­es and tech­nol­o­gy. They are, in fact, the focal point of all of it, whether they’re cus­tomers or the employ­ees who par­tic­i­pate in it.

We’re shift­ing to say, OK, we’ve done a good job of under­stand­ing and instru­ment­ing the oper­a­tions, but we haven’t done a good job of under­stand­ing and instru­ment­ing the human expe­ri­ence side of things. It’s not that we should stop focus­ing on our oper­a­tions and focus com­plete­ly on XM. This is just a nat­ur­al evo­lu­tion to improv­ing our operations.

Ann Marie: What’s the risk of not invest­ing the time in under­stand­ing the human side of your organization? 

Bruce: Monop­o­lies are break­ing down. Prod­uct life cycles are short­en­ing. Cus­tomers are get­ting more demand­ing. The mar­ket envi­ron­ment is requir­ing us to say, how do we under­stand and adjust to the cus­tomer landscape? 

Ann Marie: Which of the three major areas — cus­tomer expe­ri­ence, employ­ee expe­ri­ence and brand expe­ri­ence — do you think has the most poten­tial to dri­ve com­pet­i­tive advan­tages for SAP customers?

Bruce: XM is a fab­ric that runs across your busi­ness. For dif­fer­ent com­pa­nies, this answer will be dif­fer­ent. If your com­pa­ny needs to dif­fer­en­ti­ate its brand, then it’s going to have to focus on the brand part of expe­ri­ence. If you tend to be a cus­tomer-first orga­ni­za­tion in your com­pet­i­tive envi­ron­ment, that’ll be it.

If we think five or 10 years out, the min­i­mum lev­el of XM across all of those is going to be so much high­er than it is today. It’s not going to be a ques­tion of, do you adopt brand or cus­tomer prod­uct or employ­ee expe­ri­ence? It could be, to what degree do you invest in it? I can’t believe that any com­pet­i­tive com­pa­ny won’t be bet­ter at all three of those expe­ri­ence areas in the next five years.

Ann Marie: If some­one is build­ing a busi­ness case to prove to lead­er­ship that XM is dri­ving suc­cess, what are the met­rics they should be look­ing at or bench­mark­ing them­selves against? 

Bruce: Ulti­mate­ly, I think you mea­sure XM suc­cess by busi­ness suc­cess. The idea of XM is that it’s the crit­i­cal lever in achiev­ing those busi­ness goals you’ve always had, not to cre­ate a sep­a­rate and dis­tinct score­card for how you run your busi­ness. You can ask anoth­er ques­tion. To what degree are we under­stand­ing the areas of expe­ri­ence on the way to improv­ing our busi­ness? There are a lot of dif­fer­ent mea­sure­ments. NPS is a pop­u­lar one. It’s valu­able in some places, not valu­able in oth­ers. How do you pick the right met­rics? Which ones do you use? How do you link them together?

This is why I think XM is the next lev­el of enter­prise trans­for­ma­tion. We’re not say­ing XM is a sep­a­rate depart­ment. We’re not say­ing we’re going to add a sep­a­rate stack and a sep­a­rate depart­ment for that stack. It will require some new skills, but, ulti­mate­ly, XM infus­es across every part of the business. 

The HR depart­ment needs to under­stand XM. The cus­tomer suc­cess and cus­tomer ser­vice orga­ni­za­tion need to under­stand it. Finance does. Every­one. It’s going to make every­one bet­ter at what they do. We’re help­ing orga­ni­za­tions get there. If we can con­tin­ue to take these tools and capa­bil­i­ties and embed them in SAP sys­tems, if we can auto­mate a lot of the process­es like rout­ing data and infor­ma­tion, and if we can look at best prac­tices in arti­fi­cial intel­li­gence (AI) mod­els so that you don’t have to learn things that are there for you auto­mat­i­cal­ly — which is what we’re work­ing on — then it gets eas­i­er to adopt good XM practices.

Ann Marie: Who should be respon­si­ble for mak­ing sure that XM is infused through the orga­ni­za­tion? Do you need to bring a new type of role in or extend that respon­si­bil­i­ty through an exist­ing role like a CMO or COO?

Bruce: Great ques­tion. For me, it’s eas­i­er to break apart the notion of trans­form­ing into a mode or oper­at­ing in a mode. The first part is how do you trans­form? How do you change the busi­ness to adopt more XM capa­bil­i­ties? That requires a leader who’s focused on trans­for­ma­tion. I’m not wor­ried about the title. Lots of titles can work. But if you’re going to adopt any­thing across the enter­prise, you need senior peo­ple who are ded­i­cat­ed to dri­ving that.

After it becomes more main­stream and more embed­ded in your orga­ni­za­tion, then the ques­tion is how do you oper­ate it? Ulti­mate­ly, you may not even need any­one with an XM title at that point because it should be just part of your operations.

Ann Marie: That’s one of the rea­sons why I think it’s so hard for cus­tomer expe­ri­ence ini­tia­tives to suc­ceed. Because it does cut across the orga­ni­za­tion and it’s often not one leader’s domain. 

Bruce: I want to push that think­ing even more because we have visions of mak­ing XM even eas­i­er than that. Let’s go back to empa­thy for the cus­tomer. How is the cus­tomer feel­ing and think­ing? As an indi­vid­ual employ­ee, what is the thing that you’re doing in this sys­tem that’s affect­ing that? You can give employ­ees a pri­or­i­ty list for the things that they are doing in their job that affect how the cus­tomer feels along with the changes and deci­sions they can make to improve what the cus­tomer experiences. 

The vision around XM is not just a score­card of met­rics, but how do we put these insights about the effects of their actions in the hands of peo­ple across the orga­ni­za­tion. We want to auto­mate those insights and embed them in their nor­mal oper­at­ing sys­tems so employ­ees don’t have to go look for it. If what we’re giv­ing you is the tools to under­stand and make deci­sions, then it makes no sense for these tools to be in a sep­a­rate appli­ca­tion from how you run the rest of your business.

Ann Marie: Under­stand­ing the con­text for where these insights came from and what you can active­ly do to change the results for the bet­ter is key. That makes it eas­i­er for lead­er­ship to guide employ­ees and for employ­ees to know the two or three things they can do dif­fer­ent­ly to move the nee­dle for customers. 

Bruce: Exact­ly. Trans­late it into their words, their deci­sions, and what they do day to day.

Ann Marie: What are some of the prac­tices that the lead­ers in cus­tomer expe­ri­ence are doing that stand out to you?

Bruce: We’re still in the very ear­ly stages of com­pa­nies com­plete­ly adopt­ing XM. This goes back to your ques­tion about who leads this area. Espe­cial­ly ear­ly on in a trans­for­ma­tion, you must be com­mit­ted to over­come the resis­tance to change. The ear­ly lead­ers are going to be peo­ple who see the vision, even if the real­i­ty isn’t exact­ly there today. 

Let’s say we can get employ­ee feed­back through employ­ee stud­ies. First stop is using that X‑data to under­stand employ­ees bet­ter. We can under­stand, are they hap­py? What’s dri­ving them to stay loy­al or not? Then let’s look at the life cycle of an employ­ee. We’ll be able to trig­ger insights about how they’re feel­ing and think­ing at dif­fer­ent stages in their career with us. We can tie that to our recruit­ing data­base to under­stand where we recruit­ed, how we recruit­ed, and sud­den­ly we can have a pic­ture of not just whether our employ­ees are hap­py or not, but what are the recruit­ing deci­sions we make that lead to acquir­ing employ­ees who thrive, who are loy­al, and stay with us?

We start to have an amaz­ing view that we’ve nev­er had before. Lev­el one, let’s under­stand the peo­ple. Lev­el two, let’s under­stand the peo­ple inside of the sys­tem in which they live and more about who they are. We can make dra­mat­i­cal­ly bet­ter deci­sions because we have dra­mat­i­cal­ly more infor­ma­tion to work with.

Ann Marie: I think it’s going to be a leap for some orga­ni­za­tions to acknowl­edge the impor­tance of the employ­ee expe­ri­ence. HR is gen­er­al­ly viewed as a cost cen­ter. But hav­ing the wrong employ­ees or not being able to retain good employ­ees costs busi­ness­es a lot. 

Bruce: We talked ear­li­er about the notion of human cap­i­tal. Human beings are the most impor­tant asset and the crit­i­cal com­po­nent of any sys­tem. HR lead­ers should be think­ing about their role in engag­ing employ­ees and not just focus­ing on the oper­a­tional day-to-day of hir­ing, train­ing, pro­mot­ing. and fir­ing employ­ees. If I were an HR leader, I would be on this so fast because it’s an oppor­tu­ni­ty to become even more strate­gic among your peers and to raise the vis­i­bil­i­ty of your entire orga­ni­za­tion. For every HR leader who reads this, think about the next per­son you hire and make sure that per­son has an XM mindset.

Ann Marie: You can get the data you need to tell this sto­ry with Qualtrics, as you described in the exam­ple of align­ing employ­ee sat­is­fac­tion with employ­ee life cycle infor­ma­tion. You can make a case that your orga­ni­za­tion may be los­ing sig­nif­i­cant sums of mon­ey each year because of high employ­ee turnover — Gallup esti­mates that loss at one and a half to two times the cost of that employee’s salary. 

Bruce: Hope­ful­ly, some of this data will start to tell that sto­ry and bridge the gap for the C‑suite so that they can make smarter deci­sions about treat­ing their employ­ees as a resource. It’s in the name, human resources, but not always viewed that way. 

Ann Marie: As our mem­bers start to learn about Qualtrics and XM, what are some quick wins that Qualtrics could offer to help them make a busi­ness case for it?

Bruce: Every SAP cus­tomer can think about the peo­ple that they’re touch­ing with their busi­ness process­es, whether they’re cus­tomers, employ­ees, or finan­cial ana­lysts, and ask the ques­tion, ​“If we under­stood some­thing new about this indi­vid­ual, how could we dra­mat­i­cal­ly change and improve what we do?” Look for that one use case. Don’t get over­whelmed by all the big grandeur and the keynotes. Think about what’s the one deci­sion that could help you do your job so much more effec­tive­ly through a new com­bi­na­tion of insights. That would be my recommendation.

Ann Marie: Thanks, Bruce, for intro­duc­ing us to the XM mind­set and how Qualtrics fits with­in the SAP prod­uct stack. 

Reg­is­ter today for ASUG­FOR­WARD, our vir­tu­al expe­ri­ence June 22 – 25. You’ll be able to exchange ideas and gain prac­ti­cal infor­ma­tion from oth­er SAP cus­tomers, includ­ing those solv­ing chal­lenges in employ­ee expe­ri­ence and HR.