Oracle launched its customer experience push this week with an announcement by co-president Mark Hurd. The new direction begins to pull together the results of Oracle’s latest buying spree in which it purchased ATG for e-commerce, RightNow Technologies for customer service and other technologies for analytics in cyberspace.
While Oracle will always draw skeptics the way a dog finds fleas, I think at least some of the new direction makes good sense but not necessarily for the reasons stated.
The big push into customer experience leaves much unsaid, especially the idea that customers are increasingly turning off vendors and their messages and seeking out indirect approaches to getting the information and products or services that they need.
The push into social media and especially analytics for gauging customer sentiment is a case in point. People have a natural reticence about revealing too much to a vendor correctly assuming that anything they say in a sales conversation might be later used against them. Fair enough. But people are still remarkably unguarded about what they reveal to their peers and hence the boom in all things social.
However, if you look at the quotes recently put out by Oracle executives they’re really still selling old style CRM with the new label of customer experience. They’re still talking about costs saved and calls avoided because those are the things that make vendors buy and it’s the vendors who are Oracle’s customers — end users not so much.
The strategy is smart because we are in an era of severe cost cutting and not simply for the usual economic reasons. First off, and I have been saying this since 2007, companies like Oracle have to deal with the fact that energy and transportation costs are escalating making it harder for vendors to visit customers at a profit as well as more difficult for consumers to visit the mall. This is the age of indirect selling for both these reasons.
But add on the idea that the economy has not grown in real GDP terms since 2008 and you see another dynamic. A whole generation of people is trying to launch into life and finding it very difficult to form households. Without household formation things like carpets, refrigerators, sofas and maybe even cars are not being bought in the numbers they would be under other circumstances.
In this age of austerity and stagnation, increasing profits to produce the illusion of growth comes from reducing overhead and avoiding margin gobbling expenses like conventional selling. So you get things like this strategy of customer experience. It makes sense to me and positions Oracle and a few other companies in a leadership position so good for them on that.
I also noticed though this curious line in a fine article by Chris Kanarkus of IDG News discussing the Oracle announcement; “Larger companies such as IBM, Adobe and Salesforce.com are also building out CEM portfolios. None of them can compete with Oracle’s breadth of technologies, [Anthony] Lye maintained.” Of course, Anthony Lye is senior vice president of CRM at Oracle and the architect of the CEM or CXM strategy. He was the guy buying up the CEM companies last year.
I found it interesting that Salesforce was lumped into the “larger companies” rubric with IBM and Adobe. Oracle and Salesforce sometimes act like two Tomcats in a cage but keep in mind that Salesforce has yet to crack the Fortune 500 though it is making strides. At any rate, this looks to me like an attempt by Oracle to set up some competitors for easy knockdown rather than something more substantial on the product front. I don’t really understand the Adobe reference and while IBM has lately made strides in CRM and analytics the efforts seem directed elsewhere.
As for Salesforce, their efforts are in the enterprise with collaboration and highly socialized applications that are increasingly penetrating new niches. The Salesforce strategy resembles Apple’s and both riff off the idea of a “Blue Ocean Strategy” that was subject of a book by the same name.
If I had to sum it up, and I do, I’d say we’re at a point in time when the market is splitting up and rather than the monolithic approach to social that we’re seen since the middle of the last decade, companies are developing specialization. So we see Salesforce focusing on enterprise IT in the true cloud, and Oracle focusing on the vendor-customer transaction while others are carving out their own niches. Yes, Oracle has a cloud strategy too as well as a hardware division.
So it’s the age of austerity, of reduced personal outreach and increasing relationships with and through machines and we now have the technologies to support the zeitgeist Eventually, growth will be back on the menu. Even Lent only lasts a short time.
Oracle Open World opens up on Sunday with a keynote at the Moscone Center in San Francisco. The annual convention will attract about forty thousand people to the Bay area and promises to be exciting and interesting on multiple levels.
This will be the first Open World post Oracle’s acquisition of computer pioneer Sun Microsystems. Last year Oracle introduced a version of its Exadata storage unit based on Sun architecture (and presumptive deal close) and with the company finally in the fold you can bet there will be more product announcements that mix hardware and system software.
I don’t know if there will be net new announcements, but Sun was the driver of the Java revolution and reduced instruction set computing among other things, so I think it’s way safe to say there will be interesting things coming out of that camp.
This is also the first year post limited release of Oracle’s Fusion architecture. Fusion, you may recall, is a platform intended to unify the many disparate applications that Oracle bought up a few years ago. It is also the platform for merging and rebuilding applications along a more or less consistent Oracle product direction. With another year of development and roll out of Fusion, there will be much more to discuss and announce next week.
There’s also cloud computing to consider. A little over a year ago Larry Ellison was caught on tape at the Churchill Club pooh-poohing cloud computing but that was before Oracle really had a dog, a pack actually, in the hunt. Now that Oracle is better positioned, and given that Oracle’s database and servers support so much of cloud computing, look for Oracle to claim credit for the sunrise — to paraphrase an old Bill Clinton line.
Then, too, you can expect the usual shenanigans from a whole host of characters and partners. Everyone in this business today is into coopetition so look for fun announcements from Dell, HP (we want our secrets back) and Salesforce.com for starters.
Speaking of Salesforce, back by popular demand (or whatever) Marc Benioff will again address a crowd at the Yerba Buena Theater just down the street from the conference. Last year’s inaugural talk was expected to be some kind of challenge to Oracle but turned out to be a very successful symbiotic and statesman-like address. Too bad too because we all waited outside in the rain for the doors to open expecting something more combustible. This year, I hope it’s a sunny day.
On the CRM front, Anthony Lye and company have been working hard all year (Sounds like Christmas and the North Pole, doesn’t it?) to advance the front office suite on multiple fronts. The CRM team has scheduled two hundred sessions for the conference just on CRM. Forget the database, Java and Sun, if you’re into CRM the conference will have you drinking from a fire hose.
Trying to register for sessions is a Byzantine process though, which uses an on-line system that looks like it was built by monkeys on crack. To keep my sanity I have decided not to register for anything but to simply show up. I have a hard copy schedule. I know this strategy might exclude me from a few popular sessions but I figure that’s what beers are for.
The real star of the show, for me, will be the city of San Francisco. It’s not a perfect place for sure, but there is a wonderful energy in the city any time and it’s triply true during Open World and Dreamforce. You walk around high on the possibilities uncovered in the sessions and accented by the environment — the hills, the cable cars, the fog, the restaurants and most importantly the indefatigably optimistic crowd of natives and visitors. Did I mention the California wines?
I digress. One week till Open World. I don’t know what will be announced because I won’t get briefed till later and then I’ll be in quarantine. So, I don’t know any more than you. But I can’t wait.
This time a little more serious. Ok?
I am a software and CRM guy so that’s the focus of this piece. Much of Oracle Open World (OOW) was table setting. It was all interesting and valuable but it was also a lot of independent data points. There was lots of cool CRM introduced for sure but it all lacked a certain coherence until the Fusion announcements. That’s not a bad thing by the way, just a reflection of the maturity level of so many products. Some interesting stuff:
Support for retailers and anyone who wants to support employees who are directly involved with customers. For example, handheld applications that bring customer information to devices in support of sales clerks. Not just the customer’s size and account numbers but things like intelligent offers and any loyalty points accumulated so that a pricing negotiation can happen on the spot. The same technology supports users on their mobile devices to do things like buy train tickets and other self-service purchases. This was not really new for Oracle but it has been improved and it looks better with each iteration.
I have several problems with the self-service example though. The demo was from the Swedish Rail Service and it showed how customers can buy travel packages and trade in frequency travel points – you get the idea. But there’s no infrastructure for this in the U.S. of A. For this application to work we need a high-speed rail infrastructure and that will take about ten years (LOL). Good thing Oracle is looking at foreign markets.
I attended the afternoon half of a Chief Sales Officer Executive Summit or some such thing on Wednesday afternoon. It was very good. Lots of high-octane sales executives from billion-dollar (or equivalent) companies talking about their success with Oracle-Siebel and Oracle CRM On-Demand and their successes. They had an economist give a quick analysis of the world economy and for a practitioner of the dismal science, he sounded upbeat. I regard this as a contra indicator of something, just not sure what.
No surprises there in the following sense. CRM and SFA are pretty mature, the biggest gains we are likely to see going forward will likely be in more enlightened use of the products by the high-octane talent. I am not optimistic in the short term for the following reasons.
Anthony Lye did a good job presenting the state of the union in SFA mediated selling today. Most people still use spreadsheets to make forecasts — letting error and unpredictability enter every time a sales manager decides to spiff up the data or apply a fudge factor. Lye’s slides showed only a tiny fraction of users had forecasts that were worth anything (i.e. accuracy rating of 90% or better) yet we keep messing with the data.
I have an idea. Rather than futzing with the data in spreadsheets, let the forecasts stand as they are and make accuracy a criterion for sales compensation. Then stand back and watch things improve. Short-term pain for long-term gain.
Ok, Oracle showed plenty of good technology (including Fusion apps as part of some demos) like that described above, for B2C segments and even more for B2B but the thing you come away with is that Oracle is really focused on the enterprise. Oracle has a lot for the mid-market user – it’s more about what you don’t buy in that case – but they really groove on the sophisticated and complex selling that goes on in billion dollar companies. They have apps that solve problems that mid-market companies might not even encounter.
For example, the Oracle deal management application takes a lot of data about what a customer has bought already, their price tolerance, the value of a deal, what other companies might be paying for similar deals and derives a statistically relevant price for the deal. This happens automagically after the sales representative has fed a few data items into the system. Management, meanwhile, had set a few parameters in the system and out pops a price that the boss will, if not love, then certainly tolerate.
Smaller companies don’t do this kind of thing much. They’re focused on closing as much business as they can at the end of the quarter. Too bad, because Lye’s slide deck included one chart that showed the 30% of companies knew they were leaving money on the table – but they were not sure how much they were leaving. Maybe there is broad applicability for deal management. Ya think?
My impression of the related sales applications is that they were best for companies that sell to managed accounts. You know what I mean, two companies have long term relationships and sell parts, components, raw food and the like to a large group of repeat customers. That’s not the only kind of business they do but it’s significant and the Oracle apps work well in that large environment.
Oracle also has some apps that I find more interesting for things like territory planning and while they got some attention in the executive summit I could have used to see more. My favorite is something that helps find the “white space” in a territory. I wasn’t familiar with the term white space until this week but now I can use it almost as much as the Governator says technology.
What white space refers to is the knowledge that a territory acts like a buffer. It can absorb only so much before it gets saturated (think of a kitchen sponge here). Once the buffer is saturated it won’t absorb more so it’s smart to know at the start of a year how full your territory is – especially if you plan to assign quotas that your people have a realistic shot at making. Ok, the white space application helps the manager figure this out by taking account of things like the target density in the territory, what’s already been sold, the average sales cycle, price points and other relevant information. That’s cool and my only critique of this and other cool stuff is that Oracle didn’t show it off enough for my taste.
These are some of the applications that separate Oracle from other SFA vendors and they represent some true differentiation. I hope they do more with these apps.
I was going to write about Fusion now but this post is getting long so the next post will be about Fusion.