Communities

  • January 13, 2010

    • So the news is that Salesforce.com is raising five hundred million dollars so that it can go on a buying spree.  Half a billion isn’t what it used to be but it can still buy a good weekend in Vegas or a nice stable of emerging technology companies.  What would I do with that much money?  Assuming Vegas is off the list, here are a few ideas.

    First things first: Why borrow that kind of money when you have about nine hundred million bucks on your balance sheet?  The question answers itself.  You borrow when you can get money at attractive rates and the best time to be a borrower is when you can walk away from a middling deal.  In my humble opinion, they’re borrowing the money because they can and because coming out of a recession is a nice time to pick up some bargains.  A bargain here would be an emerging company with innovative IP and a weak balance sheet.

    So what are they likely to do with the cash?

    Let’s digress for a moment.  Seems to me that CRM is in need of a makeover.  The economic drivers that I think will be driving business in the next two decades include high and dynamic energy and transportation costs, mature markets and increasingly savvy customers who will not suffer fools.  Companies that expect to be competitive in those conditions will need different and better business processes and the software to support them.  As configured, CRM today gets C’s and D’s when examined against those economic drivers.

    First, I would buy technologies that enable a company to substitute social awareness for transportation.  As transportation becomes more expensive and business people travel less, the options are to not do business or to find other means.  I am betting we’ll choose business by other means and that leads to awareness over transportation.  CRM gets a D in awareness so far and that needs to change.  There are enough emerging companies getting close to figuring out awareness in a business context and I’d be a buyer in that market.

    Then I would look at the community side of social media.  CRM has been chasing outbound social media with the ardor of a superannuated sophomore with mixed results.  It’s been a one-way street so far and frankly, I am not sure if outbound social media companies know how to dance with CRM.  Inbound or community oriented social media has been another story.  Inbound companies have ignored CRM preferring to think that what they do is different.  It ain’t.  I’d look to buy an inbound community company and take the time to establish the business process support that will make one plus one equal fourteen.

    Then there’s video, VoIP and audio.  These technologies offer some great opportunities to CRM but they have to scale and come down a big learning curve pronto.  CRM has to have a native facility for making three to five minute videos on the desktop — with or without people but with narration and other sounds.  They used to be called commercials; we’ll find another name for this narrow cast cousin.  I’d buy some companies in these areas more on speculation at this point but I would still buy for the experience value.

    As part of the foray into video we should include a company or technology that supports Web based meetings.  When jet fuel hits eight or ten bucks a gallon (Can you guarantee it won’t?) user groups, training sessions and annual meetings just to name a few meeting types, will migrate to the Web.  It will be a good thing because it will save customers on the costs of travel and enable vendors to hold more rather than fewer big meetings.

    Another thing to keep in mind is that Salesforce is not exclusively a CRM company any more.  As a platform company, they need to constantly be mindful of the need to have a well-stocked platform containing all of the tools that business application developers of the near future will need.  Given the economic drivers you can bet that transaction oriented CRM or CRM with a few social refinements will not be enough.

    This is not a complete list but like Mark Twain said about a thousand lawyers chained together at the bottom of the ocean, it’s a good start.

    Published: 14 years ago


    Finally, Paul Greenberg’s new edition of CRM at the Speed of Light hit the streets last week and with it my description of him as our Walt Whitman remains in tact.  To promote the continuing franchise the fourth edition’s cover has the same design as the third edition but with a different color scheme.  But that’s about the only similarity between editions; everything between the covers of edition four is new.

    This time, Greenberg’s sub-title tells us he’s focusing on “Social CRM Strategies, Tools, and Technologies for Engaging Your Customers.”  That’s a mouthful worthy of the more than 600 pages he dedicates to the task — and that doesn’t even count the chapters that are available only online.

    Before we go on, let’s have a moment with the truth squad.  Paul Greenberg is a friend and he graciously invited me to make a few very small contributions to the book, so my discussion here might look to some like self-promotion.  If that’s how you think then you might want to go rearrange your sock drawer.  If you read on just know that that there is a good deal of agreement between Paul and me as well as many of the analysts that follow the market.  That’s not to say we all think so much alike that if you sent ninety-nine out of one hundred of us to a Maoist re-education camp it wouldn’t matter.  It would.

    CRM at the Speed of Light has always occupied an important niche in our world.  It continues to be the source for authoritative definitions and explanations of what CRM is and where it is going.  If you are within the CRM inner circle you might want to conclude that definitions and categorization are no longer needed.  But if you talk to real people trying to make sense of the world through a CRM lens you quickly discover the great service this book provides.

    The centrality of the customer and the importance of “relationship” over “management” — two criticisms from CRM’s past — are noted and form the motive force of this book.  Greenberg’s gift to us is to take a four-dot-oh look at a two-dot-oh market and to help us see where it’s all going.  Paul covers ideas like Social CRM and customer experience with equal ease.  And while we might disagree on some of the specifics of how these things relate to the CRM market at large (see I can be independent) it all coheres.

    One of the greatest assets of the book is Greenberg’s style, which is intelligent and conversational.  In fact, conversational is a poor word choice because Paul’s natural chattiness comes through the page and into your mind so that at times you forget you are reading rather than listening to a smart and entertaining monologue.

    CRM has become a big topic.  It’s roughly a fourteen billion dollar market and the nuances in even what companies call it and how vendors address the market can be significant.  Nonetheless, Paul does a good job of building categories and running down the differences until they make sense.

    A good example is chapter nine on user communities.  We think we know what communities are and in a folklorish way we do but Greenberg does a great job of teasing apart the differences as well as the pros and cons of managed and unmanaged communities, outcome-based social networks and a lot more.  But even more importantly, he then dives in and advises us about managing communities and offers important do’s and don’t’s.

    In trying to categorize this book I was left with the feeling that it most resembles a text from medical school that details the causes and cures of diseases one after another.  Few people read those books straight through but use them as reference guides, for example, when a young doc might be trying to nail down a diagnosis.  I expect that it will end up on the book shelves of many mid-level executives and even their bosses who want a good reference to enlighten them about the technologies that can help them run their businesses.

    But CRM at the Speed of Light, fourth edition, is also a book that you’ll want to read every page of if you have an abiding interest in the subject.

    Published: 14 years ago


    One thing that impressed me about Dreamforce was Salesforce’s ability to be creative, to invent something completely unexpected to announce in Chatter.  Whether Chatter will be any good when it is released next year is debatable but Salesforce did what it was supposed to do in bringing out a big new idea for its assembled customers.

    Most importantly, the Chatter announcement made a mockery of the attempts by SugarCRM and Microsoft to anticipate and respond.  I think those efforts fizzled because they were largely expecting a more conventional set of announcements than they got.

    It was like baseball.  If you’re a pitcher and you have a batter with a 3-2 count sitting on a fastball you might throw one but it might be better not to, instead opting for a breaking ball.  If you have to throw the heater you want to make sure it’s  just out of the zone to make the batter question whether to swing or take what ought to be ball four.  Lots of good hitters end up striking out in that situation because they’re momentarily frozen.

    Some of that happened at Dreamforce and parenthetically, I have to commend Oracle for wisely deciding not to anticipate Salesforce’s announcements with a truth squad though they certainly could have.

    So now Salesforce has this new, new thing to explain and about six months to do it.  I have to say that the idea both new and not new and getting your head around it might be challenging, I know it was for me.  Let me try again to describe it now that I have slept on it a bit more.

    Think about social media, specifically Twitter and Facebook for they are the closest analogies.  Social networks operate on three key elements, according to Salesforce and I have no strong objections to this model.  The elements of success in social media are people, content and applications.  Social media are only valuable if lots of people use them (the network effect) and they use these media to get content or to use applications.

    That’s fairly abstract but think about Facebook whose content is supplied by users who provide all the details of their lives including photos.  Facebook is the largest photo sharing site on the internet, I am told.  So notes about your life and photos, that’s pretty much the content side.  The other bit is applications.  We use applications on Facebook to enrich our experience and to get more information and content from others.

    The people at Salesforce remind me that the content and applications are only valuable if they are in circulation, if they are used by members.  Like a relay race, it doesn’t matter which person is running, what does matter is how fast the baton moves around the track.  In the same way, if information is static because it is stored on a network drive somewhere and few people know about it, then it has much less utility than if it was being used by many people.  The more people that use applications and data within you company to do business the more value they have.
    Now, where is all this information and where are the applications.  Of course they are in your in-house repositories, in the data center.  But there is also information stored in people’s heads that has potential value such as the deep backgrounds of employees, their skills and things they know that may not directly impact their jobs.

    But what if that information too could be surfaced and stored for easy applicability?  In Chatter all of that information is easily rendered as well as information about information and all of it can be subscribed to.  In an earlier post I offered the idea of subscribing to the data of a sales forecast so that when it changes the subscriber is notified.  It’s not much different from becoming friended on Facebook – you get updates when something changes on a friend’s page and it is your decision whether or not to use it — that’s what makes social media work.

    Social media is like a big exception machine notifying you about the deltas in life.  It’s management by exception and it gives you the ability to keep up with a lot without devoting much attention to the minutia.  If you think something is important you post it and your friends or followers have the discretion to decide if it’s worth absorbing.

    This model could do a lot for business if implemented properly but there are many if’s associated with that statement.  The if’s will begin to be filled in by the first strategic use cases and with them we should begin to get an idea of best practices and all the rest.  That will be extremely important.
    Not long ago I read Niall Ferguson’s “The Ascent of Money” in which there was an intriguing quote from George Soros, the billionaire financier and philanthropist.   Soros said, “Every bubble consists of a trend and a misconception that interact in a reflexive manner.”  But what are product innovations if not bubbles that attract attention and money for a time before the bubble bursts and we move on to new bubbles, new paradigms?  The experience economy was such a bubble and customer experience is its misconception.  Social media in business is a bubble too.  What will its misconception be?

    Published: 14 years ago


    Last week I was doing some research for a speech and I remembered something from a weekend stint at a cooking school that I decided to run down.  I was trying to make a point about customer experience when it occurred to me that the idea has ancient roots.

    Hospitality law is a body of law that deals with the hotel and restaurant industry and the beginnings of this large body of law can be traced to the Magna Carta.  As you might recall from high school civics, the Magna Carta or Great Charter is the first example of constitutional government and the starting point for common law in the English-speaking world.

    The charter was written in the thirteenth century and delivered to the English King John in 1215 at the point of a sword to redress certain grievances nobles had with the king’s arbitrary rule.  At any rate, the document also dealt with some more pedestrian issues of law, specifically, the idea that innkeepers were sometimes conspiring with highwaymen or bandits to rob travelers.  The Magna Carta therefore imposed strict liability on the innkeeper when a guest’s property was stolen during his stay.

    As the law has evolved, this doctrine has survived and affects the rights of hotel guests relating to premises liability, property theft and personal injury.  In some countries there are also stipulations about purity of beer and wine, food wholesomeness and more.

    Common law describes the care owed to hotel guests as “ordinary care” another way to say the basic minimum that any traveler has a right to expect.  In effect ordinary care is the guarantor of the customer experience in hotels to this day.  I have always thought of the more general idea of customer experience in CRM in the same way, ordinary care.  My point is that no hotel competes today on ordinary care.  No one advertises a property as a place where you won’t get robbed or where the food is wholesome and the sheets are clean.

    So why do we make such a big deal about the customer experience in other areas?  I suspect there are two reasons — first because it’s easy and second because it might be part of human nature.  I think it’s easy because anyone can make a stab at delivering a good customer experience, after all, we are all customers at some point and we know how we want to be treated.  So extending our ideas to customers is not very difficult.  It is also easy because any oversights we make in our initial estimates can be dealt with quickly — there is a very short feedback loop in the customer experience.

    More importantly though, any other approach to innovating around the customer requires more sophisticated feedback and that feedback has always been hard and expensive to get.  If you want to know what your customers think you have to ask and the asking process, complete with surveys and focus groups just to name a couple of mechanisms, has always been time consuming and expensive.  Consequently we rely on the customer experience.

    Modern social media tools change that equation but here’s the rub.  If we go right to blogs, Twitter, Facebook and other tools that let us elaborate before listening, we won’t get very far — that’s what communities are for but when was the last time we talked about communities as social media or social tools?

    The discussion today is about how to incorporate social media into our businesses and that’s good.  But, too often it seems to me that we fly over the information gathering and go straight to getting a message out.  We don’t do anyone any favors when we take this approach and we run the risk of becoming irrelevant to our customers and debasing the tools.  We can do better.

    Old habits die hard and there’s nothing older than customer experience as an indicator of vendor success in dealing with customers.  But we’re now embarked on an era when we can know a great deal more, a time when we can infer far-reaching information about customers and what they want.  If we use social media and communities right we can know not only if the last encounter was good but how to plan the next.

    In my book, that’s the power of social media in CRM and it is driven not by the tools we use to communicate but those we use to listen.  One of my favorite ideas in this vein is Stephen Covey’s Habit 5 from “The Seven Habits of Highly Successful People:” Seek first to understand, then to be understood.

    Genius.

    Published: 15 years ago


    Salesforce.com hosted an event in New York on Monday designed to create some separation between itself and the rest of the on-demand world.  Lately Salesforce’s competitors have gone on the attack in an attempt to me-too their way into SaaS prominence by effectively commoditizing some of the more successful aspects of on-demand computing.  CEO Marc Benioff would not sit still and watch and has instead expanded the definition in the last year. 

    Cloud computing is now the hot idea and it takes into account more than simply delivering an application to include interoperating with many other Internet based applications.

    The commoditization aspect is a neat trick and not unexpected.  Some of the gains of on-demand computing such as browser based applications and stateless computing make it easy to build applications that run on the Internet as well as behind the firewall.  Retrofitting conventional client server applications in this way gives vendors the ability to deliver some of the advantages, especially lower costs, to customers.  It also enables them to offer a choice of deployment options that range from conventional behind the firewall applications to traditional facilities management options and standard on-demand.

    In that light there is a lot to like especially if your organization does not want to jump into cloud computing just yet.  Maybe you don’t have an ATM card yet either, but I digress.

    The New York CloudForce event was designed to say that there is a lot more to this than using the Internet as the networking medium for enterprise business applications.  The program started by pointing out some of the accepted benefits of multi-tenant computing such as such as all of the technology acquisition and management services built into cloud computing.  We know what they are and they include up time, security, skilled labor and a lot more.

    To those table stakes, you can add what I have called WebNecessary applications.  By that I mean, applications or combinations of applications that support innovative business processes that either can’t be done at all, or only with great effort, through conventional computing.

    Last fall, Salesforce made a big deal about its integration with Facebook to improve the sales process.  This time, the company turned its attention to the service process and announced integration with twitter, the fastest growing social application on the Web. 

    As I look at it the integration of these products makes great sense in a service environment.  The basic idea is that when people need something they are increasingly motivated to ask their circle of friends and acquaintances for advice.  Twitter is a good bit of functionality for broadcasting your need and as the network continues expanding the likelihood that someone will see your plea and send help only grows.  But to me that’s not the important part.

    Salesforce has implemented technology that captures the help stream when it gets generated and presents it back to the vendor or manufacturer as a mini-service bulletin or candidate for inclusion in a knowledgebase.  If the solution works the vendor can make it part of the standard support offering.

    The idea of customers helping each other with advice like this is not new.  Other service and knowledgebase vendors offer similar capabilities but they tend to be tedious exercises in a more formal writing and approval process. 

    The twitter process leaves some things to be desired because it is limited to 140 characters so people who want to help with more involved support issues will need to resort to forwarding links to longer advice.  But that shouldn’t blur the importance of domesticating an easy to use and very popular social application for the needs of business.  It’s a good idea, a 1.0 idea, and we’ll see where it takes us.

    Back to New York, for sure.

    I got a lot out of the afternoon session I attended — a presentation to the financial analysts (which I am not) about the company and its business prospects.  Like the morning’s review of cloud computing, there was a bit of review but I doubt anyone minded.  Revenues are over a billion bucks, there’s almost that much in the bank, subscribers and customer numbers continue what looks like an inexorable northward march.  It was just the kind of thing to warm the heart of a financial analyst who has covered the Wall Street equivalent of Napoleon’s retreat from Moscow this winter.

    Listening to the discussions you get a sense of the scale of this company’s ambition.  CRM is a big market but enterprise business software is an order of magnitude or two greater.  Moreover, many of the enterprise business applications that will make up that market have not been designed yet or are operating in clumsy spreadsheets.

    Perhaps a natural concern on the minds of many analysts (and competitors) is how one company using a multi-tenant architecture can expect to serve this growing market.  Doesn’t scale become a limiting factor at some point?

    Salesforce anticipated the question and for the first time opened up its kimono enough to provide some insight into its architecture.  Surprisingly, fewer than 50 servers spread across three datacenters runs the whole shebang right now.  And a modest number of (it has to be said) very large database tables — about 20 — holds all the data.  Smart algorithms take care of ensuring your data is delivered in an average of 300 milliseconds with three 9’s reliability.

    Salesforce is still a young company despite its billions and its place in the market and I got a sense of that as I listened to a discussion about its finances.  Benioff said that it can take upwards of eighteen months for an investment in sales talent to provide a return.  And like any company today Salesforce tries to be appropriate in its spending— increasing it when the market is accommodating and reducing it in times like this.

    All in all the day gave me the impression that CRM is and will continue to be important to Salesforce.com.  Its recent efforts to include social media in the business processes it serves to customers is proof of that.  The company continues to grow and has its eye on larger markets that dovetail into front office computing.  If companies like IBM, Oracle, SAP and Microsoft each represent milestone moments in the history of enterprise computing, and they do, then certainly Salesforce.com is rising to that iconic status.  Its place will be secured if it can continue to convince a decreasingly skeptical audience of the value of cloud computing.

    Published: 15 years ago