Admit it, you never think about data storage any more. We used to, quite a bit. Long before the storage glut that exists today, there was already too much of it and it was hard to find places to store it. When we built software it was with an eye toward maximizing our limited storage capacities, we looked after computer memory the way thirsty people in a desert manage their canteens. Bill Gates once famously said we’d never need more than 640 kb on a computer. That was a long time ago.
Then we all got fat on data. In my lifetime a megabyte went from a million dollars to chump change. The computer I write this on has four gigabytes plus another half terabyte on an itty-bitty spindle. Storage is now just another elastic resource available for a song on the Internet.
The availability of storage has encouraged us to capture and store data about the minutest details of our lives and our business processes. For a long time vendors have captured data about keystrokes and mouse clicks, analyzing it in the hope of finding a nugget of value. This brute force approach is inelegant but it is brought to us by the ubiquity of fast and cheap storage and powerful analytics software increasingly built by out of work rocket scientists and Wall Street quants. It’s there so we use it.
I was at a conference hosted by Pervasive Software last week in which the company announced new storage and data integration products, more on that in a moment. While there, someone made the comment that data is the new oil and I think I agree. Cheap energy made possible huge economic activity driven by transportation and oil doubles as a raw material. Is data next? It already is the raw material of the digital age and it seems like collecting and analyzing data is the default answer to the question of what we do next in a variety of business situations.
Now, we already have a variety of IT products delivered as services. Everything from software to infrastructure is now available as commodity services easily accessed through the Internet. Pervasive and companies like it are talking about data as a service (DaaS) and with DaaS comes the need for data integration as a service too.
This is interesting on several levels first for obvious reasons but also because we’re watching the DaaS industry skip over its commodity and product phases only to move directly into service. It’s Joe Pine’s and Jim Gilmore’s cup of coffee from their landmark book “The Experience Economy.” You know the story — a vendor adds value to a commodity (coffee beans) through roasting and packaging and delivers to market a branded product. Then someone brews the stuff and serves it to you at a counter and it becomes a service. A third person pipes in music, gets some overstuffed chairs and mood lighting and you have an experience.
Data has become a service. I can’t help but wonder what the data experience will be but I think it might look a lot like Pervasive’s new product called Pervasive Galaxy. According to the press release “Pervasive Galaxy is a combination of service marketplace, revenue sharing, integration store and community that serves its OEMs and ISVs.” Sounds like an experience, no?
This opens up a lot of new territory in the cloud. For instance, a customer might want to use multiple SaaS applications and share data between them. That’s a reasonable objective and just as with more terrestrial applications, an integration has to be done to make the applications talk to one another. That’s where Galaxy comes in. With it vendors can write application connectors for popular packages and offer them — at commodity prices — to others in an environment not unlike iTunes or the AppExchange.
Intuit (QuickBooks) and Salesforce recently announced a packaged integration of their products aimed at the low end of the market. The glue that holds the integration together is based on this technology. Small companies that have used QuickBooks for years can slurp their customer data (Admittedly a highly jargonized technical term. Sorry.) into Salesforce and build a reasonably relevant customer target list for such things as cross and up selling.
A more robust application of the idea might seek to upload old data to generate a map of the customer base, especially useful for an organization trying to balance its sales territories or equalize service approaches. The permutations are as vast as your imagination.
Now, I can understand the attractiveness of data as a subject — it is the reason for building the above-mentioned infrastructure, which is as necessary as plumbing. But if we follow the coffee analogy noted above, then the ultimate object of the data experience isn’t simply data or clean data or even cheap and reliable data. It is the information that we derive from it. The territory map just mentioned is merely data for the data supplier just as a cup of coffee is always a cup of coffee. But in the hands of the customer the coffee can become an experience and the data becomes vital information.
My reason for this obvious statement is simple. Now that data is a service I think smart service vendors will see the importance of quickly advancing to the idea of selling information or at least aiding and abetting it. Like the four-dollar cup of coffee at Starbucks, information carries a higher price tag and there is almost no additional work.
Zuora and Salesforce.com announced today a new offering that highlights the strengths of each company and delivers new functionality to the telecommunications industry. Zuora for the Communications Industry is a solution based on the Force.com platform that handles billing, payments and customer care for telco and related industries’ customers.
This makes a lot of sense and, as often happens with Zuora, I am scratching my head wondering why I didn’t think of this. Here are what I consider the highlights.
First, there’s billing and payment for subscriptions with emphasis on the special customer relationship that is defined by a subscription. Subscribers are free to change almost at will. True we’re usually locked into two year contracts for wireless services but that’s a relatively short time and there’s no telling when this model will be vacated in favor of something more fluid. So vendors have to be ready and able to modify the relationship as a customer’s need changes. Often billing systems don’t enable enough of this because they’re mired in a paradigm — and a system — that assumes customers are on board for life, or at least decades. This presents a disruption opportunity for subscription billing providers.
Equally important, this relationship also does a lot to redefine an important aspect of CRM. Over the last few years — in concert with the social revolutions — the contact center function has been deconstructed into two constituent parts that had always been thought of together — service and support.
I think of support as helping a customer with a technical issue related to product use. Trouble shooting. Can you help me fix it? And the like. Social channels have become increasingly popular for peer-to-peer support — customers helping customers. Increasingly, support is now done through Twitter, Facebook, email and other community oriented solutions like the Salesforce Service Cloud and Lithium in a peer-to-peer setting today.
Enterprising customers even make video of service issue fixes and post them on YouTube. In fact, YouTube is so popular that it’s now the number-two search engine. Of course YouTube is not a search engine, people just use it that way and that’s the point. Support is being taken out of the vendors’ hands because customers can do it better, cheaper and faster. Vendors aren’t complaining.
Service is another matter. I think of service as the irreducible part of the vendor-customer relationship where you have to interact on some level. You can only go to the vendor when you have a billing dispute or other issue related to the core of the relationship, a peer relationship won’t do much good. Today’s announcement of a new relationship between Salesforce and Zuora makes that clear and the combination of billing, payments and customer service is spot on.
The idea has legs and telcos around the world are already jumping on board. The initial customer base includes communications vendors from several countries and continents including Canada, (Barrett Xplore) The U.S. (Open Range) and Australia (Macquarie).
This is a significant announcement for Zuora, which recently opened up its European offices, because it defines a new market and positions Zuora very nicely in the catbird seat in this market. It’s important for Salesforce too. Historically, a company like Salesforce has grown by acquisition and by extending product lines. This announcement is more of a product line extension but it’s done through developing partnerships for its existing products. Like last week’s announcement of a partnership with Intuit, Salesforce is developing new channels for its existing product as well as new ways to access them for minimal investment.
I expect to see more of this. In fact, and this is only my hypothesis, last week’s activities might offer an additional insight or market signal. Salesforce bought Radian6 for $326 million showing, as it has before, that it will buy a company for strategic advantage. Radian6 is the category leader in social media monitoring and related things and Salesforce scooped it up to bolster its position.
The same could happen with Zuora if billing and telco service becomes strategic enough and there are some interesting reasons to consider this idea. First, we’re in the beginning or middle of a replacement cycle. Client-server call center systems have exceeded their useful lives and can be replaced by a new generation of SaaS based, socialized solutions that are significantly less expensive to own and operate. Also, ten plus years ago, the wireless industry was very different and VoIP was a dream. These and other factors are potential drivers for the Zuora-Salesforce coalition.
Finally, and this has to be said, Zuora’s CEO and co-founder was one of the earliest members of the Benioff team. Tien Tzuo is a smart guy and a strategic thinker and he’s proven his chops at Salesforce and now Zuora. Zuora’s platform is Force.com too. Lastly, Marc Benioff has a personal investment in Zuora having provided some early cash. All those stars are aligned, but we’re getting ahead of ourselves. It is enough to say that the Zuora-Salesforce alliance makes sense for present reasons. We need to see how the market reacts.
Salesforce made its second major announcement of the week today when, along with Intuit, it announced a partnership between the two companies to deliver an integrated front and back office solution for small companies. Salesforce will integrate its SaaS based CRM technology with Intuit’s very popular QuickBooks. The price point for the integrated solution was not offered in the announcement.
Under the agreement Intuit will resell Salesforce CRM with QuickBooks integration that synchronizes customer data with QuickBooks and QuickBooks Online. The solution will be available through the Intuit App Center. The announcement gave no information about when the solution will be available.
Small businesses are among the last holdouts for automation technology like this and while QuickBooks has more than four million users, it is still somewhat unusual for these users to rely on CRM. Many still use spreadsheets or other manual approaches to track deals, opportunities and customers. That works for a time but every company reaches a point where manual systems break under the pressure of keeping up with growth.
You might wonder how this announcement fits into Salesforce’s overall strategy, especially since the company owns FinancialForce, an accounting package that also integrates with Salesforce CRM. According to Jeremy Roche, CEO of FinancialForce it’s a good fit. Roache said, “It’s important to note that we don’t compete with QuickBooks for deals. Our customers are typically larger, looking for an advanced financial system, with all their apps on the same platform as Salesforce, or with accounting embedded in rather than interfaced to Salesforce.”
You could have predicted that response but it’s nice to know that all parts of the organization are in synch. So Salesforce shores up its low end strategy and gains an important reseller. Intuit gets into the CRM game which is important for that company. Other vendors like Sage which has a plethora of ERP and CRM offerings aimed at the same market will be in direct competition.