The ghost of Anthony Lye presided over Oracle OpenWorld’s third-day customer experience, or CX, keynote. For CRM and related things, it was the moment I’d been waiting for. Lye is in robust health as far as I know, but he has been gone from Oracle for about a year. He was the architect of Oracle’s CRM strategy that resulted in the acquisitions of RightNow Technologies, ATG, Endeca, and other brands that the company spent billions on and consolidated into its CX operations.
Lye’s fingerprints were all over the keynote script, ably presented by David Vap, who made a kind of case for why social media embedded in CRM has become or is becoming standard equipment for any company aiming to access 21st century marketing and sales.
Vap updated some concepts about customers deserting vendors when vendors can’t meet their needs — 26 percent now post negative comments about vendors, 86 percent stop doing business after one bad experience, and 69 percent of employees are not actively engaged with their jobs.
While Vap’s effort was intended to present a brief for social’s inevitability, I felt it was more of an indictment of business as usual — of simply trying to apply social Band-Aids to what are fundamentally cultural problems in many corporations today. It was like looking through the wrong end of the telescope.
The corporate culture is still too mired in a manufacturing age — the build-it, ship-it and collect-the-money model untouched by things like subscriptions and mobile technology — and Oracle’s approach to it all seemed to me to be a social overlay on fundamentally broken business processes. As a strategy it works because it offers sinners salvation without asking them to repent. Unfortunately, they keep sinning.
What was missing, to my way of thinking, was the customer. There was little acknowledgement that amending the corporate culture and the business model starts with asking the customer — not once, but throughout the lifecycle — what do you want and how are we doing? It was alluded to in Vap’s talk, but presumably Oracle doesn’t have an app for that, only a methodology, so it didn’t get the attention it deserved.
A big tell for me was Oracle’s reliance on what I think is one major analyst firm’s infinite loop customer lifecycle. The parts of the lifecycle include Need, Research, Select, Purchase, Receive, Use, Maintain and Recommend, which brings us back to Need. I much prefer the lifecycle promoted by GetSatisfaction and some other social vendors, which uses only six stages: Discovery, Evaluation, Purchase, Use/Experience, Bonding and Advocacy.
The first lifecycle aims to provide vendor side solutions for every step — with the possible exception of Advocacy, which is inherently customer side. It is neatly contained by the vendor and its presumed use of customer experience notions.
The reason I like the alternative better is that it admits that the vendor is not in control and actually puts the customer in the center of the model. It admits that the customer is in control from the beginning, leveraging the information resources of the Internet and social media to conduct a purchase process largely free of vendor influence.
It’s the second half of the lifecycle, the back nine of the relationship, where social shows its stuff in this model. Rather than deliver a product and wish the new owner luck, the second approach continues to leverage social leading up to the most critical part of business today, bonding.
Vendors may mourn the fact that they can’t control customers as they did back when they controlled information flow, but they’ve made too little progress on the back nine in understanding that bonding is not only the new black, but also the new everything.
Without bonding you never get to recommendation, which is a tepid form of advocacy, and without either you spend more than you should attracting and maintaining customers at a time when the costs of those activities eats into margins in a nontrivial way.
For all that, it seems that Oracle might be doing well enough with its customer experience strategy, at least in Europe. It was interesting that the major use stories came from Tesco, a large retailer and grocer — and everyone’s favorite Lego. The presenter from Lego showed that he really gets it and told several stories about customer engagement, about being in the moment with the customer, and ultimately about customer bonding. Oracle needs more of that.
Had Lye stuck around, I wonder if he would have been able to turn the ship from a culture of layering technology on old business processes to one that embeds a customer culture into the technology. That’s not a fair question, because everyone moves on and what remains ought to be the culture that drives the organization forward.
Oracle has some amazing tools and the ears of very powerful people in IT across the world, so I am not concerned about it getting its social messaging right eventually. They haven’t been at it very long, after all.
There were many bright spots at Oracle OpenWorld — don’t let this rat hole I’ve fallen into give you the wrong impression. Nearly everyone I interact with said it was the best run thing in years, and much credit for my little part of that experience goes to Susie Penner for her tireless efforts to give us access to Oracle executives.
There was also the little matter of the America’s Cup, which I wrote about last time with regard to analytics. I have had a ringside seat to some of the comings and goings behind the scenes over the last couple of years, and I have to say that while many people were miffed that Larry Ellison played hooky from a keynote to root, root, root for the home team, I think he made the right move. OpenWorld happens every year; America’s Cup on your boat and in your backyard — not so much.
This week Zach Nelson, CEO of NetSuite, a.k.a. Larry’s other company, took over the Marc Benioff chair as guest antagonist but given the relationship between the companies the vibe was more sedate. For instance, no one went to the talk at the Lam Theater in Yerba Buena Gardens wondering if Nelson would be controversial or if he would utter the words, “We come in peace,” as Benioff once had. That much was a given.
Nonetheless, Nelson served roughly the same purpose as Benioff; he was the emissary from the cloud. He functioned as a third party thought leader pointing off in a future direction that Oracle itself could not for various reasons. Nelson’s direction and his talk cemented one of the key elements of cloud computing for large enterprises contemplating — what to do about the growth of increasingly expensive and hard to maintain ERP systems. In an era where data and decision-making are continuously being pushed down the chain of command conventional on premise ERP has a flexibility problem and that was the subject of Nelson’s talk.
For at least the last year various vendors have been talking about their two tier strategies in which they provide a second layer of ERP support or they cooperate with other vendors to do so. Nelson used his time to describe the advantages of using a product like NetSuite in a variety of ways that demanded a second tier of ERP.
For instance, a large multi-national company might use a second tier of ERP systems to capture local or regional data, convert currencies and adhere to local regulations before rolling the results up to corporate in a more tidy bundle. The two tiers could in practice be all NetSuite but Nelson’s point was to also support heterogeneous environments in which Oracle or SAP might be the corporate standard.
Finally, an question that is on lots of minds during a merger, acquisition or sale of a division is what to do about the financials. I have to confess that this is not top of mind for me but I can understand how it can be for the principals. Nelson’s point is that his product, by virtue of its cloud residency, can spin up a company very quickly and enable the separation or merger as the case may be.
The two tier strategy is a happening thing and I expect that we will hear more about it over time and not just from ERP vendors. Much the same argument could be made for front office conversions. As multiple conventional CRM systems begin to age out we might see SaaS CRM vendors trying to ease the transition for their own products.
Finally, two tier provides other benefits to companies such as limiting the growth of conventional ERP and initiating a transition that will move some to the cloud eventually and away from big ERP systems. That’s what Oracle can’t say on its own because as much as it would like to surround SAP systems with NetSuite and eventually convert them, it would not like to see the same thing happen with, say, Microsoft ERP surrounding and ultimately ejecting Oracle from an account. NetSuite has an inside track right now because it runs a complete Oracle stack which will make conversion easier while keeping it all in the family.
Zach Nelson’s talk was a success. He presented an appealing vision of ERP in the cloud and for that I think it’s a lock that he’ll be invited back.
All right! Recess is over! If you went to Dreamforce last week you can be forgiven for taking a kind of victory lap in your head today because it was a truly great experience, besides if you are like me you are still tired. One reason I think so many people like Dreamforce is its relentless focus on the future and on what will likely become standard practice in the not too distant future. But also, if you went to the keynotes from M.C. Hammer to Colin Powel to Richard Branson to Tony Robbins, you left San Francisco with a certain “lightness of being.”
However, if you are an analyst you need to put all of that behind you and get ready for Oracle OpenWorld (OOW), which promises to be a barn burner for its own reasons. Same city, same Moscone Center, same closed Howard Street, similar large crowd — where Dreamforce was all about the social enterprise, OpenWorld is about a lot that might not be so clearly connected. There’s hardware and operating systems and then software for the back office, front office, databases, middleware, and development tools. There are things I’m leaving out too like the America’s Cup. At OOW Oracle will provide a glimpse of its own into what the future looks like for the enterprise and in some ways it’s very different from what Salesforce is talking about and in some ways they are similar.
This is not to say that one vision is less good than the other, far from it. The competing visions reflect different world views and different realities. For instance, while Salesforce approaches things from a clean slate perspective, Oracle takes the view that what it introduces has to work with what delivered before. You can see this in its disciplined approach to supporting customers of the companies it bought way back in 2005.
Companies like Siebel and PeopleSoft whose products are getting long in the tooth and are prime targets for Oracle’s new offerings that are based on its platform called Fusion. You may recall that Fusion went GA (that’s general availability, not the mid-night train), more or less, at last year’s OpenWorld but it hasn’t exactly set the world on fire and there are persistent rumors that the stuff doesn’t work very well or that it requires a phalanx of consultants to make it do its tricks.
The big hurdle for Oracle therefore will be to convince the assembled multitude that Fusion is real and that the path to the future goes through the intersection of Fusion and Big Iron.
Speaking of big iron, last year the company rolled out some additional gear to complement its Exalogic computing devices. It seems this family of hardware is built and optimized for very big jobs involving terabytes of data gazillions of users. That’s exactly the kind of stuff the growing cloud computing movement might gobble up. Currently data centers are masses of commodity servers in racks running feverishly but without a layer of sophisticated management that would optimize their utilization and reduce costs.
There has been an interesting series of articles by James Glanz here and here in the New York Times over the last few days focusing on the power consumption and pollution caused by data centers. The pollution comes from diesel generators periodically fired up to test the centers’ ability to withstand a power interruption. The consumption is gargantuan.
But a bigger question, for which there are ready answers, asks why so much power demand? Part of the answer lies in how many companies are avoiding the necessary virtualization that will make the cloud much more efficient and sustainable. According to the Times and backed up by McKinsey & Company, which did the analysis, conventional data centers run many CPUs and disks at much less than capacity in part to cater to the urban myth of the need to keep one company’s data separate from another’s.
You’ve heard me on this before using the metaphor that we comingle our funds in banks and overlay the pool of deposits with metadata like account numbers and statements. Why are we resisting do this with data? Companies like Salesforce are already doing the same virtualization in the cloud and Oracle has an opportunity to strongly support virtualization and point to a more sustainable future.
I’m going out on a limb to say yes. Maybe it won’t happen right away but keep in mind that two or three years ago Larry Ellison ridiculed the cloud and now that he has modern hardware and software he’s a big proponent. The next logical step would be to endorse the Exa-hardware as a sustainability tool for a power hungry planet. I’m looking for some sustainability messaging from Oracle and it could even happen.
This is not a digression. Sustainability is not alien to ideas like mobility, cloud, social and analytics, you can’t separate them. I think if Oracle wants to maintain its leadership position with many of the largest companies in the world, it needs to put a stake in the ground and become a thought leader here. The next decade in IT won’t be like the one that preceded it and if Oracle simply comes out with a grocery list for replacing old hardware and applications with more modern stuff it will be missing a great opportunity. At the end of the day people go to these conferences looking for new ideas and things they haven’t seen before. That’s what I’ll be watching for.
Ahh, what a difference a good night’s sleep makes. The Greeks are still threatening default on their bonds, the economy is still in the loo, the major stock indices are teetering on a bear market precipice and Marc Benioff is still going to speak at Oracle OpenWorld or at least next door. But there is some clarifying news.
First, the guys at Oracle can claim that they didn’t cancel Marc, they simply moved his talk to Thursday. Unfortunately, Marc is getting on a plane this afternoon to go on sales calls back east (The man still visits customers and asks for the order. Not making any comparisons, just sayn).
The trip was planned for weeks according to my sources at Salesforce so there was no way to reschedule. I am sure that was communicated when Oracle offered the choice 8 am slot on Thursday morning instead. It’s sort of like saying, no, your vacation was not really cancelled, it’s just been rerouted to Siberia.
There’s been some good analysis by Larry Dignon suggesting that the audience is being played and I think there might be some truth in it.
Last year, if you recall, there was a minor contretemps in the press between Ellison and Benioff over cloud computing. Larry had introduced his compute server, Exalogic, and Marc was deriding it as a cloud in a box. “Beware of the false cloud,” he said. We all laughed and reported all of it. Larry got coverage, Marc got coverage and it was all good for business.
I am sure this was not collusion, just two guys who know each other’s moves and how to play a certain game. This resembles improvisational comedy quite a bit or maybe it is real life imitating improv. Here’s how it works — two funny people can riff on an idea for a long time without ever having a script by knowing a simple rule or two.
The first is be funny and the second is always say yes. In other words, regardless of what the other comedian says, accept it as valid and build on it, just never say no, I don’t think so, and the sketch can go on for a long time.
Don’t you think?
Like many human activities improv resembles an arms race with each iteration ratcheting up the stakes. Start with an insult, end with a war. Perhaps. There are some grains of truth in all this but as with improv, it is hard to determine how much.
For certain, Larry’s talk on Sunday was a train wreck panned by even the mainstream press. Was there concern that Marc would upstage Larry in his own venue? I believe Larry speaks this morning also. Marc will certainly talk about cloud computing and software and deride Oracle’s hardware despite the obvious fact that at the end of every cloud rainbow there is not a pot of gold but a server farm.
On the other hand, Oracle is late to the game with its Fusion products that would give them a whole cloud story. I sat in a briefing yesterday with nine IT executives and CTOs of companies that were in the Fusion beta program. We couldn’t report names of companies, but they exist and appear to be happy. That’s the state of Oracle’s newest cloud software though certainly products like CRM On-Demand have been around almost as long as Salesforce. Not to worry though, I think Oracle has made excellent progress, as I relate here, in the two years since Larry first derided cloud computing at the Churchill Club.
At any rate, the Larry and Marc show will go on today. It will be great theater and, like great improv, there will be a grain of truth in everything said by the participants.