Microsoft did some smart things last week when it announced its Dynamics CRM Online service. Most of the headlines will focus on the teaser rate or introductory pricing of only $34 per seat-month for 12 months. Until June, users of Oracle CRM On-Demand and Salesforce who switch will have an added inducement of up to $200 per user, which everyone acknowledges ought to go to conversion costs.
There are other reasons to be charmed by Dynamics CRM Online which we can review below but the emphasis on takeaways leads me to ask the question — is the CRM market becoming saturated? In a saturated market that’s typically what vendors do — keep the installed base happy and try to poach from the other guy.
But CRM doesn’t look saturated to me. Just last week I was speaking with a company that had built its own solution and was looking for help selecting something more standard. It is surprising how many companies like that are still out there. With big analyst firms predicting double-digit growth and many billions in sales for CRM over the next several years, I think I am in good company when I say saturation is not on my radar.
But that’s not to say that some amount of switching inducement is not in order. For instance, Greg Gianforte, CEO of RightNow, told me recently that in his area of focus, the service center, there’s good switching activity in part because many of the service center vendors and their products from the client-server era are reaching end of life. Some vendors haven’t kept up, some are out of business or taken over, and you can’t do some of the things customers want and need like social, if the vendors haven’t kept up with cloud solutions, for instance. That’s not Microsoft’s issue.
Also, Microsoft representatives have told a similar tale about aging back office systems and a shift now happening to retire older systems. So, perhaps for the first time in this cloud- and browser-based era there are significant reasons for companies to consider swapping out their front and back office systems.
But that’s all back office and service systems. What about sales and marketing? Pure SFA has never been a box office favorite with the masses. Early systems didn’t provide enough value to the end user and eventually, even managers determined that the amount of information coming from first generation SFA was lacking. But SFA has been increasingly saved by the efforts of people in the marketing automation business.
Marketers were arguably the first in the front office to see the promise of social media and to take advantage of it. The result has been a steady stream of better leads from techniques like lead nurturing and various customer analysis schemes which are supported by vendors like Eloqua, Marketo, SAS and others. Sales seems to be more open to accessorizing than other parts of the CRM suite or perhaps that perception is simply an outgrowth of Salesforce.com’s openness and their AppExchange. Whatever the cause, companies like Cloud9 Analytics have been able to take the raw data out of Salesforce and provide managers with the analysis and real information that SFA systems alone fail to support. The result has been continuous improvement in selling and marketing.
Back to Microsoft Dynamics CRM Online. I suppose they could have found a longer name but this will have to do. I’ll just call it “Online”. Online is a direct challenge to Salesforce and Oracle and employs the same code set, Microsoft CRM Jefe, Brad Wilson, tells me, as the on-premise CRM solution. In fact, about the only thing different is the branding, which I can appreciate. On-line means a SaaS or on-demand product hosted by Microsoft. Partners can host too but they add custom applications and other value add to Microsoft Dynamics CRM.
Partners also adhere to a more standardized form of SLA than they did a couple of years ago but anyone considering a SaaS solution from any vendor ought to read all of the small print. Having an uptime commitment is essential, but it’s not the only thing. For instance, knowing whether the data center is mirrored is important because it impacts how long you’d be down in a worst-case situation. Good back-up is nice but not if you need 48 hours to spin all of the tapes to get back to work. Good news here, Microsoft continues to invest in its datacenters to provide the peace of mind factor for its online products.
Microsoft also launched a Babel of languages — 40 in 41 markets — for Online. That should cover about 110 percent of the world’s business centers, plus Mars if we ever get there. The user interface has many graphical features and dashboards and is highly configurable by the user. It is also well positioned in Microsoft Office integrating with applications like Outlook to take advantage of user familiarity with email.
There is also the concept of a ribbon at the top of the screen that holds a graphical function menu. The ribbon changes with every change of location within CRM. It’s a great way to eliminate irrelevant tabs and bring forward the functions most needed for the work at hand. I like it.
I have not been through the product from stem to stern so there are loads of things I am not going to comment on. But it was difficult to get some information that should have been available. For instance, I run a Mac and I have many browsers but the analyst briefing was conducted using Live Meeting and Internet Explorer so I was locked out. I know Microsoft is sensitive about its standards and wants the world to use its products but this is the Internet and refusing to play nice with the other guys is no way to promulgate a standard. In fact I find this a bit churlish.
There’s no doubt that Microsoft is “all in” as they like to say. Steve Ballmer gave the keynote for the kick off and other senior executives also spoke. All-in-all this is a good effort but from the videos I’ve watched, my impression is that there isn’t enough integration of social media in the business processes demonstrated so, to me, the effort appears to be more 1.x than 2.0. But perhaps I simply missed something because of browser incompatibility.
One of the frustrations of new technology is that quite often even the vendor lacks a coherent understanding of an innovation’s business context. Too often we receive a new product category and the best we can say about it is that it is “cool.” This should not be surprising because that’s what early adopters are for. The early adopters see something cool and have the time, interest and money to investigate the new thing and in so doing they discover or establish the context.
We see this all the time and I saw this happen personally many years ago when sales force automation (SFA) was a new idea. I don’t want to take credit for anything but this story illustrates my point. I was working for a small database company in the late 1980s and our company had introduced a set of application development tools to work with its database. At that time I was the top sales person and I worked with a notebook (not a PC, you know—paper!) and a spreadsheet to keep track of deals and details.
One day, I asked my sales engineer to build me a database for my customer list. I asked that the application have the ability to capture my notes along with the usual demographic information and just for fun, it needed to have the ability to remind me when to contact the customer again. Long story short, the application was built quickly, a testament to the SE’s ability and our tools’ prowess. But when I showed it to my manager he was aghast. I was told not to use the application—that’s what spreadsheets were for, after all. I was also instructed not to waste my SE’s time like that again.
Times change but what I experienced first hand was the lack of context for this crude lead tracking application. There were few, if any, similar examples like it and my manager was not in a frame of mind to investigate how the application could help generate revenue. It was cool by my standards but, ironically, though we were in the database business, we didn’t want to be innovators at the application level within our company.
When I look at the evident excitement surrounding Salesforce’s Chatter application I see similarities. Certainly there are hundreds of companies happy to play the early adopter role and they are proving the efficacy of Chatter. But Salesforce has been vague about Chatter’s context within the enterprise. For sure, they’re doing a good job of illustrating how the product works and Salesforce provides good use scenarios. Nonetheless, Chatter is revolutionary in how it potentially reorganizes the internals of an enterprise and for that reason more context is in order.
As luck would have it, I was recently tooling through “The Wisdom of Crowds” by James Surowiecki and found what I would call context for Chatter in chapter ten. According to Surowiecki, information in an enterprise is often doled out hierarchically form the top down, because command and control is still the
dominant business model. But the people who are closest to the work and often that means closest to the customer, are the best users of information. It’s a free market concept. For decades, business gurus have made a big deal about decentralization and pushing decision-making authority down levels within an organization. But decisions require information and often information is imperfect.
What I like about Chatter is that it does not set up a high speed way for management to provide information to the worker because too much of a good thing is too much. Instead, it treats information as a commodity within the organization. Information sharing is still not perfect but Chatter accounts for this by making it possible for managers to subscribe to information flows and to step in to lend a hand when that’s what’s needed.
By this standard, Chatter is a disruptive innovation in the enterprise because it enables a breakdown of hierarchy—which has been discussed and endorsed for years but which has been unachievable for lack of appropriate technology and a business model. The two must go together, the business model is in some ways more important than the technology and it is precisely what’s lacking when we discuss Chatter’s context.
Chatter will most likely be successful because it has a solid early adopter cohort and the word will spread from it. Salesforce.com is a software company and may not yet feel comfortable taking on the mantle of business advisor but as the company grows out from its front office application roots to become more of a general purpose technology enabling concern, the company will need to accept this role and exploit it.
Perhaps this will be the subject of Marc Benioff’s next book. Maybe that book is already in process.
This paper takes a different look at the application of Web 2.0 techniques to SFA and shows how you can capture important intellectual property about your sales business process. Using Salesforce.com’s Sales Cloud as an example, the paper reviews how any sales organization can benefit. Download here FREE!
Am I kidding me? Forecasting the year ahead? Sheesh!
One of the reasons the task I set for myself is so daunting this year is that I believe we are in a massive transition state that affects the whole economy, CRM included. I think Tom Friedman got it right in version 2.0 of his “Hot, Flat, and Crowded” to wit: the root causes of the economic meltdown and the climate crisis stem from the same idea, unsustainability.
As I recently said, selling mortgages or other loans to people with none of the usual commonsense qualifications (jobs, credit history, etc.) was unsustainable and so is belching carbon into the air or for that matter drilling holes in the ground and expecting them to yield petroleum. It’s all unsustainable as in, it might work now but at some point it won’t.
Welcome to Some Point, a fast growing village east of Copenhagen.
Ironically, this should make the innovators and risk takers among us salivate at the multiple opportunities. Whatever comes from the climate talks should be good for us. Stage one will be to use less carbon and stage two will be let’s use something else or economic growth will cease. As far as I am concerned we can’t get to Stage two quick enough.
Both stages will alert us to the need for new business processes to accommodate new realities and from those new processes we will see increased demand for software. How else will we support them?
The same can be said of our long climb out of the economic crater we made selling funny paper. Software is not a silver bullet but it will have to be a big part of implementing and enforcing the new, more sustainable business rules that evolve.
Some of the candidate areas that I believe will benefit from this realignment include the following — keep in mind that this is a multi-year effort we’re talking about.
SAP spoke a lot about in-memory databases and in-memory analytics at a recent industry influencers conference in Boston. I think we will become even more dependent on analytics in the years ahead and the in-memory idea accelerates results and increases utility. A self-re-enforcing cycle may be forming here.
We have to re-think selling in this market. I believe we’ve moved into a zero-sum era in selling — people have less to spend and many choices meaning more evaluation and extended deals that start well before a sales person makes a call. Selling needs more and different tools — closely integrated with marketing — to manage the customer buying process. Those tools are in many cases out there but they still operate as point solutions. Vendors need to come together to deliver solutions to new problems.
While we’re at it, when the economy recovers, look for gas and jet fuel prices to spike above the last peaks. In that environment business travel will be reduced and we will need better and different software to support modified sales processes.
Thank goodness we have a wide array of social solutions increasingly integrated with CRM. We haven’t optimized social media in CRM yet because we’re too focused on using it as a megaphone when we need to learn to use it as a stethoscope. We will and the companies who first figure out how to do it will benefit greatly.
Service and support
Of all the areas of CRM that might benefit from the coming upheaval, I think service and support are the furthest along the path to a new paradigm. Companies like Salesforce and RightNow are leveraging social technologies and are in the process of subtly redesigning business processes. If you want to understand what CRM will look like in a few years look first at what’s going on in service and support.
We need to get our act together on this idea. Currently, anyone with SaaS, PaaS or infrastructure as a service is touting a platform or cloud computing. They are homogenizing ideas to make a buck, nothing wrong with making a buck but playing loose with definitions can impede the progress of the sector’s evolution by confusing the market. Let’s just agree that a platform has to be more than the sum of its parts. It does minimal good to offer a platform that simply moves your computer room to another state. Platform needs to mean something that makes managing the gear easier, certainly, but it also has to take new responsibility for fast deployment, customization and development of those new applications that new business processes will need.
The year ahead
I see great challenges and great opportunities in the year ahead and the opportunities extend into the indefinite future. More than at any time since the dot.com bubble our success will depend on innovation and creativity — the sustainable kind.