Picking a community partner

A community, a.k.a. community of interest, is usually thought of as a large group of people with some common reason for associating.  These days that usually comes down to the user group but in practice a community can be any group that is passionate about a product or service and wants to improve it.  Communities are as old as the hills and I have often cited the informal gatherings of enthusiasts for the steam engine that sprang up spontaneously in the English Midlands in the middle of the eighteenth Century.  In a short time these enthusiasts helped turn an unwieldy contraption into the heart of the Industrial Revolution.

Not much has changed.  Today and the idea of community is making a comeback for many good reasons.  First among them, communities work, and also, with social media all the rage, communities have become very affordable and computing technology has amplified their impact, making them a great vehicle to drive innovation and growth.  It’s no surprise, then, that lots of vendors are elbowing each other aside to claim the mantle of community and at this point, a confused public might well ask, “What makes a community anyhow — and how do I choose a partner?” Below is my unscientific summation of what to look for when trying to select a community.

Make sure that they understand what a “community” is.  Many suppliers use the word community, because it’s “hot”, but they aren’t actually building a community.  For instance, if the supplier builds a website and invites 5,000 people to “join”, and if the “members” don’t know each other and don’t interact with each other, it’s probably more of a panel rather than a community.  The difference is important because a community proves its value when members examine and share ideas.  A panel is just a fancy survey mechanism.

Understand their specific capabilities.  There is a wide array of objectives that communities address.  Find out where the supplier has expertise.  You might want to look at the Forrester construct for the types of objectives for different communities:  Listening, Speaking, Energizing, Supporting and Embracing.  Ask the supplier what they are good at then match your requirements to their strengths.  If they say “everything”, assume that they aren’t being straight with you.

Get clear on their engagement metrics.  Any community vendor should be able to specify three numbers for you that describe an engagement pyramid.  At the base is the number of members you’ll have; in the middle, the number who will come in and read, but not actually participate and create content; and at the top the number who actually will participate.  The higher the participation numbers, the higher the engagement — which is really where the gold is.

Make sure you understand what you are getting for your money.  Will the supplier recruit members for you? Will you get weekly reports?  Will the supplier monitor participation and interact with your community members?  How often?  Will the supplier do some work for you, or will you have to do it yourself?  “Self-service” often sounds good, and it’s very profitable for the supplier, but you might not have time for that option.  Furthermore, managing a community is a skill that you might not have in-house and your community’s success is dependent on that skill.  Remember, if it was easy to do everyone would already be doing it.

Get references.  It never hurts, especially in a new market like this.  Ask the supplier for the names of three clients they’ve worked with for at least six months.  Call those clients and ask about their experience.  Would they do anything differently?  Focus especially on what happened when there were problems or when service was especially important.

Visit the supplier’s offices.  If you are spending a lot of money and a significant portion of your budget, you should kick some tires.  Meet the management and prospective members of the team that would manage your account.  Talk about your needs and your vision and see if there is overlap.  Make sure you feel that they will be able to build confidence with executives in your company.  Ask for biographies of their staff and make sure that you have partners with experience that is relevant for your company and industry.  Lastly, understand whether there is depth in the organization, and notice whether you feel more or less confident after that visit. 

Ask if they’ll work with your partners.  If you have an ad agency or PR firm or other interactive partner, find out whether they are willing to integrate their efforts with that firm.

Find out what’s new.  Ask about their future plans, their innovation priorities, how their solution will change over the course of your relationship, and so on.  If you are working in the community arena, you want a supplier who has ambitious plans for the future and who will keep up with you.

Understand their experience.  Ask for case studies of companies they have worked with in the past.  See if they can talk about their lessons learned, their mistakes, and how they have improved as a result.  Organizing a community is as much about methodology and service as it is about technology.  Beware of companies that just seem to have good technology, but who lack the real-world experience to handle your complex needs.

Ask the ROI question.  Many emerging companies do not have good ROI numbers because it’s hard to calculate and our research shows that customers often don’t take stock of their situation before plunging ahead with an implementation.  In that case everyone is left to wonder what the ‘real’ ROI is.  So if the prospective vendor cannot give you an ROI statement don’t be put off but weigh it in relation to the answers to all the other questions.

Picking a community vendor/partner might not be easy at this stage of the market’s evolution, but remember, it’s the early adopters that get the biggest returns on their investments in new technology.

Messaging in an on-demand world

The way we think of ourselves is not always the way others see us.  There’s nothing revolutionary about that idea — it’s common sense.  What’s interesting to me is the way it plays out in business.

Not long ago, I was trying to help a client company try to figure out how to compete more effectively with its biggest opponent in the market.  My client is coming from behind and as the number two in the market they have their eyes set on the top spot and the reputation and market share that comes with it.

What was particularly irritating for my client was that there really isn’t a great deal of difference between them and the competitor — an increasingly common condition for increasingly crowded markets — yet my client was trailing.

Part of the whole perception game involves deciding what your differentiators are and making the case to the marketplace that your differentiators are the only ones that matter.  If you choose right, you’ll go far; choose wrong and the sky will not fall but you must be willing to take a dispassionate look at your position and be courageous enough to do something about it. 

Taking a closer look at the messages for the two vendors told me a lot.  Both vendors offered on-demand solutions but my client played that card much more than the competitor.  Interestingly, the competitor treated on-demand as table stakes and peppered its messages with benefits that potential users could easily understand and at the end of the day, I think that’s the whole story.

My client’s messages appealed to the rational decision makers such as C-level officers while the competition chose messages that told the users — and everyone else — how the product would help them get their jobs done.  The messaging difference is not that stark though.  For example, both vendors talk about financial benefits that would appeal to the C-level decision makers. 

My client’s messages talked about high ROI but didn’t give a lot of supporting evidence.  On the other hand, the competition never actually used ROI but their messages were loaded with statements about percentage improvements in a business process that lead directly to ROI.  Those messages resonate with both groups.  Users see a benefit to their job performance and savvy executives can take the data and do their own ROI calculations in their heads.

Why am I bringing this up?

Well, for starters, I see many companies struggling with the on-demand message; they spend a lot of time and treasure to make their applications comply with the new fashion only to discover that there’s lots of competition with that particular capability.  Moreover, the market isn’t swarming over their offerings.  I see the same kind of thing in partner programs.  Small companies join partner programs and think their work is done, that customers will just show up and it will be order taking time, but that is rarely the case.

These aren’t catastrophes, it simply means there is more work to do and building a marketing program around on-demand is nice but it’s not enough either.  Regardless of the delivery mechanism, customers still want real benefits from the products they buy.  Over time I think we’ve forgotten this and we’ve begun treating technology like an investment that delivers a return for doing nothing, like a treasury bond.

Nothing could be further from the truth of course and my client’s struggles with messaging brings this message home.  If you want to talk about the return that your product or service can deliver when used correctly, by all means do so, but don’t expect that to be enough.  When you boil that message down what you are left with is buy our product because it’s so cheap it pays for itself in no time. 

That kind of messaging might be alluring to many but it is the first step on a very slippery slope in a price war.  No body wins a price war, even the customers who may make temporary gains but will lose everything when — Surprise! — the vendor can’t afford to operate at the price point it has engineered.

Similarly, don’t think that on-demand or whatever the flavor of the week is, by itself, will be enough either.  As a differentiator on-demand worked when the primary competition was on-premise and while there is still a lot of on-premise software the market now understands the difference and on-demand is the growth category. 

So the competition is shifting and with it our messaging needs to shift too.  If you are in doubt, take a look at Salesforce.com, the granddaddy of the on-demand movement.  The Salesforce messaging still talks about on-demand and multi-tenant but as secondary considerations.  For some time now, Salesforce’s major message has been about success, however a customer wants to define it.  Moreover, the company’s greatest evangelists are the customers that it calls CRM Heroes.

Monetizing streaming content

One of the next things to look at in CRM might well be streaming media. 

Think about it.  Sites like YouTube and many others have made it easy to author video content that can be consumed in numerous ways and the infrastructure for making video available to users is all around us.  Most importantly, a generation of content consumers is primed and ready to consume it.  What’s lacking and what will make streaming media a mainstream phenomenon is the same issue we have confronted again and again in the Internet age — how to monetize the content.

Monetizing content might not be at the top of your list but it certainly is top of mind for content producers.  One of the first things anyone would have to do to monetize, or place a value on, their content is to know how it is consumed.  Who watches, where, when and for how long are all vital questions advertisers want to hone in on before they place ads and spend big bucks.

For example, we web surfers are notoriously deficient in the attention span department so it is imperative for an advertiser to know how long any one video is watched across different audience segments, so they ad placements gain maximum impact. Because if viewers drop off before an ad appears, the whole advertising campaign will suffer.  Not a good career move.

Much the same can be said of trying to analyze who watches, from where and when — get those details wrong and your audience might be AWOL and your clever ads unwatched.  It goes beyond simple advertising though.  One industry watcher told me that there is an important security angle to be explored too.  Consider the case of an on-line university that makes courses available on the Internet.  How do they now know if their students are really attending?  Is the registered student staying for the whole class session?  Is that student taking the test or is that person hiring a professional test taker?

Back in the day when vendors were interested in Web site traffic, following click streams was all the rage and database oriented analytics packages were sufficient to meet the need.  Click stream analysis did not rely on real time number crunching and conventional analytics and data warehouse technology served the purpose.  Now fast forward to the near future and you might realize that conventional analytics won’t cut the mustard for one simple reason.  Where click streams generated giga- to tera-byte log files, streaming media generates peta-bytes of data and unlike click stream data streaming media logs need to be analyzed in real-time.

Conventional analytics is no match for the volume of data and the real-time demand of media streams.

Ok, you say, so what’s the solution?  Clearly it involves real time or near real time analysis of streaming web log data but such systems are only coming to market now. Most media server vendors don’t even supply analysis tools for their own gear and at this point vendors with a need to know what’s happening to their content are up the creek.

So it comes back to this — marketers might have great tools for creating streaming content users might get a kick out of consuming it but, at the moment, we don’t have the tools we need to do for streaming media what Nielson has done for commercial TV for decades (though admittedly Nielson does not provide its results in real time). Consequently, it’s hard to convince a savvy marketer to make an ad buy.

I expect this is only temporary and some enterprising startup vendor is at work developing the tools that will be needed to make content consumption realistic and profitable.

It’s all about the business process now

There was a short announcement on the wire that I thought worth paying attention to on Monday February 25, 2008 — today, as I write this.  It said, “Market2Lead and ExactTarget announced a partnership to integrate ExactTarget’s email messaging web services into Market2Lead’s comprehensive, multi-channel marketing automation products.”

As announcements go it was the kind of thing you see a lot in the technology world. Two companies coming together to make a deal that makes a headline and is promptly forgotten. Too often this kind of thing starts off as a 50/50 partnership in which each side characteristically, and far from explicitly, expects that the other will put in 51 percent of the work needed to make the partnership fly. 

Good partners deliver in the high 40’s percentage-wise and the partnership teeters for a bit and is then forgotten. I don’t know either of the parties that well though I get briefings, but I see some things in the market that make me believe this time will be different.

My reason for optimism is rooted in simple market dynamics — this partnership will succeed because it has to.  There are too many other companies that offer both kinds of products already, so the fate of both companies hangs in the balance and failure is not an option for either one. How did we get to this point?

In case you’ve missed it, there has been a slow but steady move from monolithic software solutions to an approach that starts with the business process and works backward to see which solutions need to be integrated to provide end-to-end support.  This approach is entirely analogous to what happened when computer hardware suppliers opened up their busses and let in a growing army of peripherals suppliers. 

Over a few years we went from the computer manufacturer as a sole source for everything (Ok, we’re talking about the mainframe business in the 1970s before you were born, just humor me.) to an open environment where the operating system and system bus set the standard. Work with those two and you were a member of the club in good standing.

Today the ubiquity of processing power, wide open bandwidth and free storage have left us all free to imagine any number of options for supporting our business processes.  The net positive is that it is now possible to at least consider retiring all of those spreadsheet based “applications” or department based and developmentally challenged PC applications with more professional approaches. It sounds good and it is but it also involves many of what Chris Anderson termed “long tail” applications — things for which there are thin markets that do not usually support a massive software effort in the traditional sense.

That brings us back to partnerships. Increasingly, the onus is on the vendors to think bigger and to consider the whole business process, not just some little piece of it where they can put a fence up and open a lemonade stand if they are to find sufficient markets for their wares.  More importantly, everybody needs help generating market pull.  For this generation of integrators, the open standard is not the system bus or the operating system but the platform and stack. Like the hardware entrepreneurs of old, today’s software wiz kids know that building applications to the platform’s standards means greater interoperability.

Platform vendors like Salesforce.com and others (ok, guys like me) saw this several years ago and now the message is getting to the vendor and the customer. This might represent software’s new Golden Age but it could just as easily mark a top in the market. After all, during the bad old days of hardware maker hegemony a megabyte of memory had a cost of a mega-buck. Today hardware margins are thin and the business is not a lot of fun anymore.

What will happen in software is anyone’s guess but for sure it is part of the grand structure that the economist, Joseph Schumpeter, described as “creative destruction”. So it’s all about the business process now, ExactTarget and Market2Lead are just the latest examples.

SugarCRM and the alternate SaaS universe

Earlier this month SugarCRM announced that it had secured $20 million in a new financing round bringing its total funding so far to $46 million — a significant accomplishment for several reasons.

If SugarCRM is not familiar to you, it’s not a new Caribbean restaurant in SOHO.  Where exactly they got the name I never bothered to find out, but Sugar is an up and coming CRM vendor with a very different take on the market.  The company’s signal differentiator is that it is an open source product.  In other words, they freely give out the source code and a community of likeminded developers contributes to the code base by writing modules or simply providing enhancements and fixes.

You might be familiar with the open source movement from experience with Linux, the open source operating system based on Unix.  Increasingly, companies that want to run as lean as possible put their applications on Linux servers and that includes on demand solution providers, so there’s a good chance that open source is already in your life.

What’s interesting to me about open source, and Sugar in particular, is that in some ways it looks like a throwback.  Unlike on demand software that seeks to hide all of the complexity of operating system, database and code from the typical developer, open source puts it all out there for anyone who wants it.  And from the looks of it, there is a thriving and growing community of users who still want access to the code.

Sugar appears to be well positioned to support all tastes and all opinions in the on-demand vs. on-premises debate.  The company has neatly side stepped the issue effectively saying here it is do whatever you want.  As a result some customers operate in an on-demand fashion while others have a traditional IT strategy that brings the technology in-house.

It might seem heretical to on-demand true believers, but there are many companies that either don’t want to rely on “cloud computing” or who are constrained by regulations to keep close tabs on their data.  Who’s to say who is right?  There are banking regulations and there are also government edicts, especially in the European Union, about where data can be stored and for the sake of argument St. Tropez sounds a lot better to European ears than San Diego (personally, I would need to do more research).  There is absolutely no doubt that data center location will become a larger issue as American SaaS companies try to gain altitude in other markets.

Executives at Sugar tell me they took the $20 megabucks for expansion reasons, not to fund day to day operations, which to me says business is pretty good.  And Sugar is part of a growing list of companies that are trying to jump on the SaaS bandwagon while offering their own interpretations on how to get the job done.

To the list you need to add some heavy-weight names like Microsoft, Oracle and SAP but all are not created equal.  As the riffs on SaaS proliferate it will take a fine tuned ear to listen to the value propositions and determine if said propositions are right for any particular circumstance.

Here are some things to consider.  First just because a vendor offers you an on-demand or SaaS solution, it doesn’t mean that the offer is equivalent to another SaaS offer.  SaaS is not table stakes.  Consider who is doing the hosting and generally what’s on the other side of the cloud.  The gold standard is something called mirrored datacenters.

As the metaphor implies, mirroring means that the system is making an exact copy of everything that happens at another location.  In the event of a catastrophe the mirrored data center should be able to take over with minimal disruption.  But few SaaS providers have ponyed up with the capital needed to build mirrored data centers.  Often if you read a vendor’s IPO filings you will see that one of the uses for the capital raised in an IPO is for just this purpose.

So, one of the dangers of going with a reseller of a SaaS solution might be the reseller’s ability to keep you running in the event of a disaster.  Some vendors might counter by telling you there is a tape back-up but then you need to ask how long it takes to read all the back-ups back into a working system.  But this is a digression.

The other issue that some vendors like Sugar and Oracle with its grid computing architecture offer is the ability to bring together multiple systems in a heterogeneous configuration that contains both multi-tenant systems and single tenant systems to provide a kind of defacto redundancy.  If grid computing sounds appealing I recommend you let the vendors tell you about it.

So, to net it out, it looks like the on-demand debate has some distance left to travel.  The idea of a single centralized utility model is certainly one possibility but the market appears to still be experimenting and Sugar’s $46 million in funding is one example of how robust the experimentation is.  To borrow from a utility model argument from a while ago, it appears that some people are still content to dig their own wells eschewing town water.  But maybe the metaphor is more like the argument for solar panels — sometimes there’s an advantage to doing it yourself.