September, 2008

  • September 24, 2008
  • The other day I had a conversation with some nice people from the market research company Coleman Parkes Research.  They wanted to tell me about a study they have recently concluded about social networking.  I have to say it was pretty interesting stuff. 

    I will leave it to you to search for them and to download their full report.  What was interesting to me is the evidence they turn up about adoption and how the adoption of social media to date by companies follows an early adopter pattern.  As you know in an early market, there is a lot of misinformation and skepticism about the new technology – rather like a political campaign.  Eventually everyone understands the importance of whatever the new thing is and those who need it adopt it.

    Before that time, a lot of education and explanation needs to happen and that function is carried out by sales and marketing (or candidates).  So where is the social media market in the adoption curve?  From the data it looks like we are at the beginning of adoption.  There are some notable successes but a lot of skepticism driven by simply not knowing about the category.  Some top line findings paint the picture.

    According to Coleman Parkes’ research,

    ·      More than 75% of companies admit that social media will come into the business by stealth if not proactively managed.

    ·      Nine out of ten companies understand that the next crop of employees will usher social media into the workplace.

    ·      Companies are not prepared to handle this stealth wave of activity.  Approximately 60% of respondents say integrating social media technologies is not on the agenda at all at the moment.

    ·      Only 18% of respondents have any kind of strategy in place to integrate these technologies within the company for employees.

    ·      52% of respondents agree that companies who fail to embrace social media technologies for business purposes will be left behind.  More than 60% also agree that social media is the next major step in collaborative activities and technology for a business.

    If that doesn’t scream early market at you I don’t know what does.  It looks like there’s plenty of awareness of the technology but it also looks like there has not been an aha! Moment when a lot of people look at a success story and say, that could have been me! 

    The good news to me seems to be that there is plenty of awareness about the category but the bad news is that few people see the direct correlation between business pain and the potential solution yet.  That can change in an instant but it also highlights the biggest challenge for social networking proponents.  Without a clear example of a solution and a benefit, social networking could end up taking as long as it took regular networking to make it to the big time.  You might recall that the year of the network ended up taking a decade to roll out.

    All this is inextricably tied up with CRM 2.0.  There’s no doubt in my mind that, for a whole host of reasons, marketing and sales need to adopt social networking concepts and there has been good progress especially with emerging companies beginning to offer point solutions.

    Nevertheless, my analysis says that social networking is different from precious innovations.  By its nature and almost by definition, social networking solutions need to work in concert with other applications to derive optimum benefit.  The day is gone when a solution vendor can say to the market, here, take this it does this one thing really well.  Instead, I think we are coming to a realization that whole interconnected processes are needed to drive business and that means connected applications.

    One of the things I like to tell my clients is that in this market it is not enough to own a solution, you need to own a business problem.  To own a solution for a part of a process is to have a piece of an answer; owning a business problem says to your customer we get it and because we get it we team with other applications that affect the whole process. 

    Platform technology has made it easier for companies to team up to collectively own a business problem and to demonstrate real leadership in delivering a comprehensive solution.  In my experience though, progress has been slow in part because few vendors want to tie their fates to the fortunes of another.  Nonetheless, I think we’ve entered a phase when customers will have less tolerance for point solutions or the notion that it’s their responsibility to figure out how it all goes together.

    If that’s the case it will take longer than it should for ground-breaking solutions leveraging social networking to hit the mainstream.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Published: 15 years ago


    Perhaps the biggest CRM news from OpenWorld is that Oracle introduced its Social CRM applications.  The company officially brought out products for sales prospecting, a sales library and marketing and loyalty and said it has plans for more.  The applications do not replace conventional transaction oriented CRM as some people might think but they do add a new layer of support for the way people work and purchase today.

    It is most important to acknowledge that there is nothing fundamentally new here.  Anthony Lye, senior vice president of CRM at Oracle is candid about that.  “I am not so much an innovator as I am a fast follower,” he says, though that seems a debatable point.  By that he means the Social CRM applications that he has guided to market make use of well-articulated Web 2.0 concepts.  Fair enough.  You might also add that many of those concepts have found their way into social applications that ecosystem partners had been putting into new applications for a while now.  So where’s the innovation?

    Oracle and Lye’s innovative contribution may be in the way they have tightly integrated social concepts into business processes that make use of conventional CRM.  While it is certainly true that many emerging and established companies have tried their hands at socializing CRM, those attempts have always been at a point solution level – ad hoc attempts to fix a weak spot in conventional CRM with a little bit of customer outreach rather than a fundamentally new approach. 

    Oracle has not fully crossed that Rubicon either, but they have come further than most, if not all, vendors is recognizing the realities of today’s marketplace and the ways that — especially young — people are leveraging technology to communicate and network.  Lye’s insight is that these networking processes are largely off the radar of most vendors trying to engage (young) customers with the result that no one but the vendor (maybe) and the customer understands the nature of a sales process until it’s over. 

    How does a vendor compete in that world?  What if everyone treated customers that way? 

    Indeed.

    Social CRM’s answer is for a vendor to maintain communication with and between itself and its customers as well as between customers.  The result has been discussed many times before and it is the co-creation of value that manifests itself in multiple ways.  Customers are remarkably good at telling vendors what to build and how to sell it but only indirectly.  Don’t expect a lot of cool new product ideas to come fully formed out of the conversations that these communities have but they will give you reams of data about their pains.  Add analytics and some human insight to the mix and you would be surprised at what you can learn.

    The Oracle insight has been to bring together social and transaction technologies and ideas.  In the process I think they’ll change the definition of CRM – both the technology and the practices.  The Social CRM applications debuted in San Francisco this week are really the down payment on the idea.  They are the manifestation of ideas that many of others have had but, interestingly, it has been Oracle’s deep pockets and market reach that have enabled them to get this far.  It will be fun to watch the industry adjust to this and I expect we are watching another disruption in the making.  But who would have thought that it would be staid, dyed in the wool Oracle to be leading the charge? 

    Published: 15 years ago


    I am at OOW this week.  Just attending the opening keynote  with Charles Phillips right now.  There is a ton of new information to digest and I expect to blog a lot.  Of course there is a lot of non-CRM stuff to wade through…Michael Phelps just did a cameo, perhaps the most interesting part of the event early on…

    Published: 15 years ago


    Peak Oil is a term that resonates very little with about 95% of the population.  I discovered this by asking a lot of people and getting blank stares.  A few hardy souls ventured a guess and those guesses were not far from reality.  If you take those words to a search engine you will be surprised by the number of hits you get.  I got nearly 5 million hits the first time I searched on the term. 

    The on-line community is awash in blogs and publications from experts in the oil industry, economists, investment bankers, geologists, scientists and many others.  Nonetheless, the term has not penetrated the mainstream yet beyond a few ads on TV that talk about the expense of imported oil.

    If you are part of the 95%, Peak Oil simply refers to the fact that the flow rate of the world’s oil fields is at or near its maximum.  In other words, there might be plenty of oil “down there” but bringing it to the surface for processing and use is limited by geology and physics (in some cases, politics too).  More importantly, rising demand and decades of poor exploration results indicate that demand will be outstripping supply in the not too distant future.

    The experience of the oil industry is that once a peak occurs, the next move is downward and many of the same experts are predicting a decline of available oil at a rate of as much as 4% per year.  Add to that demand increases of, say, 2% worldwide and you can see that oil availability will be a major challenge in the years ahead.

    The smart money knows this already.  That’s why people like Warren Buffet and Bill Gates are buying lots of shares of unglamorous low-tech railroads.  It’s also why T. Boone Pickens is such an advocate of wind power and compressed natural gas and Shai Agassi, former SAP executive, started a company dedicated to making electric cars a reality.

    To be sure, there is no “energy crisis” per se but there is a tightening in the liquid fuels market – the fact that gas prices came down about half a dollar over the summer provides no real comfort if you consider that prices were half that — well under two dollars — less than eight years ago.  Since our cars, trucks, aircraft, busses and trains run on liquid fuels, it’s worth considering what this all might mean to our economy.  In pure economic terms, I think this would qualify as a disruption in the making.  It’s one of those moments when everything changes and what worked yesterday might not work so well going forward.

    As I look at this disruptive moment, my natural reaction is to ask what effect such a disruption might have on business and what CRM might be able to offer in the way of solutions.  In performing my analysis, it became clear to me that there are numerous front office business processes that are highly dependent on energy especially for travel. 

    Sales calls are a primary example but they are not alone, there are energy considerations in the call center and marketing departments can do a lot to help take some of the energy footprint out of front office business processes.  Driving or flying to see customers are activities that are highly dependent on energy use and in an environment where the price of fuel is high and volatile, the cost of selling will become more unpredictable and so will profits. 

    We have just completed a new white paper, “CRM & Sustainability”, which examines the challenges that this disruptive moment called Peak Oil is about to inflict onthe global economy.  The paper examines ten areas in front office business processes where innovation and entrepreneurship can be applied to develop solutions that both reduce the energy input to front office business processes and improve customer intimacy and operational efficiency.

    I do not expect that our list of ten ideas is complete, there must be many more ideas out there too but it’s a start.  Speaking of starting, some of the ideas in the paper reflect concepts already embodied in off-the-shelf, or off-the-Internet, products and services.  Other ideas will need to be built.  The point of the paper is not to prescribe specific solutions and I shy away from naming specific companies.  Instead, I want to spark conversations about the business opportunities inherent in the disruption that will be caused as Peak Oil accelerates. 

    I also know that software does not get built over night and while the energy situation today might cause many people to feel sanguine, I know the smart money is always thinking about the future.  It’s time for the CRM industry to think more like Bill Gates and Warren Buffet.

    Published: 15 years ago


    Microsoft announced an important update to Dynamics CRM this week in which they spiffed up their marketing capabilities.  You can find the news details pretty easily out on the Web but the details are less important to this piece.  The fact that Microsoft delivered an update is the real interesting part and I was glad to see it. 

    When the company announced general release of its new CRM product it went out of its way to point out that it would make frequent updates and this first major update is on track to redeem the promise.  That was certainly important to Microsoft because the company had/has a reputation for delivery problems, most notably in CRM where it skipped a whole version number release because it was so tardy.  So Microsoft delivered on this promise and maybe we make too much of what for any other company would be a rather pedestrian event. 

    Another Microsoft event caught my eye this week, which is less germane to the company’s CRM technology but very relevant to the practice of CRM.  Did you see the new ad with Jerry Seinfeld and Bill Gates?  It was part of a reported $300 million branding campaign that supposedly will help to restore Microsoft’s luster as a hip technology company.

    Does it work?  I don’t know.  What’s really going on here?

    With all due respect, Jerry Seinfeld went into syndication about ten years ago and Bill Gates went into syndication this summer.  How are they supposed to restore the luster of the old brand?  They’re not, they can’t.  Despite Dynamics CRM’s relative success this week, Microsoft is dogged by the failure of its Vista operating system. 

    In a related move the company is now deploying what it calls gurus to Best Buy stores to help sell the virtues of Microsoft products.  That’s a good idea and it mimics Apple’s geniuses – people who know everything about Apple products who work at Apple stores.  While the gurus will help with initial purchases, the program is not fully articulated to the point where Microsoft will provide training and post sales support as Apple geniuses do.

    Give Microsoft some credit for making these attempts, but they may prove to be little more than windows dressing (I know, bad pun but it proves to be irresistible).  Microsoft is suffering from what I can only describe as a transition crisis and it’s been on-going for some time.  The company is not alone and many of the high the high fliers of the last couple of decades can be similarly categorized.

    These companies have succumbed to “over-financialization” a condition that occurs when the founder and leading product visionary leaves a company or at least retires from day to day management.  In his or her place the board selects a financial whiz kid (WK) to run things.  The WK and his/her team’s purpose in life is pleasing Wall Street and there is nothing they won’t do to add a penny to the quarterly earnings per share.

    My economist friends will tell me that’s what the WK is supposed to do, to maximize shareholder value, and I might even grant that as a proposition for a moment.  However, the primary constituency is not the shareholder but the customer.  After all it is the customer who makes the purchases and unhappy customers lead to unhappy shareholders.

    You can find traces of over-financialization in other companies like Oracle and SAP, two companies that have had great rides and, to their credit, are trying to figure it all out.  Oracle especially seems to have an internal skunk-works operation going in what used to be Siebel.  Oracle-Siebel is innovating and trying to bring to market some new ideas based on Web 2.0 thinking.  Whether they will succeed is anybody’s guess because they are surrounded by the sclerotic remains of old Oracle.  For sure though, it will be fun to watch.

    Microsoft is not that far along as demonstrated by the Seinfeld-Gates ad.  Seinfeld is best known for a long running comedy show about, well, nothing, and the commercial continues in that vein. 

    In some of my lectures and writings, I like to point out that today’s customer is different from the customer who bought the first iteration of the product.  As so often happens today’s customer has grown up with a technology or a solution and using it is second nature.  That leads to interesting disconnects which is what the Seinfeld ad most points out.  The ad in some ways is trying to connect technology with everyday life but the customer knows this intuitively.  This generation of customer is way ahead of the curve preferring a quick search to fill a need over an ad that tries to entertain.

    I’ve seen a few print ads for Salesforce and Oracle – the former has never to my knowledge run commercials while the latter confines itself to golf tournaments and the like.  Moreover, Google and many others have built very nice companies without advertising at all.

    What this tells me is that Microsoft is not cool these days.  It could be again but it will take a serious rethink and some product improvements to get the mojo back.  I wish they’d called me instead of Seinfeld, I would have saved them 299 million dollars.

     

     

    Published: 15 years ago