Forecasting the year ahead
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.
Analytics
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.
SFA
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.
Social
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.
Platforms
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.
Year in review
Every year-end I write two columns. One looks back on the prior year’s forecast the other looks ahead. This is the first of the two and it’s time to compare my projections for the year with what actually happened.
Last year I took an optimistic approach by saying that it was a great time for innovation. You might recall there was plenty to worry about back then. We had a new president not quite in office and the scuttlebutt was of spending upwards of a trillion dollars in borrowed money to fix the meltdown. Some people said it wasn’t enough. A year later we see they were right and the administration is developing a jobs program to spend more billions.
I am not averse to deficit spending when the occasion requires it and this is certainly the time. But to get more fine grained let’s consider my projections for individual companies.
Salesforce.com
I said, “The team to beat, they’ll keep the pedal to the metal in 2009 and they will be amply rewarded for it.” No need to spend a lot of time here.
SugarCRM
I said, “I expect they will become more platform-like in the year ahead and offer some competition to the leaders.” Sugar did this but they seem to be more mired in the recession and the freeware business model so they didn’t impress me with their execution. Still they have some good ideas.
Oracle
I said, “I expect that 2009 might see more of a clash of definitions as on-demand, SaaS etc. become even more popular and companies like this try to blur or expand the definition.” I was talking about the blurring of the line between multi-tenant SaaS and other on-demand strategies and it appears that the blurring has happened and not just at Oracle. As I recently wrote, that blur will be with us for a while as SAP, Microsoft and Sage all have their own strategies to take some of the nicer features from SaaS to support the on-premise based solution sets. But definitions were a side-show, Oracle introduced its Fusion products this year and they have the ability to be game changers for the company by making all the acquisitions make sense.
Microsoft
I said, “In 2009, Microsoft could benefit from a bit more focus on the market and committing to real on-demand.” Well, they provided focus and they provided a product set that, like other solution sets runs in a variety of configurations, both on-demand and on-premise. The company appears to be executing well and although I question some of their strategies, it all seems to be working for them. Only proves I am not the smartest guy in the room.
SAP
I said, “… they haven’t helped themselves with their false starts and I wish them well trying to put a big idea together and deliver it, hopefully in 2009.” The big idea was their hybrid approach and it appears to make more sense for them than most. The company still needs a big idea and an out of the box thinker to promote it.
NetSuite
I said, “…the company, in my humble opinion, aims at a corner of the market that might be too small to take on everything they offer. A little up market repositioning might be smart…” I think NetSuite did this and the results are good for them. Not a week goes by when I don’t see a press release from Mei Li detailing a new deal with a good size company. More than most, NetSuite has some mojo.
Sage
I said, “In 2009 Sage will be in the process of changing its products to meet some of the challenges of the on-demand world and to adapt to the special needs of its partners.” The guys at Sage kept to their knitting this year and made good progress but more needs to be done. Sage made great efforts in CRM and on-demand strategies delivering on their 2010 CRM strategy. They’re also one of the more effective users of social media in CRM today. Keep an eye on them.
No one could have predicted 2009 would be such an awful year but as we end it, the economy appears to be rebounding though unemployment is still way too high. The big lesson of 2009 is that we were doing a lot of unsustainable things. The environment naturally comes to mind when we hear the unsustainable word but it goes for business practices like selling loans to people with no assets and no means of repaying and a lot more. In 2010 — post-Copenhagen — look for a lot of discussion about making everything sustainable. That will be the big incentive we need for a whole lot of innovation in business processes and the software to support them.
WizKids 2010
We are beginning the 2010 WizKids process.
Every year we look for the most interesting front office solutions and the most robust new companies that offer them. If that’s you please download an application form and a copy of the rules.
Good Luck!
Summits and a synthesis
Summit must be the secular name our species came up with when we decided that certain business meetings had to have the same weight as religious conversions. I am not trying to be contentious by using this vaguely religious metaphor so please consider me a radical centrist. But after a few months of vendor meetings for the analyst community in which each took us to the mountaintop to survey — via PowerPoint — their future visions for the valley below, I am almost all summitted out.
The religious reference struck me yesterday at SAP’s, very good, analyst summit in Boston because, like some religious conversions, there seems to be a necessary pain component intended to make the conversion stick. In most analyst summit meetings the pain comes from sitting still for many hours of the aforementioned PowerPoint presentations.
So, what did I learn? Well, lots though I am a CRM guy and much of what was proffered were visions of a broader valley. The biggest impression I came away with was intramural since, having been to Oracle Open World and Dreamforce, I am in a mood to compare, contrast, synthesize and perhaps even prescribe.
Put everything I saw at these and other conclaves into a food processor, run it on high until something resembling peanut butter forms and the result, to me, looks like this. SaaS computing has won the battle, maybe even the war, but the victory is not enough to secure a homogeneous peace. Translation: SaaS is important and the future of software, but there are multiple reasons why it will not reign supreme, not for a while at least.
A few weeks back, I noted that there are still some 6,600 mainframe computers not only in existence but in use and it will be some time before the population dwindles to the point that, like the B-24, there is a small handful of them capable of doing what they do. The same is likely for premise-based enterprise software.
It’s not that on-demand technologies can’t do everything that the premise-based products can, rather it is that the premise-based solution vendors have examined alternatives and decided that retrofitting their wares with some of the best benefits of SaaS is enough for the moment. It is also because customers of some application types are not ecstatic about sending their applications to the cloud.
Such has been the messaging that SAP, Oracle, Microsoft and Sage have been selling for some time now and it has legs. No doubt this is vendor-generated paradigm extension. Most important to this strategy has been the effort to retrofit their products with some of the popular attributes of SaaS.
For a long time things like better TCO, near-instant deployment and great configurability characteristics were the exclusive province of on-demand solutions. But much of that has changed so that now enterprises that that once looked longingly at SaaS solutions have some reason to put more gas in the old car and drive a while longer.
That was a strong message I got from SAP — no they don’t and won’t offer every product on-demand but they can still deliver on the hot button customer issues, to a degree. I am still puzzled by the customer who said he has sixteen instances of an SAP system and that he schedules updates and maintenance for all of them. The SaaS-ist in me says, why?
To be sure, I don’t see any new applications coming to market that have not been conceived to be SaaS and that marks an interesting point in software evolution. It’s quite possible that we are witnessing the bifurcation of the software business and that a part of the business will be on-premise well into the future. That part will continue to diminish as a percentage of all software, especially as platforms like Force.com with its more than 800 applications continue to expand.
Perhaps this even means that, for a while, new applications will be smaller and focused on market segments rather than the all encompassing front and back office systems that have occupied our attention for the last couple of decades. For example, Twitter and Facebook have huge numbers of subscribers but they are not nearly as complex as an ERP system.
So my conclusion, after a lot of airports and hotel rooms and as the circulation returns to my backside, is that we’ve achieved a kind of status quo between premise-based solutions and the cloud. The frontier will keep moving to the clouds but there is life in the old paradigm. And I suspect this will be a good thing as we turn some of our attention from software wars to the substantive questions of how we do business after the bubble and crash, as liquidity remains a serious challenge and, in the wake of Copenhagen, in a world more acutely conscious of sustainability.
CRM @ C
Finally, Paul Greenberg’s new edition of CRM at the Speed of Light hit the streets last week and with it my description of him as our Walt Whitman remains in tact. To promote the continuing franchise the fourth edition’s cover has the same design as the third edition but with a different color scheme. But that’s about the only similarity between editions; everything between the covers of edition four is new.
This time, Greenberg’s sub-title tells us he’s focusing on “Social CRM Strategies, Tools, and Technologies for Engaging Your Customers.” That’s a mouthful worthy of the more than 600 pages he dedicates to the task — and that doesn’t even count the chapters that are available only online.
Before we go on, let’s have a moment with the truth squad. Paul Greenberg is a friend and he graciously invited me to make a few very small contributions to the book, so my discussion here might look to some like self-promotion. If that’s how you think then you might want to go rearrange your sock drawer. If you read on just know that that there is a good deal of agreement between Paul and me as well as many of the analysts that follow the market. That’s not to say we all think so much alike that if you sent ninety-nine out of one hundred of us to a Maoist re-education camp it wouldn’t matter. It would.
CRM at the Speed of Light has always occupied an important niche in our world. It continues to be the source for authoritative definitions and explanations of what CRM is and where it is going. If you are within the CRM inner circle you might want to conclude that definitions and categorization are no longer needed. But if you talk to real people trying to make sense of the world through a CRM lens you quickly discover the great service this book provides.
The centrality of the customer and the importance of “relationship” over “management” — two criticisms from CRM’s past — are noted and form the motive force of this book. Greenberg’s gift to us is to take a four-dot-oh look at a two-dot-oh market and to help us see where it’s all going. Paul covers ideas like Social CRM and customer experience with equal ease. And while we might disagree on some of the specifics of how these things relate to the CRM market at large (see I can be independent) it all coheres.
One of the greatest assets of the book is Greenberg’s style, which is intelligent and conversational. In fact, conversational is a poor word choice because Paul’s natural chattiness comes through the page and into your mind so that at times you forget you are reading rather than listening to a smart and entertaining monologue.
CRM has become a big topic. It’s roughly a fourteen billion dollar market and the nuances in even what companies call it and how vendors address the market can be significant. Nonetheless, Paul does a good job of building categories and running down the differences until they make sense.
A good example is chapter nine on user communities. We think we know what communities are and in a folklorish way we do but Greenberg does a great job of teasing apart the differences as well as the pros and cons of managed and unmanaged communities, outcome-based social networks and a lot more. But even more importantly, he then dives in and advises us about managing communities and offers important do’s and don’t’s.
In trying to categorize this book I was left with the feeling that it most resembles a text from medical school that details the causes and cures of diseases one after another. Few people read those books straight through but use them as reference guides, for example, when a young doc might be trying to nail down a diagnosis. I expect that it will end up on the book shelves of many mid-level executives and even their bosses who want a good reference to enlighten them about the technologies that can help them run their businesses.
But CRM at the Speed of Light, fourth edition, is also a book that you’ll want to read every page of if you have an abiding interest in the subject.
