Sage evolves on-demand services
A long time ago I wrote a white paper about how on-demand technology would change business. The paper covered all of the ideas you’d expect including lowering costs and improving access to on-demand applications. But there was another part of the paper that speculated that if technology was that easy to come by then the next thing to look for was enhanced service based on the technology.
In other words, technology access would cease being a gating factor in executing business processes. Replacing technology as a gating factor would be having the smarts to use it optimally. I envisioned that service companies that had operated more or less locally would, or at least could, become national or global by selling their expertise based on the on-demand technology. The computer and telephone enabled public relations firms to become national in scope, but a bit more is required for a marketing services company or a design company for example.
It has taken a long time and it seems what happened first and what I had not fully foreseen was the globalization of applications based on platform technologies. Right now, Salesforce appears to be the most successful practitioner of that art. But now we appear to be at the beginning of an era when business services will become global or at least national based on the consolidated expertise of some organizations.
Judging by some of Sage Software’s recent actions, that globalization might be taking off at the SMB end of the spectrum. Recently, Sage announced new marketing services for its ACT! customers. The first service will be email marketing available on-demand. Now this may not seem to be a very big move since there are many independent email marketing providers already on the market like Constant Contact, ExactTarget, VerticalResponse and many others (you get 36 million hits on Google).
But don’t lose sight of the bigger picture. With a three million user installed base in North America that has many marketing needs beyond email, Sage is poised to build a services engine that could eventually rival its software business. This would be a very smart end run around the company’s own business model limitations. To be precise, Sage sells its products exclusively through a reseller channel. The resellers deliver product, customization and advice leaving slim pickings for Sage beyond the license revenue.
The primary way Sage grows in this model is through product sales and by recruiting new partners. But no market is infinite and the market of resellers is relatively small compared to the market of end users. You see where I am going. There is nothing prohibiting Sage from offering services based on the products it makes and the installations that its partners effect. As a matter of fact, offering this kind of service, which only makes the end customer more productive, should drive demand for the products themselves. Looks like a smart and virtuous circle to me as well as a new kind of on-demand service.
I believe the era we are entering will be constraining for many companies in several ways, not the least of which is transportation. As fuel prices resume their rise with the recovery, companies will need to find ways to take travel costs out of their value propositions. That should mean a need to enhanced marketing as in, how can we use marketing rather than face time to close more deals?
The answer to that question goes beyond email marketing and probably beyond the meager efforts that so many SMB companies now use to sell their products. Centralizing key services that can be delivered at scale via the Internet will enable SMB’s to continue to compete in select markets against larger competitors. It is also a growth market and who doesn’t like that?
EU gets it — finally
Approves Oracle’s acquisition of Sun
The bureaucrats in the EU finally stopped looking through the wrong end of the telescope long enough to approve Oracle’s purchase of Sun Microsystems. The deal had been held up for months while the EU tried to decide if the acquisition, which included MySQL, a database product bought by Sun in 2008, would have a deleterious effect on innovation in the database market. They finally decided it would not.
As a practical matter, innovation in the database market peaked many years (decades?) ago when the market began to consolidate around Oracle and the seven (or three, whatever) dwarfs. The market took care of trimming the number of databases and market demand did the rest, forcing Oracle and IBM (DB2) to develop more and better product features over time.
I am not so much of a free market enthusiast to think that everyone is a rational player (we humans are no such thing) and that the market always produces the best result — Voltaire’s Dr. Pangloss put a permanent hole in that hull. But I do believe, in this case at least, that Oracle and Sun have a clear understanding of the economic forces that are driving them into the first (?) hardware-software consolidation in the industry.
True enough, IBM is and has been a formidable supplier of gear, software and services. But absent any initiative to break up Big Blue, I can see no justification for holding up the Oracle-Sun merger. So now the merger proceeds and the bigger question will be how Hewlett-Packard responds.
NY Times to charge for access
Implementation needlessly risky
I feel bad for the New York Times because they have taken another stab at on-line journalism and almost got it right. The Times announced today that starting in 2011 the paper would begin charging for frequent access to its reporting. I applaud this much of the announcement since I believe that charging for Internet access and then moving most or all of a newspaper’s subscribers to the Web is necessary for the future of quality journalism.
I applaud Times chairman and publisher Arthur Sulzberger Jr.’s high minded statement that, “We can’t get this halfway right or three-quarters of the way right. We have to get this really, really right.” Indeed the announcement article is full of such sentiments. The article also says, for instance, “Executives said they were not bothered by the prospect of absorbing barbs for moving cautiously.” And there’s this: “There’s no prize for getting it quick,” said Janet L. Robinson, the company’s president and chief executive. “There’s more of a prize for getting it right.”
Great! Bravo!
The article says the Times will use the next year to figure out some of the details, like how many free articles to grant before the charging mechanism kicks in. That makes sense to me.
The only fly in the proverbial ointment, and it’s a big one, comes right at the end of the article: “The Times will not use one of the pay systems being marketed by other companies, like Journalism Online, led by Steven Brill, or the News Corporation, instead choosing to create the system essentially from scratch.”
Scratch!? You’ve got to be kidding me! The Times does not make its own ink and there are no lumberjacks or paper makers on staff: it buys paper and ink. But if it does not bother to vertically integrate these industries that got started somewhere in the Ming Dynasty, why on earth does it think it can get into the software business and “create the system essentially from scratch”?
Until I read those lines I thought early 2011 was conservative or even stodgy. Implementing a scalable and industrial strength billing capability should be idiot-proof and most of the next year would involve acclimating customers to the new reality.
Now? Who knows? The Times will now experience all of the joys of bet your company, major software development and chances are really, really good that the result won’t be really, really right. It didn’t have to be this way.
You can’t see this but I am shaking my head.
The sustainability decade
As long as we’re talking about sustainability we should try to tease apart just what that term means for CRM. To me, sustainability is about business processes that are repeatable and, more to the point, processes that both sides readily engage in. But in addition to the processes being repeatable — the easier part — the customers must have a stake in wanting to repeat them, which is way different from readily engaging the first time.
Now, I realize that the definition I have just provided has some basic flaws. First, it is utopian — it implies that a sustainable business process can run by itself, like a perpetual motion machine. No business process is sustainable by that definition; they all need new blood, fresh recruits to work. In fact, the simple capitalist requirement that an economy grow must be satisfied. So the sustainable business process must provision for new customers coming in and older customers leaving, for whatever reasons. In the sustainability era we also need to be very good at recruiting.
We are a long way down the trail on sustainability in some of our business processes but often the trail changes from four-lane highway to dirt road. We have highways within departments — sales, marketing service — but the pavement is more rugged when we go between those departments even today, many years into the CRM experiment. That’s fine with me, I am interested in progress over a longer term and there’s plenty if you look for it.
So, for example, we well understand the desirability of a sustainable or repeatable sales process but not so much the importance of sustainable service processes, in many situations. Old thought habits die hard and service is still seen as a money-losing proposition. Too often we compete on price and hence there are insufficient profits to enable first-rate service and support processes. But if you take another cut at the problem, for an existing customer, service and support are often the on ramp for repeatable sales. In the sustainability era, service quality (not just the experience) will be the product so efforts to enhance service will be well rewarded.
While we’re at it, marketing is too often viewed as a money-losing proposition on performance enhancing drugs. It’s marketing’s job to spend money after all and too many of us can cite John Wannamaker’s — or was it Marshall Field’s? — famous dictum that half of his marketing budget was wasted but, alas, he didn’t know which half. However, as an aside, why are we still relying on some nineteenth century encomium to influence our twenty-first century marketing thinking? In medicine, law, the sciences and many other areas, the nineteenth century is a footnote with a few nuggets we point to as the progenitors of the knowledge we now have.
Nonetheless, marketing in the twenty-first century is also an on ramp for sales, but also for research that will drive current and future product development, messages, and of course sales. Indeed, in a sustainability era, no group will have its core function rearranged more than marketing. Sales will have to cope with smaller margins, travel restrictions and the demand to be more accurate in forecasting with resulting cascades of other demands. Service and support, as we have seen with the introduction of social media into those processes, will be relieved of some of the volume that makes it so hard to do well.
On the other hand, making other processes more sustainable will require much more data and information. Marketing is ideally suited to data gathering, at least in cases where the right tools are brought in. As marketing becomes more of a research hub it will become more accurate and reliable, finally retiring Wannamaker and/or Field.
Doing that will require concerted effort and a good dose of social media. To do that we need to explicitly focus on the differences between inbound and outbound social media and work out the business processes that harmonize the two. We are only at the stage where all social media is cool and the point where we can be selective and apply the right medium to the right business problem is still in the future. When we get all the way there — in force — we will be well on our way to sustainability.
Plenty of people like to quote a line that was attributed to Bill Gates and many other people that we over estimate what we can do in a year and underestimate what we can do in ten. With that as a guide, welcome to the decade of sustainability.
Entrepreneurship and mountain climbing
I don’t know where on this earth I would have met such and interesting and diverse array of people but in the CRM industry and environs. Got email today from someone I met a couple of times who has been very successful as a venture capitalist.
Gordon Ritter is a partner at Emergence Capital and his email announced that he’s on a mountain in South America that I had never heard of. But Aconcagua is located near Mendoza, Argentina and is 22,840 feet at its peak and the second tallest peak in the world, the highest in South America.
If you track these things, there is a grouping called “The Seven Summits” that includes the highest peaks on the seven continents. Some people make it a hobby to climb all seven but I don’t know if Gordon is doing this or if he’s simply engaging in this challenge.
Some people might think that engaging in such activities is daring, others that it is more akin to suicidal or even fun. Regardless, I couldn’t resist the idea of linking Gordon’s exploits with Malcolm Gladwell’s latest article in the New Yorker (January 18, p. 24.
Gladwell’s topic is entrepreneurism and the title provides the focus, “The Sure Thing”. Gladwell’s analysis shows that some of the most successful entrepreneurs defy our conventional beliefs about them. If the conventional idea is that the entrepreneur is a risk-taking loner, Gladwell shows that he or she is just the opposite. Using Ted Turner as one example, Gladwell shows how Turner, throughout his career building what has become CNN, avoided risk and did his homework until the direction he wanted to move in looked like, well, a sure thing.
Another subject is the less well-known hedge fund manager John Paulson who, with a small team, studied the mortgage market a few years ago and became convinced that it was a bubble. Armed with this knowledge Paulson raised money and bought as much mortgage insurance as he could, waiting for the bubble to burst. When it did, he made billions.
Back to Gordon Ritter. You may not know his name, but about ten years ago Ritter was one of the earliest investors in a little San Francisco company started by a brash young former Oracle vice president named Benioff who was sure that on-demand application technology was the thing of the future.
While climbing the second highest peak on the planet might not be everyone’s cup of tea, I am sure that Ritter has it all figured out down to the smallest details. Absent a weather problem or some fluky health issue, I am sure he will summit. Actually, looking at his three week plan, it shows time built in to attempt the summit on three days just in case. Pretty shrewd if you ask me.
Good luck Gordon. Be safe.
