December, 2010

  • December 29, 2010
  • Recessions are always a good time to rebuild your competitive infrastructure and the slow growth/recession of the last couple of years has been no exception.  On the stock market, the technology sector seems to be doing quite well.  After bottoming in the middle of the summer the software companies especially seem to be rebounding.  Microsoft, Oracle, Salesforce, RightNow and NetSuite are all gainers.

    But the drivers for software acquisition remain what they have always been—improving processes, saving money or making money.  Companies whose products can do one or more of these will do well.  And customers will gobble up their wares as they seek out more competitive stances in their chosen markets.  The theme to watch for is replacement as many foundational applications that were implemented for Y2K reach the end of their shelf lives.  Here are some issues to consider.

    • Ten year-old ERP and CRM systems will be more than ripe for replacement.  New business processes and better economics will do the heavy lifting to prove the case for new applications.  Many of the conventional vendors like Oracle and SAP will be there as will newer entrants who’ve proven themselves over the last decade.  Watch for names like NetSuite, RightNow, Salesforce and others to command attention.
    • Cloud computing.  After several years of debate about what cloud computing is or is not, customers are in a great position with lots of choices for solutions.  It doesn’t matter whether you prefer single tenant or multi-tenant solutions, the economics of running software in the cloud are so compelling that you can find a vendor that speaks your cloud dialect.  Virtually every front and back office vendor has a cloud offering or two.
    • Analytics is another solution set that has been in the background for many years.  But new demands in the form of trying to make sense of the mountain of data brought in daily by our social applications makes analytics a necessary add-on.  Analytics solutions are abundant and even SAS Institute, a pioneer in enterprise analytics, has jumped into the market with cloud based solutions for social data.  It is somewhat surprising that Gartner expects only 35% penetration in customer service centers by 2013.  That looks like a great opportunity for differentiation to me.
    • It will also be a year for collaboration and I think collaboration may be the first true business social application type.  Judging from the rapid adoption the Salesforce’s Chatter is receiving I anticipate the broader market will see collaboration as a business process no one can afford to ignore.
    • Integration will be important in the year ahead too.  There are no so many applications and application types on the market that we can safely give up any pretense that a single vendor could deliver all of a company’s CRM needs. APIs and cloud computing make integration more important and feasible.  More vendors will discover that the winning strategy is to do whatever is possible to pre-integrate their wares with strategically important foundation CRM vendors.  It wouldn’t surprise me to see some vendors begin to organize around specific business processes or types such as channel selling.
    • This also implies that many companies will be looking to extend their solution sets with strategic additions.  Any company can optimize its CRM deployment and probably gain competitive benefit by looking at its business processes and comparing their level of automation with the product sets now on the market.  Need a way to keep your sales people in the game?  Try a compensation management system.  It will give them a way to quickly understand their progress in the only way they keep score.  At the same time it will reduce the back office overhead caused by end of quarter commission calculations.
    • If you have an interest in bringing out a new product but worry that a limited marketing budget could limit your success, you might first consider a variety of customer analytics that can help you determine which customers have a need, what that need is and how to approach them.
    • Or perhaps you are looking to improve service and save money but worry about displacing the good but expensive handholding your service group provides with faceless automation.  Try a social service solution that engages your user community to help answer basic customer inquiries through Twitter and Facebook.  Not only will you be able to maintain a person-to-person approach but response times might decline and there’s no telling what positive fallout might happen when customers help each other.  If you’re monitoring the chatter you might discover that a core group of customers has great understanding of your product and does a super job of helping out.  The help can also turn into articles for your knowledge base.
    • The last area for social penetration might be using solutions to analyze your negatives—to identify instances where customers express their displeasure with you on the Web.  It’s much better to deal with an irate customer than to let their anger fester, but first you have to find them.  Social media and analytics can help and it’s a worthy investment.  Our research shows that even the best companies have their detractors but often a vendor knows little or nothing about a problem.

    My analysis

    To summarize, the year ahead in CRM will be important for replacing old systems and for integrating new niche applications that sharpen your game.  The costs of these additions will be relatively low due to cloud computing and the nature of some smaller niche applications.  The recession ended in July of 2009 and while it might not feel like a recovery right now, there is ample evidence of improvement.  You can use next year strategically to improve your stance as a recovery picks up steam.  There are good products on the market and vendors are still hungry.  If you miss this opportunity, I think you’ll be saddled with your old and relatively expensive systems for longer than you might like.

     

    Published: 12 years ago


    Hangover

    Hangover

    Drifting snowOf snow that is.  Mother nature let loose on eastern Massachusetts with a couple feet for my back yard and some heavy duty winds reaching gusts of 80 mph.  We’re spending the day digging out cars and doing other valuable things that affect our survival.  Here are some pics from the Winter Wonderland.

    Squirrel, no moose, fortunately.

    Published: 12 years ago


    “Call rewrite!”  That’s what they said in the olden days on movie sets when the script needed doctoring.  It’s also what the technology industry metaphorically does about every ten years.  We rewrite much of what we’ve been relying on for information processing because the accumulation of new technologies over the previous decade has made our current batch of gear and applications uncompetitive and relatively expensive.  So say Larry Ellison, Marc Benioff and many others.  So the cycle begins again though when exactly is a tricky thing.

    By the looks of this economy the new cycle couldn’t arrive soon enough and thoughtful people are asking what the new world might look like.  Some of us may have been lulled into believing that the ten year replacement itch applied to other departments but not CRM.  After all, haven’t we been steadily accumulating changes all along?  And haven’t new technologies like SaaS, pretty much eliminated this cycle?  Well yes and no.

    On-demand, SaaS or Cloud Computing—call it what you will—has done a lot to flatten the technology replacement curve but the reality is that new stuff finds a way to creep into the world and our existing infrastructures don’t always handle the newbies smoothly.  The case in point is Cloud 2.

    Cloud 2 is as significant a departure from the norm as CRM or SaaS computing were when they were first introduced.  Driving Cloud 2 are three technologies that we are all very well versed in but which, taken together, add up to the call to rewrite.  Let me explain.

    The three technologies aren’t even new.  They include mobility, social media and analytics and they’ve been around for decades in some cases.  The convergence of these three technologies within the CRM suite is driving us to rethink CRM and they have the potential to drive the next economic cycle.

    Social media is transforming CRM but so is analytics though we are earlier in that deployment curve and while mobility has been a factor for a long time, the convergence of these factors is something special.  It reminds me of the 1990s.

    The ‘90’s saw a wave of productivity enhancement and a long period of growth with low inflation and the two are rarely seen together.  It caused Alan Greenspan, chairman of the Federal Reserve, to speculate that we had entered a new economic era of permanently lower inflation and higher productivity.  With so much evidence around him, Greenspan could be forgiven for this thinking but the laws of economics had not changed and, in fact, they were working as advertised.

    Under normal economic conditions, increased productivity—i.e. getting more output from workers—required more input.  More production translated into more people, more machines and more raw materials.  But that didn’t happen in the 1990’s as knowledge workers leveraged technology to increase their output.

    The computer automation boom of the previous decade—the 1980’s—was largely responsible for the aggregate productivity improvement.  While individual companies might have been hard pressed to provide a valid ROI calculation for their technology investments, many decision makers knew that without those technology investments, they would surely be left behind.  It wasn’t until the 1990’s that this infrastructure buying spree aggregated forming the productivity boom.

    The same kind of situation may be forming right now as three new drivers—social media, mobility and analytics—converge, especially in front office business processes.  As in the prior example, these technologies have been accumulating in our culture and they have become more robust in each passing year.  Social media may be new but its adoption has been significant.  With half a billion Facebook users alone social technologies have become ubiquitous, a key requirement in deploying any new networking technology.

    Today mobility benefits from investments in infrastructure by the carriers and in devices by individuals that provide the essentials for using social media.  Finally, analytics have existed for decades but their coupling with social media is a critical turning point.  Social media generate mountains of data that must be analyzed to be useful and studies show that analytics adoption is shadowing social media adoption in business.

    So here is the critical point for me—your investment in mobility will be enhanced and your investment in social media will be justified by how well you adopt social analytics.  That’s right, analytics is the last mile in this journey and analytics, if implemented appropriately, will make the other investments look shrewd because analytics alone will give you insight into the data churned up by the other technologies.  Analytics along with the other drivers provide the essentials for Cloud 2 and for a new round of prosperity.  Most importantly, analytics and Cloud 2 move the discussion from the hardware and software to the business process, which is where we’ve been trying to get for decades.

    Published: 12 years ago


    Chuck Schaeffer

    This week’s thought leader is Chuck Schaeffer.  In case you don’t know, Chuck is the founder and Chairman of Aplicor, a global software publisher of on-demand CRM and ERP cloud computing business applications designed for global middle market organizations.  He’s a serial entrepreneur having started and run successful consulting companies in the SAP, Microsoft and Oracle partner channels so we value his insights and comments on today’s hot topics.  For example, Chuck thinks Salesforce.com set a bar when it established trust.salesforce.com and wonders why others have not jumped into this approach to establishing customer intimacy.  Good question.  For the whole interview click here.

    Published: 12 years ago


    There are three relatively new technologies converging to make Cloud 2.  All three technologies have been available for many years, though in less robust forms and with less powerful integration.  The convergence is driven by their ubiquity, low cost and ease of use.  They are social media, mobility and analytics.  Together these technologies offer a future that is vastly different from conventional enterprise information processing served from a traditional data center or from a data center somewhere else on the Internet that made up the backbone of Cloud 1.  Read the full story here.

     

    Published: 12 years ago