March 29, 2012
I moderated a panel discussion this morning, something that goes with the job I do. It was with the Massachusetts Technology Leadership Council (Mass TLC) and the event went really well. People were engaged, there were good audience questions and the panelists gave well considered answers.
The title of the session was “Finding the Right Way to the Cloud: Measure, Manage and Monetize for Success” and I was told it would focus on the financial and business model aspects of becoming a subscription company which it did for the most part. What interested me and what motivated this piece is the quality of the discussion about technology.
In a discussion that was supposed to be about business there was a lot of technology talk. We were ostensibly talking about metrics for managing the business like churn, deferred revenue, recurring revenue, renewals and more. But the technology discussion was also about monitoring API calls in a public cloud and other things that never come up in discussions about companies like Salesforce, NetSuite, Oracle, SAP, and Microsoft because those SaaS applications hide all this complexity form the user.
I don’t pretend to understand the significance of an API call and the costs involved, but the panelists seemed to. In the middle of this I began thinking that this is the price you pay for going for an infrastructure as a service solution. I suppose there are situations when a company might want or need a bare bones hardware solution. But it seems counter intuitive to me that anyone would give up a data center only to take on this level of complexity. What is saved or gained with this down in the weeds approach?
I was surprised and delighted to be invited to chair the Sales and Marketing track at the upcoming Enterprise 2.0 conference in Boston, at the Hynes Convention Center, June 18 to 21. I will be working with a great bunch of people and look forward to putting together some top notch thought leadership for the track. Please check out the website and plan to attend some of the sessions. They’ll be worth your time and I’ll plan some nice weather for you.
Note to self: Write something nice about Microsoft Convergence 2012. They did a great job in Houston and most importantly you can really see the CRM focus coming together with social, mobile, analytics, back office and a lot more. It’s taken a long time because there are a lot of moving parts for Microsoft but Convergence was impressive.
To get a sense of all the wonderfulness surrounding Convergence you need only glance at some of the many observations made by the likes of Paul Greenberg, Brent Leary, Dennis Howlett, Josh Greenbaum and many others. So Kudos to Microsoft.
My observations will be somewhat different. While I also think Microsoft has made important strides and I applaud their CRM team, I want to focus on what’s around the bend. First there’s the new CRM GM, Dennis Michalis who took over from Brad Wilson after Wilson turned Microsoft into a CRM power almost by sheer force of will.
Michalis is a find, the kind of acquisition that, if he was a stock, would have been overlooked by everyone but Warren Buffet. From what I can tell, Michalis has spent most of his career in Europe or the Far East and did well in those market; however, he was somewhat off the radar when Microsoft saw his talent and scooped him up. Michalis has been with the company only a few months so this year’s Convergence was still mostly the result of Wilson’s efforts. Michalis will have to stand on some big shoulders to do better and I think he can.
For starters, he will need to flesh out the social, and to a lesser degree, mobile strategies and product lines to be truly competitive. Microsoft is not a social powerhouse and trails in the mobility wars, at least on the mobile operating system side (and that’s a lot). But they have a strategy to offer their CRM on multiple browsers and in fact, demoed a mobile application for the iPad, which was impressive. Their analytics package for sales, form what I saw, is powerful and sports a nice and intuitive interface though overall the product still has a straight from the software lab look to it.
The company’s biggest advances were, in my opinion, not software related though — they more clearly relate to the company evolving from an ERP company to more of a CRM company. This needs some explaining.
First, it was nice to see Kirill Tatarinov speak about the drivers that his organization takes into account when trying to figure out product direction. He said they include economics, geopolitics, people and technology, and I think that’s hugely important, though I don’t think it has been the case in the past.
The business climate, the cost of fuel and raw materials, the stability of the local political regime including personal freedom and free markets, all go into what will drive demand as well as the nature and character of demand. They drive what people will buy and the style of the technologies they will use in their personal and professional lives. All this might seem to affect ERP more than CRM but I think the distribution of influence is roughly equal.
But those are high level ideas and truth be told, it’s an ongoing effort to get them down to street level and there are some key things that I think Microsoft can do better in that regard. For starters, the company culture is one of a vendor selling through distribution to others who will produce a final full product. In ERP they’ve been successful at imagining customer business practices and driving solutions to market in some key areas, especially manufacturing. This hasn’t been the case, to the same degree in CRM and it needs to be.
Microsoft needs to do a better job now of connecting its many dots. For example, it is still at the point where it is hitting checklist items like social — so that it can compete with the likes of Salesforce — but without offering a compelling story of how a business progresses because it adopts new technology. Salesforce calls it the social enterprise and Microsoft has no counter. It is still selling components, modules, and it needs to elevate its game.
Also, too frequently for my taste, Microsoft likes to show off customers who have heavily customized their CRM instance, especially non-profits. It’s nice to see non-profits in the mix, but the focus needs to be on for profit business. Also, this makes points for their XRM strategy which goes against Salesforce’s Force.com platform, but it is wide of the mark for a customer that wants out of the box functionality that works the way its business works and drives improvement.
Cloud computing is another area for tightening up. Here Microsoft joins the rest of the market excepting Salesforce, in highlighting the benefits of a go-it-yourself, roll-your-own strategy of hybrid clouds in which customers get to decide where their data resides. I don’t think this is the right strategy for any vendor and here’s why. We see too many examples of companies who manage their own data being hacked and increasingly the hackers are not individuals with an ax to grind but nations like China stealing IP or radicals like Anonymous aiming for industrial scale mayhem.
In this world, the strategy shouldn’t be building your own bomb shelter. Microsoft and the other vendors have a credible case to make that they can and do perform a superior job of keeping data safe and that the time for going it alone is rapidly ending. A more credible and strategic program might be for all vendors to say, “Hey, we’re the pros at this, let us handle it.” If I ruled the world (hahaha!) that’s the tactic I would take. It will take some years to accomplish this education but we need to start now. And we need to quit deluding ourselves with a cowboy ethos that individuals can do a better job of data security than an organization dedicated to the task because the evidence shows this is just paranoia.
Ok, back to Convergence. My last point — that Microsoft needs to do a better job connecting the dots has another element. I am sorry to keep comparing Microsoft to Salesforce, because I think the two are more different than similar, but in the area of philanthropy I think Microsoft is trailing Salesforce when it could be leading.
You know that Salesforce has this 1:1:1 model in which it donates one percent of its equity, time and product to a 501 (3) (c) charity, the Salesforce Foundation. At major events like Dreamforce, they have charitable activities in which customers can easily donate an hour of their time to do some public good. All this activity is always tied back to the charity.
At Convergence Microsoft tried to do the same thing and the effort was inspiring but it wasn’t tied back to anything in particular. Volunteers worked with Habitat for Humanity to renovate a house and when attendees filled out evaluation forms, Microsoft donated a dollar to a Houston charity, which was great. But without some over-arching program I think Microsoft misses getting credit for its largess and also for its community outreach, which is important.
Last point. Microsoft has not been a leader in any aspect of CRM. It has taken a less risky fast-follower approach and it has breathed in other peoples’ exhaust as a result. It’s time for the company to take a leadership position in something if it expects to reach the highest plateau in the business. That plateau is unified communications (UCS).
Microsoft has Lync, a UCS that it offers and also uses in-house; Microsoft people tell me it works well. UCS is, I think, potentially the next iteration of social networking. It has enormous potential to save companies money and improve the links with customers. To say the least, it would be smart of the company to step up its emphasis on UCS. The window of opportunity is closing and I hope the company takes advantage of it.
If this sounds too critical, let me end on a more positive note. Microsoft is a rising star in CRM and Convergence polished its reputation. It has end-to-end technology from the back office to the front and from landlines to airwaves. It is making headway in social, mobile and analytics — the next wave. It has a good handle on at least some of the critical business processes that its customers depend on. Like any software company, it will always be building out functionality, but its focus now must include, to a greater degree, all the many things that go into making a whole product in the social age.
Doubtless you have heard of the social enterprise by now. It is Marc Benioff’s leading salient in a world he is convinced needs his solution to modern business. But you also know that, like many other trends, this one is a work in progress. For every Kimberly-Clark, Burberry’s and NBC Universal there are, what? Banks!
No, not the banks that ran fast, free and loose with investor’s money or made up mortgage backed securities and cleverly also invented derivative insurance at the same time on the theory that every boat needs a lifeboat. No, those were investment banks. Regular old banks that do the mundane tasks of balancing the books, offering free checking, loans and credit cards are among the late adopters of the social enterprise or so says an article in today’s Ne York Times.
According to the Times article, most banks are slow on the uptake of social technologies. While many have social outposts like Facebook pages these banks do a minimal job of patrolling social media for customer comments and other signals that something might need doing. Experts quoted in the article used words like “hibernating,” and “amateurish,” to describe banks’ efforts along with, “displaying tokenism attitudes.” Ouch!
Let’s call them “Social In Name Only” or SINOs after RINOs, a group of upstanding and principled people the Republican Party apparently no longer has room for. I’d say that SINOs are different in many ways. For starters, they haven’t abandoned anything or been abandoned by the society at large. They simply are late to the party.
A better question to ask about SINOs is why they are late. Is it that they are organized top down and the message simply has not gotten up to the head cheese? Or is it possible the intense regulatory climate that they live in (which investment banking cousins somehow evaded) has not caught up with the social tsunami due to older customer demographics? Or is it possible that a certain amount of risk aversion keeps banks from dealing with their customers on their own terms? The article suggests that high net worth customers under 50 might be about to lead a charge to social.
I don’t know but I expect some combine of forces is at work. I also smell a business opportunity and it’s bi-directional. We can figure out the upside pretty easily — better customer outreach and interaction resulting in more banking activity. But the bigger win for banks might actually be on the cost avoidance side. If you’ve ever tried to understand a statement or get a question answered about that check you bounced you know that many banks are still mired in phone hell caused by call center business processes that were engineered during the very first Bush administration.
Seems to me that your average bank could ramp up service AND cut costs significantly if it paid attention to social media and leveraged it like any other social enterprise would. But then what would we call them? Having just invented SINOs I am fatigued from my creative efforts and don’t want to think about it. Look at how short the idea cycle has become.
I have been out of the office attending Convergence and Cloudforce and the self-assigned pile of things I want to comment on has only grown. One of the more interesting articles to come across my iPad recently was in the New York Times titled, “When Businesses Can’t Stop Asking, ‘How Am I Doing?’” It’s about the almost manic approach some businesses have to calculating customer satisfaction. It reminds me of Ed Koch, former New York City mayor who made it his tag line. Back then it was a fresh idea, but now, not so much.
As you might know, customer satisfaction was the holy grail for vendors for a long time. It was used as a barometer, though not an exact measurement, for things like the customer experience and a customer’s propensity to make a subsequent purchase. But satisfaction can be misleading a customer might have lots of reasons for not buying additional products or services beyond dissatisfaction. For instance, the customer might be tapped out or just not need another car.
But now the Times article is suggesting that customers have had enough. It’s not that we don’t want vendors to know the good, bad and in between, but we’ve been asked so often and in such great detail that we’re feeling saturated. According to the article:
“If customers balk at taking what can feel like an SAT test, the fault may lie with the surveys themselves. Many businesses, often against the advice of the experts they have hired to construct their questionnaires, cannot resist the urge to ask, ask and ask yet again. Exasperated consumers, assured that the survey will take only five minutes to complete, often bail out as they approach the 10-minute mark.
Indeed, not taking advice from experts and over sampling are having predictable results. But this also points out how important it is to find alternative methods to gather customer data and the importance of big data and analytics, for example.
Social media is still percolating through business finding new homes and admirers but already we’ve discovered how much data social tools generate. Hence we are finding that analytics need to become an integral part of what we do in the front office. But it’s the combination of social media, and all the data it generates, and analytics that will lead us to a new paradigm.
While it’s hard to get customers to respond to survey requests it is equally difficult to get people to respond when market researchers are doing the asking. In my own experience a survey is often best filled out by me in a phone conversation with a sometimes-reluctant person on the other end.
You might think that big data and sentiment analysis would solve the problem but the two forms are different. From the article there’s this:
“From social media you can gauge sentiment and to a lesser extent underlying emotional content,” said Leonard Murphy, who writes for the marketing blog GreenBook. “But you won’t be able to determine why the customer feels that way. A survey gives you the opportunity to dig deeper.”
Looks like for the near future we will still need to rely on the survey but maybe we need to develop some self-restraint. Alternatively, there’s probably a business opportunity here. We’ve already seen companies that specialize in gathering customer opinions for a fee and we might see more of this in the future. Perhaps this is telling us that some form of analytics on surrogate data and direct sampling is needed to avoid complete customer survey burnout.
