CRM Evolution Notes
One of the more interesting aspects of CRM Evolution, which was held in New York last week, is how many emerging companies attended and appear to be doing well. The big guys were there too either with booths or through attendance by senior people. You can get a false sense of the marketplace if you only attend Salesforce.com’s Dreamforce, Microsoft Convergence, SAP Sapphire, or Oracle OpenWorld.
Though they are all excellent, at those shows a single vendor dominates and ecosystem partners give the impression that the market is all sewn up by the primary vendor. But while these big vendors are, indeed, doing many things right, the market continues to reward smaller vendors who are doing good things in innovative ways.
Three such vendors, Sugar CRM, Five9, and Vertical Solutions caught my eye in New York, in part because they briefed me but more importantly because they can demonstrate momentum. Sugar managed to coincide a major new funding announcement with the event. On Wednesday, they let fly a press release announcing a new round of funding worth $40 million and led by Goldman Sachs. The size of the investment plus the identity of the investor were both notable in a market where multi-billion dollar CRM companies seem to have their pick of customers.
But Sugar has been surprising many people over the last four years. Since CEO Larry Augustin came in the company has boasted fifteen quarters of, usually, double digit growth. Last year Sugar signed up one of the most coveted customers and partners — IBM – for an implementation worth tens of thousands of seats. At the same time Sugar joined IBM’s Global Alliance Partner Program. As the company was announcing its funding in Cupertino and showing off in New York, it was in the process of going live with a tranche of new user seats at Big Blue — they’ve spun up nearly 70,000 seats as of Q3 2013. Sugar has turned a corner moving from selling under 100 seat deals to increasingly going after and winning larger deals with major corporations in North America, Europe, and South America.
According to Augustin, the company’s success is at least in part explained by the platform’s robust application development tools and API set. Many companies are turning to CRM today to be the base application for building apps that run on multiple platforms and in one way or another face customers, whether or not that means participating in sales, marketing, and service. In this Sugar has plenty of competition from Salesforce, Microsoft, Oracle and just about any other name your can mention but it also has momentum.
Five9 is another example of a cloud company that has been in the market for over a decade and is now catching fire. According to vice president of product and solution marketing Liz Osborn, Five9, which touts more than 1,800 clients, has staffed up recently with some of the brightest minds in the business. Led by CEO Mike Burkland, the company is now a small directory of people who have been successful in the telco as well as customer experience space.
They are now lending their expertise to this SaaS based contact center provider to help deliver some cutting edge functionality such as a new mobile supervisor app for the iPad that allows call center managers to monitor and manage staff from any location.
The company also has some strategic CRM integrations for Oracle RightNow as well as Salesforce — they just announced more than 150 joint clients — it will be interesting to see what this cloud contact center software provider does next.
Also in the call center, Vertical Solutions’ vice presidents, Ronnie Wegmann and Kim Brault attended CRMe. Vertical Solutions has reached critical mass in several markets, most notably in healthcare.
With the new healthcare law taking effect in January 2014, many hospitals, practitioners, and insurance companies are ramping up to provide the efficient customer or patient service that providers will need to implement new approaches.
VSI’s solutions are positioned to support the convergence of device support and care services. In addition, patient centered care models and readmission penalties will drive the need for healthcare services innovation — “Customer Experience” technologies including CRM, cloud, social, workflow, and mobility will be core requirements to drive new revenue models, effectively comply with healthcare regulatory changes, and minimize costs/risk.
Ronnie Wegmann told me VSI will be making several announcements later this year regarding innovative partnerships and market strategies. Meanwhile the company continues to add customers at a good clip.
Also worthy of mention is SAP. The company has been working hard over the last two years to bring to market an iPad sales application. I’ve seen it and it is beautiful. It incorporates powerful visuals and an intuitive design along with powerful analytics. I think SAP will go far with this and some other advances in their product line. My one critical observation, though, is that the sales tool seems more focused on selling to a large company’s installed base than for developing new business. As a practical matter, though, this has become an important aspect of life in large corporations so you can’t fault SAP for taking that position. But this is still evolving so watch this space.
Lastly, there are a lot of CRM shows or parts of shows dedicated to CRM and people can’t attend all of them, but I wonder why this show in particular is not better attended. This year I heard a combination of issues like August in general and summer vacation as well as back to school issues and show promotion. If they held this show between Thanksgiving and year-end the result would be similar. However, this industry deserves a more robust event and while shows like Dreamforce are hugely successful, they are single vendor oriented. The same is true in a different way, of the proliferation of analyst shows. The role and usefulness of the independent show should not be underestimated and I hope the magazine does a few things to built it up.
Ballmer Will Retire in the Next 12 Months
From the get-go Steve Ballmer had an impossible job to do. Long the number two man at Microsoft behind iconic founder and chief geek, Bill Gates, Ballmer got to take over when the Gates bubble was beginning to wear out. Gates built the company he founded with Paul Allen from zero into the powerhouse of the high-tech revolution to the point where it straddled the industry like the colossus it was.
How do you top that?
Perhaps you don’t, at least not initially, and it was Ballmer’s job, increasingly of late, to be the guy who kept the wheels on as PC sales began to dip, cloud computing became the next big thing, and Microsoft had to scramble to be relevant. Ditto with mobile devices. Its phone has small market share, its tablet, despite an attractive UI and a real keypad, lags the iPad in sales. Bing, the search engine positioned to rival Google is facing an uphill climb.
The reason for all of these is the same — being late to the market with a similar product. Microsoft was so busy being successful that it couldn’t see a time when it wouldn’t be. It happens all the time and Clay Christenson documented it so well it’s not worth discussing further. Yet, to see Microsoft in this predicament is disheartening. Microsoft is the company that, along with Intel, Lotus, and Apple, is most closely associated with America’s rise to prominence in all things high-tech and it’s hard to see what looks like a sun setting on what has been a great three decades.
But, of course, that’s the wrong way to look at it. You can’t do anything about yesterday so, as they do rightly in baseball, you put it out of your mind and only focus on what you can do today.
Ballmer’s headed for the exits and he has already been very well compensated. According to Wikipedia, he is only the second person in history to have become a billionaire without being the founder of a company, simply through various forms of compensation. His successor will likely not be compensated as handsomely no matter what the company’s results. The new person will need to figure out how to address a market that has become much more fragmented, one which has, if not eliminated the need for, at least has reduced its dependence on Microsoft’s core cash cow offerings.
The new CEO will need to go back to the well, to think deeply about what Microsoft can be and I hope the newbie decides to put more wood behind the enterprise computing arrow than behind the games. Microsoft became great by imagining (or at least borrowing) things that didn’t exist and commercializing them. CRM, ERP, Windows, Office, content management, the browser and lots of other things were perfected by its developers for an audience that wanted standardized applications that worked. There were notable exceptions like Vista, but largely, it did all work, and those standards fueled the industry’s growth.
The rivalry for most of the company’s existence was with Apple and most of that was inspired by Steve Jobs, Gates was serenely above the fray. But I think the next rivalry ought to be with a company like Salesforce.com whose charismatic leader, Marc Benioff, has a knack for Blue Ocean Strategy consistently finding new places to play, away from significant competition while he tinkers with a new business process that his company can uniquely support.
As Microsoft looks to be more of a services company it would do well to emulate some parts of Salesforce, the company that, more than any other, brought Software as a Service to the world. I think that should be a useful target for the search committee now starting up and it provides a rough outline of who to look for. On the other hand, if the committee finds a soulless bean counter, it will be time to put out the fire and call in the dogs. There is a lot riding on this, as if you needed to be told.
The Age of Asymmetrical CRM
Am I making up a term? Maybe.
This column is inspired by the continuing dreadful news out of PC land. Last week Dell announced its profits for the just finished quarter dropped 72% year over year and Lenovo took over the number one spot in PC manufacturing from HP though both companies saw declines.
Even though the declines in shipments of PCs and laptops are serious the numbers being produced are still prodigious even as the numbers of tablets and smartphones continues to soar. There’s no need to quote numbers here, that’s not what this is about, but you can always check out Gartner and IDC who each tabulate this data or refer to this article from the New York Times.
The big CRM story lurking in all this is not simply the move to mobile which everyone already knows about. To listen to the chat these days you could get the mistaken impression that everything is going to the device but that’s way too simple an explanation. What’s really happening, as I see it, is that we are rapidly moving toward asymmetry in not just CRM but in all forms of computing.
One side of the divide is the server farm. Much as we would like to ignore it in favor of the sleek devices we carry around, the farm isn’t much changed from the mainframe, it’s just the way that we connect with it has changed and the rendering device a.k.a. terminal now fits in your hand and does more on its own. The other side is the device which, when Steve Jobs launched the iPhone and the Post PC era he christened as a content consumption device.
But it’s the server side where things get made. It’s where marketing programs get designed and pushed out the door, where sales keeps the pipeline and compiles its reports and it’s where so much of the infrastructure for service emanates. If the device is the content consumer, obviously the farm is where things are made.
With that bifurcation what’s come into sharp relief is the idea that the server side has all the analytics, number crunching, inventory systems and services that can make the consumption devices valuable. So as I see it, devices aren’t killing desk and lap tops but they are limiting their growth much as cars didn’t destroy rails, but they did sequester trains in the long haul freight business.
There’s enough server side power these days to do pretty much anything and the device market is buzzing with new apps that aren’t simply new but represent, in many cases, unheard of parts of business processes that mash up geo location, databases, unstructured data files and analytics to do some pretty far out things. We all have our own gee-whiz stories about new apps that do amazing things so no need to point any out.
So what does this do to or for CRM? It’s not the handful of islands of information we had more than a decade ago but you wouldn’t know it to look at some of the biggest corporations on the planet. In my research it is stunning and eye opening to see how many corporations in consumer-vital industries have not caught on yet. They’re still running old mainframe apps and they are being crushed by an inability to deliver on basic customer expectations.
If you follow sentiment captured by, admittedly renegade, sites like Amplicate.com (which I think has been taken down because of insufficient consumer interest earlier this year) and the PissedConsumer.com, you see the results. Old systems charged with implementing new fangled automation schemes in banking, financial services and other high volume consumer industries are failing many people in catastrophic ways and customers are lashing out.
The disconnect between old style computing and the new realities are striking and need to be solved by smarter automation that does more than hold onto old records. Companies are flying without radar in many cases as they cling to business models that don’t recognize the difference between a customer and a consumer. Hint: Consumers bought what they were told to by Madison Avenue in the manufacturing age, Customers subscribe to things and can be gone before you ever register a profit from them.
In some respects such as the need to know what customers think and need, CRM continues to expand beyond its original borders or even its most recent borders. It looks like you could make a case that everything that isn’t an accounting or ERP system is becoming CRM simply because it has the potential to gather data about people and possibly, though not necessarily, turn it into information that’s valuable to a vendor. It really is becoming two tiered in an asymmetrical way — one for capturing data and another for providing information. One that works fine on a little device and one that needs all the horsepower it can get to make sense of the data that is constantly collected.
End of a Short Road?
I’ve been having so much fun lately that I may have missed something but let me ask, have we already reached the end of the customer experience trend? I think CX still has a lot of life in it but let me play devil’s advocate for a moment.
CX is a nebulous term and idea and its discussion leads to all kinds of confusion about its meaning. Is CX about how the customer uses or engages with your product? Is it about the idea of turning your product or service into an experience? Is it more holistic and if so what’s that all about?
First off, some threads of CX are not new. For instance Joe Pine was talking and writing about it in the last century (1999, lol!) in his excellent book, “The Experience Economy.” Pine — and co-author Jim Gilmore — have been building on that idea all these years and they’ve added new insights to the original idea.
Basically though, they thought of CX almost like you’d think about a maturation process. Things go from commodity raw materials, to branded products to services to (hopefully) experiences. The classic example is coffee beans that traverse a path from bulk beans to roasted and ground product to service at a counter to experience at a hip coffee shop that gets five bucks for a cup and offers good sounds and lighting. But I’ve written about this before and you know it almost intuitively.
Another school of thought obsesses over the user interface, the store, or whatever is central to the moment of the purchase. That’s a more narrow definition and one that’s taking the original idea down its own trajectory to the moment of transaction.
So here’s why I can make the case that CX is over (though in my heart I don’t believe it fully). I prefer a different interpretation of the time we live in and the importance of how we reach out to customers via what passes for some kind of experience. Since no single definition suffices for me, let me just say that I’d rather we talked about Geoffrey Moore’s idea of whole product rather than messing around with trying to figure out what an experience is.
Experience is ethereal and philosophical while whole product is much more concrete. Whole product is CX and a bit more because it explicitly incorporates the notion of an end-to-end process that even the best definitions of CX only allude to. Philosophical CX may be more CRM while concrete CX is all about business process management (BPM). In mature markets, which we seem to have an abundance of these days, customers buy whole product, which typically includes the core thingie plus the policies, practices and other seemingly extraneous attributes that the company brings to the customer relationship.
We could argue that a low priced but more than adequate product that comes with no obvious policies and practices bucks this trend. Ah, but the low priced and adequate product has been engineered to be so intuitive that it doesn’t need those things and so they are there even if absent.
A couple of decades ago you might have bought a wireless phone for the convenience of being able to make calls from anywhere. All phones and services were about the same and we made purchase decisions based on simple attributes like flip phone style vs. candy bar shape. That was about it, you might have selected a service based on strength of signal or bars but the vendors did a pretty good job of never letting a rival get too far ahead by merging aggressively.
Ok, then things got complicated first by BlackBerry and then by Apple. RIM gave us a big screen and keypad for email while Apple gave us a true mobile lifestyle that, more than providing communication, freed us from lugging around laptops. When that happened the market went into mature phase and suddenly attributes that Apple was only mid-wife for became part of the whole product — I am talking about the ecosystem of affiliated applications — and if you didn’t have an ecosystem, you weren’t a contender. Add in the Apple Store near you with its Genius Bar and well staffed call center and the build out of the CX was complete. Today vendors compete on ecosystems and stores.
So the mobile communications market is a great example of CX reduction and as you can see it more resembles the Pine and Gilmore idea of an experience than the how-can-we-make-buying-our-stuff-even-easier school of thought. The latter seems a pale imitation of the real McCoy to me.
So, to round it out, is CX over? Have we gotten so enamored of it as a tool for “accelerating sales” (I love the naiveté of that phrase) that it has lost its punch? Or have we forgotten the importance of what it means? If we approach CX as an accelerator rather than as the way we need to do business in an era of mature markets where people need to be attended to, then maybe. But savvy companies seeking ways to keep from sliding back down the curve to commodity status will see plenty of life in the idea of CX even though it has too many meanings. Better, I think, to call it what it is, whole product orientation.