Mud season
It’s mud season here in New England that time of year when everything merges into an amorphous mess. The grey sky merges with a grey landscape made into slop by continual rains and dirty grey melting snow. It’s hard to tell where one thing ends and another begins but eventually the sun comes out and dries everything, the sky becomes distinct from the horizon, plants bloom from the firming ground and order is restored. What better time for Amazon and Salesforce to announce another partnership?
I have to say I read the press release and articles from Tech Crunch and ZDnet several times in order to separate things because I was confused. The announcement from Salesforce and Amazon today said that Amazon Connect and Salesforce Einstein would work together to provide an intelligent service offering to Amazon’s service customers. Ok, I get it, but why?
Amazon has been climbing the value chain in cloud computing for some time. Initially its AWS service provided infrastructure as a service that enabled legions of businesses to ditch the computer room and run their operations in the cloud. Additionally, the company ate its own dog food by building a customer service cloud offering that not only supports its internal needs but increasingly supports third party customers, the most recognizable among them include, GE Appliances, communications company Bandwidth, and AnswerConnect.
Amazon has other CRM components as well and relationships with Zoho, Zendesk, Freshdesk, and others. Today’s announcement pairs Salesforce’s Einstein AI tool with AWS Connect to produce a savvier version of Connect. There are and will be more integrations of multiple solutions across product lines, for example both Salesforce and Amazon have IoT offerings and we can expect more news on them in the near future, I think. But there’s a part that I still don’t get, a part that makes me think of mud season.
Historically, Amazon has pushed into new industries and markets with economies of scale, its ability to deliver something at lower cost than others in the space and consolidate market power. AWS was and is a great case in point. Unfortunately, the strategy is also one of accelerating commoditization in which only a few survive and the trend is to make a living on razor thin margins and, once the market is consolidated, reduce innovation. I understand commoditization, it’s a facet of capitalism but innovation has to have a place too.
That’s why I see mud everywhere. Can a company that started as a retailer spin off so many tangential businesses and continue to dominate all of them? Can CRM dissolve into a Salesforce-Oracle-Microsoft-SAP-Zoho and now Amazon soup of similar offerings and still offer differentiation?
My cautious answer is yes and not because of anything that Amazon is doing but because Salesforce is in the mix. Salesforce has a smart and notoriously short attention span with which it innovates a new idea and just as the rest of the market picks up on it, moves on to another object that it shines up and spotlights. Salesforce did this with social, mobile, IoT, analytics, and now its artificial intelligence offering, Einstein. With this strategy Einstein could end up powering a lot of customer facing solutions in service, sales and marketing.
This approach seems to be what Salesforce needs right now. As it is approaching $10 billion in revenues, it is, I think, also reaching a ceiling on what it can sell by itself and truth be told, it has been in this spot for some time. Selling through partners does two important things. It greatly enlarges the number and quality of its revenue streams but it also leaves Salesforce more or less free to do what it does best.
Salesforce has rapidly become the innovation engine of the industry. Its ideas drive markets and its technology is in many cases first among equals (check out the Magic Quadrants, I am not making this up). As long as it can maintain this position as the high value innovator through core technologies like its Salesforce1 Platform, Salesforce can be the exact opposite of Amazon. Where Amazon goes for the low cost commodity position, Salesforce captures the high-margin ground of innovation.
Is that a sustainable business model? Ask Thomas Edison.
Blockchain: CRM’s Next Frontier
Since 2000 we’ve seen a parade of technologies including browser-based cloud computing, social media, mobile technology, workflow, journey mapping, and big data and analytics coming into the front office. It’s typical that at first there’s only a tenuous relationship between the technology and CRM’s original mission but over a short time innovators adopt and commercialize the innovation often by rethinking or inventing from whole cloth business processes that leverage the technology’s attributes.
I think the next invasion of CRM will be blockchain technology. If you haven’t heard of blockchain, you shouldn’t be surprised because it’s been slowly making its way around the back office and it’s still early days for the technology even there. In this article I’ll delve into what blockchain is and how it might be used in CRM, but remember, blockchain isn’t in CRM yet and it might not be ever. This is all my hypothesis.
So, what is it?
Blockchain is an approach to data management that enables disparate organizations—none of which has absolute control of the data—to trace data through long processes involving multiple computer systems owned by different parties whose goals and requirements can be vastly different. Blockchain provides a common denominator for just the data these disparate entities need to collaborate on and a pedigree of the data that’s hard to fake.
So for example, an article in Harvard Business Review, by Michael J. Casey and Pindar Wong, “Global Supply Chains Are About to Get Better, Thanks to Blockchain,” discusses how the technology can potentially help manufacturers keep track not only of goods but of associated attributes like quality control by providing the provenance of everything in the supply chain proving to the end consumer (either a business or an individual) that the component meets contractual standards, for example.
Contracts are an area where blockchain has strong roots. According to the HBR article it, “…allows users to attach digital tokens—a unique, negotiable form of digital asset, modeled on bitcoin—to intermediate goods as they progress along the production, shipping, and delivery phases of a supply chain and as title to them passes between different players.”
I suspect but do not know for certain because I am not a security expert, that some form of blockchain technology could be useful for improving security regimes in many applications. Blockchain would be useful to, “transfer title and record permissions and activity logs so as to track the flow of goods and services between businesses and across borders,” say the authors, so why can’t it be used to do the same with enterprise data?
Current security approaches spend a lot of effort building taller walls to keep invaders out but that’s a recipe for an arms race: for every 16 foot wall there’s an 18 foot ladder. What might happen if once those invaders gained access they were stymied because they didn’t have the right permissions because authorizations were scattered across many data centers and servers or because they couldn’t provide accurate pedigrees for their requests?
What about CRM?
Blockchain would be especially useful to help understand demand and thus figure out where to deploy resources. The current state of our thinking about customers is that we need to get 360-degree views of everything they are about but very often, even in this advanced CRM age, that’s prevented for two reasons. First, data is siloed in different departments. Like it or not the marketing view of customers is department-centric as are the service and sales views. Second, much of our customer outlook is still supply driven, in other words, even with analytics and machine learning to coax and prod users to do things with or for customers, actors still need to interrogate data themselves.
In effect, CRM users are still boxed into a position where they are supplying things, either information, service, or product, to customers. But if the effort of CRM is to always be available to customers to supply a need, then the most cost effective approach is not in trying to supply but to manage demand. Since demand is capricious and ephemeral, something like blockchain technology probably coupled with analytics would be the optimal approach to meeting that demand. For instance, in the Internet of Things, where machines communicate with machines, it becomes vital to provide not only data but its bulletproof provenance as well.
We’re rapidly moving into an era where fragmentation means that no single entity controls all of the data that we depend on for modern life. The alternatives are to withdraw from interaction or to find approaches that continue to leverage existing structures while improving our processes to make them more secure so that we can have high confidence in the data we use. Withdrawal is a fool’s errand and history is littered with attempts that worked for a time but ultimately collapsed. The current anti-globalism and populism movements provide an example. Although I do not wish to make this a political argument another example includes the Luddites who fought automation and lost. But perhaps the most interesting example of failed withdrawal was the Shaker sect. They set up their own communities and were successful at withdrawal but their dedication to celibacy kept their movement from growing https://en.wikipedia.org/wiki/Shakers .
My point is that after several decades of innovation in a variety of technologies, blockchain might be one of those useful tools that occasionally arise to tie everything together. As Casey and Wong point out, “the sophisticated, decentralized, internet of things–driven economy that many are projecting might well be impossible,” without it.
