Convergence

  • April 3, 2013

    • Marketing is taking CRM by storm; while we’ve all been fixated on social media, many companies — both vendors and end customers — have been acting more broadly by acquiring and extending marketing solutions.

    At the recent Microsoft Convergence 2013 held in New Orleans in March, the company put a lot of emphasis on marketing.  Microsoft presented sessions on Marketing Pilot, a recently acquired and renovated marketing campaign company, and at the show announced its acquisition of Netbreeze a marketing analytics company.

    Also, at the end of last year Oracle bought Eloqua and Salesforce has introduced its third cloud dedicated to, what else? Marketing.  There are other examples too of free standing marketing companies like HubSpot and Marketo or companies like InsideView, a marketing intelligence company, growing like weeds.  So what’s going on?

    It would be a natural conclusion to say that marketing had been the final CRM frontier and that companies had reached stable points in their sales and service solution rollouts so they simply embarked on marketing.  But that’s rather simplistic and it violates a cardinal rule of business — spend money to make money or to save it, but don’t spend just to spend.

    To appreciate what’s going on you have to step back and take a more nuanced view of the market place and the economy at large.  When the economy tanked nearly five years ago it took with it a lot of jobs and capital, which resulted in slackening demand and that slack is still with us.  Advances in technology are eating up even white collar jobs today and all of this has a depressing effect on demand.

    Also, interest rates continue to test the zero lower bound as Paul Krugman might say, in part because corporations are flush with cash and because consumer borrowing is still lackluster.  There isn’t enough demand for capital so rates luff like a sail in a headwind.  Not enough people have jobs and banks, especially today, won’t lend to people who don’t have the means to repay the way they did in, say, 2005.

    So, this is a long-winded way of saying that demand is slack, that customers are the rate limiting reactant in the economic formula.  When demand is slack, companies without a clue hire more sales people, savvy companies step up their marketing games to help identify likely customers without spending the expensive resources involved in putting a sales person on the road.  And all of that is a long-winded way of saying that marketing is hitting its stride because demand is slack.

    You could argue that in other times and circumstances, for instance when there is no demand such as at the beginning of a new market, a niche or a category, it makes sense to do missionary selling and marketing is a bare bones affair dedicated to generating PR and brochures.  But this is not then.

    Today, most markets are not new.  Customers have already bought version one or two and are smart about what the next edition ought to deliver.  They’re also happy to not spend their money if they can’t get the deal they want.  Oh, and by the way, there’s a lot of competition today so forget about those 65% gross margins that version one delivered, that’s not on the table.  Smaller margins have little room for expensive and risky approaches to the market.

    For all these reasons, and some others, marketing has become the hottest ticket in town and most of the CRM vendors have demonstrated an understanding of this reality and they are acting accordingly.  Consequently, marketing vendors are having a field day.

    This won’t last forever, nothing does, at some point the wheel will turn and there will be whole new fields to conquer with some new idea and the need for the elaborate, scientific and statistically based marketing that we are now constructing, will fade away.  We’ll probably hear some company talk about expensive and over engineered marketing approaches in favor of sleek new ideas about the relative importance of sales over marketing, like they just invented the wheel.

    But for now, demand is down, margins are under pressure and competition is tough, tough, tough.  And marketers are getting their day in the sun.

    Published: 11 years ago


    It’s show time!  Or maybe more correctly it’s show season.  Last week we had SugarCon, Radian6 and Salesforce’ Cloudforce Paris.  I didn’t go to all of them — Partis could have been fun.  It was a short trip and many Salesforce execs were in Boston later in the week for Radian6.

    This week I have Convergence in Atlanta the Microsoft party for I’d say 9,000 guests, analysts, partners and others but hard numbers will be available by the time this is live.  That’s a lot of people and a lot of divergent interests to accommodate.  It’s also a lot for any analyst to cover so I won’t even try.  My focus is CRM and I hope to have something to say about Dynamics CRM soon.

     

    Published: 13 years ago


    I think the best way to analyze Microsoft’s Convergence conference this week in Atlanta is to first understand that the company is fundamentally an ERP provider.  I know they do other things — I am using Word right now.  But in a choice between ERP and CRM, Microsoft is an ERP provider albeit one that has good CRM chops — better than many other ERP suppliers.

    Microsoft offers four ERP products, the most popular of which is Great Plains.  Being an ERP company is a good thing; it’s a big market that will never go away and if you can build and service good products you will most likely make money.  This all comes down to a state of mind, an attitude, a gestalt that permeates much else that the company does.

    I think we sometimes lump ERP and CRM into a small number of buckets, which is a mistake because there is a vast difference between systems built for discrete manufacturing and those made for financial services.  It takes skill and keen insight to build one system that can serve both masters, even with modifications.  Microsoft has done this well and it supports a large partner base of thousands who specialize in delivering solutions to various markets.

    NetSuite, Sage, SAP and Oracle are also ERP providers and they share a similar, though far from identical, gestalt.  Salesforce.com is decidedly not an ERP company and its gestalt is very different.

    The difference is in how companies see business processes.  Back office processes are more clearly defined and more easily quantified.  For instance, generating an invoice might draw on many sources for data but the end result is concrete.  In the front office things are more abstract.  A marketing campaign may have goals and objectives but the hard reality is that the goals will not be met without the cooperation of many people who are not employees and who pursue their own enlightened self interest — i.e. customers.  This reality has fueled the consternation of back office leaning managers for generations as they try to make sense of marketing spending.

    With this in mind, I attended the keynote session of Convergence on Sunday.  The most telling point for me was a demo of some very nice integration between Great Plains and Microsoft CRM.  The demo scenario was a spike in product returns identified by the CRM system and how the company handled it.  Once the CRM system found the spike the action shifted to the ERP system, which quickly helped users track down a defective part, strategize a solution with a supplier and issue a purchase order to accomplish the fix.  At the end, processing returned to the CRM system to make appointments to repair the defective products.

    It was quick and efficient.  The guilty were identified and righteousness was restored.  What the scenario lacked was any empathy for the customer and any way for the vendor to demonstrate it.  Once social techniques were used to surface the problem, it was business as usual.  In other scenarios a CRM vendor might have found ways to demonstrate concern for the customer.  The CRM vendor would have a clearer understanding that the customer has other choices and the longer a problem festers — even a problem that has a satisfactory resolution — the less likely the customer will be to look favorably on that vendor in the future.  Such a vendor might have issued a bulletin and dedicated part of a Web site to remediation bulletins, for instance.  That wasn’t part of the demo but it should have been.

    This is the heart of the gestalt — cold logical processing vs. the empathetic self-consciousness of a vendor that knows in its DNA how to deal with customers.

    Microsoft has differentiated itself by focusing on delivering competent products at low prices so that small and emerging companies can afford high quality software that streamlines business and, frankly, eliminates the overhead that would otherwise swamp many businesses.  But no vendor can be all things to all people, at least not forever.  Covering a broad market is something that many vendors do when markets are new and products are relatively undifferentiated.  Aging markets force vendors to pick something they can be good at and to stick with it or perish.

    Microsoft’s position as a fast follower is well known.  Rarely has it been first into a market but its market power is such that it can take over a trend and drive it down the commoditization curve, sometimes too quickly, before it has time to fully emerge and develop.  You see this beginning to happen with social technology and with cloud computing.

    I didn’t see enough social computing and my impression is that the company is not as far along at integrating it into the mainstream of its computing as other vendors.  That said, it is not as far behind as others either.  In line with its fast follower approach it is off the lead but ready to pounce.

    In cloud computing, it will only go so far as to endorse the idea of massively scalable infrastructure — infrastructure as a service (IaaS) — a rather low common denominator.  It seems agnostic about SaaS and PaaS preferring to leave them to customer preference, which comes across as providing the ability for many vendors to host their own clouds.  The result of this approach will be data centers in the sky rather than cloud computing.

    Cloud computing takes more coordination and a willingness to open up to the rest of the world to enable heterogeneous integration and the business and process innovation that comes with it.  In a CRM gestalt this would make perfect sense but in an ERP gestalt this may be a bridge too far at least for now.

    Published: 14 years ago