Oracle announced another software company purchase today. Its purchase of Responsys makes a few founders, VC’s, and assorted vested employees very happy for the holidays. Good for them. Really, I mean it. Good for anyone who has a liquidity event like this, regardless of time of year.
Over the last decade Oracle has demonstrated its ability to imitate the business model of Computer Associates, which made an art of buying software companies and milking them for their support revenue. It did quite well in the process though buying old companies is a bit like buying a used car. There might be some good miles left in the old dog but you also have to embrace the risk of future unexpected breakdowns.
But that was Oracle-as-CA 1.0, when it bought Siebel, PeopleSoft, and all the other client-server applications companies. Responsys is far from an old company and if you look at the companies Oracle has bought recently, they are far from over the hill. They are emerging companies in an emerging market with plenty of tread left on the tires, to continue the metaphor.
This has led many people to issue warnings to other vendors in the space like Salesforce. For instance, Raghu Raghavan, founder and CEO of Act-On, and a co-founder of Responsys, has a post addressing the purchase that says in part, “Salesforce now has a formidable competitor for the Marketing Cloud that they have so expensively acquired. On the B2C side, Oracle/Responsys is (and always has been) clearly superior to Salesforce/Exact Target, and on the B2B side, Oracle/Eloqua easily trumps Salesforce/Pardot. Whoops!”
Well maybe. The thing about predictions, which I always put into a sports metaphor, is that while a team might look pretty awesome on paper, you still have to play the games. Nowhere was this clearer than with this year’s Red Sox. The team crashed and burned in September 2012 and no one expected much out of them this year but they went on to win the whole enchilada. Ditto the Yankees. Riddled with injuries and a certain albatross named A-Rod, they didn’t have a great year (for them) but they sure were entertaining in part because they kept finding a way to compete and win. I see Salesforce more like the Yankees. They’ve had some stellar seasons and they always find a way to win.
One thing Raghavan’s quote obviously doesn’t take into account is that the world has already moved beyond marketing automation as the shiny new object. It’s still way, way important but as recently as Dreamforce, Salesforce indicated that marketing is already in the rearview mirror just as surely as the current year is. That’s important too because, Salesforce has been calling the tune in CRM for many years now. First it was multitenancy and SaaS, then cloud, then social, then marketing, and now platform and becoming a customer company. This last advance is more than a slogan and it is the heart of why Oracle’s acquisition signals overreach and not shrewdness.
The fundamental assumption of the approach used by Oracle, and you might as well say Microsoft and SAP too, is that the market has not changed and will not change much. That vision is expressed in the vendor-consumer model and the product sale vs. subscription consumption model, take your pick. The reality is that vendor-consumer works well in new markets with new categories because it depends on land rush customer mentality. Seen many new categories lately? Hmmm?
Also, the subscription model is advancing on multiple fronts turning all kinds of products into services. More importantly, subscriptions are teaching consumers to be customers in a very different model where the customer forms half of a virtuous cycle of dependency that is antithetical to the vendor-consumer linear model. It’s a subscription culture today and culture is pervasive so regardless of whether you operate a subscription model or not, your customers are approaching you from that mind set. Approaching them from your old mindset might be hazardous to your business.
If Salesforce’s CEO and ringmaster, Marc Benioff, is right, then becoming a customer company is going to take more than the resources of a single company, it will require the efforts of a village, a community of loosely associated partners with solutions based on a common platform.
In the matchup between Oracle-as-CA 2.0 and Salesforce, I like Salesforce’s chances. I’ve said it before but it bears repeating, these guys have a Blue Ocean Strategy that isn’t predicated exclusively on which companies they buy and send into the breach.
They’re envisioning a future of business that they iterate towards and with every Dreamforce they get a little closer. But because the competition is stuck in an old model, Salesforce’s moves don’t entirely make sense and their boss can sometimes look like a simple huckster.
Who’s right? Which team will win it last game of the season? You have to put them on the field and let them play. So, game on, 2014, over and out.
I almost never attend a webinar unless I am speaking. When I need to know something I usually get a one on one with a CEO or other leader of a company. They’re very gracious with their time and the tutelage helps me as an analyst though often I don’t run out and write something about my experience.
Part of the reason for my reticence is that most briefings are on background — the leaders are often trying out a new idea and looking for feedback. Frequently those ideas undergo significant modification before they finally emerge. Other times, the briefing in embargoed pending an official announcement. And often a briefing is about an incremental release — suffice it to say there are lots of reasons not to write about something. At least right away. Sometimes, months later, an idea strikes and I write something. It’s not the best system in the world but I doubt I am the only scribe that uses it.
Last week I broke with precedent and attended a webinar on Microsoft’s unified communications server also known (I think) as Office Communication Server. It immediately reminded me of why I don’t do this more often but after I got over the pitch aspect and the interminable demo, I got the big picture and was happy I made the effort. Now, breaking with another looser precedent I am writing about it because I think it’s important.
Lots of companies, mainly in the telco space, are deploying unified communication servers; they include, but the list is hardly limited to, Cisco, Avaya, NEC and Microsoft, just to pick a few. This is a new field and standards are still loose and one vendor’s gear might not work with another’s. But Gartner has a Magic Quadrant for them so it’s a real market.
If UCS is new to you and you are not a dyslexic fan of USC football, it’s all about bringing together your calendaring, email, mobile, voice mail, VoIP, video and other telecommunications under one roof to better coordinate workflow, customer access and intra-company communications. I think it’s important, especially from a sustainability perspective.
I’ve been researching sustainability ideas all my life but my interest intensified in the last couple of years and now I am writing about it. I think UCS coupled with other new product ideas like content libraries, SharePoint and Salesforce’s Chatter, offers the potential to squeeze a lot of friction out of business.
By friction I mean all those things that suck up energy — both the personal and the carbon based kind — without delivering business benefit to either customers or vendors. Unified communication brings together the exploded cornucopia of communications technologies that have been invented over the last few decades into a manageable framework giving users the ability to tame what has become a communications beast.
Unified communication integrated with CRM offers the possibility of making us all more proactive and responsive to customers but in ways that simplify rather than complicate our lives. It seems like whenever we get a new technology one of the first uses we dream up for it is to somehow accelerate a business process, like selling. Ironically, that’s true occasionally but quickly everyone gets the same idea and what was once an accelerator turns the whole thing to gridlock.
A classic example might be email. As a tool for sales and marketing it proved very useful and many companies like Responsys, ExactTarget or ConstantContact (just to pick a few) have elevated it to a science. But then came various flavors of social networking with the same idea and in a short time we had way too many technologies trying to use the same basic technique resulting in jammed (and spammed) inboxes.
Unified communications reverses this trend partly. It does little to arbitrate between your media of choice but because it can track the whereabouts and activities of the recipient, it can result in one message rather than several from an impatient colleague, vendor or customer. It may not accelerate many processes but then again it might surprise you. What unified communications will certainly do is help us organize how we communicate and liberate time that is wasted because we simply don’t know.
More importantly, when you add video, VoIP and other advanced technologies, you may come to realize that what used to take a face to face meeting now only requires a quick chat. My research shows that as the recovery gains momentum, the cost of transportation will increase just as it did in 2008 when liquid fuel prices spiked. Having an alternative like unified communications might be the difference between doing business and not.
Unified communications wasn’t on my radar until the webinar and I am glad that I attended that one.