Perhaps the most interesting CRM development to come out of Denver this week was Sage’s unveiling of its SaaS or cloud offering. But now that the initial hoopla has died down (mine included) it’s time to take a more measured look at what is being delivered.
As I mentioned in an earlier post on my blog the announcement means that Sage is offering a hosted version of SalesLogix but not one that has been re-architected to take advantage of multi-tenancy. The company still legitimately claims a better total cost of ownership profile for SalesLogix because the arrangement off-loads from the partner the need to support a physical installation and from the customer, the cost of most infrastructure. The usual configuration and modification cycle remains the same however.
So is this good or not? I say both.
First, let’s ‘fess up, this is not SaaS or cloud computing, except in the broadest possible definition you can imagine. Amazon’s EC2 compute services, which delivers infrastructure as a service (IaaS), provides the cloud aspect. It’s really ASP or application service provider, a model that waned away in the last decade for competitive reasons. ASP is back because the applications are no longer client-server and thus have lower server overhead; that single change should make the model much more competitive.
Sage is betting that this change is enough to help its partners battle against NetSuite, Salesforce and RightNow (and others) by enabling them to check off the SaaS box in any bake-off and that’s a good point. In fact, in briefings with SVP Larry Ritter and EVP and GM Joe Bergera that scenario came up. Sage partners can continue the discussion about CRM and business issues with prospects once they’re past the SaaS beauty pageant and for them it’s a good thing.
Sage’s secret sauce has always been its partners. The channel may be hard to administer at times but one thing you have to admit is that partners get right into the shoes of their customers in ways that software sales people simply cannot. No wonder then that most SaaS companies are trying to breathe life into a channel solution. Microsoft has sold through a channel for a long time, NetSuite is building one and even Salesforce has its version with its AppExchange developers who sell seats as a matter of course.
Sage’s strategy from here is to enable a hybridized approach to its solutions by offering the choice to customers over core CRM functions but increasingly to also offer complementary SaaS solutions that leverage customer data wherever it happens to reside. That may represent an optimum for this business model, at least for now.
On the other hand, though, Sage seems to be taking its time bringing out complementary solutions and appears to regard that as its domain. It would be better if the company opened up this space to more competition and contribution from partners and ISVs. A more open approach would enable Sage to stock its catalog faster and make the promise a reality sooner. The company’s statement so far is that it’s going for quality over quantity but I have a mild disagreement here. I think it’s better to look for quality by letting a thousand flowers bloom and picking the best, rather than by over controlling the process.
SalesLogix in the cloud takes the company a long way to delivering lower cost solutions but Sage still has work to do. Its customers represent a market very much oriented toward operational efficiency as opposed to, say, customer intimacy. It needs to deliver low cost, easy to implement and deliver solutions, a quest that never ends. Now that infrastructure has been dealt with Sage can focus more attention on business processes and vertical deployments, which is always on its roadmap.
So to net it out, Sage was the odd man out in the hosted services derby but that changed this week because Sage is now in the hosted services game. It’s a solution that might seem odd to a SaaS purist, but it fits the special circumstances of a channel operation. I think we need a new name to distinguish multi-tenant SaaS and cloud computing from solutions that simply use IaaS, something that is assertive rather than pejorative. ASP anyone?
IBM bought Cast Iron Systems for what looks like an undisclosed amount of cash today. That’s big news if you are an AppExchange product vendor specializing in integrating with legacy systems like ERP and some CRM. Cast Iron has been the g-to company for effecting these integrations and grew prosperous doing them.
That IBM saw a need to have Cast Iron in its stable of software companies says a lot about the growing popularity of and necessity for SaaS based business software. We all know that integration with legacy systems can be a bear and for IBM a company with significant services exposure to make this acquisition speaks directly to the popularity of new-style SaaS over legacy computing.
I didn’t see any discussion of how the deal was financed whether by stock, cash or some combination. Nonetheless, it would appear, at least at this point, that Cast Iron will still be expected to do a good deal of business with companies implementing the likes of Salesforce.com and RightNow. Hence my instinct that the purchase says a lot about these SaaS companies as well as Oracle CRM On-Demand, NetSuite and almost any other SaaS company that needs to integrate with legacy systems.
Am I kidding me? Forecasting the year ahead? Sheesh!
One of the reasons the task I set for myself is so daunting this year is that I believe we are in a massive transition state that affects the whole economy, CRM included. I think Tom Friedman got it right in version 2.0 of his “Hot, Flat, and Crowded” to wit: the root causes of the economic meltdown and the climate crisis stem from the same idea, unsustainability.
As I recently said, selling mortgages or other loans to people with none of the usual commonsense qualifications (jobs, credit history, etc.) was unsustainable and so is belching carbon into the air or for that matter drilling holes in the ground and expecting them to yield petroleum. It’s all unsustainable as in, it might work now but at some point it won’t.
Welcome to Some Point, a fast growing village east of Copenhagen.
Ironically, this should make the innovators and risk takers among us salivate at the multiple opportunities. Whatever comes from the climate talks should be good for us. Stage one will be to use less carbon and stage two will be let’s use something else or economic growth will cease. As far as I am concerned we can’t get to Stage two quick enough.
Both stages will alert us to the need for new business processes to accommodate new realities and from those new processes we will see increased demand for software. How else will we support them?
The same can be said of our long climb out of the economic crater we made selling funny paper. Software is not a silver bullet but it will have to be a big part of implementing and enforcing the new, more sustainable business rules that evolve.
Some of the candidate areas that I believe will benefit from this realignment include the following — keep in mind that this is a multi-year effort we’re talking about.
SAP spoke a lot about in-memory databases and in-memory analytics at a recent industry influencers conference in Boston. I think we will become even more dependent on analytics in the years ahead and the in-memory idea accelerates results and increases utility. A self-re-enforcing cycle may be forming here.
We have to re-think selling in this market. I believe we’ve moved into a zero-sum era in selling — people have less to spend and many choices meaning more evaluation and extended deals that start well before a sales person makes a call. Selling needs more and different tools — closely integrated with marketing — to manage the customer buying process. Those tools are in many cases out there but they still operate as point solutions. Vendors need to come together to deliver solutions to new problems.
While we’re at it, when the economy recovers, look for gas and jet fuel prices to spike above the last peaks. In that environment business travel will be reduced and we will need better and different software to support modified sales processes.
Thank goodness we have a wide array of social solutions increasingly integrated with CRM. We haven’t optimized social media in CRM yet because we’re too focused on using it as a megaphone when we need to learn to use it as a stethoscope. We will and the companies who first figure out how to do it will benefit greatly.
Service and support
Of all the areas of CRM that might benefit from the coming upheaval, I think service and support are the furthest along the path to a new paradigm. Companies like Salesforce and RightNow are leveraging social technologies and are in the process of subtly redesigning business processes. If you want to understand what CRM will look like in a few years look first at what’s going on in service and support.
We need to get our act together on this idea. Currently, anyone with SaaS, PaaS or infrastructure as a service is touting a platform or cloud computing. They are homogenizing ideas to make a buck, nothing wrong with making a buck but playing loose with definitions can impede the progress of the sector’s evolution by confusing the market. Let’s just agree that a platform has to be more than the sum of its parts. It does minimal good to offer a platform that simply moves your computer room to another state. Platform needs to mean something that makes managing the gear easier, certainly, but it also has to take new responsibility for fast deployment, customization and development of those new applications that new business processes will need.
The year ahead
I see great challenges and great opportunities in the year ahead and the opportunities extend into the indefinite future. More than at any time since the dot.com bubble our success will depend on innovation and creativity — the sustainable kind.
Colorado Springs is an interesting place. Despite the name there are no “springs” it’s an arid place in a valley surrounded by the southern Rocky Mountains and Pikes Peak National Park (for sticklers Pikes really should be Pike’s but the official U.S. naming convention eliminates the apostrophe). The springs were an invention of the railroads seeking to establish a destination for vacationers. Good idea, it’s a nice place.
You can ride horseback through the mountains and see abandoned mines and homesteads as well as some rugged natural beauty. Last time I was there we rode on some trails that were barely wide enough to accommodate our horses. On one side there was forest and on the other a steep drop off. RightNow convenes its annual user group meeting at the Broadmoor Hotel in Colorado Springs next week. By most accounts it’s been a good year for software, especially SaaS vendors so the meeting should be upbeat.
Other commitments will keep me from attending the RightNow Summit but I look forward to hearing about their announcements. In general there is an unmistakable move in most areas of CRM, contact centers included, to move more operations to an on-demand footing. Whether it’s called SaaS, managed or hosted, the call center is moving to simpler surroundings — at least for the client organization, and for good reasons.
Owning and operating a call center is a big and expensive undertaking for a company. With all phases of the operation in-house, a company has to be able to support multiple subject matter experts from hardware to applications. The company also has the task of managing an impressive (some would say bewildering) array of gear both telephonic and computer. The same company also has all of the headaches of recruiting, training and managing a sophisticated workforce.
So, when a vendor comes along offering to take even a portion of that big job over for a fixed price per seat, it draws a lot of attention. In the not too distant past, the number of vendors willing to make such an offer was limited and RightNow was at the top of the heap. The market is changing making it easier for vendors to get into the business and the fact that we are even talking about the difference between on-demand, managed and SaaS solutions is evidence of that change.
But it’s not just changing technology that is driving the market. The core customers, you and me, are smarter and more experienced and we are beginning to draw less from our vendors’ call centers. Since we’ve all experienced earlier generations of products we are more likely to solve simpler problems with new products ourselves. Moreover, our recently acquired sophistication with social media makes us more adventurous when it comes to seeking out service and advice from our peers.
It was no surprise to me that RightNow acquired social networking company HiveLive to bolster its efforts in social service offerings. I look forward to hearing what RightNow CEO Greg Gianforte has to say about his company’s direction in socialized service and support. Should be an interesting conference.
Also on the docket, the following week Sage Software hosts its user meeting in Atlanta followed by Microsoft holding an analyst briefing in Redmond. I wish I could make all of these events but they are simply too close together.
Sage is always surprising in part because the company’s business model — selling exclusively through the indirect channel — puts different demands on its products and services. That has frequently meant that the company has held back on major innovations until its partners were ready to get on board. But last year, the company announced a 2010 strategy to bring its multiple CRM products under an umbrella that will enable it to achieve greater economies of scale and better integration capabilities with its back office solutions.
Also, Sage recently announced a foray into another on-demand style solution to be delivered early next year. Their original SageCRM.com notwithstanding, this will be something new for SalesLogix, their high end product. This is CEO Sue Swenson’s second year at the helm and it was clear at the partner meeting in May that she’s putting her imprint on the company. She’s tasked senior executives with ambitious plans to update key products and improve partner-facing programs. It will be interesting to see what end user facing changes are in the offing.
Finally, Microsoft is a very important player in the front and back office applications markets today. Their analyst meeting in the same week as the Sage user meeting should generate a few headlines and I am eager to hear more about their direction though I will not be able to be there.
All this activity makes me optimistic about next year, and if all this isn’t enough, Intel, AMD and IBM have all reported better than expected financial results for the recently finished quarter. The semiconductor market has always been a reliable indicator of an upturn in the tech sector and I am hopeful that these results are the first signs of a general economic rebound. But recovery means more than simply reporting better financial results especially if the increase is from a depressed level caused by recession. It’s clearly a half full glass but that’s fine with me.