• March 30, 2010
  • Oracle announced Release 17 of CRM On-Demand today along with an updated vertical market version for the pharmaceutical industry.  Seventeen is a lot of releases even for a SaaS company and Oracle should be proud of the milestone.  The same is true of the emphasis on the pharmaceutical industry vertical.

    Oracle comes to the pharma CRM market with an assist from Siebel the one time independent leader in CRM that Oracle bought a few years back.  Before the acquisition Siebel and its pharma package had managed to corner about nineteen of the top twenty pharmaceutical companies.

    For a time in the last decade you could go from job to job as a pharma rep taking your Siebel skills with you and feel right at home.  The writing on the wall now though is that pharmaceutical sales is transitioning to a SaaS model and Oracle is managing the transition for its customers.

    Oracle’s done a good job of keeping up with changes in the industry and you have to admit that pharma sales is a different kettle of fish than almost anything else in CRM.  The pharma business model is what’s unique.  Sales reps never actually sell their wares to actual customers.  They sell to the major recommender, the doctor, and even the MD doesn’t buy anything.  He or she simply writes a prescription.  So you have this odd situation where the sales person is there simply to influence the recommender.

    You might know that pharmaceutical sales once went by the name of drug detailing because that’s what you did — you were a walking, talking ad for some molecule and the whole show might last only five minutes.  In some corners it was considered an entry level sales job because you got to make calls and your company tracked prescriptions and sales within your territory, but it wasn’t exactly the same as carrying a quota.

    The pharmaceutical industry is huge, generating hundreds of billions of dollars in revenues each year.  A mid-sized pharmaceutical company can easily have a thousand reps and the largest can have tens of thousands.  There are about 100,000 pharmaceutical reps in the US Calling on — get this — 120,000 prescribers.  Currently drug companies spend $5 billion annually fielding these people.  Those costs include salaries, bonuses — all the usual stuff — and some form of payment for transportation.  Whether the transportation is a car plus fuel and insurance or mileage is academic.  It’s a lot.

    But what happens if or when fuel costs rise?  Regular gas costs about $2.80 these days — not far from the $4 per gallon we saw a little over a year ago.  Even a pharmaceutical company with its vast resources might notice its costs escalating at those prices or more.

    Drug detailing is one of the oldest forms of selling — at least in the modern era.  How much of it is based on tradition and how much is need?  Does a modern drug company need to field an army of people for what amounts to five or ten minute calls?

    These are questions worth asking.  If I am right, companies all over the map — not just pharmaceutical companies — will need to find answers as fuel prices test their former highs.

    In such a reality, many business processes will need to be rethought with a goal of reducing costs associated with transportation and to me that means taking the call to the web and with it, losing a significant number of jobs.  Sorry.

    A future pharmaceutical CRM product might be expected to offer a portal for each doctor the company targets.  Within the portal a drug maker would be able to provide all of the information usually associated with a detailing call and more, such as custom designed video and audio that the doctor or pharmacist could access when convenient, rather than in the middle of a busy day.

    The benefits to the vendor would be sizeable.  Pharmaceutical companies capture and analyze a lot of field data and that won’t change.  But because an encounter is in a portal the quality of data captured might be better.

    One of the big reasons for sending actual reps into the field is for them to deliver samples that the doctor can give along with a full prescription to patients.  Samples could still be distributed overnight after a call in this new model but with lower costs.  Anything else needed to follow up on the call could be provided through the portal.

    The portal idea has merit.  Many younger doctors use automation applications for tracking their patients and virtually all use some form of billing automation.  My doctor carries a laptop into the exam room.  Between visits prescription refills and similar requests happen online.  If even doctors are using the Web — and they’re late adopters where office automation is concerned — the drug companies should see this as a sign that they need to catch up.  The cost savings would be significant and future changes in the economy may force their hands.

    As a practical matter the changeover would take a few years as older doctors might resist the change and that would mandate a two tier pharmaceutical sales force.  This will provide the time needed to do parallel testing of the two solutions and a rigorous cost/benefit analysis.  In the end, though, this is one efficiency move that can’t be ignored forever and CRM vendors would be smart to take notice.

    Published: 11 years ago

    Open World most resembles Forrest Gump’s box of chocolates in that there is such variety that you never know what to expect.  At any moment there is equal probability that you will be dazzled, challenged, delighted and perplexed.

    This being journalism, perplexity reins as a dominant topic and perhaps the most perplexing thing about the meeting is the show floor which includes large booths from the heavyweights in the industry a.k.a. Oracle’s greatest competition and greatest customers, for example, SAP and Microsoft.’s booth sits long and narrow moored on the show floor like an aircraft carrier in a crowded harbor.

    By the time most of you read this Marc Benioff will have spoken and we will at last have an answer to the question haunting the halls of the Moscone Center.  Why would Benioff speak at Open World, the user meeting of one of his staunchest competitors?

    You can make all of the arguments you want about how Salesforce relies on the Oracle database to serve its millions of customers, you can invoke arcane game theory to explain this apparent cooperation among competitors if you like – after all the Nobel Prize in Economics was just awarded to two social scientists who studied this phenomenon.  Still you are left with an irreducible Why?

    Benioff speaks at one today and may have an answer.

    In CRM kudos have go to Anthony Lye and his team for their top to tail work with the Siebel and CRM On-Demand suites and the dogged determination to prove the necessity – even desirability – of hybrid premise-based and on-demand approaches to CRM.  I will not digress into a discussion of my oft repeated belief that this is a transition state on the way to full Cloud Computing in deference to my hosts and I only wish they would give up the sophomoric assertion that cloud computing is simply vapor.

    The CRM team is bristling with innovations for large and small customers –announcing twelve new products, eighty customer driven enhancements, thirty-one new features, a REST API, CRM availability in Microsoft Outlook, and a new Siebel version coming this year.  I think there’s more but maybe my note taking is not so good.

    Larry Ellison spoke on Sunday night — a cameo in Scott McNealy’s keynote.  Ellison made the expected and highly believable statements that rather than letting Sun sink into the, uhh sunset, once the merger is completed, Oracle would increase its investments in Sun systems beyond the hefty investments that Sun had been making.

    Oracle’s stewardship of PeopleSoft, J.D. Edwards, Siebel and fifty-five other acquisitions (according to Safra Catz) provide the needed street cred here.  Ellison even had fun poking IBM about an internal program they call Sunset reminding all that one man’s sunset was another’s sunrise.  He then proceeded to announce significant benchmark superiority over Big Blue.  Some things don’t change, benchmark competition is one of them.

    But Sunday was McNealy’s time to shine.  The justifiably proud Sun CEO rattled off a slew of Sun’s leading innovations in CPUs, memory and file management, operating systems, and, of course, JAVA.  Many of us forget how many devices run on JAVA code — without any “JAVA inside” branding — but it’s a lot and McNealy was happy to provide a glimpse.

    Ellison will speak on Wednesday to conclude the meeting and my contacts keep telling me that my questions such as those about integrating the sprawling software suite will gain clarity then.  We’ll see.

    Perhaps the most interesting moment of the show for me so far came on Sunday at the end of McNealy’s speech.  He showed a slide meant to sum up his experience at Sun as well as the operating philosophy the company has been run by.  The slide said we (Sun),

    • Kicked butt
    • Had fun
    • Didn’t cheat
    • Loved our customers and
    • Made money

    (I am not a hundred percent on the last bullet, note taking again.)

    McNealy concluded by saying of the merger of Sun and Oracle, “Larry’s going to like his new toy.”  The statement immediately put me in mind of Newton’s famous summation of his own career when he said near the end of his life:

    “I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the sea-shore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.

    I can’t think of a better description of why these very bright people work so hard to make electrons dance.  Sure, it’s profitable but at the end of the day it’s even better if the ride has been fun.

    Published: 12 years ago

    Oracle did a cool thing today.  They held an on-line trade show called Applications Unlimited Experts Live.  The company leveraged On24’s virtual trade show technology to make it all work.  As luck would have it I have recently interviewed a user of a competing trade show product for another project so I was able to get an understanding of what’s involved.

    You might think that because the event is on-line that it’s easy to put one together but the same amount of planning and the same or greater amount of content has to be prepared for these events.  The real payoff is that it’s a lot easier to get people to a virtual event—it’s less expensive and far greener.

    One complaint, attending the event required a robust set of software for viewing and listening and although Oracle had instructions for PC’s and Mac’s, I think the PC instructions worked better (I hope), I finally got everything configured and downloaded and heard Ed Abbo’s keynote.

    The interface and the virtual venue were fine and you could, if you wanted, chat or otherwise communicate with people.  As an analyst there wasn’t a lot of new content for me but that isn’t the point, I get briefings all the time.  What impressed me about Oracle’s on-line trade show was how well it was put together and how it operated.

    There are many ways to demonstrate thought leadership in a recession and show that you are engaged with your customers, this was novel and quite good.  The virtual conference saved a lot of money and ensured that customers with real interest would not be precluded from attending because budgets are tight.  While that might look like great customer intimacy (and it is) it is also great operational effectiveness because it made Oracle look like a company that is easy to do business with.  In a recession operational effectiveness is a great weapon that far too few companies use.

    It also stole some thunder from Microsoft’s Convergence, a flesh and blood trade show happening this week in New Orleans.  Think about the contrast!

    Published: 12 years ago