Michael Fauscette

Enterprise Social Networks, Building the Collaborative Enterprise

Tools that support social business initiatives fit into several different  software categories / markets. Social business is a very broad term that includes all the enterprise social activities, internal and external. I find that often people understand a single perspective on social, often based on their role or personal experience with some of the tools. A customer support manager thinks of social in the context of customers while others might immediately think of collaboration or ideasourcing. We published an IDC social taxonomy last year to try and capture all of the different social markets, mostly so we could count revenue (it is what we do after all), but also to try and make it easier to communicate about social in the enterprise. I was thinking about this taxonomy after having a particularly difficult time explaining social business to someone the other day. It's detailed and fairly complex, which is necessary, but it makes it hard sometimes to help people see the different opportunities in their own businesses. We also have published some specific business processes that can be "socialized", which seems to help make it clearer. I just recently finished a white paper for VMware (Socialcast) on enterprise social networks (ESN) that stimulated some thinking about social business and particularly around the tools that are emerging to support the collaborative enterprise. I'm starting to see some broader patterns that associate different social business processes into a few categories like ESN. For this post though, I think it might be useful to talk more about the idea of an ESN and how it can be used to support key business processes.

ESN's form the core of the enterprise social backbone and are essential for connecting the inside to the inside and the outside (employees to employees, partners, suppliers, and customers). What makes up an ESN and how is it used to support the collaborative enterprise? ESN's can include these features and applications:

• Activity stream / microblog / unified UX for sharing and communication
• Profile
• Mobile across all major OS's
• Blogs
• Wiki's
• File sharing
• Intelligent information filtering
• Task management / execution
• Decision support (including socialytics)
• Integration (both to the other components and to other enterprise systems)
• Ability to embed in other enterprise applications

There is no need for all components to source from a single vendor, by the way, as long as the integration capabilities are present and components are built to open standards. In fact there's some argument that at least some companies are better served if key components are "best of breed" to meet a greater percentage of business requirements. This componentized approach is much more prevalent and IMO part of the way that the next generation of enterprise platforms come together. The core of the ESN though, forms a critical piece of the enterprise system of relationship and would often include the new communication tools like activity streams / microblogs and profile. It's also likely that businesses will want this part of the system integrated to other enterprise communication assets like email, IM, video conferencing and voice to provide a better user experience. It's also essential that the core ESN support ad hoc work by bringing together people, data, content and supporting systems in real time and in a work context.

From the task execution perspective some of the core ESN systems provide basic task management, which could be sufficient for some businesses. Most businesses though, will recognize that projects are really the core of their operations and will need more feature rich task management and execution systems. Also likely that these capabilities are or could be part of a enterprise project management system. I like to use the phrase task execution though, to separate the new social project execution functions from traditional project management tools which most often did a great job of tracking projects but did little to enable work to actually get done. Tying the core ESN to the task execution system is business critical as more companies realize that these tools can greatly improve project success and form an important part of supporting ad hoc work.

I also think it very important for companies to connect the ESN to other social systems like social support (part of the Customer Experience Management / SCRM applications), customer communities, innovation management, supplier networks, partner networks or in other words, connected to all systems of relationship across the enterprise. Analytics in the form of embedded systems of decision and including socialytics, should also be an essential part of the ESN. Overall the ESN should bridge systems of relationships to systems of decision. A lot of the benefits that social systems bring beyond connectivity are tied to bringing the right assets together in a work context and in real time to deal with issues, problems and opportunities.

Lastly the ESN is the new age replacement for the outdated static (or nearly so anyway) Intranet. The ESN is dynamic, real time connectivity across the business to support knowledge sharing and filtering, critical business decisions and work execution. It's no surprise that companies in our bi-annual social business surveys are seeing strong increases (in the range of 11-30%) in productivity associated with social software solutions, and no surprise that the overall social software market grew almost 40% from 2010 to 2011.

Tags: socbiz, social business, ESN, SCRM, CEM, collaboration, communication, decision support, systems, enterprise

Social Dynamx, Scaling Social Customer Support

Companies are learning that today customer service is a big part of effective marketing strategy. The concept that customers decide how, when and where they interact with a company could be an opportunity but for many companies it is challenging and stretches systems and processes. At least part of that challenge comes from the proliferation of communication / interaction channels and methods. Current customer service systems, for the most part, were deigned to interact in a few specific ways including voice, online chat, email and web forms, all communication channels that the company can control. More people are turning to trust filtered online sources that are outside of the companies control though. Networks like facebook, Twitter and Pinterest offer relationship based, trusted sources for information and assistance. Rather than researching products on brand controlled web sites, prospects as for recommendations on social networks and read reviews on commerce sites and blogs. If there are problems with items purchased they ask for help on those same sites and complain on all sorts of public forums from Twitter to YouTube.

So what's a company to do? It's clear that just throwing employees at the problem is not a scalable solution. The old systems and process of react and respond now have to be accompanied by sense and respond based systems. It's questionable whether current systems and processes alone can be stretched to handle the new channels and the new types of interaction. Some customer service systems are now integrated to various consumer social networks, which is at least part of the solution, but many companies are finding that they need more specialized functionality.

There are a few systems that are trying to address this issue, social customer support, and recently I took a look at one of them, Social Dynamx. Social Dynamx is designed to manage all of a companies' social customer support interactions and then integrate into the overall IT infrastructure including existing CRM/customer support system, knowledge base, social media monitoring tool, etc. The software is cloud based and has a role based user interface that has 3 views, agent, supervisor and manager. The compelling part of the solution for me though, is in the systems ability to filter out noise, something that is a serious problem in delivering social customer support, and surfacing real issues. The algorithms are designed to score incoming posts in real time based on relevance and ability to take action, then route automatically to the most qualified agent based on the type of action required. The system has machine learning capabilities built in, so gets "smarter" with use as well.

Any system that is used to manage social customer support must be scalable and be "enterprise ready". Social Dynamx has complete enterprise workflow and embedded analytics to help monitor key metrics and provide essential reports. Social customer support is more than surfacing issues and taking action though, it is also about having conversations with customers. Social Dynamx provides tools to help facilitate the conversation including threading of conversations and the capability to de-dupe and/or unify threads to assist agents in scaling conversations while keeping up their "end". 

Social Dynamx has a lot of potential in my opinion, particularly around the ability to scale through intelligent filtering and machine learning. Companies need to find ways to scale social interaction in customer support, customers are insisting on it and support has become a key component of an overall marketing strategy. The conversations may be happening on consumer social network but the tools for business need to scale and provide enterprise class capabilities.

Tags: SCRM, customer, CEM, support, service 

Cloud Wars 2012 Continues, SAP buys Ariba

Yesterday's announcement from SAP ended months of discussion on who will buy cloud collaborative commerce vendor Ariba. As I've said a few times, most of the larger pure-play cloud vendors are getting a look by traditional large software application vendors, who need to quickly build out a cloud application portfolio. The offer, $4.3B, represents a significant premium of 106X trailing 12 month Ebitda, dwarfing the industry median for software acquisitions from 2002 to today of 16X. The price represents a 20% premium on Ariba's closing price on 5/21 but is considerably less than the 52% premium it paid for SuccessFactors last Fall.

Even though SAP executives have consistently derided Oracle over it's acquisition spree over the last 7 years, it is now clear that SAP is trying to follow the same strategy to buy its way into the cloud. SAP did make an attempt at building its own offering of course, but the efforts were arduous, proving that it's not easy to change from an on premise mindset to a cloud mindset, and are only now starting to provide some cloud assets that can be used to take SAP forward. The SuccessFactors acquisition offered the most compelling addition to SAP's cloud efforts, bringing both product and expertise, acquiring Ariba should accelerate this.

Ariba brings several important things to SAP and is an excellent addition to its cloud portfolio. From a product perspective Ariba has a mature and feature rich set of cloud based procurement, sourcing and contract management tools that, if integrated into the SAP business suite and sold by the much larger SAP sales force, could prove to be a significant money maker for SAP. Ariba also brings cloud expertise in the form of developers, support agents, sales personnel and executives that is badly needed in the SAP stable. Lastly, what might be the most important asset in the deal, Ariba brings a large and well developed supplier network / B2B community that is the most mature and respected community of this type. This asset isn't something that any other company could easily duplicate, although it will be a challenge for SAP to ensure that it continues to be managed effectively.

From a customer perspective there is some benefit on both sides of the deal. SAP provides access to resources that are far beyond what Ariba could have done on its own, so there is a strong likelihood that future releases will benefit. SAP customers, many of whom are already Ariba customers, get what should presumably be a much more tightly integrated solution and access to more cloud assets in the growing SAP cloud portfolio. Overall this deal should be positive for both companies and both customer bases.

Tags: sourcing, procurement, community, cloud, SAP, Oracle, supplier, network, acquisition 

 

Social, Mobile, Cloud...Table Stakes for Today's ERP?

I spent the past week in San Francisco attending Netsuite's annual user conference, SuiteWorld. As with most software conferences there was the usual barrage of announcements including new features, new partners and refined strategies. Of course SAP also held its Sapphire conference at the same time, so you may have had a hard time making it through all the announcement noise to see what was important from Netsuite (I'll leave the SAP Sapphire commentary at this point to my colleagues).

In the Cloud ERP arena Netsuite, the first full SaaS ERP system, continues to raise the competitive bar and deliver key functionality to its rapidly growing customer base. Last year at its first SuiteWorld conference Netsuite articulated a strategy that focused on several vertical variants and started to move up market from its lower mid-market roots. The move up market involved a repositioning of the suite for the upper mid and lower enterprise combined with a two tier strategy for the largest enterprise prospects. All of these strategic moves are paying off but the two tier strategy is proving to be of particular interest and is an area of significant growth. This approach supports the concept of keeping the current core ERP systems intact, a choice that most large companies have made, and giving departments / divisions / operating units more modern, flexible, and feature rich systems through the use of cloud based ERP that operates the local unit and consolidates up to the "main" corporate system. This is one obvious way to "fix" the aging and unpopular user experience of the aging core ERP systems while minimizing the overall cost structure and leveraging past capital investments. As an example of this approach Land O'Lakes announced that it is implementing Netsuite OncWorld in this two tier model.

On the mobile front Netsuite has taken a very realistic attitude that is focused on providing the complete user experience on any device. According to Netsuite CEO Zach Nelson mobile support is "table stakes" for modern ERP systems with customers demanding access from any device at any time. This includes tables and smartphones across the major OS variants.  Currently Netsuite offers a wide range of mobile functionality and supports IOS, Windows Phone and Blackberry.  

One of the most interesting announcements during the week was around a new product offering called SuiteCommerce. Netsuite has long offered a strong set of eCommerce features that are popular with its customers.  Commerce and the underlying platforms are under pressure to provide new capabilities that help companies deal with customers that are increasingly mobile, involved in the social web and increasingly insist on a consolidated experience that pans all interaction points. This customer revolution is not just about business to consumer (B2C) either, business to business (B2B) is feeling the same types of pressure. In the past systems were built to support cross channel commerce, that is, interacting with customers in many different siloed channels. The problem of course, is the silo approach. Customers are expecting an integrated experience that spans all channels, something that some have called multi-channel commerce. That doesn't go far enough though, IMO, because its really about eliminating the concept of channels and interacting with the customers across any/all touch points, B2C and B2B. In our predictions this year we included one about the growth of digital commerce, something that we started tracking over the last few years.

Netsuite's new commerce platform, SuiteCommerce, moves from its eCommerce roots and into the next generation of commerce solutions that work to provide this integrated commerce experience across any touch point on any device. Its important to note that Netsuite's approach is completely integrated across its entire ERP system and not just focused on the customer experience (CX) front end. Not to minimize the importance of CX, but frankly if a business can't fulfill an order it doesn't really matter how good the experience of interacting with the business was, it is still a failure. The combination of a solid commerce "back-end" with a flexible CX offering, referred to as commerce as a service (CaaS) by Netsuite, can provide significant value to Netsuite customers. SuiteCommerce is available now in two editions, one for mid-market and one for enterprise. Among early adopters the Girl Scouts of USA announced that it is moving its commerce operations to the new Netsuite platform. From a competitive view, there aren't really any strong contenders except in the large enterprise where both IBM and Oracle are making strong moves into this next generation of commerce platform.

At SuiteWorld last year, Netsuite announced its approach to socializing its applications would be through partnering with best of breed solutions and integrating through a social API rather than building its own social offering. Some of my colleagues have criticized Netsuite's social story, but in my opinion this was a smart move. It is critical to provide a system of relationship across the enterprise, something that Netsuite does effectively through its partnership with enterprise social network provider Yammer. Netsuite expanded it's social footprint last week by adding Box to its list of partners. The addition and what looks to be deep integration of the two products, provides Netsuite customers with  a strong collaboration and file sharing solution that complements the social and collaborative features of Yammer.

Today's ERP then is social, mobile and in the cloud. It also extends into a full feature commerce platform that can help companies retool and move away from cross and multi channel commerce, and start to provide an integrated commerce experience whether they are B2C or B2B.

Tags: Netsuite, SuiteWorld, ERP, SaaS, cloud, CaaS, commerce, Yammer, Box

From Big Data to Smart Data: Supporting Critical Business Decisions

Last week at Lithium's LiNC event I did a session on big data with Lithium Principal Scientist Dr Michael Wu. It's always a pleasure working with Michael, the session was well attended and the audience was very engaged. Since then I have been thinking about what we presented and I think there were a few key points that are very important in understanding how businesses can start to make use of data to support business decisions.

First I should bring back out a system model that I'm using to represent the three basic systems that we need in the enterprise today; systems of transaction, systems of decision and systems of relationship. It's important to understand the three systems, how they're different and more importantly how they are interrelated.

Systems of transaction are the application foundation for the modern enterprise. They are designed to automate routine business processes and support business transactions. They are also the source for most of the structured enterprise data. Systems of relationship are the new social solutions that enable peer to peer collaboration, content sharing, and community. The systems are used to connect employees, customers, partners and other stakeholders together and to content, data and other enterprise systems.

The third system, decision, represents the evolution of analytics and business intelligence from specialty tools that could only be used by specially trained analysts, to a system that puts analytics into the workflow, in context and as an end user tool. This concept is very important, the move from a system used by a few to look at history, to a system that is integral to the decision process. Systems of decision move information to the "right" person, at the time of need and in a work context.

So how does big data play into this decision system concept? Big data is a hot topic and according to IDC last year alone the world created ~1.8 zettabytes of new data growing by a factor of 9 over the next 5 years. The other part of that story is that much of the data is unstructured, which creates its own set of issues. Now on the face of it, it does seem that with the mountain of new data growing at a staggering pace that businesses must need to "do" something with it. The problem though, is exactly what to do? Just because the data's out there, and no doubt it's big, doesn't make it relevant, consumable or more importantly actionable. Data minus context can't be turned into usable information. There's also the problem with redundancy, a lot of data is redundant, and therefore isn't important even if you can add context and relevance.

Data is useful and actionable only if it's of interest to me (relevant) at the specific place and time (contextual) of use. The rest of the pile of "big data" is then, not of interest to me at all. The usefulness of big data is individual to a specific place / time, in the context of a specific issue or problem; or in other words, one person's signal (actionable data) is noise to someone else. Some of the data then is useful and of interest but you must know what questions to ask, for whom, and when and where it will be of use to solve a specific problem or issue, otherwise, big data is just dumb data.

So the real challenge for systems of decision is to turn the dumb data into smart data, or maybe more accurately, information. Systems of decision have to provide relevant, useful, actionable, intuitive, digestible and interactive information to the right person at the right time. The next generation of analytics are systems of decision that can provide the relevant information to every system user, in work context, to make smart business decisions. Here's a socialytics concept from Michael that fits this smart data / system of decision model:

Tags: big data, smart data, lithium, LiNC, socbiz, community, SCRM

Connecting the Enterprise: The VMware - Lithium Technologies Partnership

Companies today are under increasing pressure to change the way they interact with customers and community management platforms like the one provided by Lithium Technologies can be an important part of that initiative. With customers insisting that companies interact "when, where and how" the customer chooses and not, as in the past, only where the company chooses, customer support is more important than ever. Because of this, many companies are opening up social channels to their customers. Now these Social CRM efforts are definitely business critical, but in my opinion there's an associated issue that some companies are overlooking, their own siloed organizations. As I often tell audiences, just opening up channels to the customers without making sure their own employees can actually collaborate with each other is a recipe for disaster. I'm not saying one initiative is more important than the other, but they are in fact halves of the same process. Building a collaborative and connected business is more than opening up the conversation with the customer.

Last week during Lithium Technologies' Annual Conference LiNC a partnership with VMware's Socialcast was announced. Socialcast, an enterprise social network product I've written about a few times (here and here), provides the platform for connecting employees. Using Socialcast's Reach integration platform customer conversations and interactions from Lithium communities can be brought inside the Socialcast network, allowing employees to interact with customer ideas and feedback. Combining the enterprise social graph with the external customer social graph brings customer insights to internal experts to drive real time business decisions. This starts to move systems of relationship together with systems of decision to elevate the ability to make critical business decisions. Since Lithium communities connect out to public social networks like Facebook and Twitter, the enterprise network that is created by the two integrated graphs has very broad reach and is one step closer to becoming a networked business.

Tying companies together inside-out and outside-in is a key part of becoming a social business. Integrating the two platforms is a good step forward to doing just that, and should provide considerable business value. Socialcast enterprise social networks bring employees together with content, data and enterprise systems, Lithium communities bring customers together and open up a real time conversation. Bringing the customer conversation into the enterprise social network provides critical information that can lead to better and more timely business decisions and a more effective and innovative business strategy.

Tags: SCRM, enterprise social network, socbiz, customer, employee, decision, social

Real Business Transformation

I managed a few minutes out of my schedule last week to stop by the Yammer Tour event in San Francisco. I was in San Francisco doing a keynote for sugarCRM's user event and luckily the events overlapped. As I was listening to Yammer CEO David Sacks talk about some of the new Yammer features and interview some customers, I was struck by how much social tools like Yammer are changing businesses. Yes, I know that's almost all I've talked about for the last 4-5 years, changing businesses with social technologies and driving real cultural changes, but seeing that transformation really makes an impression. It's easy to get lost in all of the forward looking research and discussion on technology when in fact, what really matters is what businesses are actually doing with the tools to get some real business benefits. Does using social tools for business really make any difference? There are all sorts of ways to measure value when it comes to technology, we wrote a whitepaper on the ROI of social that has some ideas. Social business impacts business processes across the company and is having some interesting and very positive returns. Not all are as obvious as others though, and some of the less obvious are perhaps the most transformative.

First I should say that for me, social initiatives need to be clearly tied to increasing revenue, increasing margin, fostering innovation and/or increasing quality to be meaningful and successful. We are trying to run businesses and investments must return value or there's just no point in making them. Think about it, why is building a knowledge sharing culture and implementing a people-centric collaboration system / employee social network valuable? Well, for example getting the "right" information to a sales representative at the "right" time helps close more deals, which in turn increases revenue. Or increasing employee productivity, something that our survey respondents recently reported increases in the range of 11-30%, increases margin (and maybe quality and innovation as well). Implementing an innovation management system and process can increase innovation, and perhaps get better products to market faster which increases revenue (and maybe even reduce the costs of capturing customer input and feedback, which increases margin)... I can go on, but you get the idea. I've looked at a pile of interesting social business case studies over the past year.

Direct, hard ROI is critical to the success of social projects but that is not the only benefit to changing the culture, at least from what I'm starting to see from my discussions with companies that are using these new technologies.  During the Yammer event the CEO of the grocery store chain SuperValu, Craig Herkert, shared how the company is using Yammer. Of course the obvious benefits of collaboration in a distributed organization are playing out for them, for example connecting associates from different stores opens up sharing of successful campaign and ideas in ways that simply would not be possible without the real time connectivity that an employee social network / activity stream provides. In a traditional organization information generally only flows in very predictable directions, down from executives, up from satellite organizations or across in each satellite. Information flow like that is easy to control. Opening up uncontrolled, multidirectional communications changes the dynamic of the flow of information completely. So how transformational could this be? In the SuperValu example Herkert shared how he uses Yammer to get connected to associates and stores by reading and interacting with the real time flow from over 100 stores and thousands of people. Not in a filtered flow up from his direct reports or store managers, but directly from the employees on the floor in each store. It obvious to me that getting associates in stores across regions to help each other solve problems, share successful ideas, etc. would impact revenue, margin, innovation and quality, I mean just opening up local issues to the collective problem solving abilities of thousands would have a huge impact. What's maybe not so obvious though, is the power of this new connectivity for executives like Herkert. Having the CEO and other top executives intimately involved in the conversation is a powerful change agent for building a collaborative culture and a collaborative culture is transformative.  

Oh, and in case you're interested let's get back to the Yammer announcements. One of the interesting phenomena that is developing from social network tools like Yammer is the evolution from the old, outdated concept of the corporate intranet to a dynamic employee social network empowered by social collaborative tools. Yammer announced a series of new features and functions this past week that move their solution solidly along that path. The announcements included:

• Enhanced mobile apps with many new features
• Yammer Universal Search
• Premium Groups which provides deep team workspace functionality
• External Networks
• Yammer integration including Microsoft SharePoint, Yammer Embed (more on this in a future post), Yammer Connect Login, etc.
• Features from the recent oneDrum acquisition including Sync and Co-create (for more information see my post)

I'd love to hear what you're doing with social tools to transform your business so please share. I'll post some other case studies in the near future.

Tags: socbiz, collaboration, ROI, case studies, Yammer, value, innovation

"Late" to the Cloud?

It's a statement that I hear often lately, as more traditional software vendors start to invest in cloud computing, that they're "late to the cloud". Of course many of those who are saying it are "pure play" SaaS vendors that are no doubt starting to feel some competitive pressure as more vendors start selling SaaS applications. I also hear it from colleagues and I suppose that it is a true statement of fact but to me there's a little more to the story than that. I think the bigger question might be whether being late to the cloud is "bad".

The general perception is that being early to market with a product gives the vendor first mover advantage and lets them capture market share and mind share before any competitors get into the game. There's certainly a lot of evidence that this advantage does play out for new products or sometimes even for businesses. SaaS isn't really in the strictest sense a new product though, it's a new business model and a new (well it was new, now it's over 12 years old) way to deliver software. The first movers were companies like Salesforce.com and Netsuite, companies that led the innovation and helped define the model. Unlike a new, innovative product though, the move to establish SaaS as a viable way to consume software wasn't an immediate run-a-way success. It took many years to convince mainstream IT to support the model and to get past their security and scalability concerns. As a part of the wild west days of SaaS, these new vendors developed the methods of delivery, the architecture and the business model. Things like multi-tenancy, which clearly has scalability advantages for the vendors, became the defacto standard for SaaS. Initial success in the marketplace, particularly for Salesforce.com, Taleo, SuccessFactors, and Ultimate, that is vendors that offered a compelling product for a specific set of end users, was mostly driven around corporate IT, not with it. The exception would be Netsuite, but in its case, the initial success was in the small and lower mid markets where the need and advantages far outweighed the objections.

By 2007-2008 the SaaS model, and cloud computing in general was getting a lot of attention and was starting to get more mainstream adoption, which even included support from more progressive IT organizations. It had not however, reached the tipping point for mainstream adoption. This tipping point, I believe was accelerated by the economic crisis of 2008, which forced companies to look at cloud computing, particularly SaaS, as a viable alternative to traditional software purchase. This was an economic decision, traditional software is purchased out of the capital budget while SaaS, with its subscription pricing model, is paid out of the operating budget. Part of the crisis was in fact the drying up of capital for many businesses, particularly financing for capital projects, so it became much easier to go with a SaaS product or nothing at all. Software is an important competitive advantage for many companies, particularly in this new social and hyper-connected business environment, so choosing to not invest in key projects like social CRM, employee collaboration, process automation, decision support and deep vertical industry functionality really wasn't an option. So in that 2008-2010 timeframe SaaS crossed its tipping point.

Now look at traditional software vendors like Oracle, SAP, Microsoft and a host of midsize and small vendors. Their businesses were based on a very different revenue model, the combination of up front licensing fees, services and ongoing yearly maintenance fees that give customers access to product support and upgrades. Moving from this model to a subscription model is not an easy shift and one that most effectively is managed over a long transition period to create a smooth swap in revenue sources. There have been companies that made the switch in one bold move of course, but those stories are few and were fueled by other business pressures and issues.

Which strategy would you choose, rapid change over but risking current revenue for long term subscription revenue or a slow transition that only starts when it's obvious that the model is the future of software? First I should point out the scale of the issue, we're talking tens of billions of dollars, not a few million for the larger vendors. It seems pretty simple to me, I'd protect the largest source of my current revenue as long as possible and then add in the new sources as they proved themselves as viable. Cloud is clearly a different way of delivering software, or a different mindset over a traditional product license model, but is it really a different type of "DNA" from the traditional business of the software vendor? It certainly requires a high level of customer service and customer focus, but many of the traditional vendors already have the kernel of this attitude in their service and support organizations.

So if you're a vendor in the later wave of rolling out cloud based software products how do you gain momentum and build a product portfolio? Can you buy your way in or do you have to move your current products over to the new model? For many traditional products, the move into a SaaS model requires some fairly significant re-architecting to make the products viable as SaaS. Now some vendors have simply offered existing products as hosted offerings and moved to a subscription based licensing approach. This has the advantage of quickly getting the vendor in the market but it comes at a price to both vendor and customer. Like most things in business there isn't really a "best" one answer, but in fact a blended approach seems to be the most obvious choice, particularly if you're a larger vendor. Building some new products on a native cloud architecture, while time and labor intensive, will yield some excellent long term benefits. That doesn't preclude buying market share and expertise though. We've seen an aggressively consolidating software market over the last 6-7 years, with generally successful outcomes for the vendors and customers so repeating this with SaaS vendors is a natural continuation of the trend.

Consolidating current existing SaaS vendors into a broader product portfolio has some obvious benefits and some challenges. It increases the ramp rate for the acquirer, bringing more mature SaaS products (at least that would be the general assumption) with existing customers, a trained sales team, developers, operations staff, consultants, and product support expertise. For customers they most likely benefit from a relationship with a more stable vendor with more resources, potentially greater geographic reach and access to other product assets in the portfolio. The down side for the vendor can include the efforts to rationalize products / infrastructure / platforms, etc. that comes from adding products from multiple vendors. Re-platforming efforts can be expensive and/or complex. Integration into the existing product portfolio can as be challenging although it is generally a very important part of the post acquisition process. From a customer perspective there's always some fear of vendor lock-in as there are simply less vendors to deal with due to consolidation. I hear lots of discussion around this topic but frankly more from other analysts than from vendors' customers so maybe this is less of an issue / concern than some people believe.

Building new SaaS products (and perhaps moving existing products as well) now also comes with some added benefits. The original SaaS vendors are built on platforms and architectures that were defined and built over 12 years ago and while they certainly have been improved and modified during that time, they are getting old in technology terms. Look at what I'd call 3rd generation SaaS product architectures versus the 1st generation for example. Taking Workday as the most obvious example of 3rd gen, you can see many improvements that the older platforms simply don't have, in-memory technology, for example. So moving / building now means the vendor can leverage newer and more modern architectures and technologies, including virtualization, which was nonexistent when the 1st gen products were designed. Many pure SaaS evangelists will call my next statements heresy but traditional vendors that are getting into SaaS are also offering customers choices in deployment models, as they can build products that are capable of being deployed both on premise and in the cloud in multi and single tenant virtualized models with the capability of moving from one model to another in the future. To me this just seems like goodness for customers, but I'm sure I'll draw a few stones over it. One of the key objections I've heard to this choice model is the frequent release cycles that SaaS vendors hold to versus the much longer cycles of traditional software. The longer release cycles are due to a couple of things, the development model (usually waterfall) and the tolerance of on prem customers to upgrade cycles, which need to be longer since most companies couldn't tolerate more than an upgrade every few years. There are ways around these issues though, and we're starting to see wide spread adoption of agile dev models and efforts by vendors to sort out a way to provide frequent upgrades to the SaaS customers while giving the on prem customers ways to package up / save up upgrades to be implemented on longer cycles. This does lead to the old issue of supporting customers on multiple releases but if the vendor is willing to bear this burden (and can do so at little or no damage to the overall bottom line) then its none of my business to criticize them.

We're in a transition period for customers and for vendors. There's no magic switch to move vendor products and customer implementations to the cloud, it will take many, many years for that to happen. During the transition years giving customers options and choice seems like a very good thing to me. There are lots of advantages to moving to the cloud and companies are realizing these benefits but at the same time, many do not, or will not, move everything. For companies that have a substantial investment in core on prem systems that currently meet their needs, they will continue to operate those systems for the foreseeable future. When they add new systems, most will choose to do so in the cloud and integrate those to on prem systems as needed. Operating in a hybrid model is simply a reality for now...and that extends to many vendors as well.  So was being late bad, or was it simply "fashionable"?

Tags: SaaS, cloud, software, vendor, business model

Yammer Acquires oneDrum

Yesterday Yammer announced its acquisition of real time sync and desktop collaboration vendor oneDrum. This is Yammer's first acquisition and one that significantly increases Yammer's depth in facilitating social collaboration. Yammer provides a popular employee social network platform that is sold in the freemium model and has until now, expanded its footprint through a series of strategic partnerships that most recently include Ultimate Software. In these partnerships Yammer forms the social backbone or system of relationship for other key business systems from ERP to HCM.

With oneDrum Yammer adds seamless real time synchronization from any yammer connected device and a very important set of collaboration functions. One of the most difficult problems in the emerging collaborative enterprise is facilitating joint work around a document, spreadsheet, powerpoint, etc. Often teams try to use email as a proxy for a collaboration solution, which is definitely sub optimal and often ends in frustration caused by a versioning nightmare. Content management systems have tried to help with this problem and while they are fine with versioning they are not adept at the actual process of collaboration, that is, getting people together in real time to "do" the work. The only tool in widespread use that I've seen so far for this activity is Google Docs. Now while the functionality is excellent there are many inherent problems in using a consumer tool inside the enterprise, not the least of which is that it is generally being done with out corporate IT knowledge and with a high degree of IP and security risks. Of course some companies do use Google Docs as an approved enterprise productivity tool, which removes the security issues, but does not provide an integrated social experience. Yammer + oneDrum solves the security issues AND provides an integrated social communication and collaboration tool, with joint, real time work capabilities all integrated into the companies social network. The new features, which will be available this summer as a client download (no Microsoft Office plug-in required), will include:

• Sync: Access Yammer files through a desktop folder that includes a sub-folder for each Yammer group.
  • Users can drag and drop files into the shared folder to sync with all group folders
  • Shared folders are automatically provisioned when a user joins a new group and disappear when the user leaves (or is removed from) the group.
  • Users can open files from the Yammer desktop folder and work on them in their native applications all with real time automatic sync. This includes offline capabilities as well.
• Find: Each Yammer file lives at a unique URL (or permalink) where it can be viewed in the browser, followed, shared and discussed including automatic notification of changes. This works across any Yammer supported device
• Real time Collaboration: Employees can work collaboratively inside a Word, PowerPoint or Excel file added to the Yammer desktop folder.
• Security: Data in motion will be encrypted using 256-bit SSL/TLS and data at rest will be encrypted using 256-bit AES. Content can be marked read only and there is a version history. Viewing permissions are based on group access, so when a user is removed from a group or network, access to files is revoked accordingly.

This is only the first round of functionality so it will be interesting to see what else can be done with the integrated products after this summer's release.

Tags: yammer, collaboration, oneDrum, team, socbix, social business, enterprise

Responding in "Social Web" Time

When we talk about the impact of the social web, social business, social CRM, consumerization of IT...almost anything that has to do with the changing business environment, the topic that universally comes up is the change in people's expectations. This applies to employees, who want a user experience for the enterprise that is as "good" as their personal web experience and who want devices that provide the best and most modern functionality. For collaboration they are either provided modern people-centric tools by their company or they work around IT and use consumer tools that more completely meet their needs (although arguably not always the needs of the company when it comes to security and IP protection). The list goes on, and on and is both a great opportunity for business and a challenge for IT and older paradigms of "control".

As far as customers are concerned the reality of changing expectations is having a big impact on companies and on the way they interact and deal with customer needs. When the web saw its first wave of growth (you know, way back in the 1990's), companies treated the web like electronic billboards and brochures. Soon though, companies learned to use the web as a transaction conduit, a new distribution channel that is global and always on. It created distribution potential of tremendous value, just look at Amazon or Ebay. Today no merchant of any size would consider not using this great distribution network, which gives small, local businesses global reach. After the transaction web though, the web evolved more and we are now in the "social web" phase, where people learned that the Internet could provide a media platform and a way to interact and build global networks of individuals. It's really about channels again, new media channels and new relationship or interaction channels. I talk a lot about the three "C's" of social business, content, collaboration and community; these three C's all come from the new channels opened up by the social web.

Traditional consumer behavior is changing because of the web. Individuals are using new ways of finding brands and making buying decisions; moving away from traditional advertising and from using company sponsored information to relying on new media and trusted networks. Companies that are used to "controlling" their message by controlling the channels through which is flows and the content are learning that in this environment that is much more difficult if not impossible. These new channels provide content that is outside of the companies control / influence and open up communication channels that are not only outside of the companies control but in many cases unreachable by the company with out a significant change in the way things have "always been done".

The social web has some key characteristics that are impacting expectations, for example it's real time, open , interactive, has global reach, empowers the individual and is controlled from the end points, the individual. This creates some challenges for businesses and some opportunities. I read this article recently from CNN on a study of which companies respond fastest on Facebook (or not at all). Now most major brands (and a lot of minor ones too) have given in to the idea that they need a presence on important social networks like Facebook. Often they have built this presence with a lack of understanding of the expectations of their customers. Now don't get me wrong, I agree that you need to be on Facebook, but there are some very important things to understand about what that means. The study referenced by CNN, from STELLAservice.com, a company that rates customer service of online businesses, showed that one out of four companies failed to respond to customer service inquiries on their Facebook pages and that even less responded to comments posted there. As an example of best practices B&H Photo responds to wall posts in about 2 minutes. Footlocker, Williams Sonoma, Sur La Table and Bed, Bath and Beyond all respond in under 30 minutes, and the overall average of companies that do respond is under an hour. On the opposite end of the "best practice", brands like Victoria's Secret, Radio Shack, J Crew, and One Kings Lane didn't respond in two days.

Changing expectations mean that businesses have to learn new ways of interact with customers, new channels and new paradigms. There are 2 key areas for businesses I think, up front and down stream or before / during the sale process and after the sale support.  Companies need to move beyond the marketing message, which is not what these new channels are fundamentally about. Not that there aren't some great marketing opportunities but often in this new world customer service is the new marketing. Meeting customers when, where and how they choose and in the time frame that maps to the social web environment is critical. An hour or two is a long time in a real time culture, two days, that's ages. Remember, it's a community not another broadcast channel, so be a contributing member of that community, add value and engage in a conversation...and in "social web" time.

Tags: web 2.0, social web. SCRM, customer service, Internet, facebook, conversations, expectations, employees