Michael Fauscette

For Customers and Prospects, Experience Trumps Perception

Building a rich customer experience goes a long way toward keeping customer loyalty high. I know, not a new concept at all but it is important enough to say again. Customers buy experiences, and keep buying experiences over and over and over...you get the idea. I can think of a bunch of examples, in fact I wrote about the power of customer experience and used Philz Coffee as an example, a great experience peddler in my neighborhood and a place that keeps me coming back. But what about changing perceptions of prospects and customers? Can experience be used to uproot negative perceptions about a brand?

I guess the first issue about changing a negative brand perception is even getting an opportunity to demonstrate to the prospect a positive customer experience. Perceptions are deeply rooted and do not change easily. I like to say "perception is reality" for most people and if that's true, what we're really talking about is modifying someone's reality (and for you children of the 60's I'm not talking about "that" kind of altered reality). It's probably a bit of an understatement to say "it's hard", but there are ways to cause a shift in perception through experience. Frankly I think it's one of the only ways that can be successful.

I'll tell a story to illustrate. I am a died in the wool, loyal European car, particularly German Car, and particularly Porsche car nut / devote / loyalist (and have always been something of a . Now it doesn't necessarily follow that I don't like other car brands from Japan or the US, but I will say that in general I have not owned many US brands and in many cases don't have a very positive feeling about them. I'm not being a car snob, I just like the experience of driving a BMW, Audi, Porsche, etc. They have a certain feel, ride, drive and it's something I enjoy. I've often tried driving other brands either in test drives when purchasing or when I rent vehicles, something I do a few times a month (analysts travel, and I travel a lot). I have two distinct perception altering experiences to relate, one about Ford and the other about Chevy.

Ford first. As I said I rent quite a few vehicles during the year. I have noticed that Ford has a very active social business initiative and started following what they were doing, particularly through the person who leads that initiative, Scott Monty. I've been very impressed with the progress that Ford has made and because of that, coupled with the general good business performance, I started to get more interested in the cars. About a year and a half ago I started requesting Ford vehicles when I rent, mostly from Avis, and became more and more impressed with the handling, performance and sense of style of the vehicles. In particular I like the Ford Focus. It's well appointed, has solid performance and in general is a pleasure to drive. Now I'm not yet running out to buy one, but I have recommended that friends and colleagues who were looking at vehicles take a closer look. I have moved miles in my perception of Ford, a perception that I've held since I was a teen (which is to say a long time). In my head I thought tired, traditional and not modern, when I saw the brand, but now I think trendy, hip, well styled and high quality. Now that a shift in perception and the only way I would have made that shift is hands on. Yes the social media presence over time opened me up to try the experience, but still, at least for me. I would not have changed if the experience had not happened and been outstanding.

The Chevrolet example. I was approached recently by a colleague from a PR agency about a program that Chevrolet was running for influencers this summer. They would provide a new Chevy vehicle for me to drive for a few days and I agreed to fill out a pre and post drive survey to help them improve the vehicles and the experience. I usually take a trip to Santa Barbara with my two daughters every summer in August so I agreed to use the vehicle during that trip, which included a drive from San Francisco to and back from Santa Barbara (some 350 miles or so) (I suppose this is the disclosure, I did get free use of the vehicle for 6 days instead of renting). Now I have to say that my impression of Chevy was that the brand provides good, simple transportation in general and in a few cases like the Corvette something more special. Not a great perception but also not particularly bad. Anyway, the vehicle provided was a 2010 Malibu LTZ (which is the top of the line model). I hadn't really been in a Malibu in a very many years so I wasn't expecting anything more than good, reliable transportation but instead I was very surprised. The vehicle was well appointed, was stylish and performed admirably. My daughters were particularly fond of the embedded DVD system in the back of the front seats which they put through extensive testing. Once again my perception was completely modified by the experience and I would certainly recommend taking a look if you were looking for a nice, stylish, solid performing family sedan.

For me at least the experiences were clearly able to influence my long held perceptions and cause a change in attitude. While it didn't (or hasn't yet) move me into the customer realm, it has certainly opened me up to that idea and more importantly made me feel qualified and good about recommending the brands. That in itself is quite an accomplishment and probably "good enough" for now. 

Tags: SCRM, experience, social media, brand perception, change

Phillips out, Mark Hurd joins Oracle as the new Co-Prez

Well the speculation ended this afternoon when Oracle shot out two press releases, one on Charles Phillips resignation as co-president and the other for former HP CEO Mark Hurd's appointment as co-president of Oracle, replacing Phillips. It's not particularly surprising, everyone knew that Oracle CEO Larry Ellison and Hurd were friends, and that Ellison was very vocal about HP's decision to oust Hurd, and it comes two weeks before Oracle OpenWorld, which will be a great time to introduce customers, employees and partners to Hurd in this new role.

The move makes sense from a strategic perspective in the "new" Oracle post-sun acquisition. Hurd's background in hardware, services, and in selling integrated IT stacks is a great addition to the Oracle executive team at a time when Oracle has repositioned itself to compete more effectively with IBM and HP. I also imagine Hurd is happy to compete head to head with his former employer. Hurd gives the needed depth in areas that were somewhat lacking on the team and his focus on operational excellence and operating detail is a great fit with the Oracle culture. His strengths dovetail well with Safra Catz who continues in her role as the other co-president.

Charles Phillips had a good run at Oracle and deserves credit for making a field operations machine that has continuously put up some impressive numbers while integrating a staggering number of acquisitions including PeopleSoft, Siebel, Hyperion, JD Edwards and Sun. In the press release Ellison said that Phillips has wanted to leave earlier this year but had agreed to stay on through the Sun integration. With the availability of a strong replacement the timing seems right for the switch and three co-presidents is simply one too many. Phillips was a strong front-man for the executive team, I guess we'll have to wait and see how well Hurd takes up that role.

Evolution of Change: Signs for the Future of Business

I like taking the time once in a while to tie different trends together, it just helps me focus on what's really happening now and helps me understand where things might be going. Taken individually there are some very interesting things happening in technology and business but when you link them together a picture starts to emerge that is almost staggering in depth and breadth of change potential. I was reading "The Singularity is Near" by Ray Kurzweil the other day and a point jumped out at me that I think is extremely important when looking at change, whether you agree with Kurzweil's ideas on singularity or not. That concept is that technology growth or the growth of any evolutionary process is exponential, and is not linear or does not simply continue at current growth rates over time. In fact many evolutionary processes see double exponential growth, so in fact the growth of the exponent is exponential. It's easy to see how people might mistake the growth rate of an evolutionary process when looking at change and it's impact on the future, what you see is the rate of current change and you extrapolate that rate into the future. To actually project the change into the future you must account for the exponential nature of the change, which is very hard for most of us. It's an increasing rate of advancement over the time period examined. Kurzweil also points out that not only do we often underestimate the rate of change but we also tend to look at the change in isolation rather than as a part of a set of related changes. This is an important point, if you look at an individual change in isolation you can fool yourself by thinking that the isolated change projection is too radical when in fact the interrelated trends make allowances or compensate for each other. Ok, enough mind numbing change theory, what I wanted to do is try to link the changing factors together and see if there is a pattern of evolution that is signaling dramatic and fundamental change for business.

So what are the individual changes or shifts that we are seeing? Here are the ones that I believe signal the future of changed business and business models as well as changed models of work and personal interaction:

Cloud computing

You can't listen to any technology discussion these days where the word cloud doesn't ring out in almost every sentence. While some vendors would have you believe that cloud is nothing new or different I do not agree. Computing power as a utility that can scale up or down as needed (along with the accompanying pricing) is a powerful concept. The business model behind it, that pricing is granular and based on consumption, is also very powerful and opens up all sorts of possibilities for businesses. Moving IT from thinking about, purchasing and managing stacks to thinking about workloads, opens up a new level of strategic involvement for IT organizations and raises their importance to the overall business. Cloud computing may not be cheaper over the long run but it is significantly more flexible and scalable. Businesses require strategic flexibility and the cloud is a key part of delivering that flexibility for the hyper-networked global enterprise. The cloud is essential as an enabler of the change, providing the means for aggregating data and creating high value information across the new business networks. Value and the creation of value is changing and shifting out through the business (and people) network. Cloud facilitates linking the nodes of network easily and flexibly.

Everything as a service

The cloud plays a big part in this concept but it's only part of the enabling infrastructure. The ability for computers to monitor, measure and bill at extreme levels of granularity for the use of any asset has opened up a world of business possibilities. The recent economic crisis accelerated and increased the enterprise's awareness to the potential of consuming and operationalizing the consumption of "things" as a service over purchasing those same "things". From a budgetary and operating standpoint the idea of this operational approach and it's virtually limitless ability to scale and flex as needed over spending scarce capital for less flexibility, is changing the way business thinks about supporting work and getting things done. Software and other IT services consumed as a service is mainstream in the enterprise. Other business areas have also moved into the "as a service" model, shipping as a service (UPS and FedEx), payroll as a service (ADP), car use as a service (Zipcar and Citycarshare) and even labor as a service (Amazon.com Mechanical Turk).

I read an interesting article the other day about a service that enables individuals to rent out their own goods in their local community. Think about the possibilities this business model opens up and in this case builds on hyper-connectivity, a hyper-local community (or network) and the computing power to enable the scaling of the model. You buy an expensive device and use the model to recoup your investment or perhaps make a profit from something that you also needed / wanted / enjoy. It changes or moves the point of value.

Networked business (customers, employees, partners)

I started talking about this concept here. This transition is the most fundamental shift in the way business works and the signal of moving away from our industrial model of the past. Information driven businesses are interconnected and interdependent even if they don't yet realize it. Hierarchies are inherently inflexible and tend to stall information flow at control points. Information is the new lifeblood of the networked business and thus cannot be hoarded. The networked business can exist across boundaries, whether they are organizational, company or geographic. The Internet creates hyper-connectivity and opened up the flow of information around barriers. The social web changed interaction models and redefined community. This new community concept leads into the networked business model (or models). Network synergy is the key to the new and enhanced value pools that start to exist in the networked business environment. I think this new networked model is not a choice but an imperative that is being fueled by the existence of the social customer and social employee and the new interaction models that those groups are driving. Networking the business also enables co-creation of value, another concept that is gaining momentum for redefining value points in the enterprise.

The power of community

I suppose this is related to the networked business discussion above, since networks are just a type of community but the power of community is somewhat more broad than the idea of networked business. For example companies have found that sourcing new product or service ideas from a customer community or ideasourcing (which is just crowdsourcing ideas) can produce great new ideas AND increase customer loyalty and engagement (MyStarbucks Ideas, Dell Ideastorm, etc.). Customer support communities can help companies lower support costs while providing peer to peer support in ways that are more comfortable for customers and with the by product again being increased customer loyalty and engagement. Community also relates directly to the idea of co-creation of value, that is the company and the engaged customer (or partner, supplier, etc.) generating value together.

Internet of things

The Internet is the plumbing that connects, or maybe I should say it's the "great connector'. At first this connectivity was person to person or person to business but as the net has evolved we have developed smart devices and sensors that can be embedded in almost anything and can leverage the connectivity. The bounds of hyper-connectivity are not stretching but in fact disappearing as the network extends to nearly everything. For example RFID technology connects goods to the grid and makes them one more node in the information network. The ability to connect, capture, communicate and analyze is extended outward and adds to the available information. There's more though, as the "thing" becomes smart the ability to take action is also moved to new nodes on the network. A simple example is the creation of smart automobiles. The auto knows where it is, where it's been, it could know who is in it, it's current state (running, driving, speed, damaged, malfunctioning, in an accident), etc. The auto is on the network and let's say that it is involved in an accident. The auto reports the accident, opens a communication channel between the driver / passengers and a central monitoring facility and communicates its state automatically (for now a person with a connected computer but in the not distant future the computer itself) who can assess the situation and extend the network to law enforcement and / or emergency personnel if needed.    

Embedded sustainability

Expand the Internet of things concepts another step and it's not hard to see that connectivity empowered with smart devices could make a significant difference in our current sustainability issues. Other technology initiatives will certainly address new ways of green living but in the short term creating smart networks of buildings could help reduce consumption. Creating smart water distribution systems could ensure safe water supplies. Better logistics networks could reduce fuel consumption while optimizing the delivery of goods. Smart datacenters can reduce power consumption while optimizing computing power. I can go on but you get the idea I think.

Big data

Currently the amount of data created doubles about every 18 months. If you apply the concept of exponential growth however we should see this time compress at a rapid pace. Data sources are exploding, social web data, smart devices, enterprise systems, user generated content, etc. all fuel this accelerated growth. The opportunity to gain insight, business value and competitive advantage from this data is huge but only if the data is managed, analyzed and used effectively and efficiently. The data gets more useful the more it can be combined and processed. This will require increasingly more resources to accomplish and is a major driver in the move to the cloud for storage and analytics.

Predictive analytics

Taking the big data concept one step more, there is the real potential to use the key intersections of the data to develop and support predictions on all sorts of behaviors. I wrote about it here so I won't go through it in great detail but I will reiterate the idea that the intersection of social data and enterprise data is a value point that businesses need to leverage. Using this information will lead to predictive selling, predicting loyalty and advocacy, predicting problems and issues...all sorts of useful business information and actions.

The nature of productivity

Work is changing, enabled by hyper-connectivity, mobility, new business models and the increasing number of tools available to increase effectiveness. The computer (and it's software) is a great labor saving (and maybe in some cases labor creating, but that's for a different post) device. Connecting it to the Internet made it even more productive. Slate devices and mobile platforms take that one more step. New tools like enterprise video, blogging, microblogging, wiki's, virtual conferencing platforms, etc. continue to evolve and change work patterns. The shift from file based collaboration to people based collaboration is starting to have it's impact on productivity. The availability of content / media distributed on the Internet to these new devices not only makes managing media consumption easier but also fundamentally changes the way the media is used. Mobility extends productivity to a new level (and to new places).

Multifaceted business models

Connectivity creates the ability to separate value points in a business model. Historically business exchange for value was very straight forward, you had a product of value and you sold that product to someone for something else of value, it was generally one to one. Through the Internet this is changing and getting more complex. A simple example, you could product a good and offer it up to customers for free, instead getting your value through a relationship with another business that pays you for displaying its ads along with your product. The customer gets value from you, you get value from another source for providing value to the customer. Hyper-connectivity opens this up to ever increasing complex possibilities and the value moves around in the network to different nodes. Freemium business models operate a multifaceted business model, the free product from vendor 1 has value to a customer but vendor 1 gets it's value from vendor 2 (ads) and vendor 1 also gets value from converted premium customers in a more traditional 1:1 model.

Necessity driven innovation

This is a fairly simple concept, innovations happen to overcome hardships or problems. If you have more hardship in theory it should drive more innovation, in fact it should drive disruptive innovation (see this post for a definition of disruptive versus continuous innovation) since the need is great and overcoming the problem is hard. In the past though, most disruptive innovation occurred in the most developed places, they simply had better and more available resources to apply to the problem. Today though the Internet among other things is starting to change that. If necessity does drive disruptive innovation and the resources to overcome adversity is available then wouldn't it be more likely that innovation would come from the places that need the solution the most? It follows then that there should be a shift and that more disruptive innovation should come from developing countries where there is a greater need for the innovation. In fact technology, which is available in increasing quantities to emerging nations, would combine with their extreme market pressures to accelerate the rate of innovation. Hyper-connectivity opens up the global marketplace to these disruptions as well. And business model innovations, product / service innovations started in emerging nations would spread rapidly to developed countries thanks to the network effect.

Mobility

I've written quite a lot on enterprise mobility and the fact that workers are leveraging the explosion of new technologies to work whenever and wherever they choose. Real time ubiquitous connectivity is changing how people work and how businesses get things done. Take a look at the other mobile posts for more background on this trend.

Other radical advances:

There are a few other technology developments that support the trends above but are not standalone trends themselves, nanotechnology and artificial intelligence (AI) for example. The number and type of these technologies will accelerate and grow as the key trends effect their changes on business.

Take these trends together and I believe you start to see a picture of the post-industrial enterprise. This enterprise will have new leadership models, new ways of creating value, new work models, apply and consume technology in new and innovative ways, and operate in a highly connected, networked world. These trends themselves are evolving and will continue to change at accelerating rates. Over the next few months I'll try to take a deeper look at them and the output that we're likely to see as businesses and technology continue to evolve.

Tags: social, trends, change, post-industrial, mobile, cloud, SaaS, evolution

Maybe it should be "Networked Business"?

I like the term social business, I'm comfortable with the concepts I've used a lot over the last two or so years. I think that it captures the necessary transformation that the post-industrial enterprise needs. As I think about social business I've started to use another concept that seems to help clarify things a bit, people-centric enterprise. But, I've started to think that maybe something beyond social business and people-centric enterprise might help us think through what is really happening or should be happening in the business transformation. There are two very key social outputs (see the IDC Social Business Framework for a discussion on social outputs) that we need to consider, content and community, that represent the force of the social web. In the social context content is often represented by social media and community is seen as a social network. So here's my idea, maybe we need to start thinking of the new business model as the networked enterprise?

To build a new model for business we have to leverage the power that comes for shifting the focus from process to people. Relationships are drivers of people-centricity, so doesn't this really mean we're changing from a hierarchy to a network? I considered other terms that apply, connected enterprise, ecosystem, collaborative enterprise...all are relevant. The business transformation has impact on all parts of the business from sales to field service and from inside to out. There's a concept in economics called the network effect, or the tendency that the value of a product or service increases as more people use it. The example of network effect most often cited by business texts is the telephone, a single telephone is useless but value increases the more people have and use it. We see this effect on the social web to a great degree, social networks like facebook and Myspace are relevant because people are connected there and become more or less valuable as more people join / use the service (or don't, so network effect can be both positive or negative).

From what I've started to observe I think that there could be a related concept to the network effect in a networked enterprise. In the networked enterprise there is an effect that I call network synergy, or value to the business is increased as a result of the increased interconnectivity of it's people. The addition of the term synergy implies that the interconnection of people produces a result that could not be obtained if the people were not connected (in simple form it's the idea that 1 + 1 = 3). So in a people-centric business the increased interconnection of employees, suppliers, partners, and customers produces a result greater than what could happen if the network didn't exist, or in other words increases value to the business. The social business, which has people as its platform, performs at a higher level because of network synergy. The more interconnected the business becomes the greater the return from network synergy.

Tags: network, social business, social web, Internet, community, enterprise

Workday takes the Gloves Off?

Starting a little over five years ago, workday quietly went about the business of redefining ERP software. After spending a day with the team at its first ever analyst technology summit yesterday I have to say that they are not being quiet anymore and with good reason. The management team reads like a who's who of software innovators, many from the glory days of PeopleSoft and led by co-CEO's Dave Duffield and Aneel Bhusri. I know this team well, having spent a few years at PeopleSoft myself in the mid to late 1990's so I'm not particularly surprised to find a lot goodness here. And you have to give them credit for inviting 20 of what are probably the toughest group of software analysts you could assemble in one room, to the inaugural event.

Workday's vision is to redefine ERP software not only from a business / delivery model prospective (SaaS / cloud) but also from the focus on usability and modern design. Business is becoming people-centric (people as the platform) and workday is approaching its software from that basic design premise, a very powerful concept. Software and technology, in particular ERP have gone through a few phases; the mainframe, then the shift to client server, the emergence of the Internet and the subsequent advance of the social web, the rise of mobile computing and global hyper-connectivity.  Many of the enterprise systems in use today are still based on designs and technology from a previous phase, and the user experience is quite dated. Workday claims to be the only modern ERP system in the last decade, and while it's a little more marketing than actual fact, it does make one think.

So what did I learn about workday:

• Current Offerings: Core Human Capital Management (HCM) [benefits, compensation, absence, performance management, staffing, succession, worker spend management], Payroll, Financial Management, Higher Education, Spend Management and Services.

• 

• Delivery / License model: SaaS / subscription pricing (single price for all modules currently and no extra charge for storage, although they are planning on providing some tiered pricing for higher data volumes), multi-tenant - by their definition they are "real SaaS" (off premise in shared datacenters, pay as you go, all customers on the same code base, multi-tenant, virtualized for scalability and updates are included in the subscription)
• Average contract term: 3 years (but Aneel indicated that many larger clients are pushing for 4 years to lock in pricing)
• Current customers: ~160+
• Employees: ~630 2010, targeting 1100+ in 2011
• Growth: YTD ~130% (no revenue numbers released, they're still private). Targeting 100% per year growth.
• Product focus: "all roads lead through HCM" - focus was initially on building out a solid core HCM SaaS product. Targeting large multi-nationals. Core HCM is there today, payroll is moving up the size curve and currently is in the upper mid to lower enterprise, but hitting stride this year; talent management 2010/11; project and spend management 2011 and financials is in smaller mid-market currently with a target of hitting the enterprise in 2012. They plan to be a full ERP by 2012.
• Usability and user experience is their key differentiator in the apps market
• Largest Deployment: 100,000 employees, average deal in pipeline today is ~10,000 employees.
• Biggest driver for enterprise customers to move to workday / SaaS: painful and expensive upgrades, instance consolidation and aging user experience.
• Verticals: Targeting services but have customers in high tech, financial services, healthcare, higher educations (just closed their first deal) and some in manufacturing (but they are emphatic that they are not targeting manufacturing)
• Distribution Strategy: Direct for enterprise and upper mid-market, indirect for small and lower mid-market
• Biggest Competitors: Most often compete against legacy apps but they are focused on SAP (and they claim that they are winning in HR), they think that Oracle is more focused on competing  with IBM.
• CRM solution: partnered with salesforce.com (salesforce.com is a workday customer as well)
• Questions for Aneel: "Who do you admire in the apps/tech space?" - salesforce.com, Google and Amazon
• Platform: They do have a solid platform that includes integration (more on that later) but that are not planning on offering it as PaaS. They are an apps company.
• Average Time to go live: 4-5 months on first phase
• Design Focus: People and work ("not who works here but instead here who works?") - strength from the core - worker - work - performance. Easy to use including search, tags, links, self-service, collaboration, contextual apps, mobile and personal productivity. HR designed for business users not just for HR professionals
• New Release process: 3 releases a year. The whole process takes no more than 6 weeks to completely migrate everyone. Every customer has a sandbox copy of their production data and gets to preview the coming release there. All major new features are delivered turned off. Workday is the first customer live on every new release.
• Development cycle: agile process, 8 weeks development, 5 weeks validation and 6 weeks deployment. The new development cycle starts simultaneously with the deployment phase.
• Technology: Open standards, open source stack, object oriented, in-memory processing, metadata based, multi-tenant and elastic processing. They use MySQL for the underlying persistence data store.

• User Interface: Design goal is enterprise class technology that feels like a consumer applications. Adobe Flex based "clean and simple with the wheel paradigm for non-power users". The definitional app development process enables consistency in the UI. The use of the UI server allows the apps to scale, facilitates rapid development and enables multiple end user device support. Key interactions are developed for each device but the content is populated by the UI server which can dynamically generate UI forms, hierarchies, and grids. The UI containers are developed for specific devices and the device framework enables multiple device support. From a mobile perspective they have a 3 tier approach, tier 1 - completely native app, tier 2 - native app / shell with HTML / browser for transactions and tier 3 - browser only. Currently the iPhone is the only tier 1.
• Next big innovation: C-level apps (executive mobile) that are focused on KPI's and predictive analytics. They will be designed and deployed on the iPad.
• Collaboration and social: They have embedded collaboration around processes (comments / sharing) but currently that is it. When pushed on why no social focus on the roadmap they stated that their customers are not asking for it (in fact the customers are scared of it from a privacy, security perspective). The executive mobile initiative was prioritized higher and got scarce resources rather than a more social collaboration initiative. That said we did later hear from the new workday Labs group and they have some very interesting social initiatives that are being studied for the future.
• Workday Labs: Organization that is tasked with driving innovation and future enhancements into the product. They are currently looking at things like natural workspaces, data filters, collaboration and mobile.
• Integration: Options are - 1. web services API (filtered data where you want it), 2. Prebuilt Integration Networks (HCM, Benefits, Spend, Payroll and Financial) and 3. Enterprise Integration Builder (forms-based integrations) and 4 Integration Studio for complex integrations.
• Analytics: Embedded and designed to work in context with the current user system activity

So in summary I like what I see so far. The user interface and the focus on user experience does deliver a more modern enterprise system. I think users will find the interface clean, simple and very familiar to other consumer experiences online. The architecture and development processes should deliver a very scalable enterprise class SaaS experience. I suppose I would have liked to see a lot more in the way of collaboration, particularly around social collaboration and ad hoc interaction, including activity streams, but I guess I'll just have to wait and see if the new workday labs helps drive some of that into the product. I think they're missing an opportunity to be a thought leader around social, even if many enterprise customers still deny that they will (or in most cases already are) use social tools in their businesses, but then I would think that.

Tags: cloud, application, SaaS, PaaS, workday, innovation, ERP

Apps are Cool Again?

I've had a bit of fun this week watching the banter created by the Wired cover story and related articles titled "The Web is Dead. Long Live the Internet". The idea, fueled by an infographic that shows the rapidly increasing percentage of Internet use devoted to other than visiting web sites, is that Internet use is changing, mostly caused by the shift to the richer experience of apps. Of course in any debate there needs to be at least two sides (in this one there are probably many more than two but still), so here's an article that takes the same infographic and shifts it to show the dramatic growth of the Internet. The truth, well, they're both accurate at least.

There was a time in the history of the web that the point was the destination, the site, the page. Search evolved to help find that destination. Remember web history though, the original web was static. You went to the destination and aside from reading / looking that was it. We evolved though, and soon along came the transaction web and ecommerce. Ecommerce was still mostly about the destination and the browser was king. There was a lot of talk about the browser as the interface to the app as more software became Internet capable. Portals were born and provided browser based windows into various enterprise tasks and activities.

In the next web era the social web started to change the nature of web use, and interacting, creating, sharing and learning became the drivers of activity. This new activity type started the move away from the web site as the destination in some small ways... social site updates via SMS, for example (you could also see the start of the increasing importance of the mobile Internet). The web became a media type and the Internet became the vehicle of content distribution. The two unique forms of web based social activity took shape, content or media and network or community.

The change from web destinations and browsers to apps can really be traced to Apple's introduction of the iPhone and the Apps Store. If you'll think back, the first iPhone did not have an apps store initially but instead had web based apps, which were really not so good. Once the apps moved to the device it opened up a much better user experience and a wider variety of potential activities on the mobile computing platform. The apps become the vehicle for both creating and consuming social content (through RSS and native content) and even provide a richer experience around ecommerce. Slate computing devices like the iPad, with their increase in screen real estate, have added to the app momentum.

User experience in the enterprise is a growing concern a companies hold static with their core enterprise systems in a tough economic environment that has taught many to stretch out upgrades and core system changes in favor of new vertical and other "edge" apps that provide higher value. Unfortunately these aging core systems, while adequately handling business requirements, provide a less than adequate user experience. In contrast the new Internet apps that have grown out of Web 2.0 have a simple and much improved user experience. Employees are increasingly looking for the same experience from enterprise systems and this desire is creating a great deal of friction and what I like to call the "bring your own workplace" where workers feel empowered to work around enterprise systems when those systems don't do the job or provide the desired user experience. This behavior has added to the accelerated adoption of these new Internet apps, particularly Internet apps available on new mobile devices.

The other contributing trend in the move away from web sites as destinations and the broader use of the Internet as the enabler of technological advancement is the proliferation of smart devices or as some call it the "Internet of things". These new smart devices span a wide range of activities / uses and generally include context awareness as a key component. Context awareness in apps (mostly location awareness at present but other context information could be useful, like "what task is the user trying to perform") improves the user experience but also adds important functionality. In smart devices context awareness can add all sorts of independent data from temperature to location. Fedex launched a business last year that utilizes context awareness, called Senseaware, that creates smart packages, a feature that could be very useful in shipping biomedical materials, for example. And the definition of smart device could vary widely as well, everything from a refrigerator to an automobile has the potential to be a smart Internet device.

So apps are cool again I guess...well, for me they always were. The Internet is the backbone for these new cool apps which are enabling rich user experiences with ubiquitous access across multiple device formats. I was in a meeting today at Citrix and I heard a statement that I think captures the new normal of computing, they said, "it's really about three screens (laptop / computer, mobile, slate) and a cloud", I like that thought. I'd maybe modify it a little though, at least for the future it's about "my choice of screens, a cloud, apps (especially context aware apps) and a world of connected smart devices". And when I say apps I'm talking about the new generation of apps with simple, clean user interfaces, people-centricity (which includes user configurability), device portability, and connectivity. I'd almost add embedded social but I think people-centricity captures that possibility. Is the web as a destination dead, no, but that's not the most important part of the Internet anymore (or maybe it never was), it's about connectivity. 

Tags: Internet, web, mobile, applications, software, smart device, cloud

A Few Links

1. A free download from IDC (authored by me, Erin Traudt and Mary Wardley) on Social Business. The document presents a framework for applying social technologies to real world business problems: Social Business Framework: Using People as a Platform to Enable Transformation (IDC #223862)

2. A few weeks ago I sat down with a few people from PTC to talk about social product development. As a part of the conversation we recorded a video of some questions about wisdom of crowds and its application in the product development process. Erin Daly wrote this post on her PTC blog and included the first of the videos segments.

3. This is the link (subscription or purchase required) to the paper referenced in the PTC conversation, Product Lifecycle Management and Wisdom of Crowds (IDC #222331), that I co-authored with Michael Krigsman, Lisbeth Shaw and Sanjeev Pal.

4. A second document (subscription or purchase required) on wisdom of crowds as it applies to the CRM market, authored by Michael Krigsman, Mary Wardley and me: CRM and the Application of Wisdom of the Crowds, IDC #222166.

5. If you're interested in Social CRM (and CRM in general) you need to follow these blogs:

• Paul Greenberg: PGreenblog and Social CRM: The Conversation
• Esteban Kolsky: CRM Intelligence and Strategy
• Mitch Lieberman: A title would limit my thoughts
• Mike Boysen (and other contributes): Effective CRM
• Brian Vellmure: CRM Strategies
• Brent Leary: Social CRM
• Prem Kumar: SCORPFROMHELL
• Mark Tamis: Social CRM Ideas
• Chris Carfi: The Social Customer Manifesto
• Martin Schneider: CRM Outsiders
• Jim Berkowitz: crm mastery

6. Other smart reads on "social":

• Michael Wu, Lithium Principal Scientist on analytics
• Wim Rampen co-innovation and social business
• Ray Wang: A Software Insider's Point of View
• Jeremiah Owyang: Web Strategy
• Paul Gillin

This is not an all exhaustive list of course, but the people that I read and exchange ideas with regularl,y so hopefully it's useful to you.

Deal Log: An Update on Software M&A for 2010

So far 2010 has been another prolific year for M&A activity in the software markets. The software industry and tech in general has seen a solid amount of M&A activity through out it's existence, but over the last 6 years or so the pace has accelerated quite a bit. The current economic conditions have created additional pressure and opportunity that has caused the pace of acquisition to increase substantially this year. Vendors looking for bargains, looking for new growth opportunities, filling needed talent gaps and looking to build out additional product capabilities have aggressively pursued the M&A route this year. We also see consolidation starting to accelerate in a few newer hot technology areas like social software, mobile and cloud, as both start ups and established vendors look to expand product portfolios to take advantage of the emerging markets.

 I try to keep a reasonable list of M&A activity during the year, especially around the enterprise software markets, so I thought it might be useful to share it. If I missed anything please add it in the comments and I will update my list.

Tags: M&A, software, deal log, acquisition

Supporting Work in the Information Economy

The nature of work has changed for a great portion of the workforce. In the so-called "information economy" what we do and how we do it is in a state of transition. Add to that the growing influence of the social web on work and businesses and the gap between the "normal" in the industrial age to now is quite wide and getting wider. I wonder though, are the underlying systems that support work changing as rapidly? The roots of our current enterprise resource planning (ERP) systems, for example, are evolutions of the manufacturing resource planning systems (MRP) of the 1980's. As a part of system evolution the ERP systems were developed to manage a wider set of business processes outside of manufacturing and to provide relevant business information. In fact ERP and most other enterprise software systems followed a fairly simple path from basic transaction system to aggregating data to analysis of the data, decision support and eventually to automated decision support. CRM followed the same basic path as well. The systems that we use to run our businesses today are fairly mature at this point but is that maturity itself a fundamental problem in a dynamic work environment?   

The way you do your work should have a profound impact on the way supporting systems are designed. That seems simple enough on the face of it. MRP was designed to support manufacturing processes and since it grew out of MRP, ERP mimics that approach. Manufacturing is by its nature very process centric and repeatability to a standard is very important, especially from an economic and quality standpoint. In fact we spent a great deal of time in the 1990's doing business process reengineering to try and get all of business shoe horned into set processes. Companies spent a lot of time working out industry best practices and software tried to capture those best practices in their internal workflows.

Knowledge work is very different from making things in a traditional assembly line driven manufacturing process. Knowledge workers do research, analysis, and design / development. They take this analysis and apply it to problems, defining the problems, identifying solution alternatives and implementing their designs. Taking data, often unstructured in nature and through analysis they create information or as the pic above says, creating meaning. This information work is the crux of innovation in today's businesses and innovation is absolutely essential from a competitive standpoint in a global, hyper-connected, highly competitive, social web integrated business environment. Information work then, by its inherent unstructured nature is not process driven and in reality mostly ad hoc.

This is where, in my opinion we have a growing conflict between the needs of knowledge workers and the underlying business systems in use today. The enterprise software is process driven and yet the nature of information work is ad hoc and predominately unstructured. Don't get me wrong, there are plenty of job functions in side businesses that do require repeatable process, even outside of manufacturing. These process driven functions are well served by today's business systems. Knowledge workers do:

• Analyze data to establish relationships and cause and effect
• Brainstorm solutions
• Identify and understand trends
• Networking and making connections (both people and data)
• Creating and modifying strategies
• Business critical convergent and divergent thinking
• Evaluate and rationalize conflicting priorities
• Designing new products, services and capabilities

In contrast knowledge workers are not involved in functions like:

• Order entry
• Financial transaction processing
• Ledger entries
• Shipping

But there are positions that seem to be transaction driven that require knowledge workers like:

• Customer service (resolving customer issues, especially in today's social customer environment)
• Technical support
• Handling inquiries

In addition to the individual knowledge function there is also a growing need for social knowledge work. I think that this could actually reflect the concept of co-innovation that is gaining momentum with the social customer. This internal co-innovation is the evolution of collaboration in the social business.

So back to systems. My point is that current systems fall short in dealing with ad hoc work and that knowledge work is inherently ad hoc and unstructured. Business analytics tools try to address some of these underlying shortfalls but do not really provide all of the capabilities needed. It's an accepted fact validated through survey that knowledge workers spend on average ~70% of their time working around rigid systems. Add to that the growing need for implementing flexible business strategy in business systems to accommodate rapidly shifting competitive and market pressures that can change with alarming frequency and the problem is even greater. There must be a new generation of knowledge tools to facilitate the growing social nature of work and to allow a more ad hoc and unstructured approach for knowledge work.

Tags: social business, socbiz, knowledge, information, work, social web, ERP, software

Redefining Leadership in the Emerging Social Business Environment

It's 2010 and business has changed. The combined impacts of technology shifts like the social web, real-time mobile computing, and cloud computing; business shifts to an information based economy; and sociological changes in individual and group behaviors and expectations are creating a revolution in business. In a historical context the situation today looks reasonably similar to conditions that surrounded the start of the industrial revolution. The shift from agrarian business and social structures to industrial based structures changed almost every facet of life, modes of social interaction, social structure, hierarchies, management and leadership styles, education systems, etc.; all built to support the growing industrial economy and society. These structures have had more than 300 years to become ingrained social patterns and practices yet more and more they are coming under pressure to change to modes that will support the new imperatives in business and society.

I've spent quite a bit of time researching and discussing the business changes that are starting to have significant impact on the way companies interact with customers, employees, suppliers and partners. Out of this research we are seeing the emergence of a new business paradigm that incorporates the learning from the social web and the new interaction models and expectations of all of the business stakeholders. Social business requires new ways of engaging customers and prospects as well as new methods of operating a business. Part of the urgency to change is driven by people that have learned and gained new expectations based on their personal online life, people that make up a businesses customers and employees. People have a new level of empowerment because of their online voice and expect experiences from business that mimic those in their personal life. This has led to business looking and adopting new customer programs ranging from social web monitoring to social customer support communities. Internally companies are starting to look at employee tools and implement new ways to collaborate and interact across the business. All of this change is really related to the idea that business culture has to change to meet these new requirements and take advantage of the new opportunities presented by social business models. Along with this culture change leadership and management models are starting to feel the same pressure for change.

 I've been keenly interested in leadership and management science for most of my adult life. I have worked almost exclusively in management positions including my 10 year career as a Naval Officer and even now in my player / coach role as a group VP at IDC. Educationally I studied / have degrees in history, sociology and business management, with a particular focus in my MS program on organizational design. As a Naval officer I learned a great deal of practical leadership. As a software project / engagement manager I also learned many management techniques. I list these experiences simply to say that this is an area that I am experienced in and have studied quite a lot. All of that has not prepared me for what I now believe is a fundamental change (or need for change) in the way management functions in most organizations.

Management structures in a factory are clear and the models are "tried and true, as the saying goes. If you want to produce widgets these methods will work. In an idea and information based economy that is fueled by creativity, empowerment and independence they will at best produce mediocre results and at worst fail miserably. The industrial model, which is to varying degrees the approach in most businesses today, is based on a strict adherence to hierarchy and the centralization of power.  The model generally includes some or all of these traits:

• Strict hierarchy with a clear chain of command both up and down
• Need to know mentality, information is hoarded and can become a power base
• Openness is not encouraged and often can be used against a person in a political struggle
• Strategy is disseminated from the top
• Decision making is centralized
• Policy and rule based control driven from the top of the structure
• Conformity is rewarded
• Managers are "served" by employees
• One way communications are common (from the top down)

In the new social business a model of management and leadership will be required and will feel very different from the industrial model. This is in fact, one of the reasons that the transformation to a social business model will be a long and difficult road. Many in management today could feel threatened in the new model. Some of the traits that I believe will be required in a social business include:

• Coaching versus "managing"
• Information and content is the life blood of the social business and is shared openly and frequently (hoarding is not rewarded or tolerated) (I call this content liberation).
• Employees are empowered to make decisions (I'm not advocating anarchy, there will need to be some vision and strategy as a framework, but even the formulation of the strategy and vision is participatory and not centered in a select few). Empowerment also means the power and obligation to speak up when something is amiss.
• Transparency which leads to ethical behavior.
• Power and communication are networked not hierarchical and one way
• Managers exist to serve not be served
• Strong personal brands are encouraged and people's individual brand gains advantage from association with the corporate brand in a symbiotic relationship
• People become the enterprise platform
• Everyone has a voice and can influence the company community
• Personal responsibility and accountability are rewarded and valued

These are a few of the traits that I think will be increasingly important and lead to competitive advantage for companies and leaders that adopt them in support of a social business culture. I'm sure there are many more ideas, what should I add to my list?

Tags: social business, empowerment, social CRM, leadership, management