Michael Fauscette

Five Technologies that are Changing CRM, Comments on CRM's Next 5 in 5

The other day I was pointed to an interesting post on the Software Advice web site called CRM's Next 5 in 5, 5 technologies that will change CRM over the next 5 years. The post was written by CRM analyst Lauren Carlson, and was based on a format that IBM uses for predictions each year. In addition to Lauren's 5 in 5 predictions, she arranged to have a few of my analyst colleagues,  Paul Greenberg, Ray Wang, Brent Leary, Esteban Kolsky, Denis Pombriant and  Brian Solis add their comments.  I like the format and of course I found it hard not to add my opinion as well, so here are a few comments on Lauren's predictions:

1. Context services will provide a clearer picture of customers - Context is an extremely important concept across many areas in software and customer insight is no exception. The customer profile continues to be the center piece of businesses' CRM efforts, and the addition of location data, behavioral data and a view of a customers' social graph can enrich that profile significantly. Context services are a key input to the emerging category of applications we call socialytics as well. The richer the social profile of a customer the greater the insight and the more likely that the profile will yield data that can turn reactive efforts into efforts based on behavioral models and predictive insights. Mobile of course is adding a rich set of context data, particularly when combined with social data and with transaction historical data.

There are also other ways that I see context becoming important, taking more of a work / system view. Applications in general must become context aware. This is particularly true of systems that provide data for decision support. The next generation of software will be process aware and provide the right information at the time of need, including bringing the "right" experts together in the work context. This is one of the key productivity enhancements that I see evolving in the next generation of enterprise applications.

2. Real time customer intelligence becomes a reality - There's a lot of discussion over big data and the rapidly growing mountain of data that's created every year. IDC estimates that 1.8 zettabytes of data were created in 2011 and that data volume doubles ~every 2 years. There is work at every level to figure out how to manage and use this data. Today the problem is getting business value out of the data, and this is particularly true around customer data. While I see significant progress we're still in the early days of building systems that can provide real time, actionable customer insight. It's important to think of moving from systems of  analysis to systems of decision. Analysis is something that happens among a few highly trained people, using highly specialized systems. Systems that enable data driven decisions that are embedded in every business process are the future. The road from data to insight is one that is, today anyway, difficult to travel. There is some new thought emerging around insight as a service, here's a post from Evanlegos Simoudis that talks about this concept.

3. TV will become the next big channel in customer engagement - TVs seem like a logical extension to current channels, especially as they get more connected first through smart set top add-ons and eventually through a new generation of connected device. It seem to me though, that the evolution of the connected TV could actually converge with other devices so that there would be a seamless experience across devices from smartphone, notebook, desktop and tablet to TV or even auto. All of these channels need to be activated in the CRM system on the backend, I think, which would start to create this consistent customer experience that is device agnostic. Identity, presence, and context all interact in a way that opens up many new opportunities for providing exceptional customer experience across all connected devices. We're already seeing the evolution of the connected device expand to TV and auto, the next step is to link the experience across devices and them connect the channels to the CRM solutions.

4. Virtual meetings will change the way people do business - The tough economy has accelerated the business trend of reducing travel and interacting in virtual meetings powered by technologies that have improved significantly over the last few years. Connectivity in general is rapidly changing the way we interact online and providing ever richer experiences in both consumer tools like Skype, Facetime, ooVoo and in business tools like Webex, Go-to-Meeting and LotusLive. Mobile is also changing virtual meetings by becoming a viable alternative to desktop and laptop. I often participate in online meetings on my iPad or iPhone with Go-to-Meeting and Webex with excellent results.  The addition of mobile clients to the connection options is increasing the rate of adoption. In addition there seems to be a new (or renewed I guess) focus on UC which should provide the development of better virtual enterprise tools and thus aid adoption.

5. Gamification will go from buzz to business strategy - Gamification is already turning into a useful and effective marketing tool on the consumer side. There are some good examples of networks like Foursquare that embedded games as a part of its basic business strategy. In BtoB and the enterprise in general there has been much less "buzz" and more of an attitude of wait and see, but that should start to change. Interestingly enough the place I'm starting to see the use of gamification in business is internally in some supporting HR systems, for things like motivation and reward and recognition, and also in decision support with the use of predictive market techniques. I'd think that communities, both internal networks and external customer networks would see a growth in use cases particularly to drive engagement.

That's my take on CRM's next 5 in 5, what do you think?

Tags: CRM, socbiz, social, mobile, gamification, collaboration, context

Business Model Disruption and Dealing with Change

A couple of recent events and some commentary around them got me thinking about the current state of business, the pressure to change and how companies respond to the need to change. Change impacts people and organizations in many different ways, depending on how the person or organization is "wired". Some resistance is natural but sometimes, at least at the strategic level, companies have to face the fact that they must change to stay healthy. That applies to people too I guess, but that's altogether  a different subject.

If you've heard me speak on social business you probably have heard me talk about what I believe are the fundamental change drivers in today's deep business change cycle. Those factors are at the intersection of changing culture and changing technology, and I'm not sure one exists without the other. I think that our current change cycle, the move to an information based economy, is as large as the cycle that moved our world from agrarian to industrial and will have the same far reaching effect. The Internet or at least the open, nearly free connectivity it provides. is, of course, at the root of most of the changes, It's the information super highway that facilitates new business models and new ways of interacting.

Anyway, back to the events that started this thought process.  First was the recent fight to stop some bad IP protection legislation called SOPA / PIPA, or actually the extreme efforts of the movie industry lobby to try and force them through. The second event was the appointment of the new CEO at RIM, Thorsten Heins. Both of these events tie directly to companies or industries that appear to be in extreme denial over their current business models or product direction and come across as a fairly severe case of change aversion.

In the case of RIM, first I should say that I'm very much outside looking in and like many analyst have been pretty critical of the fact that they squandered such a lead in the smartphone market by not listening to what customer's wanted and by assuming that they knew better than those customers. What makes it so sad, I think, is that the company was truly innovative and led the way in wireless communications, and eventually the smartphone market.  Anyway, I hope that I'm wrong but it seems to me that taking an internal candidate, particularly the one person who oversaw the failing product portfolio over the last five years (his former title was Chief Operating Officer, Product Engineering and was responsible for the Blackberry product portfolio worldwide), might not be the best way to reinvigorate RIM. Now that may be harsh but give this video a viewing and see what you think. This may just be a new CEO trying to rally the troops, but if these quotes are any indication of his real feeling about RIM and the job, well: "At the very core of RIM is the innovation. We always think ahead. We always think forward. We sometimes think the unthinkable. And that is fantastic" and this "If we continue doing well what we're doing, I see no problems with us being in the top three players worldwide in the next years in wireless". I'm reminded of the famous quote: "insanity is doing the things the way you've always done them and expecting the results to be different".

Now for the movie industry. Last night I went to see a movie with my daughters. I'll be the first to admit that the outing associated with going to a movie at a theater is a part of the experience, along with the big screen, snacks, etc. But for some reason last night the whole experience irritated me. The ticket price for the three of us, $36 (my youngest is now 13 so no more children's tickets). Snacks, about $23. While getting said snacks the counter person insistently tried to up sell me from my small soda and small popcorn to a much better "deal" for only a little more....yeah, about that, I really don't need a 64 oz medium soda and a medium popcorn in a grocery bag. On top of the up sell (his job, so no hard feeling, except maybe for the attitude for the sacrilege of not wanting his "deal") he won't shut up about the new movie loyalty card. It seems for the mere price of $12 a year I could have true movie bliss, discounted movie tickets and all...really, a loyalty program you charge for? So, finally in the theater, I settle in for my movie. Over 35 minutes later I finally get through snack bar ads, mobile phone ads, have your next meeting here ads, etc. and we finally can enjoy the coming attractions...no, slip in one more snack ad and then on with the show (>45 minutes after sitting down, and no, we were only 5 minutes early for the advertised start time). So let's see, I drove to the theater, paid $49 and spent over 45 minutes watching commercials to see a pretty good movie 9 months before I could have rented it on iTunes for $4.99 in high def...hmm. Or maybe it would have been on Netflix, where I pay $8 a month for unlimited streaming, of course who knows how long a wait it is for the movie to be available. So basically I'm paying $50 + gas to see a movie sooner and with commercials that wouldn't be there if I had waited and watched it in the comfort of my own home?

The Internet changed so much, and particularly for content distribution it is causing a huge disruption. You see, using a nearly free medium that is increasingly available to anyone as the distribution vehicle is working out very well for many businesses. Now the ugly downside to digital distribution is, of course piracy. I've spent so long in the IP business (software) that I can't bring myself to download pirated movies and music but they are out there. You have to wonder though, particularly when it comes to movies, is the business model largely at fault? Are studios creating an  abnormal environment of scarcity that makes pirating more attractive? You also have to wonder if they are not, themselves, missing a huge business opportunity to leverage the disruption to their advantage. Using a new distribution model that allowed individual choice of when, where and how a new movie is viewed, seems to me like a way to increase revenue, not decrease it. I realize that it might (or probably would) disrupt the current distribution model, but that's what happens when business models are pressured into change. It would also make movie theaters focus more on the customer experience and less on extracting every last cent. I'd pay $4.99 (I already do) to rent movies, actually I'd probably be willing to pay a small premium on new releases for some reasonable period of time, if I could choose to watch it on iTunes, Netflix, cable on demand, Roku, Amazon or any other channel that might become available on the Internet. Fred Wilson wrote about this idea here.

As an interesting case study, take a look at comedian Louis CK's recent experiment with his Live at Beacon Theater special. In a bold move by an artist, he decided to produce and distribute his performance himself, rather than go the direct to HBO or some other corporate controlled route. Louis' distribution model, simple, make it available online for $5 paid via Paypal (and now Amazon as well). No DRM, no restrictions, just pay, download and do whatever you like with it after that. The results, well, after the release in December he made over $1M in 12 days. The site and video are still up and presumably he's still making money from it. Did it get pirated, of course, but in fact in the Torrent comments many people attributed buying the download to watching the pirated version first. Louis was very satisfied, he more than covered his production costs, kept some for himself and gave a good portion of the proceeds to charity. If he had gone the direct to HBO route would that have prevented piracy? We all know the answer to that. Perhaps he would have made more money with the broader promotion efforts of a big studio, who knows; but as long as the artist and his fans are happy, who cares? New business models for changing times.

 Business is in a change cycle and how businesses deal with that change will determine the next round of winners and losers. Ignoring the changes around you is not a business strategy (or at least not a good one). Four major tech trends, cloud, mobile, social and big data, are having a widely felt impact, accompanied by cultural and business model changes. The Internet itself provides much of the underlying foundation for many of these changes. It can connect people to people and information, and provide a new distribution and sales channel that extends a businesses' reach well beyond geographic boundaries. In the case of all digital content (movies, books, music, performances, etc.) the Internet opens up a wide variety of business model options, if only companies look outside of the past.

Tags: disruption, change, business models, socbiz, social, cloud, big data, mobile, RIM, Internet

Lotusphere 2012

It's been almost exactly 12 months since IBM first announced its social business initiative during Lotusphere 2011. In tech a lot can happen in a year and I have to say the folks at IBM have been quite busy. When IBM set out on this journey it did so with quite a few assets in communications, social software and analytics. While the assets provided a wide range of features and functions they did not provide an "integrated" suite of social tools. The roadmap of course, showed that this was the direction that IBM would take, but it was unproven. Fast forward a year and now we can see just how much integration and improvement IBM could accomplish.

Before I dig into the announcements though, just a short bit about Lotusphere itself. The conference was again held at the Dolphin and the Swan on the Disney Orlando Resort. I look forward to the opening session, IBM usually puts on a great show with some entertainment to wake up the crowd, and a surprise guest celebrity keynote. This year the session was opened by alt rock band OK Go, who put on an excellent multi-media show, something they're known for (actually I should say the music was backed up by an entertaining selection of videos, including OK Go's signature "treadmill" videos). The guest celebrity keynote, actor Michael J Fox, exceeded expectations and provided an interesting look at the power of community and the value that the social web can deliver in connecting people with like causes and issues. The final speaker for the opening session though, Dr Jeffery Burns of Children's Hospital Boston, was the real surprise. The case study he provided might be the best example of the power of the social web and the three C's of social business; content, collaboration and community, that I've heard. Dr Burns, working with IBM, championed and built out a community of experts scattered around the globe, with a method to provide real time collaboration for dealing with unique illnesses and a way to collect content for reuse by other physicians for learning new techniques for treating their patients. The real time community links doctors and hospitals around the world and makes the "right" expertise available at the right place and time, virtually. The end result, saving children's lives by sharing knowledge and skill through community.

Now for the product announcements... The Lotus Connections product, with its activity stream UI, is the center piece of the IBM social business offering and becomes one of the key integration points in its next release, version 4, or Connections Next as it is now called. In Connections Next IBM used the OpenSocial 2.0 standard for integration and provides the capability to pull people, data, content and applications into a single collaboration environment. The ability to integrate Connections with other applications is a key feature that moves Connections to what I'm calling the new UI for the social enterprise, putting a modern UI on aging core systems. Connections Next also ties together other Lotus offerings including email (supporting Lotus Notes of course, but adding MS Exchange support as well, an important addition as, according to IBM, over 60% of its Connections customers use Exchange), calendaring and IM. Also key for adoption and success in today's business environment, Connections adds native support for the major mobile OS's, iOS, Android, and Blackberry and includes both smartphone and tablet support. In fact many of the onstage demos were conducted on an iPad. These new mobile offerings include many business focused features including iOS remote partial wipe and Cloud-based meetings for Android using LotusLive Meeting,

Analytics, or as we like to call it, socialytics, was also featured prominently in the IBM social business story. Building on its acquired portfolio of analytics products that includes Cognos, IBM has embedded a broad range of analytics into IBM Connections Next including social media monitoring. Analytics are a key benefit and driver for companies to adopt social tools, and with these new capabilities IBM is putting a serious stake in the ground.

Lotus Notes, not to be left out, also gets a social facelift. Acknowledging the fact that many employees are more comfortable working in an email client, Notes adds the ability to integrate Connections into the Notes email client including the OpenSocial application integration capability. In effect Notes becomes IBM's second choice for a social business integrated client alongside Connections Next. From a culture standpoint, this is an important capability and should help companies encourage more employees into using and being involved in the internal social collaboration network. It's a well known fact that the more employees you can get actively participating in a social network, the more value everyone gets out of its use, which in turn drives more and broader adoption. Notes also continues its mobile offering with a next release of Lotus Notes Traveler that includes social capabilities. Mobile in general gets more integrated into a unified communications structure through Lotus SameTime, which adds presence, click to call from calendar for Android, Online meeting support for Blackberry, and even text-to-speech for Android.

IBM Symphony also wasn't left out of the social business portfolio. Later this year IBM will offer a cloud version (which also includes an on premise option) of Symphony Docs that provides browser based doc creation and editing features. It appears that IBM is planning this offering as a Google Docs competitor, which will be released as a part of its new IBM Social Cloud offerings.

Not only did IBM announce an abundance of its own social products / solutions, but it also involved several key partner announcements. On the social customer front IBM is continuing to evolve its relationship with SugarCRM as its go to market partner for CRM. The solutions are integrated and the IBM sales force is ramping up on including the SugarCRM products as a part of its own portfolio of offerings. For video collaboration / UC Polycom REalPresence video solutions are now integrated into the IBM SameTime environment. Video is an important enterprise capability and the new offering showed well.

One additional note of IBM's commitment to the social business initiative, IBM Labs. Once again this year I went on a journey into the future through the lens of IBM Labs and a broad range of social projects that ranged from using social data to more effectively assign sales executives to territories (through integration with SugarCRM I should add) to finding the real expert inside companies for knowledge sharing. These projects, a dozen or so on display / demo, are an exciting example of why IBM can provide leading edge social tools now and into the future. The use of analytics on the growing mountain of social data offers a nearly unlimited range of projects that could provide significant benefit to businesses.

All in all it was a busy week between meetings, demos and even presenting a session for IBM on IDC's perspective on social business. Always a fun week, and this year most interesting for its window into the next generation of social business solutions from IBM.

Tags: social, socbiz, IBM, Lotus, Connections, Notes, SameTime, SugarCRM, Polycom, SCRM

Social Solution Maturity

Last Summer I published a Social Business Maturity Model that we developed to help companies understand their level of adoption of social business. The idea is that you can identify a set of criteria to use to evaluate the progress a company is making on it's rollout and adoption of social tools and the accompanying process and culture change that enable the business transformation. Companies could then take that criteria and use it to benchmark their own progress and also plan out a strategy to accelerate adoption and build more momentum. We looked at culture, organization, technology and barriers to change across five maturity levels, and built criteria out for each intersection that could help identify where the company would fall and help with planning future projects. The whole model is based on the results of our semi-annual social business adoption surveys and our interaction with a wide set of companies that were evaluating and using social tools both internally for employee collaboration and externally to engage customers and create more effective partnerships. We have published a series of case studies that relate some of the specific company stories over the past year. The model, just to refresh you, looks like this:

We're now in the middle of an IDC marketscape on social solutions that focuses on tools for use in social collaboration. The marketscape is a fairly exhaustive examination of each vendor and the solutions along two axis, strategy and capabilities. Strategy is focused on the future and reflects the vendor's 3 - 5 year plan. Capabilities is focused on the here and now and is an assessment of what the company and its products do currently. This process involves direct interviews with the vendors and also collection of feedback data from customers using the solutions against a set of predefined criteria. The social solutions marketscape will be released in the Spring of this year.

Because we're in the process of the vendor interviews I started thinking of the maturity model for end users and the idea of maturity of both solutions vendor and the actual solutions. Now I wouldn't suggest that you could really do a maturity model in the same way you can for user adoption, and really in some ways the marketscape will infer maturity anyway. Still though, are there criteria that could be applied to at least start to think about the maturity or sophistication of a solution? In fact, those criteria would look similar to the criteria we're using to look at the vendors and solutions in the ongoing marketscape process. So while I don't offer a true solution maturity model today, I will provide a list of some of the criteria that I think are important in evaluating a social collaborative solution:

• Single, consolidated UI that is built to current, modern standards and aggregates access to all features and functions in one place.
• The ability to interact and consolidate interaction between employees and all supporting content, data, communication channels (email, video conferencing, IM, etc.), enterprise systems, external social networks and media into a single UI.
• Ability to define personal and role based information filters to make information streams useful.
• Connectivity that extends outside of the firewall in a controlled and secure way to bring in partners, customers, suppliers, etc. into the conversation when desirable.
• Ability to maintain enterprise profiles for each employee and access from the consolidated environment.
• Ability to embed the activity stream into other enterprise applications, particularly email clients.
• Mobile support for at least the 3 major OS, IOS, Android and Blackberry. Support for tablets and smartphone form factors.
• Configurable and granular security to protect the intersection with public social properties.
• Ability to deploy in the cloud (at least public cloud, although private cloud support is a plus).
• A full socialytics suite of capabilities as a part of the solution or through a partnership.
• Provide operational transparency and provide an agree service level.
• Continued investment in product enhancements on a regular basis.
• Subscription and/or pay for use pricing.
• Pre-packaged API / integration to common 3rd party systems.
• An SDK for extensions to meet vertical and specific customer needs.
• Open standards support
• Product support that incorporate the use of social support through peer to peer communities and public social channels.
• Published product roadmap available to prospects and customers.
• Partnerships to provide complementary technologies. Providing a partner marketplace is a good method for helping customers find solutions.
• Services / consulting partnerships that help foster customer success.
• A method for collecting, prioritizing and using customer and partner feedback to increase innovation and improve products (innovation management process).

So there's my list, what do you think? If I missed some please add them to the comments.

Tags: socbiz, social, solutions, maturity, vendor, software, technology, cloud, UI, UX, roadmap

A Look Back at Our 2011 Predictions

We're putting the finishing touches on our 2012 predictions, so look for that post in the next week or so, but in the mean time, and in the spirit of accountability and openness, I decided to take a few minutes to look back at our predictions for 2011 and see how we did. Here's the original post, if you want to refer to it, but I'll go through each one here again:

1. Social profiles become the Internet fingerprint - I'd say we get a B+ on this one. While profiles are an essential part of your online persona, the proliferation of profiles is still something of a problem. Certainly more sites are using Facebook connect or Twitter as a de facto "standard" to help relieve the pain of initial sign up, but that's as far as we've gotten. There's still a need for some way to manage all of the profiles centrally. This stretches into the enterprise as well, where we're just starting to see some ways to establish internal business profiles. Many enterprise social systems provide profiles of course, but in only a few instances are they linked to HCM systems. It's a hard problem to solve, but I'd have thought we would have made more progress.

2. The resurgence of eCommerce, increasing importance of providing a social customer experience, proliferation of context aware mobile apps and emergence of new social tools will lead to an innovative commerce experience that is a hybrid of social, mobile, online and brick and mortar. - I'd say we get a solid A- on this one. Commerce, or as we've started to refer to it, digital commerce, is a hot topic and all of the elements, mobile, social, multi-channel, etc. are top of mind with businesses. New digital commerce platforms from major software vendors like IBM and Oracle are coming together nicely. On the public social web side, both facebook and FourSquare have made some progress towards integrating into commerce platforms, particularly through a partnership with AMEX last Summer.

3. Cloud and the economic impact of new subscription models is reshaping the software channel model for vendors and their partners. - With cloud apps / SaaS reaching the tipping point last year and the rapid emergence of new PaaS, IaaS, etc. offerings + the increased availability of subscription licensing in general, it's impossible for software channel partners to ignore the impact to their current economic models. The transitions will take a long time of course, but we're well on our way...I'd give us an A here.

4. The enterprise gets serious about mobile applications, moving to more open and secure mobile platforms that provide multi-device management and much broader mobile apps deployment. - Mobile apps development  saw rapid development and adoption last year. More and more software vendors are making their apps accessible on multi-OS smartphones and tablets. The proliferation of tablets only served to accelerate mobile adoption. Enterprise IT is under tremendous pressure to support multi-device architectures and move away from the corporate mandated single device support approach of the past. Mobile platforms and virtual mobile platforms like Citrix Receiver are experiencing tremendous growth as more organizations look for ways to tame the growing number of devices choices. I'd give us an A on this one.

5. Hyper connectivity and cloud computing leads the social business to the next generation business model based on organic business networks. - The networked business model is gaining more acceptance as more businesses start to use social solutions both internally and externally. The transition will take quite a while of course, but it has started in earnest. I'd say we deserve a B+, change takes a while, but more and more businesses are looking to social solutions.

6. Social collaboration and networking tools bring new life - not death - to email. - I'm more convinced now than last year that social collaboration tools are not a substitute for email, instead they off load functions that were never appropriate for email. There's still nothing better for 1:1/few private communications, while other functions like file sharing, real time sharing, collaborative work coordination and facilitation, etc. are moving to social tools that are designed to support those functions. I'd give us an A on this one. The next step is to push all of these tools into an integrated communication and collaboration environment with context awareness, better filtering, and more user control over the "inbox".

7. Socialytics moves from enterprise experiment to core business intelligence tool in support of critical executive decision making. - Last year saw a significant move forward in socialytic capabilities and an increase in adoption of these solutions. Consolidation, which started with socialytic vendors a couple of years ago, continued as well, with major vendors adding to solution portfolios. In our recent social business surveys decision support is obviously moving up in importance as one of the key benefits of social solutions. I'd give us an A in this one as well.

8. The growth of social media and meteoric expansion of  content causes a data glut that can only be made relevant through people-centric curation, leading to an explosion of tools and methods to facilitate the process.  - Data continues to grow at a staggering pace but I have to say that systems have yet to catch up. There's a need for more effective filtering, context aware information, and a broader set of curation tools to help companies and individuals make sense out of the noise. The problem is certainly getting wore but we seem to have a gap in system capabilities that is not closing as fast as we thought. I say we get a C at best.

9. The AppStore software distribution model and subsequent disruption of pricing models leads to lower software costs and more transparent software pricing. - The App store model continues to grow and is moving into more business situations. The model is disruptive on pricing, as we've seen from the Apple stores and the subsequent effect on mobile and desktop pricing. That said, the impact on enterprise software in general has been very small to date. I think we get a C- for now.

10. The changing nature of work drives new solutions for collaboration, project management, and managing a distributed and often indirect (contract) workforce (the Human Cloud). - The trend for distributed and contact labor forces has continued as the economy has slowed again. The solutions like oDesk and Elance are very popular and growing at a rapid pace. There's a need for better tools to manage some types of projects and particularly improved collaboration, but in general there's been improvement. I say we get a B+ with some room for new solutions to tie things the new workforce to gather more effectively.

So that's it for last year. I think we did pretty good, but I guess you're the judge of that really. Anyway, look for this years predictions shortly.

Tags: predictions, 2011, mobile, social, socbiz, enterprise, collaboration, social media

One More Post for 2011

2011 is almost history, but before we start to focus on what will happen in enterprise tech in 2012, let's take a short look back at some of the events that make it a very big / important year in a lot of ways. The tech world continued to go through a settling process that is the fall out of the great recession and the rapid intersection of a few key trends. We have often referred to this as the new normal and I think that we are starting to have a much clearer picture of what that really means for tech, for software and most importantly for businesses. Four key trends, or pillars as my IDC colleagues like to call them, are the underpinnings of change in IT. These four trends are also accompanied by a lot of change in businesses, both operationally and culturally. I've talked about them before, but here they are again for reference:

1. Social business
2. Cloud
3. Mobile
4. Big data

From a social business perspective, 2011 saw a concept start to grow up. While there's still a lot of resistance to social technologies and processes on a lot of different fronts ranging from misguided analysts to insecure executives, there are enough compelling case studies and use cases to start to overcome some of the resistance. On two fronts, external customer facing initiatives and internal social collaboration and networking, we are seeing strong uptake of the supporting technology but more importantly, businesses changing the way they do business. Part of that change continues to be driven by the constituents, customers who refuse to interact with businesses what don't engage with them when, where and how the customer chooses, and employees and partners that are insisting on better, people centric collaboration and communication tools, and will work around IT if the corporate tools are not what they need. At the same time, these employees and partners are creating powerful business networks and collaborating in new, more successful ways. From the customer perspective many companies are learning that customer service is in many ways, the new marketing. Anyway, here are the main processes that we now consider as a part of social business:

As a trends grows up, there are the expected growing pains and social is no exception. Consolidation, which actually started a couple of years ago, has heated up. The major software vendors, many of them anyway, have seem the rapid growth of the technology and are moving to build strong positions. Salesforce.com is making a bold run at becoming the next generation enterprise platform with its social enterprise focus. IBM's Social Business focus is gaining traction as efforts to provide a consolidated social collaborative experience through its Lotus brand demonstrated growing momentum through the year. Oracle launched the beta of its new Oracle Social Network and is doing some interesting things on the CRM side of the business through its loyalty products and a growing portfolio of acquired products that's likely to accelerate next year. On the stand-a-lone social front, Jive led the way with a successful IPO (the first enterprise social start up to do so) and continues to gain momentum, making it a likely acquisition target over the next 18 months. Other high profile social vendors are healthy and growing including Get Satisfaction, Lithium Technologies, IGLOO, Nimble, Yammer, HearSay Social, Socialware, Attensity, NewsGator, and many, many more.  Other vendors in both social CRM and social collaboration continue to see strong growth including SwordCiboodle, SugarCRM and VMWare.

Of all the emerging use cases for social, the application of behavioral modeling techniques to the growing mountain of social data is proving of great value. Socialytics as a subset of the whole big data analytics area, offers opportunities for businesses to support a wide set of decisions from predictive sales to identifying and managing brand influencers to more effectively leveraging employee skills and competencies. Socialytics as a decision support tool is fairly new, but our surveys show that more and more companies are looking at social as a way to augment the decision making process.

I have noticed and tried to help define a few models this year. Of those the ones that seem to offer the most promise are innovation management (see this post), the concept of the three c's of social business - content, community and collaboration (see this post) and a way to look at our enterprise systems as three tiers: systems of transaction, systems of decisions and systems of relationships.

M&A activity was strong throughout 2011 across a wide variety of markets and technologies. Smaller social business vendors continued to acquire to flesh out more complete offerings. Major software vendor acquisitions included social technologies, analytics and socialytics, HCM, CRM, core platform technologies and were particularly focused on cloud capabilities as the year progressed. High profile acquisitions included Oracle - RightNow, SAP - SuccessFactors, VMWare - SocialCast, Microsoft - Skype, Salesforce.com - Radian6, HP - Autonomy and Google - Motorola Mobility. Google once again led the pack in total number of acquisitions, logging 57 by October, up from 48 in 2010.

Cloud computing reached its tipping point, I believe, in 2011, fueled by mainstream acceptance of the model, particularly in software / SaaS but also expanding down the stack to infrastructure, storage and compute power. As a method to consume enterprise software, cloud is relatively mature and there is a wide variety of applications available. The recession and the subsequent capital crunch accelerated the adoption of SaaS, as companies looked for alternate funding models for critical projects, shifting spend from capital to operating budgets. Down the stack, although less mature than the SaaS offerings, infrastructure as a service, or using compute clouds to run specific workloads, has gained wide acceptance with many more production workloads moving over the last year. Platform as a service, the least mature category, is getting some focus and will play out as a part of the coming platform wars, which I'll discuss later in the post. All of the major software vendors are making some strong moves to build and shore up a more complete public cloud portfolio. 2011 saw even the most traditional software vendors embrace the model with the realization that they could not continue to ignore it. The feeding frenzy of acquisition was kicked off over the last few months and should only accelerate as we move into 2012.

Mobile is changing how we work. The increasing power and capabilities of the smart phone, the emergence of tablets as enterprise tools and the growing support of mobile access to enterprise resources have open up the enterprise and helped to create an always connected, always on workforce (of course some may argue this is not necessarily a good thing, but still). Ubiquitous access to the Internet at truly usable speeds along with this growing ability to do "real work" from a mobile device, coupled with the growing number of enterprise assets available on the cloud, has made the mobile device the new desktop for many. IOS and Android devices, in both a smart phone and tablet form factor, are growing at a staggering pace and quickly eclipsing former enterprise leader RIM. As a side note, RIM's story would make a good case study in how once visionary leadership can get so disconnected from its customers and so arrogantly oblivious to changing trends that they squander a massive lead, with a corresponding loss in shareholder value of around 76% in one year, as the NASDAQ composite index remained relatively flat. I guess that's another post for another time though.

Consumer social has continued to be of interest as well. Many of the features and functions of enterprise social tools were vetted first in the consumer space, but beyond that, some of the consumer social sites have signaled that they may well expand outside of their current models. In particular local commerce is a much coveted yet some under served space and many of the larger consumer social players have started to move in that direction. AMEX, with its strong position in the small and medium commerce market,  pulled together a few partnerships this year that have a lot of potential in the local commerce space, including partnerships with Facebook and FourSquare. In general it seems like Facebook wants to and has some potential to become a part of the next generation of commerce platform, providing the important social commerce linkage to more traditional commerce platform vendor offerings. LinkedIn, which went public earlier in the year, continues to expand in recruiting and job search, with some potential to become an enterprise player, although perhaps as a part of a much larger vendor's offerings.

2011 will also be remembered as the time that vendors started to define the next generation enterprise platform and building the foundations of an emerging platform war. I believe that this war will shape up quickly around the new public cloud platforms from the major software vendors. The platforms themselves are not completely defined as of yet, but that definition should proceed quickly. Not to rehash my previous post though, you can hit the link above if it's of interest. 

So that's it for me and for my posts from 2011. It was a fun year and a year of continuing change in the software world. It was also a year of change for business at large, change that will continue for the foreseeable future IMHO. With that I'll just take a minute to wish you all a happy and prosperous new year! Thank you all for your support and feedback...here's to a great 2012.

Tags: trends, 2011, cloud, social, SCRM, socbiz, mobile, big data, 2012

The Cloud Wars - 2012

It seems, based on the last few acquisitions in enterprise software by three of the largest software vendors, that cloud computing has moved past its tipping point. The acquisitions, RightNow by Oracle, SuccessFactors by SAP and DemandTec by IBM, also paint a picture of how next year might play out for many cloud software vendors. With all of the large tech vendors scrambling to gain share and capabilities in cloud computing in a market ripe with choice cloud vendors in the under $300M range, acquisition is a natural path. It sounds a little humorous though, since most of these companies were hardily poking fun at these very same "targets" only a couple of years ago, but I suppose a recession and a major shift in software buying behavior have a way of convincing even the most stalwart opponents.

I thought it might be fun to do a bit of a pre-game assessment before we move into 2012. Let's look at some of the current major vendors and their cloud efforts:

• Oracle - First and foremost Oracle is a major "arms dealer" for the cloud, public and private, at the database and middleware layers, and the Exa line of hardware. Beyond that though, Oracle has made some strong moves to put together a cloud portfolio. At the past Oracle OpenWorld user conference among a flurry of announcements Oracle executives outlined a robust public cloud offering that is now in beta and should be generally available over the next few months. The Oracle Public Cloud includes database as a service, platform as a service (Fusion middleware), Oracle Social Network (OSN, also now in beta), Fusion CRM, Fusion HCM and will include the acquired RightNow cloud customer service products as soon as the deal closes; and the remainder of the Fusion ERP suite sometime next year. In the RightNow acquisition it also gets the HiveLive community platform, which could also be offered through the Oracle Public Cloud, although since the deal hasn't closed that level of detail isn't available. Next year I'd expect Oracle, with its history of an aggressive acquisition strategy, to buy up a few more additions to its cloud portfolio across a broad cross section of applications, particularly around social capabilities and industry vertical solutions.

• Salesforce.com - Salesforce.com has both a strong CRM apps portfolio and a growing platform as a service offering. It has added quite a bit to its product portfolio over the last couple of years through acquisition including additions to its platform like Heroku, social products like Jigsaw (now data.com), Radian6 and DimDim, and task management solutions like ManyMoon. There are still many opportunities for Salesforce.com to grow its offerings of course, particularly in marketing automation and additional social capabilities like community management. UPDATE: I wasn't finished with this post when Salesforce.com joined the fray by purchasing Rypple, a cloud HCM vendor, so I'll add some comments on it as well. Rypple is focused on the talent management market but with more of a social approach and has a very good reputation and client list that includes Facebook, Jive Software, GetSatisfaction, Mozilla, Rackspace, and Spotify, among others. The company has a unique and modern approach to managing team performance that include some game mechanics along with a good dose of collaboration and a innovative mobile app. From what we know of the plan so far, the company will be re-launched as "SuccessForce" and will be a part of a new HCM business unit headed by former Oracle and SAP executive John Wookey, EVP of Advanced Applications. This is both an interesting move and a bold step to start building out a more complete set of enterprise applications by moving from CRM to add the fist component of a HCM suite. In addition there will be quite a bit of cross-pollination opportunities with existing Salesforce.com products including Chatter. One side note though, this puts Salesforce.com in direct competition with partner Workday. Workday had stayed away from CRM in its ERP suite of products, choosing to partner with Salesforce.com instead. One has to wonder if they might not be looking elsewhere for a CRM offering.

• SAP - SAP has, over the last year or so, talked a lot about the cloud. In fact its now one of their three big focus topics along with mobile and in-memory. Over the last two days at an analyst summit held in Boston and streamed live, SAP's cloud strategy became somewhat more clear. I talked about their history with cloud as well as the acquisition of SuccessFactors in this post. Since that post and after the summit, I have some more information, that might help clarify its position even more. In addition to the mid-market focused ERP product Business byDesign, SAP stated that it is also moving Business One, its small business solution, to the cloud. From a platform perspective my earlier statements seem to be true. The byDesign ABAP platform with its SDK is the platform for building business apps but there is also a Java based platform that should, when available, make extension to the apps much easier to support (Java and Ruby skills being much more plentiful). The Line of Business On Demand apps currently available are Sales, Sourcing, Career, Travel, SAP EHS, and Carbon Impact. The term On Demand, by the way, as you will notice, is still used by SAP and means SaaS by its definition. These LOB apps are, with one exception, built on the byDesign platform, with Sourcing, an acquired product, still on the Frictionless platform. It seems likely that the Career OD product will be shelved after the SuccessFactors acquisition closes early next year. The future underpinnings for the platforms will be HANA in-memory based. I say future because currently HANA is only used for business intelligence but, according to SAP, will be used with all apps eventually once they are rewritten to take advantage of the technology. From a roadmap / timeline perspective I'm still a little unclear when things will be available but in fairness I haven't finished reviewing all of the deep dive breakout sessions that were not live streamed. It seems to me that the LOB apps, which are focused on a small subset of functions, will continue to rollout as more are added, and perhaps will be enhanced through additional acquisition like SuccessFactors. The eventual replacement for the enterprise Business Suite though, must be several years away from release. From a cloud go to market perspective SAP, during a GTM session yesterday, laid out some clear plans for next year. First, of course, the SMB focused Business One and some of the Business byDesign sales (about 80%) are going through SAP's existing channels. In addition SAP is fielding a dedicated cloud sales force that should number around 500. Selling with overlay sales teams is not a simple matter of course, but there was discussion of double comp and at least the admission that the cultural change will take some time.

• Microsoft - From a cloud perspective Microsoft has focused on its infrastructure and platform offerings called Azure. Those products seem to be progressing slowly but solidly. From an apps perspective though, Microsoft really only has a cloud offering with its CRM product and the new Office 365 product line. The rest of the Dynamics enterprise products can be purchased hosted by a partner but for the most part that's it. Of course last year it did make one major cloud acquisition, Skype, but so far that's really it. I think it is very possible that Microsoft might decide to get on the cloud acquisition band wagon next year, but so far, they haven't really shown any interest. Perhaps the feeding frenzy that I think is coming will shake them into action? I also think there's a very good possibility that Microsoft does some acquisitions in the social tools space, once it sees that while Sharepoint is a good back end to some social solutions, it's not really enough without a solid social front end. The cloud feeding frenzy will likely extend to social vendors next year as well.

• IBM - IBM continues to be a very acquisitive company, completing 21 in the last two years, several of which were cloud based. IBM is another "arms dealer" to the cloud as well as an infrastructure and platform vendor. It seems clear that IBM intends to continue to acquire and will look for interesting cloud vendors, particularly associated with two of its largest initiatives commerce (like the recent DemandTec acquisition) and social business. In commerce look for expansion in multi-channel commerce including mobile and social commerce. The IBM social business initiative is centered in the Lotus brands including Connections, Notes, SameTime, etc. Currently the social initiatives are mostly focused on internal and partner collaboration and communication but there's no reason to think that IBM won't get more aggressive on the customer side of social. Currently IBM partners with SugarCRM but there are a lot of opportunities for growth and even collaboration with the IBM commerce team.

• Workday - Now some might argue that an emerging vendor like Workday belongs on the target list, but for several reasons I think they'd be wrong. Not the least of those reasons is the management team, mostly all ex-members of the original founding crew of PeopleSoft, and their drive to build something unique again in the enterprise apps space. This drive, coupled with deep pockets and a very rich contact database will go a long way in keeping them independent and growing. Will they get more acquisitive next year. I suppose it's possible, although so far it has only added some very specific, needed technical IP. The Workday product suite, as far as ERP goes, is mostly complete, although certainly some of those apps are not as mature, but will evolve rapidly in functionality due to its agile development process and fast release cycles. With partner Salesforce.com now moving into direct competition with Workday though, I suppose all bets are off on how Workday will handle itself now on the CRM front.

• Google - Google is a wildcard in the enterprise, to put it mildly. It certainly has plenty of cash and at times dabbles in the enterprise, although mostly it seems those dabbles are aimed at Microsoft. Currently Google is making inroads in email and productivity but it's not inconceivable that they could decide to move in some other directions. What that might be though, is anyone's guess at this point.

• Facebook - I debated putting it on the list, but considering the weight of Facebook, its growing pile of cash and potentially a monster IPO next year, you never know. I personally think that Facebook is looking to become some sort of commerce platform, so they might look to make some acquisitions there although most likely they would partner with some of the large commerce back end providers like Oracle and IBM, to fill out the social commerce part of the platform. Other than that, I'm not sure.

Any of the remaining pure play cloud application companies might prove attractive acquisition targets, and as you can see above there's no lack of acquisitive companies with money to spend and appetite to grow quickly in cloud. I'll have to put together a post soon looking at that side of the equation. Will be an exciting year next year anyway...

Tags: cloud, SaaS, acquisition, software, oracle, ibm, salesforce.com, SAP, microsoft, workday

SAP, Successfactors and the Cloud

This past weekend SAP announced its intent to acquire cloud software vendor SuccessFactors. Timing is usually a surprise in these announcements, and this was no exception. It was however, an action that we had predicted (see IDC Predictions) and frankly something that I thought SAP should have done two years ago, when it was in the middle of its infamous "issues" with the Business byDesign development effort. SAP's decision to move now was no doubt spurred on by Oracle's recent announced acquisition of cloud CRM vendor RightNow, increased competition from Workday and perhaps a realization that the cloud vendor landscape is on the brink of rapid consolidation. The cloud apps markets are growing up and the race is now on for the "majors" to consolidate positions and broaden their cloud portfolio. Talent management / HCM SaaS vendors were bound to be acquisition targets and in my opinion consolidating niche SaaS vendors is something that was bound to happen at some point. Companies built around limited software offerings can blaze the trail but in the end, the enterprise software landscape is dominated by a few large vendors who will pick off successful innovators as the concepts gain traction and the market matures. This is the innovation cycle in today's enterprise software market (see my post here).

Over the last year SAP, under the leadership of Co-CEO's McDermott and Snabe, began the process of reinvention. This reinvention is built around several current industry "trends", cloud, mobile, social and big data (the four pillars of the new or 3rd platform in IDC lingo). For its big data push SAP is working on it's HANA in-memory platform shift for accelerating analytics. It also has indicated plans to use HANA for it's next generation applications architecture, much like the current Workday offerings, although the path for getting to that point is still not clear. For mobile, SAP relies on its Sybase acquisition and, because of that strategy, has a strong play. In social, SAP has so far focused efforts narrowly on its Streamworks product. The SuccessFactors acquisition adds some needed functionality to the social part of the portfolio through its previous acquisition of CubeTree.

So that leaves us with SAP's cloud strategy. Here, at least for me, things get a bit murky. First you have the byDesign product line, which is focused on the mid-market and despite its somewhat troubled history is growing and at last report had around 600 customers.  The original development project, which has roots back to the Shai Agassy days, was supposed to give SAP the chance to test out the next generation architecture for its enterprise suite of products in a more limited way before moving those products over. At some point that strategy was changed though, as SAP Chairman Hasso Plattner admitted last spring at the Sapphire user conference. Out of that keynote and from some other data points we see that SAP is in a position where they must develop a fresh next generation platform and clearly articulate the path for current enterprise customers. A picture is starting to emerge around that but again, its not that clear yet. The statement earlier this year was that all new SaaS offerings would be built on the byDesign platform but from what I've seen lately there is another shift in the SaaS platform strategy. It appears that there are now two "halves" to the PaaS offering, one build on byDesign which is the ABAP based offering, and a new Java based offering that will offer both Java and Ruby support, all residing on some HANA inspired in-memory capabilities. On top of whatever PaaS offering is made available, SAP seems to be moving down a path of rewriting the full enterprise portfolio in a new approach that will leverage in-memory for process intensive tasks, while shrinking the rest of the suite to workflow, people-centric tasks and contextual business activities. I will hold off writing about it more until next week's analyst summit though, where I assume we will get a much clearer picture.

So what does the acquisition of SuccessFactors mean for SAP, its competitors and the enterprise software market? 

1. Cloud growth is accelerating and the market is in for a period of consolidation.

2. Major vendors need to broaden their cloud portfolio and will do so this next year. Expect to see more moves by Oracle, SAP, Salesforce.com and Microsoft.

3. The Workday effect is being felt by SAP (and presumably by other HCM players) as they continue to have strong momentum and win big deals.

4. Lars Dalgaard, SuccessFactors CEO, will take over the overall SAP SaaS/cloud strategy and business post acquisition close.

5. SuccessFactors sales most often to line of business executives. SAP has traditionally been more of an IT sale. On the one hand this could be good for SAP, broadening its approach, but you could also argue that this might prove to be a challenging sale for the current SAP reps.

6. Workday is still well positioned to continue to be successful in the HCM market.

7. Oracle already has a strong HCM SaaS offering in the new Fusion Applications HCM modules. It also has good talent management functionality and is well positioned competitively in my opinion.

8. This move by SAP doesn't really have much impact on Salesforce.com. Salesforce is already partnered with Workday, and continues to evolve its platform strategy through acquisition and evolution.

9. Microsoft of course, is moving along its own path for platform. One has to wonder though, if it might decide to make a strong move in the cloud apps space by acquiring instead of trying to move more of its Dynamics portfolio into the cloud. The window will be short to join in what I think will be a rapid consolidation.

Open questions:

1. What does it mean for the SAP PaaS plans, as it adds yet another SaaS / PaaS offering to the portfolio.

2. How will SuccessFactors be integrated and how will it be packaged and sold?

3. What does the new product offering mean for the existing SAP HCM portfolio?

And a parting thought, SuccessFactors and its shareholders win big in this deal. With 2010 revenue of $158M, SAP paid $3.4B; as a comparison, Oracle paid $1.5B for RightNow on 2010 revenue of $185M. Of course they're in different markets, but still...

Tags: cloud, SAP, Oracle, Microsoft, Successfactors, SaaS, PaaS, Salesforce.com, HCM

Customer Service, the New Marketing in the Era of the Social Customer

Okay, I'm not the first person to write about this idea, but it has been on my mind lately, so I wanted to share my perspective on what I think is a very important change that is starting to occur for businesses and customers. The social customer is a term that is used quite a lot these days and represents an attitude shift that has spread quickly. Businesses are acknowledging that they must change customer service to meet the expectation that service be offered "when, where and how" the customer wants it and not just in ways that are defined and controlled by the business. Dealing with the social customer by providing them with choice of channels / methods and by having presence online where the customers are, is an imperative that cannot be ignored. The social web has returned power to the customer.

There's more to it than just changing expectations and even the shifts in power though. Connectivity has enabled personalization that rivals the days of main street and the "mom and pop" business model where everybody knew everybody, only now at scale. Online sharing and the subsequent data collection, analysis and use has created an new type of personal experience that customers now expect. There is also a fundamental change in how customers get information and do research on brands / products / services. The social web created a sense of community that facilitates trust relationships that serve as ready sources of information about all sorts of things. No longer do customers go first to sources you control, instead they turn to facebook, Twitter, LinkedIn, etc. And it's not just a Business to Consumer (BtoC) proposition either. Business to Business (BtoB) is still, in the end, person to person and falls prey to the same issues. Face it, you don't control the message anymore.  

The other big change is that the recession and continuing economic uncertainty is making people and businesses hyper-aware of how and where they are spending scarce resources. Value is even more important that usual in this environment and because of that, a poor customer experience will turn customers away even faster than before. Higher expectations, loss of control of the message, new technology that enables online connectivity in real time / all the time, growing influence of peer to peer networks and a hyper-focus on value...all of these things add up to customers with extremely low tolerance for mistakes. This new customer looks for conversations and by that, I really mean 2-way communication not broadcast messaging. Screw this up and guess what, often they won't tell you, but they will tell the rest of the world online (and often look for a new source of whatever they used to get from you). 

Good customer experiences are your best marketing today in the world of the social customer. Word of mouth was always an effective marketing strategy but with the social web it takes on new meaning and new power. In this new world, brand advocates can be easier to create but they are also much easier to lose, and have a global megaphone at their disposal.

So what can you do?

1. First, kill the internal silos (yes, I know, easy for me to say. Changing culture is hard, but a very important part of being ready to engage more effectively with your customers)! Collaboration, or getting and keeping all of your employees on a consistent message and  view as well as involving your whole organization in the new customer experience focus is the best recipe for success.

2. Remember (or learn) that conversation is 2-way and not about broadcasting louder across new channels. Put that as the foundation for all of your service efforts (and product design, marketing, sales...). Marketing should become less push and more dialog, in fact the strategy for services, marketing, sales, product development, etc., is really about ask - listen - respond - repeat.

3. Listen and focus on what matters to customers. Don't try to be everything to everybody, it's not possible anyway.

4. Create advocates, which comes from providing positive experiences and using the ask - listen - respond formula. 

5. Leverage the power of community through public social networks and through dedicated brand communities.

On the public social web you have to be where your customers are and you have to listen and respond. You can also create your own communities and create an even richer customer experience. Building and focusing on customer experience creates the best marketing, word of mouth / influence marketing, and that comes, in no small way, from exceptional customer service delivered "when, where and how" the customers chooses.

Tags: service, customer, social, business, socbiz, social web, SCRM

Influence and Business

Last week I was on a vendor briefing call (social media monitoring and response) and the subject of influence and it's use by business came up in the discussion. It started me thinking again about influence and how (or if) businesses could determine, track and make use of influence across a diverse set of enterprise activities. There's been quite a bit of discussion of late on the concept of measuring influence, mostly created by Klout's now infamous algorithm change and the subsequent crashing of many people's influence score. This post is not about that incident, in fact I plan to stay far from that argument, although the incident itself does illustrate an important point in an enterprise context. I'm convinced that an individual's Klout score isn't a good measure of influence for businesses anyway.

Both influence and influencer have been somewhat redefined by the Internet and the social web. I say "somewhat" because the function of influence and its relevance to business really hasn't changed, just the channels, access to channels and the reach of the new channels. I remember an exercise from the late 90's when I had responsibility for customer support at a software vendor, trying to tier our customer base so that we could focus support agents on more "important" or higher priority customers. Now I know some of you are thinking that "all" customers are important but honestly, some are more important to the business than others. It doesn't mean that you don't treat all of them with respect, it just means that you have to prioritize scarce resources. It also may not be about direct revenue from the client. Often in the priority queue, the customer with the largest stick is the one that sits at the top. There are customers that pay you a lot, there are customers that can influence others to pay you a lot, and there are customers that could, if unhappy, convince a lot of prospects to NOT pay you any money. It's all about priorities, that hasn't changed.

In a business today a customer / prospect's influence can be important across many functions. Customer service certainly has for many years, been concerned with influence. To some extent sales also understood that having the "right" reference customers would go a long way towards helping close more business. Marketing understood that influence had the potential to be important, although measuring and making use of the opportunity was usually hard. Of course as more people move online and take advantage of the explosion of "channels" across social media sites and personal blogs, as well as horizontal and specialty social networks, tracking what people are doing and saying is somewhat easier. What to do with the data you collect though, isn't any easier than before. The other side of the coin though, is that online, people have a voice that can rapidly and sometimes unexpectedly get magnified to a degree that was never possible offline. Now of course marketing would love to leverage positive influence for "word of mouth" marketing. With the growth of community based or peer to peer support, customer service has even more reason to be concerned with influence, in fact, any group in the company that wants to use a community (product management, sales, etc.) should be concerned with influence.

Businesses are struggling to varying degrees in dealing effectively with the new empowered customer / prospect. The days of a company controlling its messaging are waning. People turn to their online networks for information, advice, and recommendations instead of using company provided channels. This is the crux to the changing landscape of influence. Online influence is real time, contextual, relative, individualized and variable. Think about what makes a person influential to you. It could be that you have a trust relationship through a social network AND because of that relationship you have learned: 1. that the person is knowledgeable on the subject / content and 2. you personally value that person's opinion and advice. Influence really boils down to this, can the person's (influencer) words / actions / video / etc. get the second person (influenced) to take some action or change some belief. Or in even simpler terms, influence is based on the perception of expertise and trust which are intertwined to create brand.

So if influence is based on the perception of expertise and trust, what creates this perception? Expertise seems simple enough, it is the demonstration of understanding and knowledge on a specific topic over time. It's important to note though, that expertise is not self proclaimed, but is experiential. Trust is also fairly straight forward. Trust comes from a relationship with the influencer. Online trust is a little different though, it can actually be established through the network effect. That is, if A trusts B and B trusts C, then it would be reasonable to believe that A would trust C. But, online trust is much more fragile, any breach (or perception of breach) breaks the trust bond.

Going back to look at the other characteristics, contextual, relative, individualized and variable, you can start to see how they are related to brand (trust and expertise). For example influence is individualized because the person influenced must see the influencer as an expert and must have some existing trust relationship that supports taking action or changing a belief. Influence is contextual because of the nature of expertise, an individual influencer can be very influential on  one topic or subject and not influential at all on another topic. The influencer's impact on a person varies based on the level of the trust relationship and on the level of perceived expertise. This creates degrees of influence directly related to the strength of the influencer's brand. For example think of a simple product review on Amazon. Chances are that none of the reviewers have a specific relationship with you, so trust is fairly low and expertise can only be established by reading the reviewer's words. But if one of the reviewers lays out a case that makes you accept their expertise then the impact of the review can be more influential. But, if you have another more trusted source, say someone in your Facebook network, who offers conflicting advice you are much more likely to act on that sources' advice over the Amazon review, it simply does not have a high enough influence ability to overcome the deeper trust relationship.

From a company perspective online influence can be important but at the same time it is very difficult to establish, particularly out of context. Through social media monitoring tools you can collect lot's of data but using that data to establish influence is complex due to the nature of influence and how / who it impacts. This is even more difficult if you consider that there are differing types of influence. A person may have broad "influence" in a non-specific horizontal way, say by having lot's of followers or friends, but that type of influence most likely isn't enough to get the individual that the business is targeting to take action or change a belief. What a business needs is the influencer in the context of what outcome the business is trying to influence.

This doesn't mean that broad, popular, horizontal influencers aren't useful and important though. For example, if I have a charity event I certainly want to get to this type of influencer. This less specific type of effort to reach the broad population requires reach, amplification, a large network and a public brand that carries enough trust to move a significant number of people to action. Interestingly enough, I think this type of influence is much easier to establish and measure. It is about broad reach, resonance and a "big" public persona brand. That can equate to followers, friends and other measurable things like how often a message from them is repeated.

The problem comes though, I believe in the more specific business application of influence. The type of influence that is "measurable" by the methods that work for the broad public type of influence, isn't specific enough, isn't contextual, isn't individualized and isn't particularly relevant to the individual that you are trying to influence. Maybe a couple of examples would help here. Let's take a local eatery for example. For restaurants local influence, specific to the city and even the neighborhood is important. Certainly it's possible that a local food critic (or even a national food critic) could be an important influencer and that person might be surfaced through looking for somewhat broader public influence, but it is still very specific to the market and to the context, in this case food. But what might be even more important could be a reviewer on Yelp. I have a friend in San Francisco who isn't on Twitter, has less than 100 friends on Facebook, doesn't use FourSquare, Google+, Tumbler, Instagram, Flickr or even post on YouTube. If she has a Klout score it would be tiny, but, she has a huge following on Yelp. In fact, she is exactly the type of influencer that a local eating establishment would want, but could never be surfaced from some broad measurement of public social media presence.

Take a second example, let's say in the enterprise software world. The brands are often global or at least national so you might think that broad public influence might be desirable but the problem comes down to expertise and context again. For a complex product expertise is even more important. It's possible of course, for an influencer in enterprise SW to build a good following on Twitter or LinkedIn, but more likely you'd want to look beyond those channels to blogs. The deeper content format could quickly surface influencers and establish their expertise (or lack of expertise) based on the content. The weight of the social channel in the influence calculation is critical and specific to each industry and business.

Can enterprise influence be measured successfully and in a way that is relevant to the enterprise? The variable nature of influence by business specifics and context make this much harder. I do believe that this type of influence, that is, relevant to businesses, can be established through monitoring and measurement, but, not through non-specific algorithms. The problem with this approach is that it can't be weighted to the business specifics, it can't be adjusted to look at the specific business requirements. In fact, algorithms that are not transparent and customizable to the business are not really useful for business use cases. It might be interesting to stack rank public social presence, but unless you can consistently apply that to your business context, it's not "enterprise ready". If it has any variability that isn't completely understood and predictable by the business, it's too great a risk IMO to be used by a business. Community platforms have already started down the path of contextual influence measurement. Community platform vendor Lithium Technologies, for example, has integrated this type of tool into the platform so that influence specific to the individual community can be monitored, measured and become actionable to the community manager. Social media monitoring tools like Medallia, Attensity, Radian6 and others are moving down the path of customizable influence measurement and a response system to make use of the data.  This is an emerging area of interest from an enterprise perspective, and there's quite a lot left to sort out when it comes to online influence and how a business might monitor, measure and take action on the information.

Tags: SMM, social, influence, Klout, measurement, data, socialytics