Michael Fauscette

2012: The Year in Enterprise Software

As we move into 2013 it's time to take a look back and see what major events shaped and changed enterprise software in 2012. It was an active year, particularly from the standpoint of continued consolidation in the enterprise software markets. Several hot trends continued to drive acquisition activity and product directions, including cloud, mobile, social, Internet of things and data analytics. Social business has started maturing somewhat and is at least much clearer in specific directions and the best areas of focus for businesses to see real benefits.

The cloud wars really started in late 2011 with SAP's acquisition of SuccessFactors but gained momentum throughout 2012. The major enterprise apps vendors are moving quickly to gain footprint and functionality in cloud apps, as well as define platforms and infrastructure. Early in 2012 Oracle fired the first return shot to the SAP / SuccessFactors deal with its bid for Taleo. Not to be left out, IBM joined the HCM race with its acquisition of Kenexa in August. HCM continues to be a hot area for investment, for more on the 2012 HCM market see this guest post from IDC analyst Lisa Rowan.

The next major cloud acquisition came, once again, from SAP with its acquisition of cloud collaborative commerce vendor Ariba. Ariba provided SAP with a full featured and mature cloud based procurement, sourcing and contract management tools and the largest and oldest supplier network. Maybe more valuable though is the cloud expertise and credibility that Ariba's executives added to the SAP management team.

Oracle filled out its cloud portfolio quite a bit by focusing on customer experience. The Oracle Cloud CX suite, which arguably started in late 2011 with the acquisition of RightNow, added social marketing platform Vitrue, socialytics platform Collective Intellect, social media management platform Involver and finally with the recently announced acquisition of marketing automation vendor Eloqua. Combined with other cloud assets in commerce, sales (Fusion CRM), content, etc., the suite has a broad footprint. I wrote about the Eloqua acquisition here. In addition to Oracle's strong move into CX Lithium acquired social support vendor Social Dynamx and IBM moved to redefine it's web experience products in the context of the overall customer experience.

Social business, particularly around enterprise social networks (ESN), applications to support CX strategies, innovation management and talent and performance management, matured quite a bit over the past year. Much like cloud almost all the major tech vendors get involved in social business technology through new acquisitions, new products and enhancements to existing social tools. Existing social vendors also moved to broaden offerings through acquisition.

ESNs are one of the hottest areas for growth as many companies have / are deploying the technology and working to consolidate existing networks. Consolidation in the ESN market started in 2011 and continued last year, as larger tech vendors moved into the space. Adding to VMware SocialCast, Salesforce Chatter, Cisco Webex Social, Tibco Tibbr and IBM Connections Microsoft purchased ESN leader Yammer for $1.2B in June, Oracle made its own Oracle Social Network generally available in the Oracle cloud, Citrix acquired Podio and SAP completely revamped its offering into SAP Jam.

More and more companies are looking for ways to drive adoption of social processes and increase productivity. Getting social embedded into the enterprise workflow is gaining support and more companies are looking for ways of providing an integrated social experience. The trend is gaining momentum as vendors move from social applications to apps that are social, or have social functionality embedded inside the workflow. At Dreamforce 2012 Concur and Salesforce  announced a good example of this concept, Concurforce, an app built on the Force.com platform.

As more companies embrace social technologies internally and externally a few issues are growing that will need some answers as we move into 2013. In particular there is a growing skills gap in consulting expertise to help companies drive successful social projects and sort out ongoing operations. I wrote about it here. In addition to the skills gap there is also a growing issue for many companies that have deployed several ESN products, which often grow virally and at least initially without full executive support. This social network sprawl issue is creating the exact opposite of the desired outcome by perpetuating organizational silos. To solve this companies will have to consolidate in some cases and in other they will need to integrate the networks so that functionally a single ESN exists.

Mobile continues to be an enterprise priority as the need to support multiple devices with multiple OSs is expected by employees. Tablets continue to grow in popularity and smartphones are a standard. Many vendors have provided native mobile apps with some subset of enterprise features but are feeling pressured by customers to give compete access to enterprise features on multiple devices. Many vendors moved to provide a better mobile framework on which they can provide a richer mobile experience to cuatomers. Among those vendors that made good strides last year include Netsuite, Deltek, salesforce, SAP and Oracle, although they all have more work for this year.

Internet of things was discussed quite a lot as sensor technology gets better and more and more "things" are added to the network. In the area of automation the use of sensors with new software products is providing benefits as diverse as preventative maintenance to inventory control. From a consumer perspective the mobile device is becoming a "Swiss army knife" of sorts and integrating sensor data opens up many possibilities for health and fitness monitoring to commerce. Look for 2013 to see this trend explode across business and consumer.

There seems to be more pressure on IT over the past few years to redefine and change its roles to be more relevant to the business. What has become more of a governance and enforcer role for many IT organizations is getting pressured to find new ways of adding value as more IT buying decisions get pushed out to the line of business executives. In many companies CMOs now manage a larger IT budget than the CIO, particularly as companies deploy technology to drive CX strategies. The move to the cloud is also changing the staffing requirements for many IT shops. Many IT organizations are finding that they need more of a business process focus and less of a deep developer technical focus. Look for this trend to accelerate in 2013.

 In general enterprise software has remained a growth area as companies continue to buy technology. Driving this growth are several trends, including the need to provide better mobile support, the need to get technology that helps facilitate critical CX strategies and the need to provide a more collaborative and networked work environment. As a result of the economic pressures that continue to plague businesses many companies find themselves doing more with considerably less resources. The only reasonable way to maintain and increase productivity is though automation and through better software tools. Hot markets in 2012, social, mobile, CX, etc. will continue to be hot in 2013.

Tags: software, enterprise, social, socbiz, CX, ESN, innovation, IT, CIO, acquisition

Breaking "Things" into Smaller Pieces

One of the byproducts of the Internet is a phenomenon that is impacting all sorts of things, the trend of breaking things into smaller and smaller pieces, dramatically changing the subsequent consumption models. The ability to connect everything using the Internet opened up new business / economic models, new ways of working, new ways to build and manage relationships and many new ways to design  and use technology. From commerce to business processes to software applications the change is starting to create many new options. 

In commerce this change has disrupted several areas. Music consumption, for example, has shifted from a model where individuals bought a collection of songs (album or CD) to a model where purchasing individual songs is the most common model. This may not sound like much of a change, but in fact it has big economic implications for artists and record companies. On the one hand sales of the more expensive complete song collection to individuals that only really want 1 or 2 songs fell off. On the opposite side though, a single song that is extremely popular can generate quite a lot of revenue. 

Trading stocks is another activity that has change because of the Internet, and the change has direct impact on stock prices and market performance. Before online stock trading democratized stock trading the only ways to trade stocks (outside of purchasing shares of a mutual fund), was through a broker, which generally was full service and not really that available to the broad population. With the Internet came brokerages that operate hands off, at very low commissions and that  allow individuals to trade in very small increments, thus making active stock trading an activity for virtually everyone if they so desire. While this opened up stock trading for a broad population, arguably a good thing, it introduced a level of volatility in the market that was not there before, as less sophisticated investors, with less tolerance for loss, have the ability to trade on a whim.

This trend has created new business opportunities for providing short term access to high value items. The most obvious example of this is in the auto rental market. Traditional rental companies are really set up to provide paid access to a car on a daily and weekly basis. You can pay by the hour, but the rate is prohibitive. Enter services like Zipcar and Citycarshare, where subscribers pay a small monthly fee to have access to a fleet of cars that are available for rent in increments as small as 15 minutes. These vehicles are scattered about the cities where they are located rather than in a single rental location. A subscriber simply goes online, finds a nearby vehicle and reserves it for the desired time. The vehicle are all connected and report location, maintenance status, etc. so that the online inventory is maintained in real time as well.

Work itself is changing due to this ability to break tasks apart into smaller and smaller increments. There are several sites that facilitate the ability for a contract employee to find and execute tasks for businesses. This work could be an entire project or broken down as far as a micro-task. I wrote about this here and here.

Software applications are also experiencing this trend toward smaller "modules". Software as a service open up the possibility of consuming business processes as a service in smaller, configurable unites, or services. This has big advantages for businesses, in that it's becoming more and more possible to consume the services that are needed and forgo unnecessary functionality. It also had big implications for application vendors, as the next generation application has a very different profile from those of the past. In fact you could say that the definition of an "application" is being changed by this trend or that we need a new way of thinking about an application. Here's a simple diagram:

Change in apps leads to change in business processes themselves as more companies move to cloud based apps and realize that they can consume services configured to execute the specific business process.

Tags: socbiz, apps, process, Internet, work, consumption, SaaS, commerce

Guest Post: 2012 HCM Market - Year in Review

I'm pleased to host the following post from IDC Research VP and leading HCM expert Lisa Rowan:

2012 was a bigger year than normal on the mergers and acquisitions front in HCM -- perhaps not in pure numbers of deals but certainly in prominence.  Deals ranged from the expected to the jaw dropping and everything in between.  Reviewing the activity I see that the actions taken fit into three general themes that ran throughout the year:  the push to the cloud, socializing HCM, and Workday. Workday gets its own theme because so much of the activity was influenced by them.

'All in' on SaaS

The spate of consolidation actually began with a bang a year ago in December, 2011, with the announcement of SAP's intent to acquire SuccessFactors (SFSF). The deal was closed in February of this year. With this acquisition, SAP put a firm stake in the ground on SaaS. This particular move in HCM was a surprise at the time in that SAP had made much of its next generation Career OnDemand talent and performance applications built on the Business ByDesign SaaS framework. Instead SAP veered course to the SuccessFactors architecture under the leadership of SuccessFactor's chief, Lars Dalgaard.

The other shoe dropped in a less surprising move when in February Oracle announced its intent to acquire Taleo. Where SAP's move with SFSF brought a new SaaS strategy to SAP, the Oracle acquisition of Taleo was more about filling functional gaps in the Oracle Fusion Application portfolio.  With Taleo, Oracle picked up the leading talent acquisition offering and a respectable learning management system – neither of which were yet included in Oracle Public Cloud. Beyond that there remain overlaps across Taleo and Oracle’s other HCM products such as in employee performance management which is available across EBS, PeopleSoft, and Oracle Fusion Applications.

Also in February, Ceridian announced its intent to acquire Dayforce (completed in April) a leading cloud-based workforce management supplier.  The two firms had formed a tight relationship prior to the full acquisition. Once the deal was completed, Ceridian put former Dayforce chief David Ossip in the key role overseeing new SaaS product development at Ceridian.  Ossip was the brains behind Dayforce’s SaaS platform. The development effort follows the mixed market reception of Ceridian's InView and looks to incorporate talent management, compensation and performance with HR on a new single-platform solution by 2013. Previously, rival ADP announced its new-from-the-ground-up SaaS HR solution, Vantage HCM, in October 2011.

In March, Kronos acquired New Jersey-based SaaShr.com, a fully SaaS-based provider of workforce management software for small-to-midsized businesses. This acquisition helps Kronos further penetrate the SMB and gave them a multi-tenant platform for prospects looking for pure SaaS.  In addition, Kronos gained access to an extensive network of partners and resellers.

It's all about Social

The social wave of M&A also commenced in December of 2011 with Salesforce.com's (SFDC) acquisition of social performance management pioneer, Rypple.  Rypple was founded in 2008 by former executives of Workbrain to create a social approach to improve upon the oft-maligned annual performance appraisal process. Rypple uses cloud computing to power continuous social feedback among peers and management.   Additional socially focused HCM solutions will likely come out of SFDC with former SAP- executive John Wookey in charge. Under Wookey's leadership SFDC's HCM initiatives have been branded Work.com.  For now the use of Work.com performance feedback is targeted at workers already using SFDC in sales, marketing, and service.

In May, Peoplefluent (via parent Bedford Funding) announced a leadership investment in Socialtext. Socialtext delivers enterprise social networking products including microblogging, blogs, wikis, profiles and social spreadsheets.  The two firms will remain independent under the Bedford umbrella and will together work to deliver a socialized approach to talent management.

In June, Silkroad announced general availability of Point, a social software solution that unites talent management processes. Going beyond SFDC's Work.com, Point offers collaboration across multiple talent areas, not just feedback. With social graphing, Point can identify areas of expertise as well as centers of connectivity. In addition, Point powers collaboration, social learning, and content sharing. Silkroad may be a smaller company but Point may dramatically up their profile.

In August IBM announced its intent to acquire talent-management vendor, Kenexa (acquisition closed on December, 5th).  This deal has many facets but a major impetus for the acquisition is to fuel IBM's Smarter Workforce initiative.  Smarter Workforce is designed to bring consulting expertise together with IBM's social technology and the Kenexa talent management suite with the goal of delivering socialized solutions to workforce-related business challenges.

Furthering its investment in social technology, Oracle acquired SelectMinds in September.  SelectMinds is a provider of cloud-based social talent sourcing and corporate alumni management applications. SelectMinds’ applications enable organizations to leverage social connections to distribute job opportunities, source employee referrals, and manage corporate alumni relationships. SelectMinds' legacy is in powering alumni networks for well known professional services firms.

The Power of Workday

Despite the flurry of activity already mentioned, when reviewing 2012, the top story is Workday. It is a fair bet that the drive to SaaS on the part of both SAP and Oracle, and others no doubt, is in direct response to the meteoric success enjoyed by Workday. Workday itself is not acquisitive opting rather to build than to buy.  But market consolidation has occurred around Workday in the professional services arena:

In March, Deloitte acquired Agressor, a small business and IT consulting firm that focuses exclusively on providing deployment services for Workday solutions. This acquisition augments the resources Deloitte already had in place in its Workday practice.

In October, Aon Hewitt acquired Omnipoint another Workday implementation partner. An outsourcing services provider, Aon Hewitt found itself being called upon more and more for implementation work.  At the same time Aon Hewitt was seeing a sharp uptick in interest in Workday as a platform for HR BPO; they report 3 HR BPO clients already. Aon Hewitt will keep Omnipoint independent to continue to pursue standalone implementation deals.

Also in October, Appirio an IT services firm focused on mobile, social, and cloud-based systems acquired Knowledge Infusion, a highly regarded boutique HR business process consultancy.  This move provides Appirio with the front-end services it lacks in competing with the strategy/technical mashups à la Deloitte-Agressor and Aon Hewitt–OmniPoint.

Last but not least on the Workday front, they completed their successful IPO on Friday, October 12.

…And a few more

Less easy to categorize, there were many more acquisitions, releases, and partnerships announced.  Notables include:

In March, Cornerstone OnDemand (CSOD) acquired New Zealand-based innovator Sonar6.  Known for organically developing all of its own solutions, CSOD is not generally an acquisitive firm. But, the innovative way in which Sonar6 presents performance management was very appealing. The Sonar6 solution will remain independent targeted to employers with fewer than 500 employees. At the same time, CSOD is rolling some of Sonar6' innovation into the up market product line.

In what is perhaps the oddest acquisition in my view, in July the Corporate Executive Board (CEB) acquired SHL-Previsor , the market leader in pre- and post-hire assessments. This puts CEB, an otherwise independent body, in competition with the likes of IBM and the assessment IP it acquired through Kenexa.

Looking Forward to 2013

2012 isn't quite over so we may yet see another deal in the waning days of the year.  But no doubt we will see our fair share of announcements in 2013. Social will be hot on the list for every supplier and I hope the use cases and benefits of social start to reach and resonate with HR buyers.  Talent acquisition may prove a hot bed of activity in 2013 with so many specialty products that have sprung up around sourcing.  Also interesting things are popping up in assessment and fit analysis, especially in specific functions like sales. The only certainty is that we will be surprised yet again.

Tags: HCM, workday, cloud, SaaS, on demand, IPO, 2012, cornerstone, Taleo, SuccessFactors, SAP, Rypple, Kronos

Oracle Expands Cloud Offering by Acquiring Eloqua

Oracle announced its intent to acquire marketing automation vendor Eloqua for $871M USD, which is about a 30% premium on Eloqua's closing price Wednesday and quite the multiple on a revenue run rate of just under $100M. Oracle has been on a shopping spree over the past year to build out a customer experience (CX) offering and to rapidly gain cloud market share, so this move isn't all that surprising really. Relationship marketing is a key part of any CX strategy and was a functionality hole in Oracle's cloud CX suite so Eloqua seems like a natural fit. Oracle's current marketing automation platform, Siebel, is on premises and really was not seen as a contender when compared with the newer cloud based platforms like Eloqua, Marketo and Silverpop. 

The solution's core is still email, which may seem surprising in today's social web driven world, but frankly email still works. There's quite a bit more to these offerings than email though. The core of the next generation part of these newer marketing automation systems is about better targeting, tracking behavior and managing campaigns. It's really about revenue generation, which means that an automation solution has to help marketing deliver better, more qualified leads to sales.

Eloqua will fit nicely into Oracle's overall CX cloud offering, as this diagram shows:

The deal impacts Oracle's competitors, particularly salesforce.com, IBM, Microsoft (MarketingPilot), and SAP. In fact I'm a little surprised that the headline didn't read "salesforce.com acquires Eloqua", especially since there is a substantial overlap between Eloqua's and salesforce.com's customer base and salesforce.com's marketing cloud does not include a marketing automation solution. Salesforce has focused its marketing offering only on social marketing and apparently, at least for now, has no plans to expand past that. Microsoft recently bought a small marketing automation vendor, MarketingPilot, although currently the solution is more focused on marketing / advertising agencies than on end user business customers. That doesn't mean that its not being re-targeted though. IBM, who is a leader in marketing solutions, doesn't have a marketing automation platform, so perhaps it will be looking to acquire one of the remaining vendors. SAP seems happy with its current solution but one has to wonder if this acquisition might not be the push needed to put it in the market for a more robust solution as well.

The deal impacts Marketo, the number 1 competitor to Eloqua's platform offering. With Oracle's sales machine behind Eloqua, it's likely that its market penetration will accelerate rapidly as long as Oracle can keep its sales force focused on the buyer, the CMO, versus its usual buyer, the CIO. It seems to me that Marketo is a prime acquisition target at this point, but who exactly the buyer will be is not so clear. There are other targets available, like Silverpop or some of the older email centric platforms like Responsys.

For Eloqua customers I'd say overall this is a good situation, Oracle provides gains financial stability, more scalable data centers, etc. Those customers that choose will also get access to other CX solutions that presumably will be integrated with Eloqua, particularly around analytics, social and commerce. For Eloqua customers that are not current Oracle CRM customers though, there will be some concern. Oracle has stated that it will continue to support the integrations to the other platforms like salesforce, Microsoft and SAP, but the proof for customers will be in the continued execution. 

This is a great move for Oracle, it adds an important piece to its CX cloud offering. The question now is which vendor(s) respond with additional acquisition(s) in this market?

Tags: CX, experience, oracle, eloqua, marketo, CRM, cloud, microsoft, salesforce, SAP, marketing

Customer Communities as a Focal Point of Customer Experience Strategies

Lot's of talk lately around customer experience (CX) strategies, CX management and around technologies that can help facilitate the implementation and execution of those strategies. What is CX and how can a company effectively build both culture and implement underlying technologies that can truly impact customers and provide an engaging experience? CX is a broad term used to refer to a strategy that is designed to orchestrate a positive experience or interaction for customers at any and all touch points. The definition extends to the systems, processes and employees that impact that experience as well, which in reality could be all employees and any technology. This probably seems exceptionally broad to many of you, especially since most companies define "customer facing" employees as a small subset of employees that interact directly with prospects and customers. I'd suggest though, that in the spirit of evolving a full CX strategy that companies must change that definition and include all employees, as even the most remote activities of an employee has the potential to impact the customer. For example you probably don't think of the employee tasked with locating a specific product in a warehouse to fill an order as customer facing but I'd submit that in fact, that employee might own one of the most important pieces of a CX strategy...getting the right product to the customer. Let that part of the process go wrong and see how many happy customers you have.

I believe that a key part of any CX strategy is the use of a customer community. Customer communities are quickly evolving and companies are finding that they can be used across many functions very effectively. Many communities are initially deployed as a way to encourage peer to peer support and interaction as a means of deflecting some of the customer service calls. These customer support communities are proving very valuable to companies but if that's the only focus for the community I think you're selling it's potential short. That same community is generating useful content that can be harvested and reused in the companies knowledge base and also for training and documentation, for example. The community also provides a fertile ground for marketing and sales. Word of mouth advertising is a very powerful marketing tool and can be driven through the community by providing a positive experience and by nurturing influencers in the community.

The customer community is a great source of sales intelligence as well. By using socialytic listening tools and analyzing the collected social data in the community, buyer needs, potential and even direct intent can be determined. The extension of the use cases for communities doesn't stop with marketing and sales though. Communities are a integral part of an innovation management process and can provide product marketing and product designers with a source of ideas for improving current offerings and for new products and services. Using the broad customer community as a source for product and service ideas not only provides much better and broader input to the innovation process but also increases customer engagement by involving them more intimately in defining and improving the company's products and services.

In building a CX strategy that encompasses multiple touch points across online and off, one of the biggest challenges is effectively answering the simple question of who are you? On the surface this seems pretty straight forward but it is not, in fact it can be extremely difficult. Knowing you as "you" on facebook, Twitter, Pinterest, Instagram, Google+, the companies eCommerce site, in the companies loyalty program and in the actual store all require some way to link you to multiple identities. How many email addresses and usernames do you have? The customer community platform may hold the key to this identity problem, or at least be an important part of the solution. Most communities start with a simple sign up process, maybe even offering to use a public social network as the vehicle for signup like facebook connect or Twitter. That is the first link in putting the complete identity picture together. The next step is the community profile itself. If you can establish a trust relationship with the customer, demonstrate value and draw customers into providing a more complete profile then you fill in the puzzle pieces even more. This is incremental trust building of course, much like the concepts that were developed in the 1990's around permission based marketing and its application through email marketing. In other words the more you demonstrate responsible use of personal data and the more value I can get from the community by adding personal details, the more likely I am to help clean up the identity questions. The community is the most natural place to do this.

Companies are using customer communities for many things and seeing very good returns for the investment of management time and in the underlying technology platform to simplify community management. What unique use cases have you developed for your customer community?

Tags: community, customer, CX, experience, socbiz, social, Internet, loyalty, customer data, strategy

Dell Launches Social Media Services Practice

One of the biggest concerns I hear from companies about social business in general is the lack of services / consulting expertise to help with implementation and operations. There is a skills gap today across all of the functional areas under the social business umbrella and it will take some time for that gap to close. For companies to realize all of the value that socializing a business process might bring, they will most likely need some outside assistance. In the large service providers, with the exception of IBM,  there is still a lack of focus on social business so for the most part the help companies need is not coming from the channels that they are used to looking to for aid. There are several smaller consulting boutique firms that are providing value though. I wrote about this issue in this post so I won't go any deeper here.

This week Dell joined the list of service providers that are focusing and building expertise in social business. Dell was an early adopter of social technologies particularly in its customer / prospect facing processes. Dell Outlets was one of the first organizations to demonstrate how to drive sales using Twitter, for example. Dell partnered with Salesforce.com to deploy an ideasourcing system to gather feedback from customers on products and services. The most well know initiative for Dell though, is its use of social media monitoring and response technologies to power its social command center. Dell makes extensive use of social tools across sales, marketing and customer service so of course over the past few years it has built up quite a bit of first hand best practice knowledge. Packaging up that expertise and taking it to market in a new consulting practice is an extension of all that Dell has learned in its own efforts and seems like a natural next step for the company.

Dell Social Media Services is focused on providing end user consulting services for honing customer listening, engagement and response operations. Its consulting offerings include:

• Best practice seminars on building a command center, gaining executive buy-in and support, launching a training program and other topics related to social media monitoring (SMM)
• Design, build and operate a social listening command center
• Listening and insight outsourcing using Dell's command center and consultants
• Strategy advisory services

Dell has already done beta testing of the offerings with several customers including The American Red Cross and Clemson University. More information about the offerings and a demonstration of the Dell Command Center will be available next week at Dell World. After the offerings have some time in the market we (IDC) plans to do a case study on the results. It will be interesting to see how the services are received, I suspect that many companies will look to Dell Services for assistance.

Tags: Dell, socbiz, social, SMM, social media, social consulting, services, customer