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

SAP Goes Social

It's turning into a big news week for enterprise social network (ESN) software, first Yammer's 1st user conference, YamJam12, and then a very interesting announcement from SAP. SAP has, in the past at least, not really exhibited a great deal of interest in social software, nor have its few product attempts in the social business area been particularly compelling. The truth is that many of the enterprise software vendors have had some false starts and made some missteps over the past few years in attempts to get involved in the rapidly evolving enterprise social software market. The market is large already and getting larger quickly as adoption rates for social business solutions are skyrocketing. For the social software market (ESN) our recent forecast shows ~$1.1B in 2012 growing to ~$4.5B in 2016 (a CAGR of 42.4%), but that's not the whole story. The overall social business solutions market is ~$2.9B in 2012 growing to ~$10.3B by 2016 (a CAGR of 28.8%). With market numbers like that, it's pretty obvious why major enterprise vendors like IBM, Oracle and Salesforce.com have all rolled out new social business offerings ranging from ESN's to customer experience suites this year. It also explains why Microsoft recently bought ESN vendor (and a market leader in our recent social software marketscape) Yammer.

So now its time for SAP to make its move and with this weeks announcement, SAP becomes a contender in the social software market. Now this didn't just happen though, there's a bit of a story to it, as one might expect. Earlier this year SAP signaled that it was getting serious about social by hiring well known social business expert Sameer Patel to head up its social business efforts as the Global VP and GM of social software solutions (DISCLAIMER: and also a friend). Sameer spent the better part of the last several years helping companies actually DO something with social business solutions, so he brings a wealth of real world experience to the position and the team. Since joining SAP he has gathered together a talented team and completely reworked SAP's strategy and offerings, and I have to admit so far, I like what I've seen.

There are quite a few ESN solutions on the market today, and frankly most have similar features. They can operate as a system of relationship across the entire organization and offer employees a modern, clean and simple way to collaborate and connect to each other, and to data, content and systems. This approach, forming a new social layer, works fine for some employees and some roles, that is, moving collaboration and a lot of day to day communication into a new system. Some employees, particularly in some specific roles, roles that spend much of their time doing work inside an enterprise system, like customer service agents or AP/AR clerks, find it undesirable or inconvenient to add an new system for communication and collaboration that is separate from the system that occupies most of their daily activities. That's why it's necessary to provide the capability to embed the ESN into other enterprise systems to get the broad adoption that delivers the greatest value from the network. While the current leading ESN's have this capability it has always seem to me that the major enterprise vendors were in a unique position here, and could leverage the ESN most effectively through inserting it into the work flows inside its other enterprise systems. That's exactly what SAP is doing with its new ESN product, SAP Jam.

SAP Jam, which is offered both on prem and in the cloud, is built to connect people (employees, partners, customers) to people, content and data in context to the enterprise work flow / process. Jam is enterprise ready, mobile (iPad app available now), secure, not silo'ed and in SAP terms "infused" across the rest of the SAP apps portfolio (phased in across the next few releases of course). The following diagram, provided by SAP, gives a good overview of the strategy:

The current roadmap, which is subject to change, provides social on-boarding and collaborative opportunity management in Q4 2012, along with several integrations including Sales OD, Finance OD, Social OD and CRM 7, as well as the Jam API. In the first half of 2013 SAP plans to add:

• Social Goal & Performance Management
• Collaborative Travel Planning
• Collaborative Contract Management
• Collaborative Call Center Support

along with a number of additional integrations, including an OpenSocial API.

SAP has come a long way in a very short period of time, and has some very aggressive plans in the coming months. The real proof is in the execution, so I'm anxious to see how the plans progress and to talk to some live customers once there's a bit more experience with the new solutions. Based on what I've seen so far, SAP is definitely in the social business software game now, and has a good opportunity to provide significant value to its customers.

Tags: socbiz, SAP, social SW, ESN, networks, Jam, SCRM

Organic Business Networks

I was having a conversation the other day with a colleague about trends that are impacting and driving change in businesses and as often happens lately we ended up on the subject of business networks. When discussing new concepts we have no choice but to apply words that have existing, accepted meanings, even if those terms don't quite fit what we're trying to say, and add other adjectives to help translate the picture that you have in your head to mutual understanding. For the last few years, as I've focused my research more and more on emerging trends in the enterprise, I've found this task very challenging. Using the word social in some business context for example, is fraught with issues as people try to shoehorn their own understanding of the word into some new frameworks. The word network, I've learned, is another ambiguous term when used in a business context. It seems that the word's techie baggage, while appropriate to some extent in understanding where I'm trying to go with this idea, causes some confusion. The challenge then is to find the right adjective(s) to start to move people in the right direction, or perhaps, even though it's not my favorite activity, delve into a more detailed definition of business network.

The problem with the word network is also part of the strength of applying it to the current emerging business environment. From IT networks that are flexible, scalable, configurable, fault tolerant, accessible from multiple points and on multiple devices, we can borrow concepts that businesses need to begin to apply more broadly. The downside I think, to using the word network is that when many people hear the word they start to think of the physical connectors, the Ethernet cables and routers, etc. that make up the LAN or WAN and that's very limiting. Or perhaps they think of it in terms of the social web, which can also be distracting even though again some of those characteristics apply.

Sitting in the Philadelphia airport early this morning in one of those inviting white rocking chairs they provide, sipping a cup of tea and prompted by the sight of so many people connecting and carrying out business, I had an idea. When I think about business networks in the context of all of the other technical and cultural change factors that I see in our post-industrial information economy, maybe what I mean is "organic business networks". The word organic could be confusing though, but when I think about it in this context I am thinking that it has similar traits to organic computing. Organic computing is a computing system that is self-optimizing, self-healing, self-configuring and self-protecting. More broadly organic models are generally patterns and methods found in living systems used a metaphor for non-living systems. So applying an organic model, organic business networks are networks that represent the interconnectedness of the emerging information business environment. Organic business networks connect people, data / information, content, and IT systems in a flexible, self-optimizing, self-healing, self-configuring and self-protecting system. People are the primary nodes of the network but the other nodes, data, content, applications and systems, are no less important.

A business functioning as an organic business network would incorporate the characteristics of a social business, as I listed here, but go beyond this basic idea, using social business as the operational paradigm but using the organic business network as the mode of operating it's business. The two concepts play off each other, social business is the "what" and the "organic business network" is the how. An organic business network lets the business work outside of traditional "firewall" boundaries and is the continuously adapting implementation of an optimized business strategy. In this approach value creation can move to the optimal point in the network depending on strategic influencers like economy, market dynamics, customer behavior, prospect behavior, partner behavior and needs, supply chain dynamics, predictive business outcomes, etc. An organic business network driven company is the anthesis of a hierarchical, rigid, reactive, process constrained, and silo'ed organization. Instead the business can adapt to changing conditions, leverage assets effectively and thrive in a hyper-connected, global competitive, information driven environment. What do you think, does that add a little clarity?

Maybe it should be "Networked Business"?

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

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

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

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

pearltrees, socializing and curating content on the web

Content of any type is not useful unless you can find it, organize it and interact with it. In the enterprise companies have tried many different schemes to try and get business content collected in a central repository, organized, tagged, version controlled, and searchable. This has often taken the route of "content management" systems. Content management systems to varying degrees, do an adequate job of getting some content into a controlled system environment. There are challenges with content management systems on two fronts though, getting content into the system in the first place (getting employees to participate in inputting content in some way) and getting the right content into the hands of the person who actually needs it. Search helps find content and tagging can increase searchability of course, but the whole system is only as good as the ability to input and tag the content, which inherently requires broad participation. To me it seems that the problem isn't management of content but the opposite, liberation of content. 

Curation of content is a concept that is gaining momentum across various media types online. If you want to learn more about curation you can check out CurationNation. The idea though, revolves around involving human interaction with content to filter and organize. Combined with the power of the social web, curation has the potential to change the way we collect, consume, organize and share content online. Socialization of content could take the form of curation if a social system was applied to the process. 

I had the pleasure this week of chatting with Patrice Lamothe, CEO of French startup pearltrees and since that meeting joining and using the pearltrees system. Here's a screenshot of my account:

 

 The concept is fairly simple really. Pearltrees is a social network with tools and processes to capture, organize and share web content or pearls. As you browse and read things online you can capture those "things" in your pearltrees (web pages, blogs, Tweets, etc.). The social aspect of pearltrees then allows your content to be viewed, searched and linked together by others with similar interest. You can add pearls from others into your trees and share the pearls in pearltrees, facebook, Twitter, email, permalink and also embedded in other web pages. Here's an embedded pearltree from my account:

Overall I'm starting to think that pearltrees is useful and that curation or socialization of content has a lot of application in the enterprise. An enterprise private label version of pearltrees, although not available today, could form the center of a social content process that would address many of the current content challenges for businesses. I'm enjoying using pearltrees for my own research although I'm looking forward to a non-flash version so that I can use it on my iPad, which has become my primary content consumption tool. (They are working on an HTML5 version for later this year)  

Social Business Prezi

Several people have asked me for the Prezi I used during my Directions presentation last week. The Powerpoint slides are available for download on the IDC Directions site (if you attended the conference). Here is the Prezi that goes along with the slides:

The Road to Social Business Enlightenment on Prezi