Michael Fauscette

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

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

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

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

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

Culture Drives Innovation

I have an ongoing interest in innovation and the culture around it. I guess that stems from my many years in the software industry. In software, innovation is the life blood of the business. I've written about innovation a few times but as reminder I believe that there are two types of innovation in software, continuous and discontinuous. Continuous innovation is the process that feeds the maintenance stream of traditional software companies. It could also be argued that it feeds the ongoing customer commitment to a subscription based or SaaS software product. Discontinuous innovation is the process by which a "category killer" or disruptive product gets to market. This type of innovation results in a giant leap forward in technology and often has a transformational impact on business. For example, Apple's iTunes software (and marketplace) changed the way people consume music and movies and pushed the person MP3 player into the mainstream. Platform as a service (PaaS) offerings like salesforce.com's Force.com and Netsuite's SuiteCloud could be changing the way companies develop and deploy applications (that remains to be seen). On a broader scale Client / Server disrupted the mainframe, the Internet disrupted client / server and the social web is disrupting relationships and business. Continuous innovation is important as a business sustainer but discontinuous innovation is important as a way for companies to leap frog competitors and rapidly gain marketshare and walletshare.   

Alright, so why am I rambling on about innovation again. Recently I ran across a great example of the culture of innovation (or to be precise the impact of culture in a negative way on innovation). I recently transitioned from AT&T / iPhone for my family mobile ser vice to Verizon (not the subject of this post, but a very good transition). As a part of that shift my two daughters (11 and 14 yrs old) had the chance to pick new phones. They were moving from a Nokia slider (the 11 yr old, the slider replaced the 1st gen hand-me-down iPhone by her choice btw) and an iPhone 3G. I allowed them to pick whatever they wanted from the current Verizon phone portfolio (including the HTC Incredible) and they both picked the new Microsoft Kin although different models, the 11 yr old took the Kin One and the 14 yr old took the Kin Two. Their only real complaint was the lack of apps but the social integration of the OS more than made up for that shortfall (and my older daughter has an iPod Touch so she didn't really miss the iPhone at all). They both required full data plans but then both had already been on full data plans on AT&T so I didn't really think about it.

The Kin has been much maligned in the blogsphere in recent weeks. Microsoft discontinued the phone a couple of weeks ago after a really poor showing with something less than 10K sold. I've heard and read lot's of stories about why the phone wasn't popular but my own experience leads me to believe that the phone did in fact have the potential as a disrupter, but fell short on two fronts...the lack of an apps store and the requirement of a full data plan (so pretty expensive for a phone targeted at teens). Now the funny thing is that both of these issues were created when the phone fell victim to some internal politics at Microsoft. The original Kin (or Project Pink as it was known internally at Microsoft) the brainchild of J Allard and with technology from the 2008 acquisition of Danger was something of a darling project and operated independently of the Windows Mobile OS division led by SVP Andy Lees. The project was on a short timeline for delivery in 2009 and included an apps store concept. Verizon won the bids to carry the phone and had promised a lower price data plan to make the phone attractive to teens (and parents). Allard, who is also credited with the Zune, used bits from Danger and from Zune but did not include the legacy Win Mobile platform (which was later scrapped and rebuilt as the Win 7 mobile platform). Not to go through this whole debacle play by play, you can do that here in this Engadget Post, but the problem was politics. Lees wanted control of this rogue project and eventually got control. Thus begins the end of innovation, the project was re-scoped, the apps store was out as were other innovations and the delivery date was slipped. Verizon, faced with the new longer timeline reneged on its promise of lower pricing and the phone was released to its now predefined failure.

From the reaction I've seen the phone had potential but politics and the desire for control smashed the innovation and set it on a path of sure failure. This is to me, a great example of what happens in companies when they value the organizational structure and power over innovation. It also points to the evolution of a company and its ability to innovate. Culture is one of the most critical elements that allow people to develop and launch innovative ideas. Microsoft, and executives like Lees, do not foster innovation if it threatens their political power and control. Often we see larger software companies in the continuous innovation camp, but rarely as creators of discontinuous innovation. The open culture that is required to create disruptive products is much more prevalent in start ups. Not that larger software companies can't create disruptive technologies, but often those technologies come through acquisition, not internal development. Politics make it very difficult for the culture of innovation to thrive.

Tags: mobile, microsoft, Kin, innovation      

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

The Social Enterprise - the internal view

Everywhere you turn today you hear about the social web, social media, social networks and social CRM. The focus is most often outward facing when applied to business and I've been a little guilty of that on my blog as well. For this post I want to turn the lens internal for a little while and take a look at some of the kinds of projects companies can do to improve the way their employees interact and produce value. There are several types of social initiatives that can produce very good results internally and help to improve productivity, capture and share knowledge and reduce waste / costs.

First lets look at collaboration. Collaboration is not a new subject but some interesting new tools and processes are evolving out of Web 2.0. Email was one of the first Internet enabled collaboration tools and its overuse is threatening its effectiveness. Employees use email for everything, they share files, work on joint docs, broadcast information and carry on conversation (asynchronous though they be). I remember one of the start ups I was involved with a few year ago that had such a corrupted email culture of overuse that I caught an employee sending me an email from the very next office...no, no files attached or information that I needed written, it was in place of walking maybe 10 feet total to have a conversation. Email for me now has such a high noise level because of the flood of cc or bcc's that I receive that are of no use or interest to me that I often miss the one important email amongst the 100's of useless ones. OK, sorry for the rant, anyway my point is that email is ineffective for a lot of the collaboration that is needed. For synchronous conversations that are 1:1 IM has become the tool of choice for many and it does a credible job for quick information exchange. The internal tool that is gaining in popularity (and personally I think has real promise for collaboration) is private label microblogging. The functionality is much like Twitter but is restricted to employees (and contractors if you choose). The microblogging tool enables both synchronous and asynchronous communication, can be used very effectively to broadcast information and can provide direct private messages as well as open public communication. The fact that the size of the messages are short is a big plus over email for many things. Internally at IDC we have used the microblogging tool Yammer since last October with very good results and adoption. Yammer has the capability to attach files if you choose so that's an added feature over public microblogs like Twitter. Providing links to useful or interesting information, sharing what projects you're working on and asking questions of the broader group tends to break down silos and help draw employees together to assist others, provide answers, and even get involved in projects where they add value (projects which might very well have gone unnoticed before). In some ways tools like this become a virtual water cooler in todays modern mobile or widely dispersed workforce.

Joint or collaborative projects carry their own set of issues for many companies. Sharing a joint deliverable can be difficult and frustrating if there's not a system and process in place. Content management systems (CMS) were designed more for the collection and management of content rather than the co-creation of deliverables. Email is a poor tool for these types of projects as there seem to always be version management issues. One simple but relatively effective solution is to use an online set of productivity tools that allow all project participants access to the deliverables and the ability to control the permission levels from view only to edit / create. Tools like Google Docs, Zoho and ThinkFree have those capabilities and are reasonably compatible with the prevalent authoring tools like MS Office. There are also project collaboration tools that have shared workspaces that work well for collaborative projects (both internal and external). Oracle BeeHive, IBM's Lotus, Clarizen, etc. all have the capability to provide joint workspaces.

Capturing and sharing employees knowledge can be challenging. With the churn caused by our current economy it is even more critical to provide a way to capture business processes, job knowledge, knowledge about clients, or what we could call Tribal Knowledge, keep it current and shared across all employees. CMS's were designed to manage content, not facilitate knowledge capture and sharing. Wiki's can provide a powerful alternative for capturing and sharing the tribal knowledge. There are free or almost free alternatives as well as good Wiki capabilities in e2.0 platforms like HiveLive, Jive or Mzinga. Using crowdsourcing and the wisdom of crowds concept to get content and maintain high quality, Wiki's give employees the opportunity to contribute to the companies knowledge base actively, directly and with a very simple process. The use of Wiki's could extend to all types of company knowledge capture efforts. In addition to Wiki's and using very similar concepts, ideasourcing, which has really evolved as a customer idea capture / management tool could be used internally as well. In the simplest form an ideasourcing tool could become the company suggestion box, capturing and rating employee input about all sorts of ideas for general company improvement. Taking this further though the ideasourcing tool could be used a way to solve business problems by asking for broader input on things like cost cutting ideas, growth ideas, ideas on innovations, product ideas, service and customer service ideas, etc. Broadening the base of employee involvement in problem solving offers multiple benefits from improving morale through better employee engagement (building community) to capturing innovative ideas that would never surface under other problem solving methods. Ideasourcing is a great way to start building customer engagement and community (arguably the most effective way), used internally it has the same impact. The level of transparency a process designed around internal ideasourcing should lead to and the broad empowerment that can result from engaging all employees creates employee community. Community could be increased at this point by improving or deploying a company networking solution (which could be a simple as a closed LinkedIn group).

We're bombarded with data all the time. Depending on the way that data flows to us, it often can be unmanageable and turn into noise (see my comment on email above for example). Part of the problem in my opinion is using the wrong vehicle for some types of information. Sure you can blast out everything in email newsletters or post on corporate Intranet sites, one a push method and the other a pull approach. I suggest there's a much more effective way to share much of the same info. Why not use company blogs with RSS capabilities to allow employees to opt into the information that they find useful? Granted some compliance issues would drive certain types of information to be handled differently but for the bulk of data the RSS feed / internal blog could work as a more effective channel.  

I've recently posted on social analytics so I won't rehash it in this post, but I do see many internal ways to apply the concept to very good return including locating real expertise among employees, understanding influence and connectivity (which could be very useful in increasing sales, customer satisfaction, damage control when someone leaves the company, etc.), and understanding / measuring employee sentiment (loyalty, morale, etc.). I'm also not going to go into ways to implement the tools listed here, I've started a series of post on an iterative project methodology that could be used to effectively rollout internal initiatives. I will, however reenforce one very critical concept, that is that the technology and tools around social enterprise are secondary to culture change. Change management must be the keystone in any social enterprise initiative or the project stands a much lower chance of success. The good news is that many times the first initiatives are actually employee initiated and can have a great deal of employee support. Process of course, also has to change but that's a part of the project (and hopefully documented on a Wiki).

What is Enterprise 2.0 anyway?

I realized the other day that I had fallen into a bit of a trap on my blog. I had some thoughts on e2.0 and had jumped into posts about it, when in truth I had never defined what I was talking about. I've built an initial model and started refining that but the most basic thing, a definition, was lacking. Now truth be told I had a taken an approach of "you'll know it when you see it". So what are we talking about when we talk about e2.0, is it simply Web 2.0 applied to business? I think it's a little more than that, although that's a big part of it today. Here's what I think e2.0 is: applying emerging technologies like Web 2.0 accompanied by organizational, cultural and process changes to improve business performance in an increasingly connected global economic environment. Let's dissect that a bit more. The most basic part of this is why do we need an e2.0 initiative? e2.0 is an imperative for business because of the shift created by the growing use of the web in business. This shift has created a connected, global economy where any local business can rapidly become a global enterprise on everything from sourcing (global supply chain) to distribution (global customer base). A new competitor used to be the new brick and mortar store down the street (which had to be constructed, you saw that competition coming), now it could easily be an unknown established firm from half-way around the globe (and could appear almost instantly). Competitive advantage comes from conectedness in this environment, the word ecosystem, or a symbiotic relationship between your business and suppliers, outsourcers, partners and customers has taken on a very different meaning today.           

e2.0 is not about the technology, but instead about the business transformation, that is organizational, cultural and process change necessary to apply emerging technology to greater advantage in this new connected economy. It's also not just Web 2.0, although Web 2.0 certainly created the first wave of technology and concepts that are providing a response to the connected business imperative. This business transformation is happening in a different way than transformation in the past, which is also the Web 2.0 influence. e2.0 is happening, at least in its initial wave, from the outside in and from the bottom up, not just top down. I read an interesting post recently in a Harvard Business Publishing blog on bringing the core of the business to the disruptive edge, very appropriate, in my opinion, to what's happening in the e2.0 transformation.

The other underlying factor in the e2.0 definition is that business is becoming social again. In the era of the local small enterprise (which lasted into the 1970's), business was social. That changed in the 1980's with the impersonal enterprise hitting everything from grocery stores to banks (some have argued that this impersonal approach to banking is a key contributor to the current financial crisis, makes you think anyway). The internet, and more accurately Web 2.0 is changing the definition of social, friend, acquaintance and changing the way we interact socially. This same model is being applied to the enterprise, building new relationships based on interaction and value.

Should you look at Enterprise 2.0 projects in the economic downturn?

I've read quite a bit lately on Enterprise 2.0 and the different areas in business that are utilizing Web 2.0-like technology, processes and concepts. There is a least a lot of "talk" about it, although the actual use is evolving slowly. I've mentioned before that I believe that the current economic situation will accelerate E2.0 use, as businesses try to get and stay closer to their customers and partners. There are several areas that could benefit from the use of E2.0, here's a model that I've worked up to start looking at these opportunities.

This is just a start to capture some of the potential of E2.0 and will evolve from here. So with this model a few areas of benefit seem clear:

• IT infrastructure to the cloud, reduces capital expense and internal expense to maintain. SaaS / subscription pricing of applications and infrastructure out of operating expenses.
• Increase innovation and greater opportunity to meet customer needs by using crowdsourcing and the wisdom of crowds (lower cost methods for building requirements, understanding customer needs, etc)
• Lower customer service cost and increase satisfaction by providing service to customers when, where and how they want it. Increased intimacy by creating an ongoing customer dialog.
• Increase effectiveness of partners, P2P networks, ecosystem.
• Reduce supplier cost while increasing performance and visibility.
• Increased sales effectiveness by providing greater visibility to prospects.
• Brand monitoring and brand building, conversations.

This is a short list so far, what do you think belongs here?

cloud, Enterprise 2.0, financial crisis, PaaS, SaaS, SaaS, Social CRM, social media, Software, Web 2.0

My social media strategy

I was catching up on my RSS reading this afternoon and read a post on @chrisbrogan (Chris Brogan's) blog that started me down an interesting thought path. Chis had read a post by @ducttape (John Jantsch) about his social media strategy and then posted his strategy as well. I've gotten a lot more active in social media over the last year and have worked out a fairly extensive personal branding strategy but I realized I hadn't really captured, evaluated and understood all of the things that I was currently doing. So with that in mind I decided to capture what I'm doing and share that with you. So here's an analyst take on a social media strategy:

Tools:

• Mozilla Firefox
• NetNewsWire RSS
• Ecto (offline blogging)
• MacBook Pro
• iPhone
• Tweetdeck
• Skype
• Yammer client
• Evernote
• Scrivener (all my writing except blogs happen first here)
• Google Alerts (I have a name search that runs every day and emails the results)
• an assortment of other productivity tools including iWork, iCal, iMail

What's always open in tabs on Firefox:

• IDC Web Mail
• Facebook
• My Blog
• Typepad
• Twitter
• Yammer (I like the threaded view, I leave the client running too so I get pop up notifications of posts but I usually read the post in more detail on the web)
• Google Docs (I've started using this to collaborate with other analyst on presentations and other projects so there are always a few docs in progress)
• Optional: LinkedIn, Myspace, Technorati, Backtype, Digg, Addictomatic (I love this search for research)

So how does it fit together?

Daily:

• Constantly monitor phone, SMS, Twitter stream, Yammer stream and preview email (high priority email I answer immediately but everything else I deal with twice a day, well, I try to anyway. About twice a week I do a complete email cleanup.)
• Morning and evening review RSS feeds, Tweet anything useful, try to comment on at least 1 post
• Early morning - review To Do list (in Evernote), update, check calendar and lay out my day, update Facebook status
• Evening - review To Do, check calendar for next day, update Facebook status and answer any Facebook correspondence, check Myspace
• Research 20-30% of my time, vendor briefings, talking to end users, on line research
• Check blog stats on Typepad a few times a day (obsessive but I can't help it)
• at least 3 times a day I do a deeper dive into Twitter on Tweetdeck, run searches on vendors I follow, AR people I follow, other analyst, etc. Post a few links, answer questions, RT a few good tweets and jump in on any conversations
• Yammer - at least twice a day I do a deep dive into the threaded view to see what's up, post a few links, answer questions
• Google Alert
• check speaker leads and tips once a day for opportunities
• Blogging - I try for 3+ posts a week (I'm constantly tracking ideas in Evernote)
• IDC Writing, working on projects and developing presentations: 35%
• My new book proposal: 10%, need to spend more time on this one
• 1-2 times a week I spend time editing photos in Gimp, posting them on my website or Facebook when I have some time to work on it
• Deal with administrative responsibilities at IDC, 10%, sometimes more

Less often:

• Try for at least 1 speaking engagement every 2 weeks (I'd like to take this up to once a week this year)
• There are two vendor end user conference seasons so for Feb, March, April and May in the spring and Sept, Oct, Nov I average 2-3 user conferences a month
• Attend and / or speak at other conferences. I'm currently mostly focusing on Enterprise 2.0, social media, Open Source and SaaS.
• Trying new social tools (I don't really want another social network, Facebook and Myspace are fine for that and LinkedIn is fine for business networking). I try to take a couple of hours a week to try new things I run across, especially research tools.
• Run SEO analysis of my blog once or twice a month, check Twinfluence to see if I can improve my twitter use
• At least once a week look for new people to follow, check MrTweet once a month
• A few times a week I take an hour or so to look at the markets I cover and make sure I'm not missing something, try to think of new approaches, models, etc.
• I'm currently investigating adding some video to my blog and trying to work out a strategy to get more TV exposure.

Ok, that's a pretty busy list. I suppose it helps that I'm ADD and multi-task pretty often. What do you do and what tools do you find useful?

Enterprise 2.0, Web 2.0, social media

Open source data integration SW vendor Talend secures series C funding

Economic crisis aside some companies are still managing to innovate, grow and get the interest of the VC community. In a round led by Balderton Capital (one of the early investors in MySQL) and AGF Private Equity (an existing investor in Talend) Talend raised $12M, bringing their total funding to $20M. In addition Balderton general partner Bernard Liautaud (founder and former CEO and Chairman of Business Objects, recently acquired by SAP) joined Talend's board. Talend intends to use the funding to fuel worldwide expansion and continued growth.

Why all the interest in Talend? There are several factors that come together that make Talend a very interesting investment. The data integration market grew around 21% in 2007 and close to 10% in 2008 (a troubled year where in contrast application software only grew around 6%), so they're in a "hot" market. Over the last few years we have seen customers deploying more mixed brand suites than large, monolithic single brand suites. In addition, customers are consuming software in a variety of models from on premise to SaaS / Cloud-based or even SW appliances. As this trend has accelerated data integration has become even more important and complex (and expensive). That makes an open source integration solution, if high quality, very compelling and customers are voting for Talend by downloading, using and paying for the solutions. In two years Talend's Open Studio solutions have been downloaded over 3.3 million times and paying customers ger over 300% last year. And these customers are not just small or medium businesses, Talend also counts companies like SNCF, Virgin Mobile, Levolor, and MediaLab (to name a few) among its customers. If you follow this blog, you know I believe that open source software could do much better than the market average in spite of (or because of) the economic crisis. Talend looks like a start up to watch!

open source, Software, start up, VC

Interview with SageCircle's Carter Lusher on my IDC SBS Group

I dropped by the analyst and AR meet up that SageCircle hosted on Monday, January 12, 2009 in the Silicon Valley. While I was there SageCircle's Carter Lusher recorded a couple of video's, the previous one on analyst use of social media, and this one of me talking about my IDC Group, Software Business Solutions and what we're up to. Here's the link: video

Enterprise 2.0, ERP, financial crisis, open source, partner, SaaS, Social CRM, Software, VAR