Michael Fauscette

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

What is "social" CRM anyway?

  I've spent some time lately working with an IDC colleague, Mary Wardley (she covers CRM and runs the apps team in my Group) on working out a definition for social CRM. We are doing a joint presentation in the upcoming IDC Directions conferences (actually I'm doing the West Coast presentation and she's doing the East Coast) on social CRM and are in the middle of a small survey to collect some data to see what companies are thinking about social tools and the use of them to get closer to their customers. We both had observed the emergence last year of a few vendor offerings that moved beyond traditional transaction based CRM coupled with what seems to be growing awareness and interest among companies to utilize new ways of interacting with their customers.   

First the working definition: "Social CRM is the tools and processes that encourage better, more effective customer interaction and leverage the collective intelligence of the broader customer community with the intended result of increasing intimacy between an organization and its prospects and customers. The goal is to make the relationship with the customer more intimate and tied to the company by building a public ecosystem to better understand what they want and how they interact with the various company touchpoints like sales, customer service etc. This is done in a way that empowers the customer, makes the interaction more of a Web 2.0 experience and allows the customer to interact when, how and where they choose. The tools themselves are user driven, collaborative and social in design, promote interaction and focus on user driven innovation. They may include linkages to public social networking environments as well as private company owned systems."

Okay, it is a lot of words but I suppose we're struggling to capture all that could be social CRM and keep it succinct. If we break it apart a bit though, I think the "meaning" will become clearer. First, and this is important, social CRM captures both the tools AND the processes around the tools to:

• leverage crowdsourcing customer ideas
• apply the wisdom of crowds to those ideas
• create a public customer ecosystem
• take the customer experience and communication to the time, place and method the customer prefers
• increase customer intimacy and empowerment

Keywords in this definition: user driven, social, collaborative, crowdsource, ecosystem, community

From a company standpoint the social CRM definition could be applied in any customer touchpoint (or desired touchpoint). In product development / marketing wouldn't it be helpful to have customer's direct input to the process? Sales could have a long term and ongoing conversation with customers / prospects to build trust and understanding. Marketing, what are people saying about your brand on Twitter or Facebook? Customer service wouldn't it be useful to engage with customers who have problems in a way and at the time that suits the customer rather than the company?

Alright, enough about the definition, its still evolving anyway. These are only a few of the opportunities available to companies who embrace a social CRM approach. I've already mentioned a few of the offerings available from Oracle and salesforce.com , I'll probably do a follow up to what's available in the near future.

Enterprise 2.0, Oracle, SaaS, salesforce.com, Social CRM, Software, Web 2.0

Raising visibility for open source software

If you follow my post you know already that I believe open source software (OSS) will get a boost this year from the fall out of the financial crisis and potentially a subsequent increase in business process outsourcing (BPO). I read an article today from BBC's Maggie Shiels that reported President Obama has asked Sun co-founder Scott McNealy to author a white paper on "Why Open Source". In the article Scott is quoted as listing the benefits of OSS as more cost effective and productive than proprietary software and that OSS improves security, provides higher quality SW at lower costs and has higher reliability. He also says that he doesn't want to see the government get "locked-in" to one specific vendor or company. He goes on to suggest that the government should "mandate" the use of OSS in the government (I'm not so sure about that, but he has a right to his opinion).

The concept of switching to more OSS is sound and interesting on several levels and could have an additive effect to the other factors I've mentioned before on OSS adoption. The President has committed to cutting wasteful spending and this type of initiative just might be one of his cost cutting exercises. I'm not advocating the wholesale replacement of existing systems but what I do find compelling in this is the opportunity to reexamine each agencies strategy and find ways to improve quality and productivity while cutting costs. Personally I have some experience implementing software in a government agency, including an assignment as the engagement manager for the PeopleSoft ERP implementation at the US MInt in 1997 (yes, that is proprietary software, that's not the point). From what I've seen projects that focus on modernization, eGovernment initiatives, efficiency and increasing productivity while leveraging OSS when appropriate could indeed provide the advantages Scott mentions.

Looking beyond the potential for improvement for the government though, a move by the government to use more OSS would have a very positive impact on OSS growth. It would help reduce some of the mis-perceptions about OSS that have been barriers to its widespread use and help give more credibility to the model. Just the idea that the President is thinking about such an initiative will help with adoption IMHO. It will be interesting to see how this develops over the coming months. Now the question is, who's writing the white paper for the Obama administration on the advantages of using SaaS based solutions?

open source, SaaS, government

Interview on analyst use of social media by SageCircle's Carter Lusher

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 video of me talking about my use of social media and what I thought its value is for industry analyst and AR. Here's the link: Video

Enterprise 2.0, Social CRM, Software, Web 2.0

Web 2.0 to Enterprise 2.0 to Gov 2.0?

At the salesforce.com lunch last week announcing their new Service Cloud offering, they also highlighted salesforce.com CRM Ideas and the Obama administration's Citizen's Briefing Book initiative. Continuing Obama's use of technology to engage more effectively with the American People and to provide more transparency in government, the transition team partnered with salesforce.com and system integrator (SI) Reside to implement the Citizen's Briefing book on Obama's change.gov site. The briefing book uses the Ideas application to collect ideas on topics ranging from the economy to the environment and then allow people to vote up the ideas that they find compelling and important. Submission / voting closes this evening at 6PM and the book will then be used by the new administration to help prioritize their plans / agenda.

I have thought about that use case quite a bit over the last few days. I've seen some other interesting uses of the app, like Starbuck's MyStarbucksIdeas and Dell's IdeaStorm but this is the first time I've seen it used in an eGovernment initiative. The concept of applying CRM Ideas crowdsourcing of input to policy making with Digg-like voting to surface the input with widest support is a strong one. Both Starbucks and Dell have reported widespread adoption by their customers and attributed both some really innovative business ideas and increased customer engagement. Increasing customer engagement especially through ongoing conversation is one of the key's to "social" CRM, so will it work for government as well? I guess we'll see because it does look like this new administration plans to use technology to involve citizens in government more...social government (and no not socialist government), or eGovernment... Citizens actually engaged with government, maybe they're on to something...

cloud, Enterprise 2.0, SaaS, SaaS, salesforce.com, Software, Web 2.0

Google, is this the year for the disrupter to disrupt?

As an industry analyst I've certainly joined in with my colleagues in the exercise I'll call "what if'ing"...you know, the what if this vendor does this or that and how would so and so react, how does that impact the market and most of all is this the next big disruption?? Well, I will tell you (although it's probably no big surprise) that Google is often the "big" disruptor in many of those conversations. I can certainly see, in several areas how Google "could" be a disruptor in the enterprise software market. On the other hand there have been just as many reasons on the list of why they won't be the disruptive force. I've heard (and at times supported) concepts like Google is a search and ad word company and has no real designs on enterprise software, Google apps are mostly the product of individuals using their 30% time allotment to work on what they want, Google doesn't have a real coordinated business plan behind the apps...you get the point, and I could go on, but I won't. I won't because with todays announcement Google answered most of these objections / questions.

Today Google announced the launch of its new reseller program for Google Apps (messaging, collaboration, security and compliance + the Google platform). Google claims over 1 million current business customers, and 10 million active users (access their accounts at least once in 7 days), with over 3000 new businesses signing up daily for Google Apps. The reseller program is very comprehensive, here are some of the details:

• Available immediately
• Worldwide
• Reseller retains ownership of the customer & handles billing
• Recurring revenue model for the life of the customer relationship
• Comprehensive partner enablement program that includes marketing, sales and tech training and tools for ordering, provisioning, integrating and on going management
• Partners can sign up and start training now, start transactions in March

There are currently over 50 "beta" partners in the program. The opportunity extends beyond Google apps of course, and includes the opportunity to offer services and bundle / develop more comprehensive solutions using the Google platform or other platforms like Salesforce.com's Force.com. This announcement sets Google up to have one of the only VAR channels built from the ground up for "cloud" computing and clearly demonstrates their desire to become a leader in the enterprise productivity, collaboration, messaging, security and compliance markets.

cloud, Enterprise 2.0, Microsoft, PaaS, SaaS, SaaS, salesforce.com, Software, VAR, Web 2.0

The road to enterprise 2.0

Will 2009 be the turning point for Enterprise 2.0 initiatives? Well, OK, there are a bunch of other issues going on, like that whole financial crisis / collapse of the economy thing but still. I've been fairly bullish on E 2.0 projects and I do think that this year will be a turning point in many ways. E 2.0 projects just might be one of the things that thrive (or at least survive). Before we look at what companies might find compelling let's look at what the vendors are doing and how they seem to be approaching the development / rollout of these type of tools.

Basically two camps have emerged among the vendors that get E2.0 (or at least are starting to get it), those that are building (or buying) functionality in new and existing products from the ground up (Oracle's approach) and those companies that are partnering with consumer Web 2.0 vendors to create new offerings (the Salesforce.com / Facebook partnership, for example). It's to early to tell if one approach is better than the other and each does offer some interesting benefits. There's also no reason to think that vendors will stick with one approach over the other, it would be no surprise me to see some new imbedded functionality in a Salesforce.com release this year, for example. The acquisition route is also pretty interesting, especially in this economy where acquisition may well be the only way some of the Web / E 2.0 start ups survive. I've noted before that if customers find the offerings from the larger vendors like Oracle and Salesforce.com compelling, then I believe a lot of the E2.0 start ups are in trouble. Only time will tell but, with a few exceptions, that does seem to be the way this is playing out.

So why would companies be interested in investing in E2.0 in this economy? I mentioned in my Business Case 2.0 post that I think the idea of closer, more intimate relationships with both a companies customers and partners is now recognized as valuable and in a down economy, takes on more importance. That in itself is enough to drive companies to invest / shift money into E2.0 projects. There's also survey evidence that mid market companies are maintaining spend in social media type online marketing efforts which could also fuel E2.0 initiatives. The mid market in general has started to use technology as a significant competitive lever, especially in their efforts to compete effectively with larger enterprise companies in a global market. Social CRM, for example, will be viewed by many of these companies as a competitive advantage and, IMHO will get funded this year. I have said it a few times, and I do believe that E2.0 will be one of the bright spots over the next couple of years.

cloud, Enterprise 2.0, SaaS, SaaS, Social CRM, Software, Web 2.0

Welcome 2009, what do you have in store for us?

OK, I admit I'm pretty thankful to say good bye to 2008. Not that it was bad personally, on the contrary, on a personal level it was a very good year. But, as we all know, from a business / economic perspective it was a disaster. While I feel like I made good progress personally and professionally, I realize that many people have had severe consequences to deal with as fallout from the latest financial crisis. So, like I said, it's good to see 2008 in the rear view mirror!

Now moving on, what does 2009 have in store for us? I'm not planning on going through all my predictions for 2009 in this post, IDC has a formal process for publishing those and I'm very represented there. What I do want to do is pull out a few things that are around the edges of those predictions and talk about them a bit. Now truth is, most of these bits are already in previous blogs, but there is some value to pulling them all together. The 2008 financial crisis, the single most important driver in what will happen with the software industry, is a key factor in most of my predictions and my thinking on behaviors, trends and changes. I also believe that we are going through a fundamental industry change cycle for the software market and that we will look different on the other side of that cycle (18-24 months or so). Here are a few random thoughts:

• As a result of the crisis I think that SaaS and possibly open source software (OSS) will see a big boost in adoption, and I've covered that in some detail in past blogs (see those posts for some deeper analysis).
• Social media, social networking tools, web 2.0 concepts are catching on in the business world and that trend will accelerate this year. That said, it's still the wild west and in the end we have to figure out how to measure the impact and business value of this change. I don't know where it's going yet, will web 2.0 platforms like Facebook and Twitter be integrated into business software (for example the Salesforce - Facebook platform integration announced at Dreamforce 2008) or will a new class of enterprise 2.0 business software gain traction (Yammer, Oracle's E2.0 apps, etc.). Even though spending is declining due to the financial crisis I believe that businesses will continue to spend and experiment with these types of initiatives.
• In general, companies are not going to spend money on horizontal products and ERP upgrades if they can help it. They will spend money on high value vertical apps that solve specific business process problems. There are exceptions to this though, some markets will continue to grow at a respectable pace, products like enterprise search and content management for example, should see >10% growth this year.
• In another fallout of the financial crisis, I think businesses will increase spending in the business process outsourcing (BPO) space. The cost savings, the reduction in distractions from core business, the opportunity to increase service levels, etc. are all drivers of this trend. As a secondary and related trend, the increase in BPO spend and availability, which will surely increase competition, will have BPO providers scrambling to find lower cost solutions. The end result could be an increase in the use of open source software in BPO solutions, which would boost the overall OSS market.
• I'm beginning to think that Platform as a Service (PaaS) could be one of the key disrupters over the next few years. Part of that disruption is related to the desire for closer fit of vertical solutions (see my blog post of that topic). If this is true, then the major application players (at least Oracle, SAP and Microsoft) will have to come up with a strategy to get / build / acquire / partner for a PaaS offering and soon.
• Full blown SaaS ERP solutions like Netsuite and to some extent Workday will see good growth in this economy especially in the Mid market where companies tend to continue to invest in technology as a competitive differentiator even in a down economy.
• Google apps are a disrupter and adoption will increase in this economy.

Ok, that I think is enough for now and yes, they do look a lot like predictions, oh well. Look for my and my groups actual "predictions" in an IDC doc that will be out sometime this month.

Enterprise 2.0, ERP, financial crisis, Microsoft, open source, Oracle, outsourcing, PaaS, Project execution, Project-based enterprise, SaaS, salesforce.com, SAP, Social CRM, Software, start up, VAR, Web 2.0

Software business case 2.0

I was musing with a colleague the other day about building a business case for purchasing software and where the real value was in software implementation. I've used a methodology for years when I worked for software vendors that assisted prospects in establishing the what, why and how of the proposed software project. The basic process involved a consulting engagement that assisted the prospect in establishing their current business state, best practices for the specific industry vertical (benchmarks) and the future state of the business after the proposed project was completed. In evaluating the proposed project I used four criteria: 1. revenue, 2. cost, 3. quality and 4. innovation. The subsequent business case we developed used the four criteria and applied them to the future state to demonstrate the value of the project to the business. We looked for some combination of the criteria to use as the justification for the cost of the project. Many times this took the form of a return on investment (ROI) calculation, because, face it, that's what executives wanted to hear...that the proposed project would pay for itself in X amount of time in increased revenue or decreased cost (or the Holy Grail, both). On the softer return side you had quality or innovation, often much harder to quantify (not always though, increased innovation might be demonstrated, for example, by bringing more compelling products to market faster; increased quality might reduce scrap costs, etc.).

Lately I've started to think that the original four criteria are not the only factors any more, that something else is starting to emerge that could be used to establish value. I'm more involved in using social media tools over the last two years, so maybe that's impacting my thinking more, a good thing. I also have come to believe that Web 2.0-like tools should be used in the enterprise, so again that's opened me up to some different thinking. So at this point I'd add a fifth criteria, intimacy to my list. Intimacy can be applied to new projects to gage the increase in dialog, engagement, and interaction in an ecosystem. This might be most obvious when applied to Social CRM tools, which by their design increase customer intimacy but the term could also be used in a supply / design chain or perhaps in a partner ecosystem as well. Applying Enterprise 2.0 tools in the enterprise to increase intimacy. I will admit that I'm still in the early stages of thinking this metric through, but I'm convinced that this is an important new part of evaluating the value of a prospective software project.

Enterprise 2.0, ERP, Project management, Social CRM, Software, Web 2.0

Oracle Openworld Update

Finally on Day 4 of Openworld (OOW) I'll get some time to provide an update. I have kept up a steady conversation on Twitter, but it's time to provide more information. This is my third OOW in three years as an analyst and the most obvious observation is that the overall messaging and strategy is consistent across the three conferences. Three OOW's ago was just a few months after the launch of the Applications Unlimited program and the first attempt to clarify and define the overall Oracle business strategy. In Monday's opening Keynote by Oracle President Charles Phillips he reenforced the overall messaging: Complete - Open - Integrated. From an applications strategy Complete / Open / Integrated translates to Applications Unlimited or a broad and comprehensive portfolio of industry solutions, SOA enabled (open standards) and integrated through Applications Integration Architecture (AIA). There are several key themes that are continuing across the applications strategy, investment in the horizontal suites, expansion of the vertical applications, development of more Process Integration Packs (PIP's) for integration and moving closer to Fusion Applications. Last year, Anthony Lye (who at that time was responsible for CRM On Demand, but now has responsibility for the whole CRM suite) showed the first of the Fusion Apps, mobile tools for sales people, and it turns out, gave us a glimpse into what has turned into a series of moves to rollout Web 2.0-like functionality into the enterprise. This year, with the announcement of things like Social CRM, a plethora of iPhone Apps ranging from asset management to expense reporting (which included a cool feature to automatically track miles driven based on the iPhone's GPS), Oracle makes a strong move into Enterprise 2.0.

At all OOW's there are a whole list of "announcements" and this year is no exception. One of the biggest announcements was for a new product line called Beehive. Beehive replaces the old Oracle Collaboration Suite (OCS) and provides a collaboration platform for internal management of all communication and collaboration channels. The platform provides hooks into a companies existing email or a replacement email system, presence, calendaring, IM, directory, phone, etc. and should pose an interesting alternative to other Unified Communications (UC) offerings on the market. Oracle has used Beehive internally for up to around 1200 employees for close to a year as well as supported several beta / new customer deployments to date. On the partner programs side of house Oracle rolled out it's new Partner portal and a host of Web 2.0 type tools for partner enablement. Another area of interest is the changes rolled out by Oracle's customer support organization around the new My Oracle Support. In its first release MY Oracle Support provides customers with a way to interact with Oracle and maintain current configuration information to enable more proactive and effective support. I learned from Global Support head Juergen Rottler that in a next release to come shortly over the next couple of months Oracle will up the level of support by providing communities around various customer segments. These communities will encourage P2P networking, sharing of best practices and issue resolution through the power of crowds.

Overall OOW this year is up beat and seems to have a lot of energy emanating from partners, customers and employees. The business strategy, growth through acquisition focused around more and better industry vertical solutions is fully baked and continues to drive growth. Oracle continues to invest in all major acquired brands and continues to innovate across those brands. Fusion Applications are coming, we saw, under NDA of course, several demonstrations that were very interesting. And this year, Oracle started on a path of demonstrating that they are Web 2.0 savvy and they are learning how to incorporate those concepts into the enterprise with offerings like Beehive, mobile apps, Social CRM, etc.