Oracle launched its customer experience push this week with an announcement by co-president Mark Hurd. The new direction begins to pull together the results of Oracle’s latest buying spree in which it purchased ATG for e-commerce, RightNow Technologies for customer service and other technologies for analytics in cyberspace.
While Oracle will always draw skeptics the way a dog finds fleas, I think at least some of the new direction makes good sense but not necessarily for the reasons stated.
The big push into customer experience leaves much unsaid, especially the idea that customers are increasingly turning off vendors and their messages and seeking out indirect approaches to getting the information and products or services that they need.
The push into social media and especially analytics for gauging customer sentiment is a case in point. People have a natural reticence about revealing too much to a vendor correctly assuming that anything they say in a sales conversation might be later used against them. Fair enough. But people are still remarkably unguarded about what they reveal to their peers and hence the boom in all things social.
However, if you look at the quotes recently put out by Oracle executives they’re really still selling old style CRM with the new label of customer experience. They’re still talking about costs saved and calls avoided because those are the things that make vendors buy and it’s the vendors who are Oracle’s customers — end users not so much.
The strategy is smart because we are in an era of severe cost cutting and not simply for the usual economic reasons. First off, and I have been saying this since 2007, companies like Oracle have to deal with the fact that energy and transportation costs are escalating making it harder for vendors to visit customers at a profit as well as more difficult for consumers to visit the mall. This is the age of indirect selling for both these reasons.
But add on the idea that the economy has not grown in real GDP terms since 2008 and you see another dynamic. A whole generation of people is trying to launch into life and finding it very difficult to form households. Without household formation things like carpets, refrigerators, sofas and maybe even cars are not being bought in the numbers they would be under other circumstances.
In this age of austerity and stagnation, increasing profits to produce the illusion of growth comes from reducing overhead and avoiding margin gobbling expenses like conventional selling. So you get things like this strategy of customer experience. It makes sense to me and positions Oracle and a few other companies in a leadership position so good for them on that.
I also noticed though this curious line in a fine article by Chris Kanarkus of IDG News discussing the Oracle announcement; “Larger companies such as IBM, Adobe and Salesforce.com are also building out CEM portfolios. None of them can compete with Oracle’s breadth of technologies, [Anthony] Lye maintained.” Of course, Anthony Lye is senior vice president of CRM at Oracle and the architect of the CEM or CXM strategy. He was the guy buying up the CEM companies last year.
I found it interesting that Salesforce was lumped into the “larger companies” rubric with IBM and Adobe. Oracle and Salesforce sometimes act like two Tomcats in a cage but keep in mind that Salesforce has yet to crack the Fortune 500 though it is making strides. At any rate, this looks to me like an attempt by Oracle to set up some competitors for easy knockdown rather than something more substantial on the product front. I don’t really understand the Adobe reference and while IBM has lately made strides in CRM and analytics the efforts seem directed elsewhere.
As for Salesforce, their efforts are in the enterprise with collaboration and highly socialized applications that are increasingly penetrating new niches. The Salesforce strategy resembles Apple’s and both riff off the idea of a “Blue Ocean Strategy” that was subject of a book by the same name.
If I had to sum it up, and I do, I’d say we’re at a point in time when the market is splitting up and rather than the monolithic approach to social that we’re seen since the middle of the last decade, companies are developing specialization. So we see Salesforce focusing on enterprise IT in the true cloud, and Oracle focusing on the vendor-customer transaction while others are carving out their own niches. Yes, Oracle has a cloud strategy too as well as a hardware division.
So it’s the age of austerity, of reduced personal outreach and increasing relationships with and through machines and we now have the technologies to support the zeitgeist Eventually, growth will be back on the menu. Even Lent only lasts a short time.
(Cross-posted @ Beagle Research, LLC.)