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Five Conferences 2013: SugarCRM next up

By on May 14, 2013

Overture

sugarcon 2013Okay, this is apology #2 (or apology twice repeated). This is one of several technology conference “seasons” where they pile onto one another. Thus, as I’m writing this I’ll have been to five conferences in about 3 weeks, though my good friend and thought leader Ray Wang actually went to five conferences in three days recently, so I clearly have nothing to complain about.  I’m going to write individual blog posts for each but they will be much shorter than the norm.  I apologize that I won’t be giving them the full review of the conference I would have otherwise. It will be in this order (with the date of the conference in parentheses):

  1. Infusionsoft (March 25-29)
  2. SugarCRM (April 6-9)
  3. Clarabridge (April 17-19)
  4. Infor (April 21-24)
  5. Lithium (April 23-25)

I’ll be repeating this overture in each of these posts – except that as I complete one, the link to it will be in the Overture list.  This is going to take some time too.  So don’t look for it as a weeks long project. It might take me a month or two.

SugarCRM and SugarCon 2013: The Biggest Picture

SugarCon 2013, in NY at the Waldorf Astoria probably was SugarCRM’s most important event in the last several years for multiple reasons.  SugarCRM itself is at an inflection point – one that will drive its success – or lack thereof – in the next several years, depending on the direction that they go from here.  I’m not attempting to be dramatic at all. As all of you probably know, I’ve been a fan of this company for nearly a decade and have seen their potential all this time and have seen them start to realize this potential.  But I don’t think they’ve ever reached this kind of nodal point before – one which can make or break them over the next couple of years – and this was reflected at the conference.

The good news is that the indicators are considerably more positive than negative though they have some things that they must (and I do mean must) resolve to make sure that there are no obstacles in the way of their potential growth.

The Conference: Location, Location, Location

Before we get into it, I want to say a couple of things about the location of this conference.

Why, you might be wondering? Who gives a flying…whatever about that? And why should you (Paul G) cover this?

There is always a reason, grasshoppers.

As I’ve said many times before, conferences are key moments in the life of a company – especially a technology company which is not only in a highly competitive environment, but in a closely watched industry segment – closely watched by financial and industry analysts, general business media, and investors. What a company does at a conference, how they present themselves, the feeling that they leave the attendees with, the experience that the attendees have and the themes that they present all have lasting impact on both the immediate, often visceral and reactive responses of those who one way or the other watch or participate and the long term impressions that they leave – all of which can impact business performance over a year.

If the conference impression is “bad” rather than “good” – and there is a lot that goes into those big terms – then the things that occur over a year with the company – a prospect making a decision, an investor deciding to invest, a bad or good article in the business press – can be decided, especially if the decision is marginal -  by the “badness” or “goodness” – the feeling that the attendee or watcher has about the company that has been shaped by the conference.  This isn’t crass or raw; its rather subtle,  but the impact on decisions that could go either way is there.

Think about it.  If you attend a conference and your impression of that conference is that it was messy or busy or crowded or the food sucked or the presentations were poor or the message was unclear or videos were salesy or the attention to you was lacking, how are you going to feel about the company that held the conference? Of course, that depends on a lot of things, but odds are good you won’t have a good feeling about things.

I’m not trying to overblow the importance. But the conference is watched closely by those who have an impact on the company, so the conference needs to be carefully handled and well produced.

That said, while all in all, SugarCon 2013 was a all in all a very good conference, I would never hold another one at the Waldorf Astoria.  This is clearly a hotel that was built for captains of industry to stay at – with grand ceilings, beautifully appointed lobbies, a world-class bar and fantastic conference food – best ever in fact – but it was almost impossible finding one’s way around from track to track, room to room. You needed sherpas to figure out how to get from one place to another.  Not only that, the staff that ran the A/V for the Waldorf, clearly didn’t understand the tech industry because they tried – though SugarCRM’s staff backed them off somewhat – to run things with far too much “efficiency” and with far to little “effectiveness.”

The true saving grace of the conference was the quality of the content, once you managed to find the room that the presentations were in. To Larry Augustin and SugarCRM’s credit, they had the greatest array of influencers speaking both as keynotes and in tracks that I’ve ever seen in a single event.  That goes to the regard that these influencers hold SugarCRM, believe me. I won’t say why I’m putting it that way, but it really says a lot about that.  The content presented all in all was exceptional and that goes a long way to making or breaking a conference. This made this one.

All in all, not great but a good experience due to the quality of some of the content and effort by the SugarCRM people, who are very nice generally to make it pleasant, which, given the hotel set up, was actually a significant achievement.  At this point, SugarCon is better off in San Francisco, much as I love NY – and I really, really do.

The Strategy

SugarCRM’s strategy for the last two years has been crystalline and consistent.  They are among the most refreshing companies in the industry, because unlike other companies that I won’t name here, they remain committed and proud of their commitment to CRM. They don’t run from it, which is to their enormous credit. Thank you, SugarCRM.

With the signing of the partnership with IBM, they are now focused strongly on one thing – moving upstream to the enterprise.  This does not mean that they are going to ignore the small and midsized market that they’ve flourished in but it does mean that they are doing all those things that they have to do  – painful or not – to get the company ready to meet that upmarket challenge.

Over the last year and right up to the conference this meant several things:

  1. Proof of concept that they could scale to the enterprise – They did this in spades, not just because IBM showed faith in them by signing the deal, but far more that IBM decided to replace all 67,000 seats of Siebel with SugarCRM.  By the conference many of those seats had been replaced.  To make this more definitive, one of their newer customers, New York Life, is going to be scaling SugarCRM up to 4500 seats as part of their deployment.  Case closed here, gang.
  2. Be an “enterprise-ready” company – This meant a large number of senior personnel changes with a significant number of their long time senior management departing the company over the last year. Not all of them have been replaced yet – more on this in a short while – but those slots that have been filled are filled with people who know how to handle the enterprise.   But, it also means having a culture that can handle the enterprise and they are getting there. They have reorganized to put all customer facing efforts into a single organization; they are hiring more sales people who know how to sell directly to the enterprise; they are providing executive sponsorship to named accounts and making other moves too numerous for me to cover. But they are not quite there yet – because of one significant hole – and that is related to its personnel changes.  Nice, how the loop works here. For me, at least.  Who, you ask?  Soon.
  3. Make more changes at the partner level – The SugarCRM partner network consists of some excellent partners – but only a few know how to sell into the enterprise.  Which means that SugarCRM now has to find partners who can sell into the enterprise. The combination of that with the departure of long time channel VP Jeff Campbell created a somewhat mistakenly nervous partner network, which is a short term problem. But, regardless of the partners’ skittishness, a partner issue not a SugarCRM issue, SugarCRM is doing exactly what it should here – which is to add enterprise partners. They are not neglecting the rest of the partner network. Their plans indicate a significant level of increased attention to the existing partners and to the new partners as they get them. On the one hand, they’ve announced that they are going to improve the tools and services that they provide partners with to help them be successful. They are also going to invest more effort in the partners that show value. That’s all great. But they are also doing what they need to by starting to recruit the larger systems integrators to become partners. Not only do they have IBM, but they also have PwC and Cognizant among others.  All in all, while it may be a bit scary for the partners, SugarCRM is doing exactly what they must to make both the partners and the company be both successful and “grown up.”  So partners, stop being paranoid.  Really. This is a good thing for you.
  4. Make sure that the product architecture scales – SugarCRM 7.0 most assuredly does. For SugarCRM, this might be the most significant version in their history.  More on this in a few minutes.  This is their crown jewel.

Just to be clear, the transformation of the company to their enterprise ready state is ongoing and on target, but like any transformation, it is in flux. It’s at that point where it could go oh-so-right or, a misstep and it could be set back significantly. Thus, this is an inflection point.  Luckily, they have veteran investor and CEO Larry Augustin and some superb senior management such as Lorna Heynike,  the Group VP of Product Strategy, who know what the hell they are doing. They are proving to be a significant steadying influence as the ship continues to turn.  Plus the SugarCRM product has proven to be rock solid over the years. It stays consistently contemporary – and is able to handle both the legacy customers and the customers looking for a full architectural refresh. AND, it has now proven its scalability. Their foundation remains very strong.

The 2012 results were telling. They had 60% year over year revenue growth for the company – not surprising, given the evolution of this company over especially the last three years.  This meant, at the end of 2012, 1.2 million users and 6500 subscription customers.  In the first quarter of 2013, further growth – 30% year over year for the quarter. Sweet. Strong.

The Messaging and the Marketing

So there is no question that despite some of the painful changes that SugarCRM has been making, they are on the right path.  But here is where the conundrum comes in.

The conundrum roll please.

They are on the friggin’ money when it comes to their messaging, yet their marketing overall has taken a step back in the last year. They MUST and I mean MUST hire a CMO.  Priority #1.

How does that work and why should they?

First, there is clearly more to marketing than just messaging and branding. Among other things, there is:

  1. Influencer relations
  2. The presentation and representation of the company to the public – as a company, not the product
  3. Marketing as the first line of conversation with the public in all its forms
  4. Thought leadership

When it comes to their messaging, they couldn’t be any smarter or better than their “Every User, Every Customer, Every Time” approach.  In an era where customers and users a.k.a people are demanding highly personalized individual responses, no message could resonate as they scale up better than this CRM for Every(one).”  This is right for two reasons:

  1. It indicates that they are in touch with the contemporary market – each CRM user or person impacted by CRM has a personalized experience with it.  It could be in the customization of the UI and UX or in the result of the interaction between the customer and the company.  But it is singular.
  2. The “every user, every customer, every time” reflects the scalability, the portability and the reliability of the products.

Trust me here. It’s the right message. This is one of the best messages, given the offering, in the industry.

But, in the other areas they’ve fallen back a bit.   That would include influencer relations, thought leadership and the representation of the company to the public in general, which includes their visibility.

Let’s briefly look at each:

  1. Influencer relations – To their credit, they’ve brought back the always amazing Martin Schneider, so whatever influencer relations glitches they have, if he’s involved in any way, will go away.  But at least at SugarCon, there was a more lackadaisical approach to the IR than in the past – and this is not acceptable for a company that has a great deal of positive capital among the influencers who know them.   There are two things they need to do to rectify this.  Pay closer (not more) attention to those they already know and also go beyond them, by expanding their network.  There were a number of problems at the conference which had nothing to do with influencer egos but had to do with lack of attention to detail that hurt SugarCRM more than the influencers.  The only one for the most part out of SugarCRM’s control was poor Internet connectivity that took a long time to get resolved – which made it hard to cover the conference in real time – which the influencers were ready to do.  Worse though, and something they could control, were inconsistent interactions with the SugarCRM staff and the influencers. This meant sometimes trying to cram in too much at once and other times unable to get anything finished even when started.  This is not because they aren’t nice people, they are very nice, but because they were overwhelmed by the amount of work they had to do and they were not experienced at the IR part of this – except Martin Schneider who handled it perfectly as pretty much always – since he is an influencer in his own right. This definitely damaged the overall impression that the influnecers had of the event. What should have occurred, which would have dealt with the inexperience, was a more programmatic and planned approach at the event, including 1 on 1 meetings, assigned, rather than ad hoc access, and letting the staff know the limits on both sides of the interaction – meaning when its too much and when its too little. This allows one to set expectations on both sides – the staff and the influencers. Secondly, there was a decidedly smaller group of influencers than last year which given where SugarCRM is trying to go, is not wise.  SugarCRM needs to bite the bullet and reach out to some of the enterprise influencers who cover a wider swath than CRM but are focused on the enterprise software world.  It might be a wise move.  Bring them to the event. I could say more, but I won’t.
  2. Thought Leadership – there was no evidence of that at the conference.  Nor since the conference. To their credit, SugarCRM has eliminated open source as a differentiator, which admittedly takes away what was their thought leadership focus for years. It forces them to retool. They have a clear theme for the refresh, though. That would be “personalized deployment while scaling to thousands.”  Start building the assets to support that superb messaging.
  3. Representation/Visibility of the Company –  Again to their credit, SugarCRM might be the most transparent company on the market. They are not afraid to talk about their tough decisions; they are not afraid to expose some of their weaknesses and they are always open and friendly and amenable to answering all kinds of questions. But they have to do much more than just that.  They have to be out there, representin’.   SugarCRM is one of the good stories when it comes to the CRM world. They are a company that has gone through a lot of changes yet consistently comes out on the right side of those changes. They have good people working there; they have a great product; they have influencer good will. But they don’t get out there to events beyond their own; they don’t emphasize their philanthropy or values as a company.  They underrepresent themselves.   They need to make changes.  More of the values and less of the how to increase revenue discussions at SugarCon 2014.  Plus SugarCRM management needs to attend something other than SugarCon and IBM Connects.

Look. This boils down to a simple thing.  While they do so much right, when it comes to their public-facing activity, they need to find and hire a CMO – and sooner than later.  All of these issues go away when that happens.

SugarCRM 7.0

With all the things that they have to do, this is the one thing that they don’t have to do. They have a rock-solid, contemporarily architected, functionally intelligent, outcome-based, gee-tar pickin’ , oops, sorry, highly customizable product that competes with almost anything out there you can name.

SugarCRM 7.0 might be their greatest release in the last decade – if not, it is their most important.  It covers all platforms ranging from desktop to tablet to smart devices with native interfaces for each of them – all HTML5 based.   But what makes it great – because it is customizable down to the object-level – is that it can scale and yet each user can have their own personalized version of the application without compromising the security or the quality of the data or the functionality that is being universally used by the company.  The user interface is vastly improved and while no one is at Infor’s standard, this provides a pretty damned nice user experience.

They’ve made an interesting choice on how they deploy their cloud. They have a private cloud – which in this case means a locally hosted one – with data centers in United States, Ireland, Singapore, Japan, Australia, and Brazil. The rationale is that this provides network and data isolation, which in turn allows for greater security and more control over change management.

I can’t say enough about this product – so I won’t say anymore.  Again, I have limited space. But this is a crown jewel and one that they’ve managed to align with the crown of the contemporary king.

Summary

SugarCon 2013 was an interstice for SugarCRM because it pointed out the soundness of the direction they are taking and the one glaring weakness they need to resolve to get there. They are on the right track and they remain one of my favorite companies for their leadership, their product, their candor as a company and because they are just really interesting. But by SugarCon 2014, they need to have resolved this one weakness and if they do, I suspect that you will see a company that has already either leapt to a new level or is at the cusp of doing so.  If they don’t, I suspect they will be like the Waldorf Astoria – grand ceilings but a confusing path.  Knowing them, I’m preparing to celebrate their growth.  In San Francisco.

(Cross-posted @ Social CRM: The Conversation | ZDNet)

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Sourcing reinvented: cloud supply chain and spend management

By on May 13, 2013

If the future is a networked world, then we may well find that the future belongs to sourcing vendors. No other category of vendors has had its landscape transformed so fundamentally by the advent of the Web, to the extent that leading vendors such as Concur and Ariba took early decisions to wholly rearchitect their products to become cloud-native, while an entire new breed of cloud vendors have grown up alongside them.

They knew that the only way to tap into the sourcing and spending patterns that were evolving as the world went online was to become cloud-native. In the process of adapting to this connected, always-on, and now increasingly mobile environment, they have moved further and faster than most other categories of enterprise software vendor.

Today, the cloud is further transforming the nature of sourcing itself, enabling new crowdsourcing strategies in which prospective suppliers — not only of goods but increasingly also of intellectual labor and professional services — compete in a global marketplace on a contract-by-contract (or even microtask) basis. This form of online sourcing is still in its early stages of evolution, as it irons out the intricacies of automated reputation rating and price setting, while guarding against the constant attempts of participants to game each platform for short-term profit. Once these teething issues have been resolved, automation of the sourcing and spend management process will step up to an entirely new level of innovation, which will likely have repercussions across other application stacks they’ll link into, such as HR and revenue management.

This overview of today’s leading cloud supply chain and spend management vendors is the fifth and final in my series of blog posts setting out a cloud perspective on the old, established categories of enterprise software. Previous posts looked at what replaces ERP, the redefinition of CRM, the fast-changing landscape of collaboration, social and docs and the new, people-first nature of HR and talent management.

These reviews take a strictly cloud-only stance, and I focus on larger enterprise offerings rather than those for SMBs. Some vendors may be past or present consulting clients or work with me in the EuroCloud industry association, but know not to expect any favors from me in my independent writing. This is a necessarily brief overview, and if you feel I’ve missed any important players or points, please use Talkback below to add your feedback. If you want to drill in further, one expert I can recommend is fellow Enterprise Irregulars blogger Jason Busch and his colleagues at Spend Matters.

Concur. The granddaddy of expense management in the cloud, Concur Technologies was founded in 1993, had its IPO in 1998 and then completed the transition from conventional licensing to subscription-based cloud multi-tenancy in the full glare of public financial disclosure — “Don’t do it as a public company,” CEO Steve Singh later advised. Now firmly established in the cloud, Concur is continuing to grow its ecosystem of partnerships, ranging from travel providers such as hotels group InterContinental, to participants in its newly launched App Store. Its $120 million acquisition of travel planner Tripit in 2011 was the most noticeable of a number of steps it is taking to enable travel and expense management on the move. Today it is working to make sure that its mobile applications take full advantage of location awareness, recommendation engines and push notifications to act as an intelligent travel assistant to users on the road.

SAP/Ariba. Long before its acquisition by SAP, spend management vendor Ariba migrated away from its on-premise heritage to become a cloud applications vendor. It has now become the core of SAP’s cloud offering for managing suppliers, although this is not the first time SAP has ventured into the cloud on the back of an e-sourcing acquisition. One of Ariba’s srongest suits is its network of one million registered suppliers, which claims an annual transaction volume of close to half a trillion dollars. Such huge numbers demonstrate the value that can be amassed by building up a global network in today’s networked economy, even if Ariba sometimes spoils the effect with high charges for processing electronic transactions. The challenge for Ariba and its parent SAP is keeping its offering relevant in a fast-evolving world.

Other supply chain. Moving goods and services around the world requires a vast hinterland of hidden support services in fields such a freight management, financial and customs documentation, warehousing and logistics, and much more. Among many innovative and specialist cloud players here, one to watch is GTNexus, which manages both physical and (after its merger with TradeCard) financial supply chain processes. Others to mention include B2B integration giant GXS, which operates a SaaS portfolio to manage supply chain activity, supply chain management vendor e2open and, on a different tack, cloud bill of materials management specialist Arena.

Coupa. The fastest-growing of the next generation of spend management vendors, Coupa has always led on bringing ease-of-use to business procurement. Over the past few years it has rounded out its offering with a range of spend optimization tools, including the acquisition last month of expense management provider Xpenser to add improved mobile functionality. It is becoming a serious challenger to the established enterprise vendors in its space.

Rearden Commerce. One of the most overlooked names SaaS players in the spend business, Rearden Commerce has been playing a long game to build its next-generation vision of automating connections between buyers and sellers, backed by $340 million of venture and strategic investment to date. In late 2010, it swallowed up smaller spend management player Ketera, although a later realignment saw Rearden doubling down on its core commerce network offering.

Other spend management. Other pureplay SaaS vendors in the space include Perfect Commerce and leading commerce network operator Hubwoo. Notable players serving the SMB market include Bill.com, which automates invoicing, bill payments and collections,, online invoicing, billing and accounting vendor Freshbooks, and ExpenseWatch.com (owned by Amazon CEO Jeff Bezos).

Other expense management. Despite the dominance of Concur, there are many others around, including Certify and SMB-focused webexpenses. Adding mobile functionality early has helped open up opportunities for more recent newcomers Expensify and Shoeboxed.

Crowdsourcing. There’s an explosion of experimentation and innovation as the world of crowdsourcing matures. Traditional contingent labor sourcing providers such as IQNavigator should probably be looking over their shoulders at these uniquely cloud-powered providers who bring on-demand to the world of clerical and professional services. Beyond the more established freelance networks such as eLance and oDesk, there are a range of more specialized crowdsourcing marketplaces springing up, ranging from 99Designs for creative work and XTM Xchange for translation, through to Blur Group‘s platform for everything from artwork to accounting. Others such as CrowdSource and CrowdFlower focus on harnessing microtask labor. These services are not yet hooked into other enterprise procurement and workforce management applications, but their impact when that happens will be enormous.

(Cross-posted @ ZDNet | Software and Services Blog)

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SapphireNow, Past and Future

By on May 13, 2013

sapphirenowIn the run up to SapphireNow this week I have seen several blogs and tweets about SAP’s new (as in last five years) analytical, cloud and mobile products – HANA, SuccessFactors, BYD etc. During the course of the week every announcement around these products will get amplified.

The reality is after years of trying, these new products only contributed 6.5% of 2012 revenues.

To understand why SAP’s future is being shaped so slowly, I believe you have to look at SAP’s past.

In talking to SAP customers, I get two major areas of disappointment

a) “We signed up with SAP as an application provider, but in the past decade it has been enamored with becoming a platform company.” NetWeaver, Business Objects, Sybase, HANA are all visible signs of that desire and related investment strategy over the last few years. In the meantime, over $ 100 billion in application maintenance paid by customers has not yielded much in the way of functional leaps.

My friend and fellow Irregular, Thomas Otter is leaving Gartner to re-join SAP and writes

“In 1995 Klaus Tschira, one of the SAP founders, impressed me so much with his vision for HR technology that  I convinced my wife that we needed to move to Germany. There is much in that vision that still needs to be built, so in a sense I have unfinished business with SAP.”

There are hundreds of areas, especially around industry solutions, where  SAP could use other Thomas Otters to make up for neglected functionality over the past decade

b) The massive partner booths at each Sapphire are a vivid reminder of SAP’s poor management of its ecosystem over the past decade. Customers can see the impact in the metrics and benchmarks in their shops

  • Hosting – SAP customers have paid more per unit of compute and storage to IBM, EDS etc than did customers of other legacy or packaged apps. And 5 to 10x what cloud vendors like Amazon or Rackspace increasingly charge per cycle or GB per month. Not sure why SAP has not tackled its partners and asked why its apps require gold plated arrays or chips.
  • Apps management – SAP customers have paid more per user for Basis, config support etc to Infosys, Accenture etc than did other packaged or custom apps. Per end user Salesforce, NetSuite and others are showing they can deliver with X times fewer support staff. Again not sure why SAP has not pushed for multi-tenancy and shared services in its partners.
  • Upgrades – SAP customers are some of the slowest in the ERP/BI world. Workday customers get upgraded 3 times a year in background and customers primarily test and integrate – much shorter projects

This did not happen overnight. But SAP and its partners have shown little willingness or ability to tackle the inefficiencies over the last decade.

So, while SAP employees, partners and fans descend on Orlando to hear about the future, they would be as well served to ask what SAP is doing to rectify the neglect of the past decade.

Without that, many customers will continue to stay away from the newer products.  They may be too polite to say it, but the saying definitely comes to mind:  “Fool me once, shame on you. Fool me twice, shame on me”

(Read this and other articles @ Deal Architect)

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2013 ERP Market Share Update: SAP Solidifies Market Leadership

By on May 13, 2013

SAP Headquarters, Building 1

During 2012 the worldwide Enterprise Resource Planning (ERP) market experienced sluggish growth of just 2.2%, yet Software-as-a-Service (SaaS), financial management and Human Capital Management (HCM) applications showed potential for breakout growth.

Through the challenging times of the previous year however, SAP still retained worldwide market share leadership.  These and other insights were recently published in the recent report, Market Share Analysis: ERP Software Worldwide, 2012 authored by Chris Pang, Yanna Dharmasthira, Chad Eschinger, Koji Motoyoshi and Kenneth F. Brant.

Key Take-Aways

  • Overall market growth of just 2.2% and the top ten vendors owning 64% of the worldwide ERP market is leading Gartner to predict further consolidation of the industry.
  • SAP had just over $6B in total ERP software revenue in 2012, leading the worldwide market with 24.6% market share.  Oracle had $3.12B and Sage, $1.5B in software revenues for 2012.  Oracle’s market share was 12.8%, and Sage, 6.3%. The following graphic shows worldwide ERP market share for 2012.

ERP-Market-Share-2012-Stats

  • Infor achieved 49.5% revenue growth in 2012, increasing their 2011 sales from $1B in 2011 to $1.5B in 2012.  Their market share increased from 4.2% in 2011 to 6.2% in 2012.
  • Microsoft achieved 4.2% revenue growth  in 2012, increasing revenue from $1B in 2011 to $1.1B in 2012.  The majority of these sales are for the Microsoft Dynamics AX ERP system.
  • The fastest growing ERP vendors  in 2012 include Workday, Cornerstone OnDemand, WorkForce Software, Ventyx and NetSuite.
  • Workday grew 114.7% in 2012, increasing revenue from $88.6M in 2011 to $190.3M in 2012.
  • Cornerstone OnDemand grew 61.5% in 2012, increasing revenue from $58.4M in 2011 to $94.3 in 2012.
  • WorkForce Software grew 39.8% in 2012, increasing revenue from $11.8M in 2011 to $16.5M in 2012.
  • NetSuite grew 34% in 2012, increasing revenue from $139.7M in 2011 to $187.1M in 2012.
  • SaaS-based ERP revenues are projected to grow from 12% worldwide in 2013 to 17% in 2017.  The following graphic from the report Gartner’s Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications published: 29 October 2012 shows this progression.  You can find a research roundup at the previous post SaaS Adoption Accelerates, Goes Global in the Enterprise, which provides additional insights into which factors are driving SaaS adoption.

 SaaS-Revenue-Market-Sizing

Bottom line:  SAP’s continued market dominance depends on how well the company orchestrates it core ERP strategy with the following areas: BusinessObjects 4.0, its highly regarded analytics suite; social application adoption (StreamWorks and SuccessFactors Jam); the many Cloud-based initiatives they have including SuccessFactors and BusinessbyDesign; mobility platform wins;  and major wins with their SAP Sybase DBMS and HANA architectures.

(Cross-posted @ Forbes)

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Building a Customer Experience Strategy

By on May 13, 2013

This sounds like an ambitious post and I guess it is, but let me say up front that there is no “one size fits all” answer to how to build a customer experience strategy. There are though, some things that you should consider and some tips that are working for some of my clients.

What is customer experience? I’m not going to spend pages trying to define it here, but basically CX is your company strategy that is built to create a company environment that is focused on understanding and meeting customer expectations. A “good” customer experience occurs when expectations are aligned with experience to create satisfaction. CX then,  is built on a comprehensive strategy or game plan that is defined by your brand attributes and by customer expectations. The strategy defines the intended experience from the customers perspective. Once you’ve defined the experience then create it, align culture, organization, processes, technology and products / services to the strategy.

The first step in building any CX strategy is understanding your customer; who are they, what do they expect, how do they expect you to act and when do they want interaction. In this data collection exercise, which by the way, is on going to support a flexible strategy and proper execution, you’re looking for actionable, data driven insights that can be used to build a customer experience roadmap. Roadmap and strategy in hand, then here are a few tips that have helped companies work through the complex steps to support ongoing execution of the strategy:

  1. Organizational model: If you believe that only employees that are considered “customer facing” are involved in CX, you need to step back and rework your strategy. Everyone in your company is involved in CX. Delivering the “right” experience with the “right” product or service at the “right time” to the “right” customer, requires the alignment of actions from every department. Think about it, if the wrong product is shipped, or the product quality is low, or the bill is wrong the customers’ expectations are not met and their experience has suffered. If your organizational model is sound and you have built a culture focused on solving the customers problems though, you might be able to recover if quick and correct action is taken. In general organizational silos are the enemy, and a collaborative and empowered workforce can go a long way towards solving your CX issues. And don’t forget about incentives, make sure that you are paying people to collaborate and rewarding them for the behavior your customer wants.
  2. Culture: Culture goes hand-in-hand with the organizational model. Aligning culture to the strategy is the start of changing behavior to deliver the desired customer experience. Changing culture is not a simple or fast process, but there are solid change management technique that will work if you focus your efforts.
  3. Listen – understand (expectations) – focus (employees and processes) – act: You are building the “I own your problem” mentality in your employee population. Build awareness that it is every employees’ role to prevent friction points for the customer and that they are empowered to make decisions.
  4. Sales Model: Don’t focus on building your sales model, instead first learn how people buy / want to buy your products / services. The connected world has changed and often your customer knows a lot about your product before they interact with you. Instead of selling, they want information to support an informed buying decision. Understand how the customer wants to buy and then match that to your sales model.
  5. Influence: In the past, when we segmented customers, we often identified a VIP group of customers, mostly based on how much the customer is buying or has the potential to buy. In the new information based economy influence is the new VIP. Instead of just focusing on the customer that are spending the most money, identify and treat your influencers like the special customers that they are. Influencers reach many more customers and prospects and drive a lot more business. Through analytic tools you can find and nurture your influencers and, in some cases even identify them before they reach influencer status.
  6. Proactive: A CX strategy needs to be proactive, not just reactive. Build tactics that help you reach out to your customers and especially your influencers. Conversations are good and asking for feedback then using it to improve your CX execution is invaluable.
  7. Delivery: Don’t forget delivery as a key element of the CX process. Delivery is often the point where the experience has the highest potential to break down, so it is a critical component of the ongoing customer experience.
  8. Mobile experience: Don’t forget mobile! Now I sort of feel silly for saying something that I think should be very obvious, people use smart phones at a rapidly growing pace and will interact with your brand from mobile devices. I can’t tell you how often I try to look up something from a company site only to find that the site provides a terrible mobile experience. I can tell you, that makes a big impression on what people think of your brand.
  9. 1:1 feel: Notice I said 1:1 “feel” not 1:1 experience. I’m not suggesting that you need to always interact 1:1 with your customers, but what I do believe is that with the amount of data available you can scale the 1:1 feel and create mass individualization. Customers expect to be treated as an individual, not as a faceless entity. Now I understand that this leads to the discussion of knowing your customer at every interaction, a data problem for most companies but…
  10. Identify your customer: Identify your customer at every touch point. this might be the most difficult technical issue that you face but it’s absolutely critical. We all have multiple identities online and in person, tying those together is no small task. I believe though, that effective use of customer communities can give you the means to connect all those identities and is a critical part of any CX strategy. See this post for more on this subject.
  11. Measure: You are trying to create a consistent experience quality across all interactions. You have to measure and act to effectively manage an ongoing CX program. Embedding analytics into all business processes is essential, but even more so is the culture that uses the data to take action.
  12. Technology: This is a tough topic, there’s so much that you need to do. I’d say the real underlying concept though, is integration to eliminate technology silos. CX touches tech across all your systems, and includes CRM, but doesn’t stop there. You need a community platform, listening tools (social media monitoring and response), and the back office aligned to the CX strategy. The supply chain, financials, product development and design, manufacturing, etc. all have impact on your CX strategy.
  13. Removing barriers: It’s not enough to build a strategy, you have to create a culture of doing. Empowered employees solve problems and remove barriers. There are other barriers to consider, organization, incentives, collaborative environment, management alignment… I can keep going but the point is to spend time identifying barriers and then building a plan to remove them.
  14. Listen – understand – focus – act: Okay, I listed this one twice, but it’s just that important.

Hopefully this list is useful. CX is not a simple topic, but there are lot’s of good examples and case studies that can help you see what other companies have done successfully. Having the mind set to listen, learn and take action though, is your responsibility.

 

(Cross-posted @ Michael Fauscette)

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CxO Talk guest Hinchcliffe proclaims, ‘IT is dead’

By on May 13, 2013

During the latest episode of CxO Talk, my weekly video talk show with co-host Vala Afshar, social business expert Dion Hinchcliffe made provocative assertions about IT. Dion is chief strategy officer of consulting firm, Dachis Group, an experienced enterprise architect, book author, and fellow ZDNet columnist so we should examine his comments carefully.

In our discussion, Dion proclaims the era of IT essentially over, with line of business functions inevitably absorbing technology and leaving the CIO to reign as steward over nothing more than low-value technical plumbing. Think phone systems. Dion’s perspective appears fatalistic, implying highly devalued IT departments that merely provide basic infrastructure while other groups in the enterprise absorb strategic aspects of technology.

Dion explains that, ”our existing model for IT is broken in a highly proliferated universe,” because organizations increasingly demand rapid access to solutions with a relatively short lifespan. Therefore, he calls the traditional IT model a “choke point” for technology innovation in the enterprise.

Following the CxO Talk show, I asked Dion to elaborate his views regarding the state of IT in its present form:

It’s pretty clear to most technology leaders that traditional IT, as we know it, is undergoing the biggest challenge in its history. The advent of intense competition and tech innovation from outside the organization has reached an unprecedented and — more importantly, an unsustainable level.

Internal business customers can now far more easily obtain IT service from the cloud, SaaS products, app stores on mobile devices, and outsourcing partners. And they can do it far more cheaply, faster, and with less hassle this way. IT departments are now the hardest way to get things done (albeit there are many risks for shadow IT as well, though widespread problems due to it are not emerging as fast as many would have thought.)

BYOD is just another proof-point and canary in the coal mine as cheap, agile, disposable consumer tech remakes today’s IT landscape. This means the infrastructure of IT in most organizations will recede into the cloud while digital strategy moves into other areas of the organization, including the much-discussed new role of Chief Digital Officer.

The global CIOs I talk to in general see this writing on the wall: The overly-centralized IT department as the provider of all technology is just as outdated a concept as sourcing all your IT from one vendor, like we did with Microsoft in years past and IBM before then.

It’s a very challenging time to be in IT, yet also perhaps the time of greatest opportunity. IT seems to be splitting into 1) tactical infrastructure and 2) strategic tech innovation as applied to the business. The former is heading largely to the cloud, while the latter is going to move across the C-Suite in a variety of interesting ways.

These arguments are hardly new. For example, in 2008 I wrote a piece called, “Is IT becoming extinct?,” which summarized a variety of reasons explaining why IT has lost influence in the enterprise. I followed that a post titled, “5 tips to prevent IT extinction,” that offered advice to a scared IT crowd. In 2012, I also wrote about a devalued future for IT. However, since 2008 more data has emerged to strengthen Dion’s argument.

For example, Dion calls out data that shows flat IT budgets while lines of business increase their spend on technology. Gartner presents this graph, showing flat IT budgets:

Gartner IT budgets 2013 Source: Gartner

Meanwhile, this next chart, from Retail Information Systems, shows the growth of technology budgets in retail marketing between 2012 and 2015. The chart demonstrates that marketing will have significant increases in technology spending over the next few years. Although focused on retail, similar shifts are happening in many industries:

Retail Information Systems - 2012 technology budget allocations Source: Retail Information Systems

Dion’s comments are also consistent with recent survey data described in a Harvard Business Review blog, showing a high level of CEO dissatisfaction with the current state of IT:

57% of the executives expect their IT function to change significantly over the next three years, and 12% predict a “complete overhaul” of IT

With project failures remaining at high rates and IT continually blamed for lack of responsiveness, it’s no wonder that the existing model seems to have broken down. But, this problem will not be solved by simply waving a magic wand that transfers technology to marketing or other groups inside an organization. The problem and solution are more nuanced than that.

Simple technology transfer arguments fail to recognize that when IT becomes less involved delivering specialized technology to lines of business, those groups must learn to become deep technology experts. When lines of business transform into IT departments, they will face similar challenges as IT itself. Unless, of course, we give the easy and fun stuff to lines of business and leave IT with the harder problems.

(This discussion does not even address core computing functions that must remain centralized — security, data integration, bandwidth, and network infrastructure, for example, should remain basic IT activities.]

The ability for lines of business to absorb massive change relating to technology will be an ongoing challenge in this new world. Therefore, the real solution is a new kind of collaboration between IT and lines of business.

‘The most innovative CIOs I talk with recognize the essential importance of partnerships to address these issues. For example, during another episode of CxO Talk Kim Stevenson, Intel’s CIO, said:

The next decade is about business transformation and business efficiency; how does IT help the business grow? You can’t do it alone, it’s always in partnership with the business, but IT can be a catalyst to that business growth. There are no IT projects; they are all business projects today.

During yet another CxO Talk conversation, Gartner group vice president, Mark P. McDonald, also elaborated on partnership between IT and the business:

Turning sparks into flame and growing that flame requires a scalable, very capable platform. That’s what the CIO brings to the table. The most powerful combinations we’ve seen are the CIO and CMO working together with a shared goal to grow the business. When my goal is to grow the business, everybody has the potential to win.

On a different episode of CxO Talk, the CMO of LexisNexis, Steve Mann, said that marketing tasks such as campaign deployment and management, for example, require “intricate knowledge” that IT cannot fulfill unless they provide dedicated resources to marketing. Steve’s comment further implies the kind of partnership that both Kim and Mark advocate.

Yes, the relationship between IT and lines of business are ambiguous and fraught with difficulty. However, the bottom line is this: partnership based on deep collaboration is the only solution that will work. Both IT and the business need each other; both sides must adapt and bend to the winds of change.

If you are a CIO, the message is clear: gain a more sophisticated awareness of business needs, actively forge cooperative partnerships with your business counterparts, and learn to say “yes” when the business seeks assistance. Your survival depends on taking these steps.

===============

CxO Talk is a weekly talk show that explores the tension between technology and lines of business in the enterprise. Our guests include senior level executives, analysts, and other top thought leaders who can offer a valuable perspective on the issues.

Here is a video of the entire conversation with Dion Hinchcliffe:

(Cross-posted @ ZDNet | Beyond IT Failure Blog)

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Today is my last day at Gartner.

By on May 10, 2013

Today is my last day at Gartner.

The last 5 1/2 years have flown by. I have learnt more than I imagined I could, and probably forgotten more too. I’ve done over 3000 inquiries, written over 100 research notes, led several magic quadrants, attended 100s of Research communities, spoke at numerous conferences and strategy days.  I’ve worked with fascinating colleagues, users and vendors from around the world.  I consider many of them to be friends, even though we have met so rarely in person.

5 years of conferences

5 years of conferences

It has been a blast, and I will look upon my time at Gartner with a deep fondness.  The way Gartner has handled my departure only increases my respect for the organization.  I expect to see Gartner’s HCM research grow from strength to strength.

So if it has been so good, why change?  As an analyst, you advise, you can suggest and you may even influence markets. That influence gave me a tremendous sense of satisfaction and respect for the responsibility that the role brings. But for the past few months I’d begun to wonder whether I wanted to remain an analyst for the rest of my career or not. I wasn’t really sure, but I felt a nagging itch. It took a while, but I have figured out what that itch is. It is the itch to build something.
This weekend I will be getting on a plane to Sapphire, the SAP annual conference,  not as a Gartner analyst, but as a SuccessFactors employee. I’m going to be the product manager for Employee Central. You can see the welcoming press release here.
I’m nervous, as I will need to learn a whole new raft of skills. I’m excited for the very same reasons.
Some of you reading this will know that I worked for SAP before joining Gartner, so you may be wondering why join SuccessFactors, which is part of SAP?  Here are my reasons.
  1. I reckon this is the most exciting job at the most exciting company  in HCM technology today.
  2. More broadly, HCM technology is the most dynamic place in application software now. What happens in HCM today will shape enterprise applications for the next 20 years. The investment, focus and market landscape is fundamentally different from where it was 5 years ago.
  3. Successfactors very rapidly developed a market leadership position in Talent Management software, and they have the opportunity to do the same in cloud core HRMS. Combining SAP’s deep experience and massive presence  in core HRMS and Successfactors will make for a powerful combination.  I think I can help make them work better together.  I understand  some of SAP’s strengths and weaknesses, its culture and how to get things done.
  4. There is no better salesforce in enterprise software. When aligned, is remarkable.
  5. The leadership team at SuccessFactors and SAP have very clear idea of what they would like me to do. I have seen too many analysts be hired into strategy roles, and then whither on the vine of large vendor politics. It is crystal clear that my fundamental job is to lead the team building Employee Central. This will be a massive challenge. I look forward to the learning curve.
  6.  In the 1995 Klaus Tschira, one of the SAP founders, impressed me so much with his vision for HR technology that  I convinced my wife that we needed to move to Germany. There is much in that vision that still needs to be built, so in a sense I have unfinished business with SAP.
My day today is tinged with feelings of farewell, but I can’t wait to start my new role .
To my colleagues at Gartner, I’ll reiterate my thanks for 5 fabulous years.
To my new colleagues at SuccessFactors and  SAP, thanks for the lovely welcome.

(Cross-posted @ Vendorprisey)

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CRM Idol 2013 Starts Today

By on May 9, 2013

CRM-Idol-sparklingIn this third year of its existence, CRM Idol has become one of the ways that emerging technology companies in the customer-facing space, (CRM, social, marketing, sales, customer service, etc) get visibility and build a name for themselves. Each year, two companies shine from the pack and are seen by the analysts and influencers, media and market as the best of the youngsters – the ones with the brightest futures.

Each year, we are able to highlight the best and brightest out there.  The past winners:

2011

Get Satisfaction

BPMonline

2012

Crowdtap

Artesian Solutions

2013

I guess we’ll see about this, now won’t we?
There is no question about the market for customer facing applications being substantial. Taking into account traditional and social CRM and calling it all CRM here, we are speaking of an estimated $18 billion market in 2012 – up 12.5% from the year before according to Gartner Group’s Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012 report published April 2013. That’s a lot of bucks.
But that said, its also an opportunity not just for small players, but one that has the well established technology companies actively engaged too. Which means its pretty tough for a small company to try to get themselves heard in a market of giants who have large budgets to make the noise they have to.  CRM Idol’s purpose is to give them that visibility AND to get them the mentoring to prepare them for that.

So, without further ado, please welcome CRM Idol 2013 and if you’re interested in being a participant, go the CRM Idol website  and read the rules and request a submission form. The market awaits.

(Cross-posted @ Social CRM: The Conversation | ZDNet)

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In The Early Days, Don’t Forget To Pay Yourself, Too

By on May 9, 2013

Screen Shot 2013-05-07 at 10.46.52 AMWhen I co-founded my first company, way back in the dark stretch between Web 1.0 and Web 2.0, we got a terrible deal, from a dilution and valuation perspective.  Yes, we raised $9m to get the company off the ground, but we had to sell just about everything to pull it off.

The trade-off from the VCs?  Big Salaries and 100% Vested Stock.  We didn’t ask for either, but in their minds, I guess both were pretty cheap things they could do while still maintaining maximum ownership for themselves.  They were right, in fact.

In EchoSign, my second start-up as a co-founder, in the end I went the other way.  As part of being Somewhat Lean, I went without any salary not just in the very beginning, but then again for quite a long time after we raised a $2m Series A financing … until we raised our Series B.

It felt like something I needed to do, to contribute that back to the company, in the pre-Traction phase and even after that.  It was one of several things I did to stretch out that relatively modest Series A to last 2 years.  But with hindsight, it wasn’t really necessary to do it for too long.  It was a step too far, and once our revenues kicked in, it really didn’t make any bottom line impact.

My learning?  Make sure you pay not just your team, but yourself, a market salary, upon:

the earlier of (x) as soon as the business can afford it or (y) closing sufficient outside capital to give you > 12 months of runway.

Working for peanuts seems like the start-up thing to do.  And if you don’t have enough money in the corporate bank account, it’s the only option.  It’s even sort of fun, in a way, for a while to jointly sacrifice.  It makes things more visceral.

But eventually, you’ll feel like you’re upside down.  Don’t let it go too long, if you can help it.

Also, working for free or too-cheap has another downside: it gives you an excuse.  If you’re taking an expensive salary … you know you have to deliver.  If you are working for free, doing “your best”  may seem enough.  Coming up short when you aren’t paid?  It’s not your fault anymore.  After all, you didn’t take a penny.  It’s a subtle point but I think an important one.  Getting paid increases the pressure on you.  This can be a proper and good thing.

One last thought: if you choose to work for “free” post-funding, consider getting additional stock = your forgone salary.  I did this.  It worked out very well in my case at least, and makes sense post-funding since you are really “investing” the money you aren’t taking out of the company as salary.

(Cross-posted @ saastr)

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Things are changing fast in medicine, thanks to mobile.

By on May 9, 2013

This post was written by and was published at Things are changing fast in medicine, thanks to mobile.

Wow – this is an amazing video on just how much smartphones can help reduce costs, increase healthcare efficiency and improve patient well-being and outcomes.

Screen Shot 2013-05-07 at 14.56.26

We may not be fully there yet in terms of the widespread availability of this hardware and software, and then there’s getting it accepted by the medical establishment, but this is certainly a big step in the right direction.

A search in the iPhone App store for the term ‘Glucose” returns 217 apps and a similar number for the term ‘ECG’, while a search for ‘Glucose” in the Google Play Android apps store returns over 1,000 results

Things are changing fast in medicine thanks to mobile – exciting times ahead.

(Read this and other articles @ GreenMonk: the blog)

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