I’d like to say it’s going to be a good year in CRM and I firmly believe it, though I can’t offer a single all encompassing reason for my optimism though there are plenty of small things that begin to add up. In an earlier time the metaphor might have been “straws in the wind.” So what are they?
First, the economy is looking better but that’s faint praise. Things are not as bad as they were a few years ago, for instance the economy is adding in the neighborhood of 200,000 jobs monthly but I read an article the other day that said at this pace it will be another five years before we’re back to the employment level before the crash — in part because we need to absorb all the people who are entering the workforce. But as I like to say, black ink is better than red no matter how little there is.
More concretely, in our financialized economy, the markets are healthy and the broad CRM industry is doing its part to pump out new public companies. While all of them can’t be Salesforce caliber there have been many recent IPOs and the new year looks to have a few more teed up. That at least shows us that companies are evolving as they should and finding markets for their wares.
As usual, companies that are expanding the margin of our markets are the ones to keep an eye on. While I have seen my share of emerging CRM companies as an analyst and a judge in CRM Idol, the ones that are most interesting are those at the margins while the companies that try to reinvent the wheel don’t usually capture the imagination. Companies that I am watching for the year ahead include Xactly, InsideView, TreeHouse Interactive, Scout Analytics, Full Circle CRM, Lattice-Engines, HubSpot, Apttus, and Zuora. My good friend Paul Greenberg will publish a list of a bazillion companies he likes in his watch list. This is not intended to be all inclusive, just a smattering of companies I am well acquainted with.
All of these companies are expanding the margin of the market, expanding our horizons, and while only a few will have an IPO this year, the rest are worth keeping tabs on for sure. IPO candidates in my humble opinion include Xactly, Zuora, Apttus, and InsideView. Interestingly, none of these companies is what you would call a social company, which shows that there are more margins than just social. However, each is squarely positioned as a SaaS value proposition and that says the cloud is a live and well.
Xactly is reinventing compensation management, not just for sales where it got started but in every department of the enterprise. Zuora is making the subscription model mainstream by making accounting and finance in this new world easy. Apttus is a double or triple threat offering configuration, pricing, and quotation technology but they also have invented a way to be into and using Microsoft Office applications in conjunction with SaaS products like Salesforce. The result is a new kind of uber app. Lastly InsideView started as a sales intelligence tool but is expanding its footprint to provide sales and marketing teams with the data and insights they need to pursue opportunities.
I am warming up to TreeHouse because they have an interesting product line including partner relationship management (PRM) and marketing automation. PRM is one of those things that has come and gone more than once over the last twenty years, always with different players. I think this time might be significant as increasing numbers of vendors seek quality partner channels as a means of streamlining their operating costs.
If there’s a theme for the last group — Scout Analytics, Full Circle CRM, Lattice-Engines, HubSpot — I’d say it’s analytics. You might not think of HubSpot as an analytics company, and I don’t think they are one. But analytics is a part off what they do when they provide inbound marketing solutions. Inbound, done right, can be a big boon to business.
The other three offer mainstream analysis, if not analytics. Full Circle focuses on marketing management which I have written about many times because I think the idea of understanding the data and the metadata of marketing programs can do much to make you look smart if you’re a marketer. Lattice loves to crunch data about marketing and the sales process and they do it well. I don’t know any sales manager who doesn’t want better knowledge about all of the processes his or her team is involved in and Lattice is one way to get it.
Lastly, Scout has more mainstream analytics but for subscription companies and they make a good partner for Zuora. Subscriptions generate mountains of customer use data that can be used to predict everything dear to a subscription company’s balance sheet — I mean heart. With Scout’s analysis of use data, companies can spot revenue opportunities as well as danger signs like potential churn. Any way you slice it, this makes knowledge and that translates into market power.
So that’s some of what I am looking at as we start the year. I think it will be a year of base hits with an occasional sprinkling of home runs. Many, though not all, of the companies in this article have raised significant cash over the last year indicating both that the VC markets believe in their stories. But this also means clocks are ticking, investors want to see some returns and IPOs or private sales are on deck. Either way this makes for an entertaining start to the year.
(Cross-posted @ Beagle Research, LLC)