Beagle Research Group

Happy WizKids Day

Some time between Groundhog Day and March Madness each year we try to publish a short report that showcases some of the brightest emerging companies in front office computing.  We call it the WizKids Report and we present the companies in the report with a small award.  At times, companies who have felt they deserved the recognition of a WizKids award but who did not receive one, have referred to it as Passover. 

What can I say?  It’s that time of year again.

Throughout the year we take a lot of briefings from the newest and smallest companies to the very largest in our space and we make our decisions on which companies to profile in the report based on those briefings and later follow up.  We also speak with real customers to ensure that what we’re hearing in the briefings matches reality. 

There have been times when we have followed a company for two or three years before including them in a WizKids report simply because when we started coverage the company was truly embryonic and one of our requirements is to speak with customers who have used the product for a while.

This year’s group is really eclectic and reflects several trends in our market including the prevalence of the SaaS business and technology model and the general level of maturity in the market.  Interestingly, six out of the seven members of the Class of 2008 are involved in the salesforce.com partner program and their wares can be seen on the AppExchange (.860 in baseball terms, not bad really).  That could simply reflect my need to get out more but I think it’s also a sign of the times.

Another sign of the times is the emphasis more and more companies have on delivering solutions that make their clients easier to do business with.  I have been investigating this phenomenon for a while and believe it is very understandable. 

Fundamentally, we’re at a point in many markets where competing on features and functions is becoming less effective because so many competitors have acceptable functionality.  When that happens companies look for other ways to compete and one of the richest areas to explore is a company’s customer facing business processes.  With that comes a need for technologies that streamline and simplify making it easier for the customer.

Here’s a rundown of this year’s WizKids.

• Firepond helps vendors improve their sales processes with a configuration, price and quotation SaaS based solution which organizes proposal data and reduces error leading to better margins and improved customer experience.
• InsideView is a sales intelligence SaaS service that uses Web crawler technology to find and deliver useful information for sales professionals.
• Lithium Technologies helps companies deliver great service through customer communities. 
• LucidEra provides on-demand analytics to sales professionals and managers so that they can run their businesses more precisely and profitably. 
• Marketo delivers sophisticated on-demand marketing solutions to emerging and small companies in a format that is affordable and easily consumed. 
• TerrAlign brings sophisticated mapping and planning to territory planners for large sales teams such as pharmaceutical companies. 
• Verticals onDemand has made a business of providing vertical market versions of Salesforce applications, for example in pharmaceuticals and medical devices.

If you’d like more information about any of these companies check out their Web sites or download a copy of the WizKids 2008 report at www.BeagleResearch.com.

What’s interesting to me is that some of these companies look more like parts of a solution than the whole enchilada and no doubt some might get acquired but the current environment suggests that acquisition is not as certain as it once was.  The presence of rapidly improving platform technology makes it possible for all of these vendors to integrate with other applications and thus deliver end-to-end functionality out of the box — or off the cloud to be precise. 

Thus platform technology is reducing the need for some companies to buy others.  For example, there has been a great deal of consolidation in the analytics space in the last few years but that does not seem to faze LucidEra which offers a growing suite of on-demand analytics. 

There’s also an economic angle here.  The current financial situation is drying up credit and many IPOs have been delayed and there’s no telling how much M&A activity has been forestalled.  Having the ability to stand alone and play well by partnering with multiple other vendors is a good strategy for survival and something common to these companies.

A few years ago, I thought the market would play out like this and I wrote about it but I had no idea how many new and different applications would be developed as a result.  The WizKids program has identified some pretty cool solutions but even more interesting to me is the high degree of innovation that the SaaS model continues to inspire.  There are a lot of vendors offering the application delivery part of SaaS these days but still very few who are providing the ability to create and deploy solutions at a low price point.  The WizKids are a great example of why it is important to provide both.

Beagle Research Group, LLC Recognizes Software’s WizKids

Announces annual WizKids™ Award and report for advances in CRM

Stoughton, MA, March 26, 2008 — Beagle Research Group, today announced the winners of its annual CRM WizKids award for innovation in front office software.  The WizKids award is given to emerging software companies that demonstrate new and innovative solutions to business problems encountered in the rapidly changing front office.  Denis Pombriant, managing principal of the company and the report’s author said, “This year’s awards showcase a group unified by their abilities to deliver high performance applications to many specialized situations through on-demand computing.”

This year’s report includes companies with solutions that support specialized sales processes.  For example, Firepond provides a configuration, pricing and quotation solution and InsideView delivers market place intelligence to sales people and TerrAlign enables managers to configure sales territories and LucidEra which provides on-demand analytics for the sales process. 

The 2008 WizKids Award winners are: Firepond, Inc. Framingham, MA; InsideView, San Francisco, CA; Lithium Technologies, Emeryville, CA; Lucid Era, Inc., San Mateo, CA; Marketo, Inc., San Mateo, CA; The TerrAlign Group, Inc., Reston, VA; Verticals onDemand, Inc., Pleasanton, CA.

The full report is available at www.BeagleResearch.com.

About Beagle Research Group

Beagle Research Group, LLC is a consulting and market research organization focused on emerging companies and technologies that will have an important impact on the way business is conducted in the future.  WizKids is a trademark of Beagle Research Group, LLC.

Automating the suggestion box

Starbucks’ new customer-community-let-us-hear-from-you idea shows how hard it is to do the social marketing thing and it also shows how corporations sometimes take good ideas and drain the life out of them and then present the morphed idea as the real thing.

A short diversion is in order. Customer experience follows the same trajectory. Back in the late 1990’s Jim Gilmore and Joe Pine published a ground-breaking book called “The Experience Economy” in which they argued that the next big idea in improving marketing was in staging experiences for customers.  The idea sort of caught on at least to the point that their latest related book is titled, “Authenticity: What Customers Really Want”.

The pair argued persuasively for an evolutionary scale starting with commodities and ending with experiences in which the higher item on the scale was merely a customized version of the lower item. Thus a product was a commodity which had been customized. Following that line of reasoning a service is a customized product and an experience is a customized service.

So far so good, but when the corporate world got hold of the idea it became immediately apparent that customizing service was simply too expensive or too much bother or both. At that point a customer experience went from something that was actively staged by a company for a customer to a passive idea mediated by secondary metrics.

Everyone wanted to know if the customer experience was a good one, as defined by their metrics. As a result easy things got quantified and the hard stuff sometimes got ignored.  Was the call answered on the first ring?  Did you wait in queue for more than a minute?  Did the agent use your first name? Did the clerk smile? A lot of it was pretty useless and even silly.

I interviewed Pine recently and asked him about his reaction to the uptake of the customer experience in the market, here’s what he said:

“One thing is really bothersome, and that is that so many folks who claim to have read "The Experience Economy" missed -- or act and talk as if they missed -- the main thesis: that…experiences are a distinct economic offering, as distinct from services as services are from goods. So many glom onto the language of “customer experience” or “experiential marketing” rather than truly design and stage experience output.

Now we’re at it again and if you didn’t know better you might think that Starbucks was way out front on the leading edge of a new marketing idea but I have to say, whoa horsey, not so fast.

The idea of capturing customer input is a good, even noble, one but it needs to be done with some science or it won’t be much good. Out of the thousands of people who use your product what slice of them participates in your community? Is it the same cranky people all the time?  Your competitors?  Do you know?

Setting up what amounts to an automated suggestion box leaves all these variables wide open and gives your marketers the impossible task of deriving meaning from what, pardon me, Shakespeare called “a tale told by an idiot, full of sound and fury, signifying nothing.”

A few weeks back I wrote a piece about choosing a vendor who can help you set up a community.  Today I would like to suggest that the secret of community success is that it must be active and it must be actively managed. Gathering random comments from customers might be useful and I won’t dismiss it, but if you are planning to use the input from a community to make decisions about how you manage and grow your business, you need much more than the feedback from a random group.

That means you should pick your community members — I didn’t say you should stuff the ballot box but you need to pick the members — so that you have a representative cross section of your customers. The data that comes from a cross section of your customer population will be more accurate (not perfect) and enable you to make reasonable extrapolations.

If you pick your members you also need to specifically pick what you ask. Open ended questions that solicit rants might make it seem like the vendor is really interested in community input but, again, it simply leads to chaos. The best questions are derived from lots of listening.  When multiple customers express a similar thought you might be witnessing a pattern emerging but you need to test it further. Develop a question or two designed to get people to choose among a short list of possibilities, then find multiple ways to ask the same question.

In the end, the difference between a community that works and one that simply makes you look good is similar to staging experiences compared to worrying about the customer experience. The way that works requires active participation by the vendor while the cheap and easy route bastardizes the idea and only leads to confusion. 

If we follow the cheap and easy route, in the not too distant future it is conceivable that communities will get a bad name because “everybody knows they don’t work”.  Analysts will develop data that proves the fact and that will be that.  We’ll go back to not listening to the customer because some genius might have even proved that communities are no better than dartboards and dartboards are way less expensive.  I digress, but the thing that will be proven not to work will be the thing that couldn’t work.

So hats off to Starbucks for automating their suggestion box.  Now, your coffee break is over, get back to work and develop a real community.

Microsoft Convergence

Microsoft Convergence is a very large show. Last week in Orlando, there were in excess of 9,500 people most from outside of the United States and by that measure alone it was a successful event.  Convergence is one of Microsoft’s chances to meet face to face with its partners and customers for the usual mix of training, new product announcements and the like and I went hoping to learn more about the company’s continuing effort to field a relevant CRM solution.

What I found was a mixed bag.  First off, Convergence is an ERP show.  There’s nothing wrong with that but Microsoft has, I believe, four ERP systems and CRM is a latecomer to the mix.  Also, a show like this has equal parts devoted to the products, partners, customers, prospects and press and analysts and all of the parts are moving so it’s somewhat difficult to tease out the CRM part. 

What I got from the CRM part was this: Microsoft has a very serviceable CRM 1.0 product.  By that I mean all the parts for conventional CRM such as SFA, marketing, and service are there and the partners and end users are making use of them in creative ways to derive value.  However, in a world that is increasingly talking about CRM 2.0, social media, social networking and communities, Microsoft still has some distance to travel.  I did get to see some community applications and was told that version 5.0 would have more emphasis on CRM 2.0, but that’s still in the future.

Microsoft’s messaging was another matter.  I can’t quite describe it but seems like they are trying to sell CRM as if it is another part of ERP.  ERP is inherently inward looking and its purview is a limited set of well defined business processes.  On the other hand, CRM is inherently outward looking, its processes are mediated by the vendor and participated in by balky customers and that difference can be substantial.  At a time when most CRM vendors — Salesforce, SAP, Oracle Sage and others — are making visionary statements about engaging the customer in new and different ways, Microsoft’s CRM messaging was filtered through a green eyeshade.  For me it didn’t work.

While we’re on the subject of messaging, it was surprising to me that there was no third party speaker offering any visionary statements that backed up the company’s primary messages and speakers.  The only visionary speeches were the keynotes delivered by Microsoft executives, most notably Steve Balmer.  Microsoft is not the only vendor to avoid bringing in visionary speakers but I can tell you it makes a difference.  Sage, on the other hand, routinely brings in people like Martha Rogers and Joe Pine to talk about the future of business, not computing per se.  These speakers get partners thinking about how their businesses need to continue changing and in my opinion it’s worth the effort.

After a few years in which the company did not have a great deal to show for CRM, they have gone to the other end of the spectrum and can now inundate you with features and functions.  Sometimes that leaves an impression that Microsoft CRM is more of a tool kit than a set of solutions.  While I don’t think that’s quite accurate, lots of partners make a living customizing Microsoft solutions so the tool kit impression might have been good for partners but not so good for me.

The company also focused on a couple of things that I don’t think of as important — the centrality of Outlook and the ability of its CRM product to operate behind the firewall in conventional mode or across the Internet in an on-demand mode.

Outlook is wonderful and I use it, but I am not certain that it makes sense to build the CRM user interface around it.  After all this time, there should be other, better, metaphors to focus on, if not, the designers in Redmond ought to come up with something — customer microsites for example.  It makes no sense to me that the company that completely re-invents the PC operating system every four years can’t come up with a better metaphor for a CRM work environment than email.  (Then again there’s Vista.)

As for the on-demand/on-premises debate, I can understand the attractiveness — even seductiveness — of having both options and Microsoft has done a good job of building one code set that supports both modes.  I can also understand that there are still outposts of the computing world that are not ready to cut the tie with conventional and expensive on-premises computing and for them the Microsoft solution is brilliant.  Nonetheless, I don’t think messaging that positions the future of computing as a choice between two completely equal options is valid.  The options are not equal, on-demand is the emerging metaphor.

What I have more trouble understanding is the way Microsoft enables its partners to host on-demand CRM.  I was told that Microsoft has no hard rules in place that stipulate things like service levels that the partners must provide.  In effect, every partner gets to make its own service level plan and a Microsoft executive told me the company expects that simple competition will drive higher standards. 

As a practical matter, that means one vendor might offer a SaaS 70 Type II data center with mirroring, and another might not.  It seems like a big risk for the customer to first understand the differences and then to shop for the better alternative.  It is an even bigger risk for Microsoft to be making its software available in such an unstructured environment and to place its reputation in the hands of a Balkanized group of partners with differing SLA standards.

I have to say I just don’t get it.

Microsoft Convergence had a good deal going for it.  The show was well attended, the show floor was packed with partners and customers looking for solutions and there were many good sessions.  The show highlighted the company’s jewel in the crown which is its partner program.  If there’s one thing that Microsoft gets it is how to operate a partner program. 

There are numerous partner programs in the CRM space right now and, no surprise, some are better than others.  The biggest unanticipated consequence of Convergence might be the effect it will have on other partner programs.  With credible CRM to complement its multiple ERP solutions Microsoft may at last be in a position to compete more effectively with CRM vendors that do not offer as many amenities for their partners.  If that is true, look for other companies to beef up their partner programs in a hurry.

Little Deuce Coupe

You might be tooling down the information superhighway right now in your cool new hybrid SaaS-mobile wondering what that thing is in the rearview that’s beginning to gain on you.  It’s best to look twice and convince yourself that what you are seeing is no mirage.  It may look a lot like your father’s Oracle-mobile but it isn’t, not exactly at least.

At the wheel is one Anthony Lye senior vice president of Oracle’s CRM group and he’s driving something with an improved engine and a new chassis bought from a garage down the street — Siebel, Inc.  In fact, some of the parts even came from another racing team no longer in the biz — guys by the name of Upshot. 

Then again, you might still be driving that client-server clunker you bought just before the last MIPS crisis.  It still runs great but it’s hard to get enough fuel for it and your boss is complaining about the high costs. 

If any of this sounds familiar, keep reading.

Lye and his team spent the better part of the last two years and more than eighteen million bucks working on their ride.  It’s still a work in progress in some ways but when you drive it, to retread an old lyric, you “Get rubber in all five gears”.

Yesterday, you might have noticed, Oracle announced version 15 of Oracle-Siebel CRM OnDemand.  That makes it the 15^th release in its four and a half year life span and the fifth release since the Oracle acquisition of Siebel.  Fifteen releases going around the track four and a half times keeps pace with the lead car, if you’re keeping score.

What’s interesting about this release and the direction that Lye is heading is the CRM 2.0 orientation.  Speaking with Lye is like listening to any 2.0 gear-head in the CRM business.  He uses words like ‘consume’ to describe what users do with on demand applications and his vocabulary is peppered with other words like mash-up, Web services, and mobile.  All this is fine and far from unique, but coming from a honcho at Oracle you shake your head and wonder if all the planets are where they belong.

Maybe that’s over stating it a bit but the fact is that Oracle is resurgent in CRM and the company is doing some interesting stuff picking up on social networking among other things.  Lye is a big believer in the whole CRM 2.0 idea and he’s ready to compete anywhere you can find an Internet on ramp — browser, desktop, portal, PDA. 

The release announced yesterday aggressively goes after all the nooks where there may be things that CRM can take advantage of and Oracle makes a big deal about connecting them to CRM.  That includes RSS feeds, custom applets, and leveraging social networking sites like YouTube as well as news services all in an effort to give the CRM user relevant access to the larger world.

Lye’s shop is making its play in CRM right at a time when the primary competition is looking at building out other markets.  Salesforce.com is a formidable competitor and the car to beat on the CRM track though some wonder about the foray into application development.  I don’t.  Platform is a smart and very logical direction for the leader in on demand to be taking the industry. 

Still, a few people wonder if salesforce.com might be taking its eye off the ball and that may have been part of the reason that, a few weeks ago, some people gave credence to the rumor of a buyout of Salesforce by Oracle.  I am not one of those people for numerous reasons which can be briefly summarized as, the price was too low and Benioff is not foolish.

Meanwhile, Oracle continues its push with new functionality, focus on the social side of CRM and a novel approach to the multi-tenant/single tenant argument.  I am not sure I buy into the bit about the looming unimportance of multi-tenant architecture despite the fact that some vendors are starting to pick up on it.  Many people can be wrong all at once regardless of what they say about the wisdom of crowds.

If Lye continues to drive his race, he and Oracle have enough product at this point so the limiting factor will be more along the lines of whether Lye can teach an old database company to dance.  Companies in this state have crossed over into financial innovation and Lye is all about product innovation.  So far, Lye has made some important strides but the challenge for the foreseeable future will be to teach a few new tricks to a company that has been in the pole position so long that many in the organization believe it’s theirs.