Posts from the ‘Social CRM’ Category

Dec 27

How Cloud Computing Is Accelerating Context-Aware Coupons, Offers and Promotions

Retailers and marketers often face the challenge of getting coupons, offers and promotions delivered at the perfect time and in the right context to their customers.

The rapid advances in cyber foraging, contextual computing and cloud computing platforms are succeeding at revolutionizing this aspect of the retail shopping experience. Context-aware advertising platforms and strategies can also provide precise audience and segment-based messaging directly to customers while they are in the store or retail outlet.

What makes context-aware advertising so unique and well adapted to the cloud is the real-time data integration and contextual intelligence they use for tailoring and transmitting offers to customers. When a customer opts in to retailer’s contextually-based advertising system, they are periodically sent alerts, coupons, and offers on products of interest once they are in or near the store. Real-time offer engines chose which alerts, coupons or offers to send, when, and in which context. Cloud-based analytics and predictive modeling applications will be used for further fine-tuning of alerts, coupons and offers as well. The ROI of each campaign, even to a very specific audience, will be measurable. Companies investing in cloud-based contextual advertising systems include Apple, Google, Greystripe, Jumptap, Microsoft, Millennial Media, Velti and Yahoo.

Exploring the Framework of Me Marketing and Context-Aware Offers

A few years ago, a student in one of my MBA courses in international marketing did their dissertation on cyber foraging and contextual mobile applications’ potential use for streamlining business travel throughout Europe. As a network engineer for Cisco at the time, he viewed the world very systemically; instead of getting frustrated with long waits he would dissect the problem and look at the challenges from a system-centric view. The result was a great dissertation on cyber foraging and the potential use of Near Field Communications (NFC) and Radio Frequency Identification (RFID) as sensors to define contextual location and make business travel easier. One of the greatest benefits of teaching, even part-time, is the opportunity to learn so much from students.

I’ve been following this area since, and when Gartner published Me Marketing: Get Ready for the Promise of Real-Time, Context-Aware Offers in Consumer Goods this month I immediately read it. Gartner is defining Me Marketing as real-time, context-aware offers in grocery stores. Given the abundance of data on transactions that occur in grocery stores, Gartner is predicting this will be the most popular and fastest-growing area of context-aware offers. The formula for Me Marketing is shown below:

The four steps of the Me Marketing formula are briefly described as follows:

Consumer Insight and Permission – The first step of the framework and the most difficult from a change management standpoint, this requires customers to opt in to receiving alerts, coupons, offers and promotions. The best retailers also have invested heavily in security and authentication technologies here too.

Delivery Mechanism and In-the-Moment Context – The real-time offer engine is used to determining which coupons, offers and promotions are best suited for a specific customer based on their shopping patterns, preferences and locations.

Select Best Offer – Next, the real-time offer engine next defines a very specific product or service offer based on location, previous purchase history, social media analysis, predictive and behavioral analysis, and previous learned patterns of purchasing.

Redemption – The purchase of the item offered. Initial pilots have shown that less frequent yet highly relevant, targeted offers have a higher redemption rate. It is encouraging to see that early tests of these systems show that spamming customers leads to immediate opt-outs and in some cases shopping competitors.

A Short Overview of Contextual Advertising and the Cloud

Cloud-based systems and applications are necessary for retailers to gain the full value that contextual advertising can provide. This includes the social context, with specific focus on aggregation and analysis of Social CRM, CRM, and social media content, in addition to behavioral analytics and sentiment analysis. It also includes the previous browsing, purchasing, returns and prices paid by product for each customer. Cloud-based integration architectures are necessary for making contextual advertising a reality in several hundred or even thousands of retail stores at the same time.

Geographical data and analysis is also essential. RFID has often been included in cyber foraging and contextual advertising pilots, in addition to NFC. As Global Positioning System (GPS) chip sets have dropped in price and become more accurate, companies including Google, Microsoft and Yahoo are basing their contextual advertising platforms on them. Finally the activity or task also needs to have a contextual definition.

Combining all three of these elements gives the context of the customer in the retail store. The figure below is from Three-Dimensional Context-Aware Tailoring of Information. This study also took into account how personas are used by companies building cloud-based contextual advertising systems. The taxonomies shown in the figure are used for building personas of customers.

There are many pilot projects and enterprise-wide system tests going on right now in the area of cloud-based contextual advertising. One of the more interesting is an application suite created entirely on Google App Engine, Android, and Cloud Services. The pilot is explained in the study Exploring Solutions for Mobile Companionship: A Design Research Approach to Context-Aware Management. The following figure shows a diagram of the suite. This pilot uses Cloud to Device Messaging (C2DM) which is part of the Android API to link the Google App Engine server and Android client. Google will most likely add more depth of support for C2DM as it plays a critical role in contextual system development.

Benefits of a Cloud-based Contextual Advertising Platform

For the customer, cloud-based advertising systems over time will learn their preferences and eventually impact the demand planning and forecasting systems of retailers. This translates into the customer-centric benefits of products being out of stock less. In addition, customers will receive more relevant offers. The entire shopping experience will be more pleasant with expectations being met more often.

For the retailer, better management of product categories and more effective gross margin growth will be possible. Having real-time analytics of each coupon, offer and promotion will also give them immediate insights into which of their selling strategies are working or not.

For the manufacturer, the opportunity to finally understand how customers respond at the store level to promotions, programs including the results of co-op funds investment and pricing strategies will be known. The manufacturers who partner with retailers using these systems will also have the chance at attaining greater product differentiation as their coupons, offers and promotions will only go to the most relevant customers.

References:

Me Marketing: Get Ready for the Promise of Real-Time, Context-Aware Offers in Consumer Goods Published: 24 December 2012 Analyst(s): Don Scheibenreif, Dale Hagemeyer

Tor-Morten Grønli, Ghinea, G., & Bygstad, B. (2013). Exploring Solutions for Mobile Companionship: A Design Research Approach to Context-Aware Management. International Journal of Information Management, 33(1), 227. http://www.sciencedirect.com/science/article/pii/S0268401212001259

Tor-Morten Grønli, & Ghinea, G. (2010). Three-Dimensional Context-Aware Tailoring of Information. Online Information Review, 34(6), 892-906. http://www.emeraldinsight.com/journals.htm?articleid=1896452

Dec 4

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Roundup of CRM Forecasts and Market Estimates, 2012

Showing signs of growth through 2013 and beyond, the latest round of CRM forecasts illustrate how quickly behavioral and predictive analytics, greater usability, integration with social media and mobility are transforming this market.

Even with the most usable, easily learned CRM systems, enterprises at times struggle with adoption rates however. That problem has venture capitalists very interested in finding the next Salesforce.com, which a few have told me will look more like Facebook than a traditional CRM application.

Facebook’s future is going to be defined by how well they manage their migration to mobility, and the same holds true for CRM. Today there are 110 CRM applications in the Apple App Store and 47 in the Android App Store. Gartner predicts an exceptional growth rate of 500% by 2014 for mobile CRM. For CRM vendors to get there from here, they need to make usability and streamlined user experience a high priority.

Key take-aways from the latest CRM forecasts and market estimates are provided below:

According to Gartner, Salesforce.com’s worldwide CRM market share was 16.7% in 2011, second only to SAP. Gartner is predicting Salesforce.com will be the leading CRM vendor worldwide by 2013.

SAP continues to be the worldwide leader in CRM software sales, with Salesforce.com ascending to second place according to the latest available data. Oracle was displaced by Salesforce.com in 2011, a trend Gartner and independent analysts have predicted will accelerate through 2013. The latest market share analysis of the CRM worldwide market is shown below from the latest available report on market share. Source: Predicts 2013: CRM Goes More Cloud, Becomes an App, Has a New Leader and Changes Name. The following table provides the most recent CRM worldwide market share analysis from Gartner.

The role of CMOs relative to CIOs are changing with respect to who is responsible for defining the needs of an enterprise in the areas of CRM, pricing and channel management strategies. Gartner did a survey on this earlier in the year and found that 72% of the companies have a Chief Marketing Technologist, growing to 87% by 2014. A slide showing how the differences in marketing-led versus IT-led is shown below. You can download the entire slide deck from this location for no charge: High-Tech Tuesday Webinar: Profile of Marketing as a Technology Buyer.

The much-hyped area of social CRM will attain $1B in worldwide sales by the end of 2012, achieving 8% of all CRM spending this year, as Gartner has predicted often this year. Gartner sees the revenue breakout of this market as follows: Bazaarvoice generating $130M; Salesforce (BuddyMedia, Radian6, Chatter, Jigsaw), $120M; Oracle (Vitrue, Collective Intellect, RightNow and Involver), approximately $45M; Lithium, $45M; Jive, $40M and the revenues of approximately 250 smaller vendors with revenues of less than $2M in 2012 comprising the remainder of the market size. Predicts 2013: CRM Goes More Cloud, Becomes an App, Has a New Leader and Changes Name.

Gartner, Forrester and IDC have predicted that cloud adoption rates by CRM subcategory will vary through 2016. All agree Sales applications will see the majority of net new sales on the SaaS platform. Of these research firms, Gartner has the most aggressive forecast of CRM SaaS adoption, projecting 50% of all CRM applications will be Web-based by 2016. Gartner is also predicting 95% of Web analytics applications will be delivered via the Web by 2016, an uplift from the 40% of sales applications delivered via the cloud today. Source: Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications

30% of sales organizations will issue iPads and tablets as the primary device standard issue for salespeople by 2014. From a personal computing device standpoint, tablets will be the fastest-growing segment, with average annual spending growth of 25% through 2016. Despite this rapid growth, Gartner predicts that by 2015, only 20% of organizations will have launched dedicated mobile applications for customer service use however. Source: Gartner CRM Vendor Guide, 2013.

Gartner predicts that by 2014, public social media networks will be in use by 80% of sales professionals with only 2% adoption rate of social CRM applications in the same time period. Source: Predicts 2013: CRM Sales.

Marketing automation will lead CRM application segment growth with a 10.7% compound annual growth (CAGR) through 2016, reaching a total market value of $4.6B. Sales will continue to be the majority of CRM software revenue reaching $7.9B in 2016. The following table provides an overview of the CRM Worldwide Software Revenue Forecast from 2009 to 2016. Source: Gartner CRM Vendor Guide, 2013.

Throughout 2013, Microsoft will quickly integrate Yammer throughout the entire Office Suite and demonstrate the value of using social graph databases to increase collaboration. Many have questioned the decision by Microsoft to spend $1.2B for Yammer. To see the full value of the acquisition, it’s necessary to get beyond SharePoint and look at the architectural elements of Office itself. Like Facebook, Yammer relies on a social graph database. For Microsoft, this architectural approach means they will move very quickly to the cloud in 2013, and also be forced to modify the Office architecture as well. You can find a presentation from 2011 Yammer produced on their integration strategies at this link: System of Engagement: Yammer Announces Activity Stream API, Open Graph for Enterprise and Yammer Embed

Source: Microsoft’s Changing Social Software Strategy: Yammer, SharePoint and the Role of Cloud Services Within Office

CRM projects lead by consultants and system integrators (SIs) were completed the majority of time for Oracle installations (26%) down from 35% in 2009. 11% of CRM projects completed by consultants and SIs were based on the SAP CRM application suite with 9% based on Microsoft Dynamics CRM. Salesforce.com has continued to rise in this area, with 16% of all projects completed in 2012, up from 10% during 2009. The most common projects were customer service and support at 82%; sales, 74%; customer data, 73%; and marketing, 44%. Projects ranged in size from $500K to over $10M. The following graphic shows the percentage of projects by large external service providers by year.

Source: CRM Applications Deployed by Consultancies in 2012 Show Which Skills Are Prevalent

Oct 31

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SaaS Adoption Accelerates, Goes Global in the Enterprise

In working with manufacturers and financial services firms over the last year, one point is becoming very clear: SaaS is gaining trust as a solid alternative for global deployments across the enterprise. And this trend has been accelerating in the last six months. One case in point is a 4,000 seat SaaS CRM deployment going live in Australia, Europe, and the U.S. by December of this year.

What’s noteworthy about this shift is that just eighteen months ago an Australian-based manufacturer was only considering SaaS for on-premises enhancement of their CRM system. What changed? The European and U.S. distribution and sales offices were on nearly 40 different CRM, quoting, proposal and pricing systems. It was nearly impossible to track global opportunities.

Meanwhile business was booming in Australia and there were up-sell and cross-sell opportunities being missed in the U.S. and European-based headquarters of their prospects. The manufacturer chose to move to a global SaaS CRM solution quickly. Uniting all three divisions with a global sales strategy forced the consolidation of 40 different quoting, pricing and CRM systems in the U.S. alone. What they lost in complexity they are looking to pick up in global customer sales.

Measuring Where SaaS Is Cannibalizing On-Premise Enterprise Applications

Gartner’s Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications published: 29 October 2012 breaks out the percent of SaaS revenue for ten different enterprise application categories. The greener the color the greater the adoption. As was seen with the Australian manufacturer, CRM continues dominate this trend of SaaS cannibalizing on-premise enterprise applications.

Additional take-aways from this report include the following:

Perceived lower Total Cost of Ownership (TCO) continues to be the dominant reason enterprises are considering SaaS adoption, with 50% of respondents in 2012 mentioning this as the primary factor in their decision.

CRM is leading all other enterprise application areas in net new deployments according to the Gartner study, with the majority of on-premise replacements being in North America and Europe.

Gartner projects that by 2016 more than 50% of CRM software revenue will be delivered by SaaS. As of 2011, 35% of CRM software was delivered on the SaaS platform. Gartner expects to see SaaS-based CRM grow at three time the rate of on-premise applications.

95% of Web analytics functions are delivered via the SaaS model whereas only 40% of sales use cloud today according to the findings of this study.

The highest adoption rates of SaaS-based applications include sales, customer service, social CRM and marketing automation.

SaaS-based ERP will continued to be a small percentage of the total market, attaining 10% cannibalization by 2012. Forrester has consistently said this is 13%, growing to 16% by 2015.

Office suites and digital content creation (DCC) will attain compound annual growth rates (CAGR) of 40.7% and a 32.2% respectively from 2011 through 2016. Gartner is making the assumption consumers and small businesses will continue be the major forces for Web-based office suites through 2013.

The four reasons why companies don’t choose SaaS include uncertainty if it is the right deployment option (36%), satisfaction with existing on-premise applications (30%), no further requirements (33%) and locked into their current solution with expensive contractual requirements (14%).

Bottom Line: Enterprises and their need to compete with greater accuracy and speed are driving the cannibalization of on-premise applications faster than many anticipated; enterprise software vendors need to step up and get in front of this if they are going to retain their greatest sources of revenue.

Source: Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications Published: 29 October 2012 written by Chad Eschinger, Joanne M. Correia, Yanna Dharmasthira, Tom Eid, Chris Pang, Dan Sommer, Hai Hong Swinehart and Laurie F. Wurster

Jul 2

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Forecasting Public Cloud Adoption in the Enterprise

The economics of public cloud computing are accelerating the pace of change occurring in enterprise software today.

Many of the scenarios that Clayton Christensen insightfully describes in The Innovator’s Dilemma are playing out right now in many sectors of this industry, shifting the balance of purchasing power to line-of-business leaders away from IT. True to the cases shown in the book, new entrants are bringing disruptive innovations that are being successfully used to attack the most price-sensitive areas of the market. Winning customers at the low-end and making their way up-market, new entrants are changing the customer experience, economics and structure of the industry. Salesforce.com is a prime example of how the insights shared in The Innovator’s Dilemma are alive and well in the CRM market for example. This is an excellent book to add to your summer reading list.

Defining The Public Cloud

The National Institute of Standards and Technology (NIST) have defined the public cloud in their latest definition of cloud computing in their September, 2011 brief you can download here (The NIST Definition of Cloud Computing). The NIST defines public cloud as “the cloud infrastructure is provisioned for open use by the general public. It may be owned, managed, and operated by a business, academic, or government organization, or some combination of them. It exists on the premises of the cloud provider.” In addition the NIST defines three models including Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). Gartner’s definition of public cloud computing is comparable yet includes Business Process as a Service (BPaaS) and Cloud Management and Security.

A quick check of the term public cloud on Google Insights shows the rapid ascent of interest in this area. A graphic from Google Insights is shown below:

Public Cloud Adoption in the Enterprise

In the many conversations I’ve had with CIOs and CEOs of manufacturing companies the role of cloud computing comes up often. There’s a very clear difference in the thinking of CIOs who see their jobs as selectively applying technologies to strategic needs versus those who are focused on compliance and risk aversion. The former see their enterprises moving to public and hybrid clouds quickly to better integrate with dealers, distributors and suppliers at a strategic level.

The public cloud’s pervasiveness in the enterprise is growing rapidly. This market dynamic is reflected in the report, Forecast: Public Cloud Services, Worldwide, 2010-2016, 2Q12 Update (ID:G00234814). Gartner breaks out forecasts into the areas of Cloud Business Process Services/Business Process as a Service (BPaaS), Application Services/Software as a Service (SaaS), Application Infrastructure Services/Platform as a Service (PaaS), System Infrastructure Services/Infrastructure as a Service (IaaS) and Cloud Management and Security Services. Highlights from the report are presented in the following five areas:

Cloud Business Process Services/Business Process as a Service (BPaaS)

Gartner is predicting that BPaaS will grow from $84.1B in 2012 to $144.7B in 2016, generating a global compound annual growth rate of 15%.

Of the eight subsegments Gartner is tracking in their BPaaS forecast, Cloud Payments (17.8%) Cloud Advertising (17.1%) and Industry Operations (15.1%) are expected to have the greatest compound annual growth rates (CAGR) in revenues generated by 2016.

In terms of revenue generated, Cloud Advertising is projected to grow from $43.1B in 2011 to $95B in 2016, generating 17.1% CAGR in revenue growth through 2016.

Cloud Payments are forecast to grow from $4.7B in 2011 to $10.6B in 2016, generating a CAGR of 17.8% worldwide.

E-Commerce Enablement using BPaaS-based platforms is expected to grow from $4.7B in 2011 to $9B in 2016, generating a 13.6% CAGR in revenue globally.

Application Services/Software as a Service (SaaS)

SaaS-based applications are expected to grow from $11.8B in 2012 to $26.5B in 2016, generating a CAGR of 17.4% globally. Gartner tracks ten different categories of SaaS applications in this latest forecast with CRM, ERP, and Web Conferencing, Teaming Platforms, and Social Software Suites being the three largest in terms of global revenue growth.

The three fastest-growing SaaS areas include Office Suites (40.7%), Digital Content Creation (32.2%) and Business Intelligence applications (27.1%) having the highest CAGRs from 2011 through 2016.

SaaS-based CRM will see the largest global revenue growth of all categories, increasing from $3.9B in 2011 to $7.9B in 2016, achieving a 15.1% CAGR worldwide.

Web Conferencing, Teaming Platforms, and Social Software Suites will grow from $2B in 2011 to $3.4B in 2016, generating an 11.2% CAGR. Gartner is including Enterprise 2.0 applications in this category.

SaaS-based ERP is forecasted to grow from $1.9B in 2011 to $4.3B in 2016, achieving a 17.3% CAGR.

Supply Chain Management (SCM) is an area that Forrester, Gartner, IDC and others have predicted significant growth in. Gartner’s latest forecast for SaaS-based SCM is $1.2B spent in 2011 growing to $3.3B in 2016, representing a 21.1% CAGR.

Application Infrastructure Services/Platform as a Service (PaaS)

Gartner forecasts the worldwide enterprise market for PaaS platforms will grow from $900M spent in 2011 to $2.9B in 2016, representing a 26.6% CAGR.

Growth rates by PaaS subsegment include the following: Application Development (22%), Database Management Systems (48.5%), Business Intelligence Platform (38.9%) and Application Infrastructure and Middleware (26.5%).

Application Infrastructure and Middleware is expected to be the largest revenue source in PaaS for the next four years. Gartner reports this subsegment generated $649M in 2011, projected to grow to $2.1B in 2016, generating $1.5B in revenue and a 26.5% CAGR.

System Infrastructure Services/Infrastructure as a Service (IaaS)

With a projected CAGR of 41.7%, this segment is the fastest growing of the five Gartner included in their public cloud forecast. From $4.2B in revenue generated in 2011 to $24.4B in 2016, IaaS is expected to grow by just over $20B in the forecast period globally.

CAGR by IaaS segment from 2001 to 2016 include Compute (43.2%), Storage (36.6%) and Print (16%).

The Compute subsegment is expected to see the greatest revenue growth globally, growing from $3.3B in 2011 to $20.2B in 2016, generating a 43.2% CAGR.

Cloud Management and Security Services

Comprised of Security, IT Operations Management and Storage Management, Cloud Management and Security Services generated $2.3B in 2011 with a forecast of $7.9B in 2016, generating a 27.2% CAGR.

IT Operations Management (38.2%), Storage Management (30.6%) and Security (23.7%) each have relatively high CAGRs through 2016.

Bottom line: Of the five areas Gartner includes in their forecast, BPaaS and its subsegments show trending towards greater support for enterprise-wide transaction and e-commerce management. With 76% of the entire 2012 public cloud forecast being in the BPaaS segment, it is clear Gartner is seeing strong interest on the part of enterprise clients to spend in this area.

Apr 21

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What’s Hot in CRM Applications, 2012

Serving the sales force is a mantra and mindset that resonates through the best companies I’ve ever worked with and for.

That priority alone can help galvanize companies who are adrift in multiple, conflicting agendas, strategies and projects. Uniting around that goal – serving sales and getting them what they need to excel – can turn around even the most downtrodden companies. And size doesn’t matter, the intensity of focus and commitment to excel do.

That’s why the latest report from Gartner’s Ed Thompson, What’s “Hot” in CRM Application 2012, published last Thursday resonates with me. He’s talking about how sales strategies need to be propelled by rapid advances in mobile technology, social CRM, sales content and collaboration, and clienteling to serve the sales force more thoroughly than ever before. His assessment of what’s hot in CRM is a great foundation for getting behind the mantra of serving the sales force and engraining it into a corporate culture while getting full value from the latest technologies.

Here are the key take-aways from the report:

Software-as-a-Service (SaaS) delivery of CRM applications represented 34% of worldwide CRM application spending in 2011. More than 50% of all Sales Force Automation (SFA) spending is on the SaaS platform. Gartner clients who are successfully running SaaS are now looking at how to get value from Platform-as-a-Service (PaaS) in the context of selling strategies.

CRM spending grew 13% in 2011, fueled analytical, operational and social CRM growth. Operational CRM represents 80% of all CRM spending and grew 10% in 2011.

Analytical CRM, in which Gartner includes predictive analytics and market segmentation analysis, grew a solid 10% in 2011 and is having a very strong year with inquiry traffic.

Social CRM grew 30% in 2011 in revenue terms and is 7% of total CRM spending globally as of 2011. 90% of Social CRM spending is originating in Business-to-Consumer (B2C) organizations with the remaining occurring in B2B.

Gartner is projecting that CRM will be one of the top three search terms on Gartner.com throughout calendar 2012 based on the trends and volume of calls they are seeing today.

CEOs see CRM as their #1 technology-enabled investment in 2012 according the query calls through April, 2012.

CRM is ascending rapidly in the priorities of CIOs in 2012, moving from 18^th place to eight place in the latest Gartner analysis.

The following table of Highest CRM Application Priorities, 2012 show what’s trending within Sales, Customer Service, E-Commerce and Marketing inquiries Gartner is receiving from its clients. Consider these as leading indicators of interest. Over time these areas will need to solidify for forecasts to be completed.

Apple iPads are the great maverick buy of 2012 with thousands being purchased by Sales and Marketing management with the immediate requirement of IT integration to these devices. IT departments are scrambling on the security issues and lack of polices on BYOD. In enterprise software, iPads are proving to be highly effective as demo platforms for new SaaS-based applications. They have become the new sales bag of the 21rst century.

High Tech, Life Sciences and Insurance are the three industries with the greatest levels of iPad adoption as of April 2012. Gartner is predicting that by the end of 2012, 80% of all sales representatives in the pharmaceutical industry will be using iPads for their daily sales tasks.

Social or community customer service is the hottest area of growth for post-sales service with high-tech, media, travel, telecommunications, retail and education-based clients dominating client inquiries.

Mar 20

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Gartner Search Analytics Shows Spike in Hadoop Inquiries in 2012 – Good News For CRM

Hadoop was one of the most-searched terms on Gartner’s website in 2011 through 2012, spiking to 601.8% over the last twelve months alone. Additional insights from the Search Analytics on Hadoop include the following:

27% of all inquiries are from banking, finance and insurance industries, followed by manufacturing (14%), government (13%), services (10%) and healthcare (8%).

North America (75.9%) and EMEA (13.5%) are the two most dominant geographies in terms of query volume.

Here is the trend line from Gartner Search Analytics:

What’s driving Hadoop’s meteoric rise in searches is a combination of industry hype about big data, CIOs getting serious about using Hadoop distributions that minimize time and risk yet deliver value, and the dominant role Amazon is playing in bringing Hadoop into the cloud. Today Amazon offers Elastic MapReduce as a Web Service that relies on a hosted Hadoop framework running the Elastic Compute Cloud (EC2) in conjunction with Amazon Simple Storage Service (S2).

Microsoft also scored a major hiring win this week announcing that Raghu Ramakrishnan, former chief scientist for three divisions of Yahoo is now with Microsoft. Raghu is now a technical fellow working in the Server and Tools Business (STB). He’ll focus on big data and integration to STB platforms. Big Data on Azure will accelerate now with him on-board.

Hadoop’s Potentially Galvanizing Effect on CRM and Social CRM Analytics

The quickening pace of Hadoop adoption in the enterprise is good news for CRM and especially social CRM. Analytics and Business Intelligence (BI) are the “glue” that unify CRM and keep it in context. One of Hadoop’s greatest potential contributions is the analysis, categorization and use of unstructured content. Marketing and sales won’t have to run three or four systems to gain insights into customer data, they can run a single analytics platform that fuels the entire selling cycle and lifetime customer value chain of their businesses. Hadoop has the potential to make unstructured content more meaningful while also reporting the impact of customer insights on financial performance, profitability and lifetime customer value.

Translating terabytes of customer, sales, services and partner data into meaningful analytics and business intelligence (BI) is emerging as a priority for CIOs, who are sharing responsibility for driving top-line revenue growth. Hadoop shows potential to be the “glue” or galvanizing technology base that unifies all CRM and Social CRM strategies.

To get a perspective on how fast Hadoop is being evaluated and adopted it’s useful to look at the Hype Cycle for Data Management, the latest edition published July, 2011. This is another indicator of how quickly Hadoop and big data are gaining in terms of CIO mindshare. Big Data and extreme information management are on the technology Trigger area of the hype cycle. The Hype Cycle for Data Management is shown below:

Bottom line: CRM and Social CRM will benefit more than any other area of an enterprise as Hadoop’s adoption continues to accelerate. CIOs are increasingly called upon to be strategists, and with the ability to translate terabytes of data into strategies that deliver dollars, look for Hadoop’s contributions to drive top-line revenue growth.

Oct 7

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Transactions and Complex Selling: Strong Catalysts of Cloud Computing Growth

Enterprise software vendors need to challenge themselves to deliver significantly more value if the potential for cloud computing is going to be achieved .

Instead of just going for the low-end, easily customized processes within analytics, CRM, supply chain management, ERP, pricing or service, vendors need to take on the more challenging, complex hard-to-solve problems enterprises have.

As I am completing more research on personas, I’m finding what CIOs really look for in SaaS apps. Flexibility and ease of workflow support, intuitive user interface design without sacrificing functionality, and support for analytics, business intelligence and knowledge management systems integration are all mentioned often.

Nearly all of them also mention that the existing generation SaaS applications on the sell-side, from CRM to order capture and order management aren’t taking on the more challenging areas of their strategies. The result is the CIOs are still relying on legacy, on-premise apps in areas of their companies that are ready for change to SaaS-based applications. Cloud platforms are taking on these more complex, challenging problem areas, yet innovation still lags the needs in the market.

Transactions Are The Fuel of Cloud Infrastructure Growth

CIOs are focusing on how to exceed the expectations of their internal customers at the workflow and interface level while infusing SaaS apps with analytics, business intelligence and knowledge management support. What’s missing is the killer transaction platform layer and transaction-based applications. Gartner’s report, A Workforce Without Humans: Three Ways Technology Will Eliminate Skilled Jobs in the U.S. Through 2020 by Kenneth F. Brant by Johan Jacobs has the following graphic which shows CIO’s estimates of migration to cloud-based IT infrastructure and applications which supports this point.

Source: Maverick Research: A Workforce Without Humans: Three Ways Technology Will Eliminate Skilled Jobs in the U.S. Through 2020 by Kenneth F. Brant by Johan Jacobs

Much of the report is based on the results of Gartner’s 2011 survey of U.S. CIOs. Additional insights from the survey include the following:

Virtualization and cloud computing are the two top-ranked U.S. CIO technology priorities for 2011.
83% of U.S. CIOs estimated that more than half of their transactions would be conducted on a cloud infrastructure by 2020.
79% of the respondents predicted that more than half of their transactions would be completed on applications leased using the SaaS platform by 2020.

For cloud infrastructure platforms and SaaS applications to deliver that level of transaction volume and support, there needs to be a major shift in how enterprise vendors develop software. Making better use of analytics, business intelligence and knowledge in the enterprise is key. Designing applications that make information and knowledge sharing intuitive is critical.

The following figure from the same report cited earlier shows the relationship of technologies to potential business value. Many CRM and sell-side vendors tend to focus on being a substitute or just barely delivering increases in human productivity.

Going after the hard work of optimizing pricing strategies, call centers, making multichannel selling strategies profitable and getting the most out of social networks to make the customer experience exceptional will deliver major gains in productivity. It’s been my experience during the persona interviews that for any SaaS vendor to really excel here they need to get beyond human productivity and make it possible for enterprises to deliver exceptional customer experiences daily.

Creating SaaS applications that take on real complexity earns trust too, which no amount of pure efficiency can compete with.

Source: Maverick Research: A Workforce Without Humans: Three Ways Technology Will Eliminate Skilled Jobs in the U.S. Through 2020 by Kenneth F. Brant by Johan Jacobs

An Example: SaaS in Manufacturing

The following table compares the strategies and systems used in a typical manufacturing company. Enterprise apps vendors for the most part are focused on make-to-stock and assemble-to-order automation and efficiency (SAP ByDesign for example).

As the continuums move from left to right, the process, systems and strategy challenges exponentially increase. As a result there are only a few vendors who can manage the more complex engineer-to-order requirements in manufacturing for example. Transactions there are very small in number, yet orders of magnitude more profitable. This is just an example of many areas in enterprises that need major improvement.

Instead of just focusing on the easy processes and strategies on the left, vendors need to go after the more difficult, complex selling and transaction challenges on the right. This is why CIOs want SaaS applications that are easy to customize from a user interface and workflow standpoint, while at the same time supporting analytics, BI and knowledge management. The goal is to slot them into these more challenging areas of their business and transform their company’s intelligence and expertise into profitable growth.

Bottom line: The true catalyst of cloud computing growth isn’t just SaaS economics; it’s how effectively enterprise software vendors address the very difficult transaction, order management and selling challenges their potential customers face all the time. When that happens, the many optimistic forecasts of cloud adoption in the enterprise will take a step closer to being fulfilled.

Aug 13

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SaaS-based Analytics and Business Intelligence Market Update, August 2011

Challenging, uncertain economic times accelerate sales cycles and lead to more closed deals for business intelligence software providers. Companies get an urgency to reduce costs and risks, relying on the insights gained from these applications.

There’s an interesting dichotomy starting to emerge in how experts and analysts define just how these markets will mature however. Both agree that economic uncertainty are growth catalysts yet they diverge on adoption rates, roadblocks, and which analytics and BI technology will dominate in the years ahead.

This week I read Balancing Custom And Packaged Apps In Your Application Portfolio Strategy by George Lawrie, Mike Gilpin and Adam Knoll from Forrester and the latest Hype Cycle of Business Intelligence, 2011 by a collection of Gartner authors led by Andreas Bitterer. I’ve summarized the key points of each below.

Forrester Sees SaaS Applications Overtaking Custom Application Development

Forrester sees SaaS-based applications starting to replace in-house custom application development, gathering momentum through 2013. Gartner, with their Hype Cycle for Business Intelligence, 2011 just released this week, shows BI platforms having greater near-term benefit than SaaS-based analytics and BI. Custom application development projects are going to face continued pressure to keep up with business requirements that SaaS applications are proving able to handle more effectively and economically than ever before.

In-house development makes more sense for specific analytics and reporting requirements, yet will continually be eroded by SaaS-based applications that can meet most requirements at a lower cost. Forrester has in the past said SaaS-based adoption of analytics applications in general and predictive applications specifically would be very slow due to data integration challenges. This study points to a potential shift in their mindset, as the data shows SaaS-based analytics beginning to replace custom in-house developed applications.

Here are the key take-aways from the report:

Analytics processes are supported 79% of the time with custom application development. Procure-to-pay (33%) and record-to-report (33%) are the second-most supported. Multiple responses were allowed in the survey.

When asked which process areas they are automating with SaaS, analytics (33%), record-to-report (18%), order-to-cash (15%), and purchase-to-pay (12%) were the most common responses. There was a small sample size on the Forrester report and the most startling insight was how quickly respondent companies plan to migrate from custom application development to SaaS-based analytics and BI.

Nearly 50% of the respondents to the Forrester survey have between five and 19 SaaS-based applications today with 18% expecting to have 35 or more by 2013. In addition 63% of respondents expect to deploy between five and 34 SaaS-based applications by 2013, a significant shift in just two years.

36% of survey respondents say their SaaS applications run completely standalone. Another 36% mention they use a combination of on-premises Master Data Management (MDM) and process integration tools. Ironically only 3% are deploying their applications on cloud-based MDM or process integration-based platforms.

Gartner’s Hype Cycle for Business Intelligence, 2011

Unlike the hype cycle for cloud computing, this hype cycle has fewer technology categories (25), a narrative firmly grounded in business process and strategy, and more practical and pragmatic insights versus just theoretical. At 50 pages it’s quick read and while there are many excellent points made, I have summarized the key take-aways pertaining to the highest hype points and SaaS adoption below:

Mobile Business Intelligence (BI) is the latest entry to the Hype Cycle for Business Intelligence based on the massive hype around analyzing locational and application data. The hype surrounding the Apple iPad Series, Google Android and other tablet and smartphone platforms has made this one of the most hyped areas of the last year according to the analysis.

Consumerization, Decision Support, analysis of non-traditional data and “Big Data” are the areas of the greatest innovation today. The hype cycle points to search, mobile, visualization and data discovery being the catalyst of Consumerization. Predictive analytics, which is on the Slope of Enlightenment on this latest hype cycle, is critical to decision support. The non-traditional and “Big Data” area of innovation is further supported by content, text analytics, in-memory DBMSs and columnar DBMSs.

SaaS-based Business Intelligence is at the apex of the Peak of Inflated Expectations yet will continue to have low adoption rates. Gartner believes that the lack of trust in third parties managing confidential data, and the inertia and fear many companies have in moving to a new architecture are slowing adoption. This is in contrast to the survey Forrester released this week showing analytics being one of the most popular SaaS-based applications planned by 2013 in their base of respondents.

Gartner sees SaaS-based Business Intelligence of the most value to midsize and smaller organizations who lack IT staff yet have very specific, targeted information needs. Website analytics, social media monitoring, dashboards, predictive analytics and Excel as a BI front-end all apply. Both Forrester and Gartner agree on this point and see this type of custom development going away quickly internally.

There is a massive amount of hype surrounding in-memory computing, particularly from SAP at its Sapphire conferences . Gartner believes that SAP’s vision of in-memory computing exceeds in-memory analytics to include analytical and transactional processing. As a result, In-Memory Database Management Systems are at the Peak of Inflated Expectations.

Source: Hype Cycle for Business Intelligence, 2011, Published 12 August 2011 | ID:G00216086 By Andreas Bitterer. Gartner, Inc.

What Both Agree On

Forrester’s survey shows SaaS eventually replacing custom application development while Gartner’s Hype Cycle for Business Intelligence shows the practical, pragmatic technologies including dashboards, predictive analytics combined with the more complex Business Activity Monitoring (BAM), Business Intelligence Platforms, and Data-Mining Workbenches delivering the most value. Despite these differences, both agree on the following:

The overall market for BI, Analytics and Performance Management continues to grow at between 8 to 12% per year depending on the forecast used. The following forecast is from the report Market Trends: Business Intelligence, Worldwide, 2011-2014, 7 June 2011 | ID:G00213483 by Dan Sommer and James Richardson.

Source: Market Trends: Business Intelligence, Worldwide, 2011-2014, 7 June 2011 | ID:G00213483 by Dan Sommer and James Richardson

2011 continues to see large, strategic deals for analytics and BI closing more rapidly than they have in the past.

SaaS-based analytics and BI continues to gain a greater share of spending in midsize and smaller companies. Both also agree that the proliferation of smaller SaaS-based analytics and Bi vendors concentrating on a specific niche have successfully displaced in-house custom development of competitive applications. Trust in the smaller vendor, their track record, customer references and financial viability are what are winning deals for SaaS-based analytics and BI software providers today.

The market transition from build to buy is now in full force as budgets become available again. This is key assumption of both analyses and means that smaller, more niche-oriented SaaS-based analytics and BI vendors stand a chance to get new reference accounts and grow, despite a challenging economy.

Apr 2

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Gartner’s Hot CRM Applications for 2011 Show SaaS is Accelerating in the Enterprise

Gartner’s report, What’s ‘Hot’ in CRM Applications in 2011 shows clients are moving to the next stage of their strategies for using SaaS in the areas of customer service, marketing and sales. They’re asking for more analyst time, discussing how to quickly deploy applications company-wide versus just in departments, and most important, how to measure the results. Cross-CRM applications including Business Process Management Systems (BPMS) and Master Data Management (MDM) are two of the more popular areas of inquiry Gartner is getting right now from infrastructure initiatives standpoint to unify CRM data and strategies as well.

Factors Driving Faster Adoption

Escaping high maintenance fees on their legacy CRM applications, facing chronic time shortages that make the traditional lengthy application deployment cycles unaffordable and impractical, and a mindset of measuring results from software spending are fueling greater SaaS adoption.

A local financial services firm is migrating to SaaS-based feedback management and analytics to capture customer satisfaction more effectively than their legacy CRM application could. Chief Marketing Officers (CMOs) are also driving more technology adoption in the areas of social media for marketing, lead management, mobile marketing and Web analytics as they’re more accountable for delivering measurable results. The new mindset in many companies about measuring results and continually improving strategies is a powerful catalyst of SaaS application adoption. A summary table from the report is provided below (please click on it to expand for easier reading) along with key take-aways.

Key Take-Aways from the Report:

Software-as-a-service (SaaS) delivery represented approximately 26% of all CRM application spending in 2010. Spending on CRM applications grew by more than 8% in 2010.

In sales applications, almost 50% was delivered via SaaS, where it is now widely viewed as a mainstream model.

Operational CRM is the automation of processes such as campaign management or case management. It represents more than 70% of all CRM spending and grew at around 4% in 2010.

Analytical CRM, which includes predictive analytics and segmentation applications, grew 9% and according to Gartner represents nearly 25% of CRM spending.

Social CRM grew at over 50%, but still represents less than 5% of all CRM spending. According to the report, 90% of social CRM spending is by business-to-consumer (B2C) companies and approximately 85% of spending is initiated by companies based in North America. Gartner expects the social CRM market to reach $1B in revenue by year-end 2012, up from $600M in 2010.

In terms of inquiry traffic, Social CRM is the hottest area of interest in customer service and marketing departments, followed by related areas like digital marketing and e-commerce. Gartner points out that Social CRM is used both within and outside an organization and is of equal importance to its clients today based on their inquiries.

Bottom line: This report shows more companies are confronting the need to change their customer service, marketing and selling strategies to be customer driven on an enterprise, not just department basis. They are relying on SaaS based applications as the catalyst of changing customer-driven strategies in companies. CMOs and other senior managers are focused on measuring customer satisfaction, loyalty and profitability instead of just cost reductions as a result.

Source: What’s ‘Hot’ in CRM Applications in 2011 Ed Thompson, Michael Maoz, Kimberly Collins, Michael Dunne Publication Date: 17 March 2011 ID Number: G00211657