A couple of weeks back I wrote about using CRM technology to support major account planning, and that while it wasn’t perhaps the most glamorous use of CRM technology, it was a very cost-effective means to increase revenues. Another one of these ‘dull but effective’ uses of CRM is in the area of margin protection. As background a lot of organisations experience two issues:

Firstly, the company has limited visibility of future sales opportunities. Quotes and proposals may be stuck on individual hard drives, or lost in an array of folders on a shared drive somewhere. There may be some visibility in a pipeline/forecast report in Excel or a CRM system, but often there’s relatively little detail as to exactly what is being sold and at what price. For many organisations the first real visibility is when the order is processed.

Secondly, and I know I’m heading into dangerous stereotype territory, salespeople tend to be driven by getting the deal done rather protecting revenue or maximising the value of the deal.

The combination of these two factors means that many companies unnecessarily surrender margin, which in turn can have a profound impact on the bottom line.

One way to address this is to increase the visibility of future sales opportunities, as well as develop a set of processes for the appropriate authorisation of discounts. This increased level of scrutiny tends to help businesses improve retained margin by helping ensure that discounts are only offered where they’re genuinely needed.

This management oversight can also potentially be used beneficially for other purposes:

• It can help ensure what’s being proposed to the customer is appropriate for their needs – for example, are we selling the professional edition, but, actually given their requirements, they need the enterprise version.

• It can help ensure that what’s being proposed will actually work. For many businesses the solutions they offer are increasingly complex, and there’s a growing risk of putting forward a solution that won’t operate as intended once it’s installed.

• It can help organisations identify additional potential revenue opportunities that may have been missed. In the same way Starbucks always seem to ask me if I want anything to eat with my morning coffee, these opportunity reviews can be a useful prompt to ensure that the salesperson is offering the full array of products and services to meet the potential customer’s needs.

While it’s possible to introduce these processes without using CRM software, using an appropriate technology to support them can make the difference between success and failure. CRM’s opportunity management capabilities, which allow a far more detailed profile of the deal to be built up than can easily be tracked in an Excel spread sheet, and workflow capabilities that allow review actions to be automatically created, based on defined criteria -for example if the value of the proposal is greater than £x and the retained margin is below x%, and the opportunity is at a given stage in the sales cycle – are a natural fit for these margin retention/maximisation initiatives.

As with the strategic planning, the cost of supporting these processes within a CRM system is likely to be relatively minor. The capabilities are likely to be largely out of the box without the need for heavy development work.  The greater challenge is to develop the right set of processes, and to get people to follow them.

Again, as with strategic planning, it may not be the sexiest (or most expensive) use of CRM, but, if through the right processes and supporting technology, organisations can increase average margins by a few percentage points, and do the same for average sales values, then the impact on the bottom line can be highly attractive.

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One company you couldn’t keep out of the news in April was SugarCRM. Early in the month it announced it had raised $33 million in additional funding to support ‘its advancement into the enterprise market and to pursue strategic business opportunities’. This brings the total investment in the company to around $80 million to date.

The latest investment clearly reflects growing confidence the company can profitably establish itself as the number three in the SME space behind Microsoft and Salesforce.com. While there’s a lack of hard figures (given it’s a private company) SugarCRM announced a 67% year on year growth in income in 2011 and 118% year on year in the first quarter of 2012.

At its San Francisco SugarCon 2012 event the company debuted the release of SugarCRM 6.5 which included improvements to the user interface, full text search, enhanced performance and integrations into IBM’s social networking and e-commerce tools.

The company also announced a shake-up of its partner programme including a new distribution agreement with Ingram Micro, changes to partner certification, and the establishment of a partner advisory council.

Historically perhaps, the company has seemed a little too self-obsessed about its open source credentials, but there seems to have been a shift in recent years to competing on a much broader basis. With the increased investment and the global penetration of its free open source offering, it will be interesting to see how much ground it can make up on its larger competitors with its paid subscriptions.

Another company that featured heavily in the news in April was Yammer, a vendor of social collaboration tools. Perhaps stung into action by the emphasis that Salesforce.com is placing on Chatter, the company, established in 2008, claimed it had overtaken Chatter last year, and was now through the five million user mark.

Yammer, which closed a funding round of $85 million in February, also announced its first acquisition: oneDrum, a firm based in Scotland that provides file synchronisation and collaborative editing functionality for Microsoft Office documents.

The company also announced its Spring Release with a range of new features including Universal Search which allows users to search for both data held in Yammer as well as the systems integrated into Yammer. And in this respect Yammer also announced an integration into Microsoft Dynamics CRM as well as five other applications, which adds to existing integrations that include SAP, Netsuite, SharePoint, and Salesforce.com itself.

The battle for the enterprise collaboration space is likely to be an intriguing one to watch. Salesforce.com has a lot riding on it because it potentially allows it to spread its influence across the enterprise and will doubtless bring its considerable weight to bear to try and ensure Chatter is a success. Yammer, seemingly perhaps David to Salesforce’s Goliath, has two big things going for it which may allow it to prevail: firstly the consumerisation of IT which means technology is increasingly sold bottom up rather than top down, and which fits closely with Yammer’s sales model, and, secondly, its independence. As CEO David Sacks recently noted ‘Yammer is a social Switzerland. We will integrate with anyone’.

In terms of this month’s financial results, SAP seemed to disappoint the market with its first quarter results. Revenues were up 11% to 3.35 billion euros with the market apparently expecting 3.38. The company citing ‘sales execution issues in North America which impacted first quarter performance’ raised a few eyebrows, so it will be interesting to see how it bounces back in quarter two.

Microsoft announced quarterly revenues of $17.41 billion representing 6% year on year growth with the Microsoft Business Division up 9%. Interestingly the announcement revealed the inroads Dynamics CRM have been making following the release of Microsoft Dynamics CRM 2011 last year, with sales showing 30% year on year growth.

On the acquisition front, the marketing automation market place continues to heat up with Marketo’s acquisition of Crowd Factory which seems to round out Marketo’s business to business capabilities, with Crowd Factory’s offering aimed at large-scale consumer marketing. This comes hot on the heels of last month’s announcement of Silverpop’s acquisition of CoreMotives.

Salesforce.com used its Washington DC Cloudforce event to announce a major new government cloud initiative. This will involve a separate dedicated multi-tenant instance of Salesforce.com to support state and federal government, projected to be available by the autumn. It will be supported by a separate AppExchange, and a major integrator training programme.

Finally, while we’re on the topic of vendor events, 1,500 small business owners and entrepreneurs attended Infusionsoft’s InfusionCon 2012, in Phoenix, Arizona. With speakers including Gary Vaynerchuk, Geoffrey Moore, and Chris Brogan, the event was refreshingly focused on helping organisations grow through technology, rather than the often arcane details of the technology itself. Perhaps an approach that other vendors could potentially learn from.

Anyway, that wraps it up for April, if I’ve misunderstood or missed anything notable, please don’t hesitate to comment.

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I was working with a professional services client a few years back. As our interview process progressed a recurring theme emerged which was the gains one of their key competitors had been making in recent years. Both companies sold to large corporate customers and the competitor seemed to have developed an uncanny ability to unseat or undermine my client in its key accounts. My client had been consistently surprised to see what had previously been exclusive supply arrangements become shared, and shared ones become exclusive to their competitor.

As time went on we started to piece together what was happening. The competitor had developed an account planning process which was proving very effective in focusing business development activity and resources in the right place at the right time. The planning process was performed to a mandated set of time-lines, and, critically, was supported by the executive team, with the CEO reviewing and monitoring each and every plan.

I’d long been convinced of the benefits of major account planning, but this was a particularly powerful example of how a company could significantly reshape the competitive landscape of an industry by using the process so rigorously.

Major account planning tends to be effective for a number of reasons:

• Without wishing to over-generalise it’s surprising how little many salespeople understand about their customers, particularly the major ones. It’s often only when they go through a structured planning process that they start to explore and understand the full potential of their customer base.

• In the natural order of things, sales activity tends not to align well with account potential. Where we’ve undertaken research that plots sales activity against current and potential customer value, there’s often a mismatch of effort versus account potential. In other words there may be a tendency to spend as much time and resource with an account that is only generating, or has the potential to generate £x, with an account that can generate ten times £x. This can be the result of the natural inclination of many salespeople to focus on new business or the tendency to work with the accounts they feel most comfortable with rather than those that realistically have the greatest potential. The planning process tends to identify these disparities and allows resources to be focused where the greatest opportunities lie.

• With salespeople under pressure to hit often demanding sales targets there’s a tendency to focus on the here and now rather than developing for the future. The planning process helps the sales approach become more proactive, focused around developing the most promising opportunities rather than being driven by the most urgent. Major account plan also provides the salesperson and their management with the means to measure progress towards the agreed objectives.

• Given the tendency for major accounts to span different geographies, markets, and product sets, and the likelihood that they will interact with many different teams and staff members, the planning process helps everyone understand that there is a plan, what it is, their role in it, and, in so doing, helps channels energies towards the defined goals.

The components of a plan will vary from business to business depending on the nature of the products and services being sold as well level of detail required, but key areas will typically include:

General profile data – which sets out a profile of the account and its markets and covers areas such as revenue, employees, market capitalisation, locations, subsidiaries, products/services, competitors, news, issues, challenges, and key initiatives

Customer profile data – sets out a profile of the trading relationship such as current and historic revenues, profitability, spend on individual product and service lines, share of wallet, contract end dates, purchasing approach

People – sets out a profile of the key customer contacts, which we have a relationship with, who is responsible for the relationship, and the strength of the relationship

Account team – profiles the responsibilities of internal staff in relation to the account and their roles

Relationship profile – considers the strength of the relationship with the customer and may include analysis of competitive activity, key threats and the strategy to mitigate them

Targets – identifies potential business opportunities, defines revenue/margin targets, and tracks progress year to date

Objectives, and supporting activities – sets out the plans the long and short term plans to develop the account, tracks the associated activities, who is responsible for them and target dates.

The key challenge of the major account planning process is to make the plans actionable. Too often they get hidden away in a filing cabinet, hard-disk or shared drive, and are only dusted off to begin planning for the next year. This is where CRM technology has a role to play. In my earlier example one of the reasons the approach was so effective was the tight integration into the competitor’s CRM system. Managing the major account planning process within the CRM system has a number of benefits:

• It increases the visibility of the plan to those that need it
• It avoids creating and maintaining data in two places as a lot of information such as account profile data, contact data, sales opportunities, news feeds and trading history may already exist in the CRM system
• It’s easier for the management team to monitor progress

In terms of how to integrate major account planning within a CRM system, there are a number of account planning add-on modules available on the market, but, given the flexibility of most of the leading CRM applications, it’s generally relatively quick and cost effective to custom build the capabilities to meet an organisation’s individual needs.

Assuming you can marry up the major account planning process with the right supporting technology, and, critically, achieve the necessary user adoption, the impact can be extremely significant. It may not be the most glamorous use of CRM technology, but it’s one that’s often overlooked, and one that can rapidly make a big difference.

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As I touched on in last week’s March CRM news round-up, the mid-range CRM market looks to be opening up a little. If you’d asked me last year I would have said that Microsoft and Salesforce.com had a stranglehold on the market, but things seem to be changing. Sugar CRM clearly thinks so too announcing last week another round of investment totalling $33 million. Here are some of the areas that Microsoft and Salesforce may just be a little vulnerable:

An increasing enterprise focus – both organisations have been successful penetrating the larger, enterprise accounts, and both clearly see this as an attractive market place.  However, as companies like SAP have found, it’s difficult to be successful in both enterprise and the SME space, and they may find it difficult to maintain their appeal with lower end customers as they progress up the food chain.

Product focus – I’ve never been wholly convinced how seriously Microsoft takes the business solutions market given their vast range of other interests. Salesforce on the other hand has progressed largely because of their laser-focus on a single market. But, that seems to be changing. A raft of acquisitions, and a strategy that looks less and less centred around CRM, could weaken the strength of their product positioning and allow competitors to make gains.

Innovation – while there’s been a number of key technology jumps over the last fifteen years, particularly to web and cloud-based technologies, for which Salesforce has been a key innovator, progress on the functionality side has been rather more leaden. Microsoft in particular seems to have adopted a strategy of fast(ish) follower, and may well be vulnerable to more adventurous, agile competitors.

The impact of social media – Microsoft seems to have been in denial around the convergence of social media and CRM technology. Salesforce on the other hand has embraced it through products like Chatter, in an attempt to drive its influence far wider in the organisation. Whether Salesforce has the right strategy remains to be seen, but the reality is that the social dimension of CRM represents one of those technology shifts, like the move to the cloud, that may have the potential to change the established order of things.

The interface – it would be interesting to speculate what a CRM system would look like if it was designed by Apple. Very different from the current offerings I’d suspect. While there’s nothing inherently wrong (or right) with either interface, my best guess is this could be an interesting battleground for those that choose to innovate there. Look and feel is important, as Steve Jobs so conclusively proved, and, with a wider range of appliances like phones and tablets to access CRM from, there may just be scope for a user interface revolution.

Business focus – Infusionsoft added 3,000 customers in 2011 alone. Their success is built on consistently hammering home the business benefits of using their software. This is something of a rarity in the jargon strewn world of IT, and the major players in the CRM market are no exception, tending to talk up the technology rather than the operational impact. What Infusionsoft understands that perhaps other have missed is that a) people don’t buy technology for technologies sake, they buy the benefits it produces, and b) the benefits often aren’t obvious to them. There are opportunities for vendors who grasp this.

Price – Microsoft’s debut into the SaaS market last year was supported by an aggressive pricing strategy, but the recent announcement of pricing for their forthcoming mobile client suggests they may not be wholly committed to this approach. Salesforce faces the dilemma of pricing for both their deep-pocketed corporate clients, as well as more price-sensitive SME’s, and this may leave them exposed to competitors who can offer reasonably functionally-rich products at an aggressive price-point.

Despite these potential chinks in the armour, Salesforce.com and Microsoft are hugely impressive, heavily resourced CRM vendors, with fully-featured product sets, large installed bases, and thousands of salespeople and partners. The market is unlikely to change overnight, but when you consider how the SaaS revolution changed the order of things in a few short years, it’s clear that major change in the space can happen relatively quickly. Even if Salesforce.com and Microsoft are not to be unseated any time soon, there’s still a potentially profitable third place in the CRM mid-market to be fought for, and plenty of lucrative market segments available for those that can differentiate themselves. It feels like we have a very interesting few years ahead.

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The month started with a little bit of puzzlement as Salesforce.com suspended plans to build a new head office campus in San Francisco’s Mission Bay area. Salesforce cited the immediate need to accommodate its growth in head count, but the move seemed to mystify some of the financial community.

There were fewer mixed messages at the San Francisco Cloudforce event as Salesforce announced a series of new initiatives. Key items included the announcement of Site.com, a cloud based content management system, and Salesforce Rypple, an integrated version of their December acquisition which supports social based employee evaluation.

The company is clearly looking to piggy-back on the success of its social offerings, like Chatter, to expand into new lines of business. Cloudforce also seemed to signal an emphasis on larger enterprises, and a thawing in its often prickly relations with other back-office providers. Perhaps most ironically of all was an apparent rapprochement with the IT department, given that much of Salesforce’s success has arisen as a result of bypassing them.

It will be interesting to see how successful Salesforce.com are in penetrating outside their traditional markets, and what it means for their position in the CRM market if their product set becomes more diverse and their focus becomes increasingly on larger businesses.

The likes of SAP and Oracle are also likely to prove more capable and determined competitors than they may have experienced in the CRM market to date. SAP were suggesting that a third of their revenues could come from subscriptions by 2015, and in a quick counter to Salesforce’s ‘Social Enterprise’ strategy announced that that their recently acquired human capital management company, SuccessFactors, would make its social collaboration tool, Jam, available free to all subscribers.

Equally, any speculation that Oracle might be weakening under pressure  from younger cloud-based rivals in the light of a disappointing quarter two,  was quickly squashed with the release of their quarter three figures showing net income up 18% to $2.5 billion, and, perhaps more tellingly, new software revenues up 7% to $2.4 billion.

It wasn’t only Salesforce.com who ran a major event in March. Microsoft hosted Convergence in Houston for its Dynamics products attracting 10,000 partners and customers. As a fast follower, rather than innovator, and as a company that has been notorious for playing its cards close to its chest regarding future developments, perhaps unsurprisingly there don’t seem to have been many ground-breaking announcements.

On the CRM front, we already knew what was coming in the quarter two release, but there were indications that we will see social customer care as well as cloud based data enrichment later in the year.  There was a lot of emphasis on the cloud with Microsoft’s ERP packages, Dynamics NAV and GP, scheduled to have cloud-based versions in the fourth quarter.

The event did give us a fix on current CRM user numbers: 2.25 million users and 33,000 customers, giving an average implementation size of 68 users, which is higher than I would have guessed particularly after the launch of its SaaS version last year, which generally appeals to smaller organisations.  This suggests some pretty large implementations of Microsoft CRM out there, including Microsoft’s own it would appear, having announced at Houston that they had finally replaced their Siebel CRM system, that’s been something of an on-going embarrassment to them since they launched into the CRM market.

While Microsoft may not have been making big announcements, some of its partners were happy to do so. Marketo unveiled a new integration of its marketing automation system into Dynamics CRM which will help Microsoft plug a key gap in its current offering, and, to maintain the marketing theme, Silverpop, used the Houston event to announce the news that it had acquired marketing automation company, CoreMotives.

In an interesting counterpoint to Microsoft’s quarter 2 announcement of a new set of mobile functionality, Zoho announced a new Android client for its CRM system to complement its iPhone and Blackberry based clients. As I touched on previously, Microsoft’s, $30 per user, per month pricing seemed somewhat wide of the mark, particularly when you consider that Zoho have priced theirs at $3 per month.

Finally, Sage North America seemed to be starting to grapple with that fact that their business model looks increasingly unattractive when compared with its cloud based competitors. Recurring revenues, compared to Sage’s one off licences fee, and low or non-existent payments to implementation partners, compared to the heavy margins paid by Sage, seems to have led the company to announce a monthly pricing option for many of its products, with a reduced margins available to partners. How well that will sit with its reseller community, who may increasingly be attracted to more leading-edge products remains to be seen.

That concludes my take on the news for March. If I’ve missed or misunderstood anything significant please feel free to comment!

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There seem to be a number of interesting themes emanating from Salesforce.com’s San Francisco Cloudforce event earlier this month.

The announcement of Site.com, a cloud based content management system, and Salesforce Rypple, a Salesforce and Chatter integrated version of its December acquisition, which provides a social approach to employee evaluation, signals that Salesforce.com has significant plans outside of its core CRM market.

This isn’t disconnected diversification. Its foundation is another key Cloudforce theme: the ‘Social Enterprise’, which builds on the success that Salesforce has had with its ‘Facebook for the enterprise’ application, Chatter, and takes it beyond its traditional CRM roots into other areas of the organisation. By pioneering the use of social tools like Chatter it can piggy-back these to penetrate a whole range of new business areas.

But it’s not just the ‘social’ in ‘Social Enterprise’ that’s important; ‘enterprise’ clearly has significance in its own right. While Salesforce’s initial successes may have been with small and mid-sized businesses, the company has for some while been successful in challenging the likes of SAP and Oracle in the market for enterprise systems. Judging by the range of high profile companies that presented alongside Marc Benioff, large enterprises are becoming a more important focus.

Perhaps surprisingly though, it wasn’t the CEO’s of the likes of HP, Toyota and Kimberly-Clark that presented; it was the CIO’s, CTO’s and the like. There’s a delicious irony that their strategy now involves the embrace of the IT department – given that so much of Salesforce’s success has come as a result of enabling a generation of sales and marketing managers to use their software as a service model to bypass them.

Finally, the tone seems to be different. Less combative, more part of the establishment. The rapprochement with the IT department, the partnership with Infor (an ERP vendor who might be considered the antithesis of all that Salesforce holds dear) and seeming acceptance that Salesforce will need to successfully coexist with other major back-end systems providers like SAP, has the feel of the punk rocker that evolves into a pillar of the community – think Bob Geldof, one time Boomtown Rat, now knight of the realm.

Whether its dominant position in cloud and social are sufficient to significantly extend its reach in the enterprise only time will tell, but given their mastery of both strategy and execution – witness the speed in acquiring, integrating and reframing Rypple and Assistly – you’d be bold to bet against them.

Assuming we’re not reading too much into Cloudforce, and this is a major strategic shift, then Salesforce’s challenge will be to hang on to the CRM business in the process. If Salesforce becomes too enterprise, or its offerings too diverse, then, given that it’s impossible to be all things to all people, its appeal, particularly to small and mid-sized businesses, could rapidly fall away.

This may well open the way for new competitors. If you’d asked me a year ago, I’d have said Salesforce and Microsoft had the CRM mid-market largely locked up. Now I’m not so sure. The launch of Dynamics CRM 2011 seemed to signal a full-on Microsoft assault on the market, but this hasn’t fully materialised, and if Salesforce shifts its focus, then there’s an opportunity for new or existing players to start to fill the void. When the wild child rocker becomes part of the mainstream, the stage is set for a new generation to arrive.

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Having speculated in my previous post that Microsoft might start offering rental pricing for its CRM software, coming on the back of SAP suggesting a third of their revenues could come from subscriptions by 2015, it appears as if Sage North America will be launching the option of subscription pricing for both its on-premise financial and CRM applications.

Traditionally Sage has charged an up-front licence fee for its software, which is topped up with an annual maintenance charge of about 10% of the initial fee for those customers who wish to receive new versions without further charge.

While this model has worked well for Sage over the years, the success of the software as a service (SaaS) vendors, like Salesforce.com, has helped establish an alternative payment model whereby software is paid for on a per user per month basis for as long as the customer chooses to use the software.

The problem for Sage is that this looks a much better business model. Assuming the average CRM implementation is likely to be in place between five and ten years, then the maths suggest the monthly model is likely to be a lot more lucrative.

For example, let’s hypothetically say an on-premise license costs £750, the revenues over 5 years, assuming a 10% annual maintenance charge, would be £1,125, on the other hand a rental model of say £25 per month would generate £1,500 revenue over the same period. Run these figures over ten years and the figures diverge even further with the rental model generating £3,000, versus £1,500 for the up-front license.

The rental model has another big advantage. It’s predictable. Because there’s a constant stream of revenue coming through the door, there’s protection from the gyrations of the marketplace and the software developer can manage the business with considerably more certainty.

But Sage has another problem. The new generation of SaaS vendors while happy to work with implementation partners, offer little in the way of margins for selling their subscriptions. Sage on the other hand has paid resellers north of 40%. That’s a big difference in retained revenue. Retained revenue that could be reinvested in product development or sales and marketing.

In principle the margins Sage pays to its reseller network should guarantee it a highly motivated channel with thousands of salespeople anxious to promote its products. But here again market forces may have moved against it. With organisations increasingly resistant to being sold to, success is increasingly dependent on a vendor’s ability to centrally orchestrate its marketing. The achievements of Salesforce.com seem to be a function of a brilliantly coordinated marketing strategy supported by a heavy commitment to on-going sales and marketing investment – something that Sage has struggled to counter.

Details from a CRN article suggest that Sage North America will reduce margins to 35% for the first year’s rental, and 20% thereafter. This would mean that resellers face a double hit: a significant reduction in margin percentage and that it will be staggered over time rather than received up-front.

While Sage may argue that the rental approach will benefit resellers over the long term, in the short term they would take a hit until they built up a steady revenue stream. This might not be an issue for well funded software developers, but resellers tend to lead a much more precarious commercial existence and a significant change to cash flows could have a devastating effect.

The impact of these changes will depend on how many organisations take up the rental model, and particularly how many of these are customers who wouldn’t have otherwise purchased the up-front licence. My best guess is that the average customer is sophisticated enough to understand the likely life expectancy of a system, and will realise, given the choice, that the rental model is likely to be a more expensive approach (particularly if the CRN figures are correct), so I’d figure therefore that there won’t be a huge uptake for this option (though I’ve been wrong plenty of times before).

It’s debatable therefore whether the unrest this new approach is likely to generate in the reseller community is likely to outweigh the benefits of an increase in revenues over the long term, but at least it shows that the new management team recognise the issues they face. Perhaps the most effective strategy would be to simply remove the choice and only have rental pricing, though this needs to be calibrated on what the customer is willing to pay rather what might be simply attractive to Sage. The key dilemma of course is how much change can Sage North America afford to make while keeping the reseller community on board, at a time when doing nothing may no longer be an option.

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As I mentioned in last week’s CRM industry news post, when Microsoft launched Dynamics CRM 2011 early last year, they committed to a series of regular, six monthly updates. From a company whose CRM release frequency was closer to Olympian than biannual this was no small undertaking, so the preview guide for the first release of 2012, was always going to be an interesting read.

Perhaps the most eye-catching announcement was CRM Mobile, a rich, native application for smartphones. Note the plural here. One might sensibly have assumed that CRM Mobile would be exclusively for Windows Phone, given that traditionally Microsoft CRM has been welded to its own technology stack, but surprisingly the application will also be available on iPhone, Android, and Blackberry devices, as well as the iPad.

Offering the full breadth of Dynamics CRM functionality, the Mobile Client is likely to be a big hit with salespeople and service staff out on the road who need to be able to read and update customer and prospect data on the go.

What caught my attention is how Microsoft is proposing to price the new service: $30 per user per month, which I understand will be on top of the licence cost for the core client. The ‘per person per month’ approach is the same regardless of whether the user is on-premise, or using the software as a service option (SAAS). With SAP this week suggesting a third of their revenues could come from subscriptions by 2015, perhaps software vendors are coming to the conclusion that subscription pricing, as pioneered by the likes of Salesforce.com, is simply a better business model. Or, perhaps it’s simply a case of mimicking what the cool SAAS kids are doing. Either way, it’s an interesting change to their historic approach, and it will be intriguing to see if this is adopted for the licensing of the core on-premise product in due course.

The fact that Microsoft is charging at all for CRM Mobile surprises me a little. Last year’s 2011 launch signalled a much more aggressive stance versus Salesforce.com, particularly in respect to the online version, and I fully expected Microsoft to continue to attack them hard on price. $30 dollars per user per month, so $360 per year, suggests more of a profit maximisation strategy. Even in this respect I suspect they may have the pricing wrong. Sure, some people will gladly sign-up at that price, but I’d speculate that mass adoption will require a price considerably south of thirty dollars.

The theme of compatibility has also been extended to the internet browser. Historically, CRM Dynamics has only been compatible with Microsoft Internet Explorer, but this release extends support to Firefox, Chrome, and Safari. This willingness to play nicely with other technologies will clearly win them more friends and customers, and opens intriguing possibilities as to where this rapprochement may ultimately lead.

From a core functionality perspective there are a couple of enhancements. The internal micro-blogging and social collaboration features have been extended to give users the ability to like and dislike posts, and offer new filtering capabilities. This seems to fall somewhat short of the ‘waves of social innovation for Microsoft Dynamics CRM’ promised in the Q4 2011 release, though I suspect we will see these featuring heavily in Release 9 later in the year. A feature called rapid view forms has also been added which would appear to allow users to get quicker access to data when there’s no immediate need to edit the information.

In terms of its online version, Microsoft has plugged a gap between online and on-premise, by adding in custom workflow activities, and has been working hard to build out its data centre and service certifications, with nine announced and further ones planned.

Other enhancements include support for Microsoft SQL Server 2012 and a new reporting services add-in called Power View which is positioned as a next-generation business intelligence (BI) tool. The portal framework for customer and partner portals has also enhanced to allow organisations to use standards-based identity providers such as Facebook, Google, Yahoo, and Windows Live ID, which can relieve portal administrators from the chore of user password management. Finally Microsoft has released a range of industry specific templates including life annuity insurance sales, non-profit, health plan sales, and wealth management which should allow organisations in these sectors to implement a system more quickly and cost-effectively, as well as showcasing how the system can be tailored to suit vastly different sets of requirements.

Overall then, the mobile clients and increased compatibility with other technology platforms are notable steps forward. I would have liked to have seen more enhancements to the core application, particularly with respect to social integration which is something of a glaring oversight, but I’d imagine this will come sooner rather than later. What’s unclear to me though is what Microsoft’s strategy is in terms of taking on Salesforce.com – the other 800lb gorilla in the space. A year ago it looked like a full on frontal assault based on price, but looking at the mobile client pricing now, I’m less sure. Perhaps it will become clearer as the year wears on, but regardless of the strategy questions, we shouldn’t lose sight of the fact Microsoft has clearly been successful in one key respect: shipping product on a regular basis. Gone, it seems, are the days when we had to wait three years for a new feature set, which, if nothing else makes for a much more interesting spectacle for those of us watching from the side-lines.

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photograph courtesy of allison.hare

I enjoyed writing a post at the end of last year called ‘Reflections on CRM in 2011…’ and wanted to start to do a more regular piece on what’s been happening in the CRM market. January was a little quiet, so I’m covering January and February in this post.

As I mentioned in the reflections post, the CRM market seemed pretty buoyant in the second half of last year. This seems to be borne out by a number of CRM software company updates. Infusionsoft announced record customer growth in 2011 adding 3,000 new customers and increasing revenues 50% year on year. Sugar CRM announced 97% year on year growth in their fourth quarter, and identified themselves as the third most used CRM system in the world – I’m assuming largely based on usage of their open source version.

The main threats to the likes of Microsoft and Salesforce.com are likely to come from the current lower end systems, so these results may give them food for thought. Not that Salesforce’s performance seems to be in any way impacted so far. Figures reported this week showed quarter four revenues up 38% year on year to $632 million, exceeding market expectations.

Salesforce.com have been on something of an acquisition feeding frenzy of late, so the challenge was always going to be how well and how quickly these acquisitions will be integrated into their business. If the acquisition of Assistly is anything to go by the answer is very. Acquired in September, the software was rewritten, rebranded, and relaunched as Desk.com in January, a mere three months later.

What was also interesting about the Desk.com launch was the pricing structure. The first user is free, additional users are $49 per user per month, but there’s the extremely innovative alternative of a pay for use basis of $1 per hour. The direction of Desk.com also signals that Salesforce.com hasn’t lost sight of its small and mid-size business roots, as its core product pushes deeper into the enterprise market. It will also be interesting though to see how Desk.com impacts its previously close relationship with Zendesk now the two compete head to head.

Microsoft unveiled its plans for a quarter two update to Microsoft Dynamics CRM 2011. As part of its 2011 release, the company committed to regular product updates, rather than the previous once every two or three years, or so. In its ‘Release Preview Guide Q2 2012 Service Update’ the company confirmed this commitment and, amongst several enhancements, outlined the release of a new mobile client. What perhaps was most remarkable was that it would provide a native application for a range of Smartphones including, obviously, Windows Phone, but also Android, iPhone, iPad, and Blackberry. It was also announced that the system will support Chrome, Firefox, and Safari browsers alongside Internet Explorer. Traditionally Microsoft CRM seems to have been welded to the Microsoft technology stack, so this seems a significant departure.

On the takeover front, Blackbaud, a leading global provider of software, including CRM, to not- for-profit organisations announced the takeover of close competitor Convio for $293.9 million. The company’s press release, perhaps predictably ambiguous, stated ‘The acquisition of Convio will combine the two companies’ strengths to accomplish a common mission – making multi-channel supporter engagement a reality – at a faster pace than either company could achieve on its own’ though I suspect the pressure that the likes of Salesforce.com, Microsoft, and other mainstream CRM applications, are putting vertical market specific vendors under was a driving force, as was the higher proportion of SAAS based revenues that Convio generated.

Oracle announced the acquisition of SAAS based talent management vendor Taleo for $1.9 billion, presumably a direct response to SAP’s acquisition of SuccessFactors. While neither are CRM applications, it’s interesting to see the enterprise vendors aggressively building-out their suite of SAAS based offerings, and follows on from Oracle’s acquisition of RightNow last year. I think we would be naïve to believe these are the last acquisitions by these two this year, and it will be interesting to see if this has any further impact on the CRM marketplace.

Zoho, who have been one of the entry level vendors I’ve been watching carefully over the last year or two, suffered a major outage in January with some users unable to access their system for over eight hours. While this isn’t remarkable in the sense that most SAAS vendors experience down-time (though I suspect availability is higher than the average in-house application) what was both remarkable and highly commendable, was the transparency with which the company handled the situation culminating in a post on their blog entitled ‘Our Friday outage and the actions we are taking’ which explained in detail what had happened and what actions the company was undertaking to avoid future repetition.

That rounds up my take on the CRM marketplace for January and February. If you think I’ve missed anything key, please feel very free to comment.

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Photograph courtesy of Klearchos Kapoutsis

The last six weeks or so have reinforced just how important it is to be on the front-line when a CRM system is rolled out. We’re in the process of going live on an initial deployment to a few hundred users spread across multiple locations, and sitting through training and go live has been particularly insightful.

There’s a lot that can and should be done to minimise the unexpected when you give live. Effective requirements definition, extensive user involvement, agile development, well written and managed user acceptance testing programmes, and well run pilot deployments, will go a long way to ensure that a design stands up in the real world. Nonetheless, no matter how thorough these activities may be, one thing you can be absolutely sure of is that users will surprise you with previously undiscovered bugs, usability problems, misunderstood processes, missing and incorrect data and various other assorted gremlins and omissions.

The interesting thing is that while users will spot a fair proportion of them (and some users have a great talent for this), quite a number were things that I spotted myself, watching people use the system as part of their day to day jobs. Had I not been there, then my best guess is that some proportion would remain undiscovered, passed over by users as just one of those irritating things that you just lived with. It’s perhaps only when you understand how something was meant to be, that flaws become apparent.

So, while it’s important to quickly act on issues when you roll out a system, it’s also critical to have the right eyes in place to spot them. Users are good source, but they shouldn’t be the only source.

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