Gartner Trajectories of CRM Solutions

Back in April this year I did the ‘Forrester Trajectories of CRM Solutions’ which examined past Forrester reports for CRM in the mid-market and enterprise markets. At the time I struggled to find the Gartner equivalents. With the recent release of Gartner’s Magic Quadrant Report for Sales Force Automation (http://www.crm-guidebooks.com/2011/07/gartner-magic-quadrant-sales-force-automation-july-2011/) I thought I would see if, with the combined power of Google and Bing, I could turn up the quadrants this time around.

In fact I found the past five years of quadrants. Here they are:

 

 

To Those That Have Fallen, We Salute You

Just like the Oscars I would like to take a moment to remember those products that did not make the 2011 Magic Quadrant. Since 2010 we have lost (cue sentimental piano music…):

• Cegedim Dendrite (although 2010 was the only year they made an appearance)
• FrontRange Solutions (GoldMine): located in the ‘niche players’ in the previous four years, they are no longer on the quadrant
• Maximizer Software: another niche player that is no longer on the Gartner radar
• Landslide: A ‘visionary’ that had slipped into ‘niche’ last year and unfortunately has fallen off the chart this year

In previous years we also lost off the Gartner quadrant:

• Infor: last seen as a niche player in 2008
• Consona: made a once-only appearance in 2008
• Saratoga Systems: acquired by CDC in 2007, it fell off the radar in 2008
• Entellium: the company filed for bankruptcy in 2009, bought out by Intuit
• RightNow Technologies: last seen on the Gartner quadrant in 2007

New Contenders

The only new players to make the quadrant are Microsoft Dynamics CRM Online (the online version of the incumbent on-premise solution) and Zoho (http://www.zoho.com). Zoho is an online applications player based out of India (think of them as a budget Google apps). I have been watching Zoho for a while and, if you are in the market for a basic sales force automation solution, and want other applications like invoicing, simple accounting etc. it is worth looking at. A well deserved addition to the quadrant.

Overall Trends

In the Forrester trajectory post I observed a general trend towards the top right, suggesting all products were improving. This is not as obvious in the Gartner trajectories but what can be seen is a consolidation of products. Counting the number of products in the quadrant over the years we have:

• 2007: 20
• 2008: 16
• 2009: 14
• 2010: 15
• 2011: 13

This can also be seen in the number of companies in the quadrant:

• 2007: 13
• 2008: 13
• 2009: 11
• 2010: 12
• 2011: 9

In both cases the market has shrunk, in terms of participants, by about 1/3.

The movement of CRM products to the cloud will only, in my opinion, speed this consolidation up. The fact is, for small and medium-sized businesses, with minimal internal IT infrastructure, a cloud CRM offering is very compelling and very affordable. While there will likely always be a market for on-premise deployments (for example in regions with unreliable internet connections) the option of the cloud is becoming more and more acceptable for many organisations. Companies which choose not to offer cloud versions of their products will become more specialised, niche players or fade away.

Also, the barriers are high for new offerings. The combination of low price (and therefore low relative annual turnover) combined with the feature-rich nature of the incumbent products make it very difficult for a new contender to invest on building a competitive product knowing their return on investment will take a significant amount of time.

The future is likely to be dominated by cloud and cloud/on-premise offerings by a small collection of players already in the market.

Individual Product Movements

The products in the Gartner quadrant appear to be a lot more stable than their Forrester counterparts. Significant movements are:

• Microsoft Dynamics CRM has migrated from a ‘challenger’ to a ‘leader’
• Oracle CRM On Demand has moved from a ‘visionary’ to a ‘leader’
• SAP has moved from a ‘niche’ to a ‘challenger’

The good news here is nothing appears to be moving backwards; two major players are now considered leaders in the industry and another is potentially improving. The stagnation of Oracle and the rise of the some of the niche players, such as SugarCRM, Pivotal and SageCRM, seen in the Forrester reports, is not seen in the Gartner reports.

Conclusions

Reviewing the Gartner reports it appears the sales force automation market is consolidating, probably due to the move to the cloud; a trend that will likely continue. While difficult for new contenders to enter the market, Zoho has made an appearance and it will be interesting to see how they fare in future reports.

The one consistency between the two sets of reports is the rise of Microsoft Dynamics CRM. While Forrester considers Microsoft Dynamics CRM the market leader, Gartner still sees salesforce.com as the player to beat. The battle between these two giants is great for consumers as both will work harder to produce the dominant product. It is a great time to be in the CRM industry and I eagerly await future Forrester and Gartner reports to see how the battle plays out.

Erin Brockovich, Social CRM and Why Chatter is Not a Social Tool

As there is buzz about the cloud (http://leontribe.blogspot.com/2011/07/what-is-cloud.html) there is also a buzz about something called Social CRM. A prevailing wisdom has it that for CRM to be social, you just need to add a tool that looks like Facebook or Twitter. To put it simply, this is a nonsense or, at least, not the complete story.

System vs Philosophy

One of my first blog posts talked about what is CRM (http://leontribe.blogspot.com/2009/01/what-is-crm.html). In essence, I suggested there are two sides to the CRM coin: CRM as a philosophy and CRM as a system. I also suggested that CRM systems do not have to be implemented to anticipate customer need and manage the customer relationship. The idea of an ‘xRM’ system means any number of business processes can be managed through a CRM system.

The same applies to this idea of Social CRM. The philosophy of Social CRM is best explained by a text such as the Cluetrain Manifesto (http://leontribe.blogspot.com/2009/03/all-aboard-cluetrain-its-been-waiting.html). The idea is by engaging with clients in ‘real’ conversations, rather than crafting marketing messages, clients will respond more favourably and, ideally be loyal and buy more. Chris Brogan describes it pretty well (http://www.crm-guidebooks.com/2011/04/social-mediasocial-crm-still-about-people/) and Dr. Graham Hill also summarises the concept of ‘value through engagement’ (http://www.mycustomer.com/topic/social-crm/service-dominant-logic-and-social-crm/125536).

Because it is difficult to go to every client’s house for a ‘cup of tea and a chat’, to assist in engaging clients, systems can be introduced which open channels for two-way conversation. Traditionally CRM system have been focussed on pushing out a message, rather than engaging in a conversation. Social CRM systems seek to remedy this deficit. I explored this topic in my ‘Push and Pull’ post (http://leontribe.blogspot.com/2009/02/push-and-pull-marketing-crm-and-social.html).

Do We Need Systems for Social CRM?

Just as we can engage in a CRM philosophy without a CRM IT system, we can engage in Social CRM without a Social CRM IT system. A great example of this is seen in the movie ‘Erin Brockovich’ (http://en.wikipedia.org/wiki/Erin_Brockovich_(film)). Erin hates lawyers and is not one for process. However, she cares deeply about the people of Hinkley and their plight resulting from contaminated ground water. By engaging the town’s people in a direct, meaningful way she achieves what the lawyers fail to do, obtaining the signatures required to ensure the people get the money they deserve. While the lawyers’ formal, less intimate engagement had caused mistrust and confusion, Erin’s approach gained the trust of the people and made them feel that they were doing the right thing by engaging with her.

However, the movie also illustrates the importance of a systemised approach. When Erin is sick, much of the information, such as contact information, has to be re-obtained by the impersonal lawyers as the only place the information resides is in Erin’s head. With a CRM system in place, this information could be held centrally. The lawyers could get access to the information they need to do their job and Erin could keep them away from the clients.

Do We Need Chatter or Yammer to have a Social CRM System?

Again, not at all. Despite what the doomsayers suggest, e-mail is still an excellent tool for direct communication and is thriving (http://leontribe.blogspot.com/2011/06/is-e-mail-dead-and-is-communication.html). These new ‘collaboration tools’ ultimately allow organisations to use different channels for different kinds of conversation. Interestingly, my own conversations with users of programs like Chatter suggest that, while these kinds of tools do assist in engaging in meaningful conversations with clients, it is not for the reasons you would think. The reason these systems help organisations be more social is because these tools funnel indirect communication away from e-mail. E-mail, along with the telephone, SMS and face-to-face meetings then become the primary channels for direct, meaningful engagement with clients, while the ‘collaboration tool’ is used for general, non-specific impersonal communications (memos), crowdsourcing requests and high-level catching up with distant connections (status updates). In other words, non-essential indirect communication is funnelled through the collaboration tool, letting e-mail be more effective as a one-on-one communication and engagement tool.

Paul Adams, a former researcher at Google, who now works at Facebook has published a slideshow of his research into social networks and how online social tools do not always do a good job of mapping how we interact in the real world (http://www.slideshare.net/padday/the-real-life-social-network-v2). At slide 122, he makes the following statement “Online social networks make it easier to reconnect and catch up with weak ties”. Status updates give us an easy way to see what people are up to. A few slides later he describes online social networks as a “powerful route when sourcing new information”.

What online social networks do NOT do is convert temporary ties (people we interact with only once) to weak ties or weak ties into strong ties. If they did, they would be a truly social tool in the Cluetrain sense. This ‘social conversion’ happens through other channels such as meetings, phone calls and, to a lesser extent, e-mails. This is reinforced on slide 142.

This idea that e-mail is reserved for strong, authentic connections is also corroborated on slide 144 where Paul says “Many people use e-mail for very private exchanges…Some young adults use e-mail to communicate with their strongest ties because their (online) social network is overloaded with information.”

The 224 slides are definitely worth browsing as he goes on to talk about how real social networks influence buying habits and how people behave differently on online social networks than in real life interactions.

I understand it may be controversial to suggest a tool like Chatter is not social, but I strongly believe Erin would not have had as much success ‘friending’ Hinkley on Facebook and posting to their wall as she did directly speak directly to the individuals. Chatter would have been great, however, if she was looking for someone in Masry’s law firm who knew something about Hexavalent Chromium or worked on groundwater contamination cases. Chatter aids collaboration but this is not the same as aiding a meaningful two-way conversation. The statistics on the Chatter site confirm this (https://www.chatter.com/why/). The improvements are in areas of collaboration and productivity, but not in areas of client engagement and loyalty.

Conclusions

The philosophy of social CRM is that customer-centric selling can be improved through active and direct engagement with customers. Systems can be put in place to support this. The specific system will depend on the channel in which we intend to engage with the customer. However, if a business implements social tools with no clear vision of their purpose they are wasting their time.

Collaboration tools provide an online channel to engage with others. However, collaboration tools are not synonymous with the concept of a meaningful conversation with a customer or colleague; they simply allow us to share information. The research supports the notion that other channels, such as face to face meetings and e-mails, are still the preferred choice to maintaining strong connections in our networks. To put it another way, if you want to collaborate with people use a tool like SharePoint, Yammer or Chatter; if you want to forge a relationship, pick up the phone or, failing this, send them an e-mail.

What is the Cloud?

There is a lot of noise about this thing called the cloud and while many people have a basic understanding that it has something to do with running software on the internet I thought it was about time to throw my hat into the ring to try and clear this up.

Starting With The Basics: How Does a PC Work?

Let us cast our mind back to an ancient time when there was no internet. If you wanted to run software, it required your own computer and it went something like this:

Let’s start from the bottom and work our way up. A computer has a thing called BIOS. This is the program that starts up when the computer is started. It is hard-wired into the mother board (the big flat circuit board inside your computer) and its job is to start the various bits on the motherboard up and to get the operating system going.

The operating system is, ultimately, software but very special software. The operating system is the gateway between the stuff on the motherboard and the software running on the computer. In this sense it is a platform that all other programs run on.

Software is simply computer programs that run on a computer. Therefore anyone that says ‘no software’ (you know who you are) is talking nonsense because even if a program is running on a server in Singapore and the results are being displayed on a monitor in Boise, Idaho it is still software. Anyone who tells you something different is trying to sell you something.

The hard drive is where all data sits. This includes software, data, music and anything else encoded into 1’s and 0’s.

When a program is run, it is copied into memory and the CPU (which actually does everything by coordinating all the other bits) works with it there. The reason it makes a copy is that memory is faster to read and write to. The reason we don’t abandon the hard drive and make the whole computer memory is cost. This being said, back in the early days of home computers, things like the Commodore 64 or Sinclair Spectrum 48k had no hard drive, just memory (64 kilobytes and 48 kilobytes respectively).

Eventually, when the software does something, it needs to tell the user about it and this is where the screen comes in.

As a disclaimer, I am not an IT graduate, I am a physics graduate that got into IT. Therefore this model may not be completely accurate. However, it has been my working model for the last 25 years and works wonderfully for this article.

Thanks For The History Lesson. What Does This Have To Do With The Cloud?

The thing is, if you understand how a computer works, it is easy to understand the cloud because all the cloud does is replace bits from the computer and use bits somewhere else in the world. Generally speaking, the more you use someone else’s bits, the less control you have on what those bits are. This will become evident as we get into the explanation.

Let us look at some of those cloud terms:

Infrastructure as a Service (IaaS)

This is where we want to run our software on someone else’s machines and they get to say what those machines are. In theory we could hold the software (including the operating system) on our computer and have someone else’s machines read it across the internet but this would be quite slow. So while we are really just using someone else’s hard drive, CPU and memory, we generally also load an operating system and software on the other person’s hard dive for quick access by their CPU and memory. An example of IaaS is Rackspace (http://www.rackspace.com). Rackspace also offer to provide one of a selection of operating systems. Although this could construe as Platform as a Service (see below) because the choice is with us and not them on the operating system, it is still considered IaaS.

If we are just looking to use someone else’s hard drive, this also sits under IaaS and an example of this is Amazon S3 (http://aws.amazon.com/s3/).

Platform as a Service (PaaS)

If we do not get to choose the operating system, this is PaaS. A good example of this is Azure (http://www.microsoft.com/windowsazure/). Here we use someone else’s hard drive, CPU, memory and operating system. We can load whatever software we like onto it and even have it read software sitting on our hard drive if we like. We could also have it read someone else’s hard drive, like Amazon S3. The recent iCloud service by Apple appears to be doing precisely this (http://www.neowin.net/news/icloud-uses-amazon-web-services-and-windows-azure-for-now).

Software as a Service (SaaS)

This is where we get no say on anything other than the specifications of our screen. Someone else chooses the servers, the operating system and the specific software that runs on them. Examples include Hotmail, salesforce.com, Miniclip flash games and Google apps.

What is nice about SaaS is that we do not need to worry about our computing power to get the software to run; it is someone else’s concern. In theory, I could dust off my old Sinclair Spectrum 48k and run a Saas application, which normally takes four or five modern servers to run locally (or on-premise as they now say). All my Speccy has to do is coordinate the information coming from the application, via the internet,  and display it on my monitor or, in the case of the Spectrum, my television. In reality this would not quite work as the Sinclair Spectrum has no way of talking to the internet. The best it could muster in its day was chatting to cassettes. However, the principle is sound.

Conclusion

There is a lot of noise out there about this cloud thing but it really boils down to one simple concept: if you are happy to give up some control to a provider you trust, you can get great technical services with less headache and probably at a lower cost. If this sounds tempting, it is then a case of working out how far you want to go with it. There is no doubt that as these services become more reliable and more feature-rich businesses will take them up more and more, willing to gain an economic edge on rivals in exchange for losing a little control of their IT infrastructure.