Is E-mail Dead And Is Communication Becoming Social?

This article is again inspired by my clandestine visit to CloudForce last month (http://twitpic.com/4wh1cq). One of the claims in the keynote, which I tweeted at the time, was that social channels are now more popular than e-mail. I found this to be an incredible claim, obviously said to justify Chatter, and I vowed to dig deeper. I attempt to synthesize a lot of information here so the article is quite large. For those of you that want to cut to the chase, feel free to jump to the Conclusions section.

So Where Does This Claim Come From?

The claim seems to come from a Nielsen study from two years ago titled “Global Faces and Networked Places” (http://blog.nielsen.com/nielsenwire/wp-content/uploads/2009/03/nielsen_globalfaces_mar09.pdf). The report talks about how consumers are becoming more social and talks at aspects I mention in my Cluetrain post from the same time (http://leontribe.blogspot.com/2009/03/all-aboard-cluetrain-its-been-waiting.html). The purpose of the study is to justify why advertisers should consider social channels. It is in this context that the claim of popularity is made.

Here is the key table:

‘Global Active Reach’ is not clearly defined but seems to mean the browsing internet population (and possibly relates to the percentage of time they spend online and what they do with that time). It is also not clear how they derived these numbers. The definition of ‘Member Communities’ is vague but is said to incorporate “social networks and blogging sites”. So, in essence, the study says that in 2009 more people on the internet accessed social networks and blogs than an online e-mail account. A little surprising but not outrageous.

The study then goes to talk about time online saying people online, in 2009, spent one in every eleven minutes looking at Member Communities. The study does not directly compare relative time spent between Member Communities and e-mail.

Do Other Studies Talk About Time Spent On Internet Activities?

Absolutely. Here is one from February this year (http://www.comscore.com/Press_Events/Presentations_Whitepapers/2011/2010_US_Digital_Year_in_Review).

This one says people are spending more time on Facebook than other places.

It also says that people are spending more time online looking at social networking sites than looking at their e-mail (in agreement with Nielsen).

It also says the youth are specifically spending less time online checking e-mail.

It also mentions 12% of internet time in 2010 was spent on social networking sites, that is, one in every eight minutes (as a comparison to the previous Nielsen statistic of one in every eleven minutes in 2009)

Nielsen also brought out a nice chart showing where all US internet time was devoted in 2010 (http://blog.nielsen.com/nielsenwire/online_mobile/what-americans-do-online-social-media-and-games-dominate-activity/)

This clearly states that almost three times as much time is spent online looking at social networks and blogs compared to e-mails.

Does This Mean People Are Abandoning E-mail?

No, although sensationalist articles suggest it is the case (http://www.digitaltrends.com/computing/polls-show-e-mail-popularity-waning-facebook-messages-ready-to-fill-in/). Let us be very specific here. The comScore report (and the Nielsen reports) are talking about time spent online. People are spending more of their online time looking at Facebook. People are spending less of their online time looking at web e-mail sites.

The same comScore report talks about smartphone use and has this graph.

Nielsen also have a graph talking about US mobile internet use time.

The thing to notice here is that using a phone to access email is more popular than accessing social networking or blogs and it is growing (http://pewinternet.org/~/media//Files/Reports/2010/PIP_Mobile_Access_2010.pdf). There is about four times as much time checking e-mails through a mobile internet device than checking social networks and blogs.

My guess is people are abandoning reading their e-mails through a web site and using things like their phone instead.

An alternative explanation is people are spending more hours online and of these extra hours, more is spent browsing social networking sites. Therefore, as a percentage, e-mail browsing is down but as a raw number it may be untouched. However, this suggests this is probably not the case (http://news.cnet.com/8301-1023_3-10297935-93.html)

So How Many People Are Using E-mail And Social Networking Sites?

If we were not careful, looking at these studies, it would be easy to assume that more people have social networking accounts than e-mail accounts. The Radicati Group report from 2010 (http://www.radicati.com/?p=5290, https://community.dynamics.com/product/crm/crmnontechnical/b/crmsoftwareblog/archive/2011/05/12/the-death-of-email-has-been-greatly-exaggerated.aspx) sets the record straight.

Despite a lot of people reading Facebook walls, there are still almost three times the number of people with e-mail accounts. The same report also compares the number of e-mail and social networking accounts but this needs to be treated carefully because it is likely an individual has , in my opinion, many more social networking accounts than e-mail accounts.

The Pew Research Center (http://www.pewinternet.org/Static-Pages/Trend-Data/Online-Activites-Total.aspx) regularly survey the US population to see what they are doing online and have been doing so for over ten years. According to Pew, 79% of the US population are now online. Here are some of the questions they ask. Obviously the second two are specifically for those in the survey on the internet (the second ‘n value’).

It is clear from this that the percentage of the US population accessing the internet over the last ten years has increased but has possibly reached a plateau at around 75-80% of the population. E-mail use has been constant for the online US population over the last ten years at around 90-95% and social networking sites are rapidly becoming very popular, currently sitting at around 61%.

This appears to be in conflict with the Nielsen data which suggests e-mail use is much less and social network use is much more but, again, we must remember Nielsen talks about time while this talks about the actual population. Combining the two we can say that while more people use e-mail, when they are online they spend more time checking for status updates than looking at their inbox. Another thing to note here is the Pew survey is less specific about the channel in which things are done. There is no clear distinction between reading an e-mail via a computer and doing it via a smart phone.

Is There a Place For Social Business Tools?

Being Generation X, I remember a time before e-mail and explaining to my peers in the early nineties what e-mail was and how it would fundamentally change the way people communicate (“it is like sending a letter, but instant”). There is no doubt e-mail has provided massive benefit in terms of communication and collaboration which, in turn, has led to gains in business productivity. However, e-mail does have limitations. Wikipedia has a good list (http://en.wikipedia.org/wiki/E-mail#Problems). A couple of the issues, specifically regarding collaboration, are:

• Attachment size (Anything larger than a few megs is problematic. Attachment size has not scaled with Moore’s Law)
• Information overload (being bombarded with too many e-mail and, more importantly, not having tools to effectively manage them)

As for attachment size, the best option here, in my opinion, would be to abandon e-mail attachments altogether and seamlessly integrate an online collaboration tool, such as SharePoint, into the mix. Rather than attach, you simply provide a link to the document which sits somewhere in the cloud. People can then go there, view the file, collaborate on it etc. Security can be centralised to control distribution, there is versioning and the attachment size issue goes away.

There is no doubt that a tool like Chatter or Yammer can help reduce the volume of e-mail and allow general communication to be ‘posted to the board’ rather than ‘spammed’. However, it needs to be clear that this does not actually reduce the overload but rather puts it somewhere where we can ignore it until we have time to address it (talking to friends who work at salesforce, this is exactly what happens with Chatter). It also needs to be clear that using ‘the feed’ is only appropriate for certain forms of communication while others are appropriate for the inbox.

Moreover, given the social experience, I predict that these collaboration tools will not reduce the total volume of communication but increase it. One of the common complaints of tools like Twitter and Facebook is the limited value in some of the communication. Because of the low barrier to message, it is always tempting to tweet something one simply could not be bothered e-mailing. What was once the domain of the water cooler will now find itself on someone’s ‘Wall’ for everyone to see and contribute to.

In terms of my own experience, being an MVP means I am on quite a number of e-mail lists, forums, blog subscriptions etc. I also tend to funnel all communication through to Outlook, which means it comes in as an e-mail or RSS feed. The volume is massive. However, through the use of Outlook rules to ‘park’ non-vital information, I almost manage to keep on top of it. While this works for me, I can see the value in an alternative channel for general, non-specific communication. Ideally, the application where one consumes e-mail would be the same as the one where one consumes ‘the feed’. Nothing kills productivity faster than constantly jumping back and forth between applications. This person also agrees (http://www.informationweek.com/news/global-cio/interviews/229900080) and sees something like Outlook as the ‘one true application’. Outlook has started down this path with the social integration in Outlook 2010 but it would need to look a lot more like the social integration with Instant Messenger before it could address the issues mentioned here.

Conclusions

In summary:

• When people are online they spend more time checking people’s status updates than their inbox
• When people are on mobile internet devices, such as smart phones, they spend more time in their inbox than checking status updates
• Of the people on the internet, in the USA, between 90-95% of them use e-mail while only 60-65% of them use social networking sites (although popularity of social networking sites is rapidly increasing)
• E-mail has problems such as large volumes of messages and a restricted ability to allow collaboration on large documents. Alternative collaboration tools can address these issues.
• Be very careful with online claims, especially ones predicting the demise of an incumbent and those claims where the person making the prediction has a vested interest. These days, with a bit of effort, it is relatively easy to verify the claims and understand the assumptions behind them. Just because someone spends ten minutes on Facebook and two minutes checking their inbox does not mean one has more intrinsic value or ‘popularity’ than the other.
• E-mail is not dead and will be around for a long time to come (in fact from what I can tell e-mail volumes are increasing over time, not decreasing http://www.radicati.com/?p=3237). What will change are the options for communicating with people. Just as e-mail gives us the opportunity to reach people in ways which were more difficult with a telephone, so too social collaboration gives us the opportunity to work and communicate with people in ways which are difficult with e-mail.

A Slightly More Elegant Codeless Universal Search For Dynamics CRM

This is a follow-up to the Codeless Universal Search post I did a week or so ago (http://leontribe.blogspot.com/2011/06/codeless-universal-search-for-dynamics.html). Fellow Dynamics CRM MVP George Doubinski suggested using a custom activity entity and make use of the activity ‘Regarding’ field which can link to any normal record. The advantage being we no longer need one column per search entity in the results. The good news is it works.

What Does It Look Like?

How Does It Work?

To this entity we add 1:N relationships to the entities we want to search on and a keywords field, as before, to populate with the things we want to search on.

The workflows work the same as before, except we populate the regarding field on the new entity record.

The final step, as before, is adding the keywords field to the find Fields of the Quick Search.

This should work for any entity we can associate activities to.

Making It A Standalone Search Box

Something you can also do to either the original version or this one is make it a shortcut outside of CRM which you can have as a favourite in Internet Explorer or a shortcut on your desktop.

To do this, firstly browse to the default view for the new entity.

You will see at the top you can ‘Copy a Link’. If you select the little black triangle next to this, it lets you copy a web link to this view. I was getting an error when I tried this online so if it fails use the ‘E-mail a Link’ instead and copy just the web address part. Open up a blank web page, copy in the link to see if it works and if it does add it to your favourites.

Enjoy.

A Codeless Universal Search For Dynamics CRM

About a month ago I gate crashed Cloudforce, the Salesforce promotional roadshow. When I was not on their booths showing off Dynamics CRM (http://twitpic.com/4wh1cq) I was attending sessions seeing what they had to offer. One feature which made me jealous was their universal search. For quite a while now Dynamics CRM users have been asking for the ability to search across multiple records at once but short of getting SharePoint into the mix, buying an add-on or coding a solution it is not possible.

This got me thinking whether it would be possible to create a universal search using what we have available through codeless configuration. It turns out it is possible and actually reasonably usable. Moreover, while the solution is built on CRM 2011, I can see no reason why you could not build the same thing in CRM 4.

What Does It Look Like?

Here is the end result:

You type into the quick search the string you want to search on and the results come back. In this case I was looking for Yvonne and got two hits; a lead and a contact. From the results I can now click through to the records.

How Does It Work?

The first step in putting this together is to create a new entity called ‘Universal Search’.

I left the ‘Connections’ tick box ticked but it does not need to be. Similarly, Duplicate Detection can be turned off.

You will now need to create a 1:N and N:1 relationship to each entity you want to search on.

The thing to notice here is I have turned off the Display Option for ‘Navigation Pane Item for Primary Entity’. Doing this for both the 1:N and N:1 relationship results in the creation of a pseudo 1:1 relationship between the Universal Search entity and, in this case, the Account entity. On the form you will be able to look up the other entity but there will be nothing on the side to indicate a relationship.

Here is the Lead record for Yvonne to give you the idea.

Now we have the structure in place we need to add some workflows.

The Workflows

The first workflow creates a universal search record every time an Account is created (or whichever entity you want to search on).

In the universal search record we populate the Name, the keywords field (a new multiple lines of text field to hold the key words we will search on) with the Account values of interest e.g. Account Name, Account Number and we add a link back to the Account.

In the second step of the workflow we then update the Account to link back to the Universal Search record through its lookup.

To reference the record you have created in the previous step, you drop down the ‘Look For’ in the Form Assistant, as in the diagram.

In this case I have added the Universal Search lookup field to the Account form but this is not necessary as workflow allows you to populate fields which are not on the form (you just scroll down the form to the Additional Fields area).

The second workflow updates the Universal Search record if details on the Account change.

In this case we trigger off of a change in the key fields on the Account (Account Name, Account Number). we then update the Universal Search with the new information.

You may have noticed that both workflows are marked as on-demand. In the case of the first workflow, this is needed if you have old records which you want to create Universal Search entries for. In the case of the second workflow, this is necessary if you change the fields you want it to search on as you then have to run it across all the records in the system to update the keywords that will be picked up. Incidentally, if you do adjust the fields you are searching on, remember to reflect this in three places; the create step of the first workflow, the trigger fields in the second workflow and the update fields in the second workflow.

Performing The Search

Once you have performed these steps for all the entities you wish to search on, all you need to do is adjust the Quick Find view of the Universal Search to include the keyword field as a Find Field and add the lookups to the entities you are searching on to the View Fields and you are ready to go. You can add any CRM entity which allows workflows to be run against them and which can be part of a 1:N and N:1 relationship.

Conclusions

As with other codeless solutions, the result is a little clunky but very usable. Probably the biggest downside with this one is the back end maintenance. If you implement this after the records have been created, you will need to run the first workflow against all the old records in the system. Also, if you change you mind about the fields you are searching on, you need to adjust the workflows in three places and run the second workflow against all relevant records. In a database with a large amount of records, this may be inconvenient.

On the plus side, this works in 2011 (and probably v4), is codeless and can be set up in an hour or two. I guarantee that a coded solution cannot get near that kind of turnaround.

Enjoy.

Running the Dynamics CRM VPC on Windows 7

Microsoft have now released a VPC demo image for Dynamics CRM 2011

https://mbs.microsoft.com/Cms/Templates/document/General.aspx?NRMODE=Published&NRNODEGUID={060C9677-229D-49E1-9F00-95E56D9F1657}&NRORIGINALURL=/partnersource/deployment/methodology/vpc/MSD_CRM2011VirtualMachine&NRCACHEHINT=Guest&wa=wsignin1.0

A nice set of two virtual machines; one running Dynamics CRM and the other running Exchange.

The Problem

The problem is Dynamics CRM 2011 only runs on 64 bit servers. Therefore the VPC image is 64 bit. The only software Microsoft provides to run 64 bit VPC images on is Hyper-V. Hyper-V only runs on Windows Server 2008, which is also 64 bit. Therefore, if we are to embrace all things Microsoft, and want to run the demo on a laptop, we need to install Windows Server 2008 on our laptop.

Unfortunately Windows Server 2008 was not built to be run on laptops. It has no concept of things like hibernation and power management. No one says ‘I am so glad I installed Windows Server 2008 on my laptop’. So what is the solution?

The Solution

While Microsoft provides no software to run 64 bit VPC images on a laptop operating system like Windows 7, Sun Microsystems does. VirtualBox (http://www.virtualbox.org) runs on Windows 7 and plays nicely with Microsoft VPC 64 bit images.

So, the first step is downloading and installing VirtualBox. The latest version, at the time of writing is 4.0.8. Download the installer and hit ‘Next’, ‘Yes’ and ‘Install’ a lot.

Now that you have installed VirtualBox we need to run it and add our downloaded VPC image to it. To do this we click the ‘New’ button.

The wizard will guide you through adding the VPC image. Set up VirtualBox to run the image as a Windows Server 2008 64 bit

Next you will need to assign memory. The guide suggests 4G RAM but I only have 2G RAM to spare.

Please note: In the end I had to set this to over 2000 MB to avoid the guest blue screening due to running out of memory.

Next you will want to use an existing disk. Browse to the disk you have extracted from the Microsoft demo download.

After this you click ‘Finish’.

If you try to start the image at this point you will see the Blue Screen of Death about five seconds into booting. First we must click on ‘Storage’, remove the SATA hard drive and add it back as an IDE drive. It should look like this when you are done.

Click OK and start up the machine. Many popup boxes appear but once you wade through them it should kick into operation.

Fixing The Memory

The biggest problem you will have, if you are running the image on a host machine with 4G RAM, is the lack of memory available to the guest. To be honest, if you are going to be performing extended demos with this image you will need a machine with at least 8G RAM. However, if you don’t have this option, here is a quick bit of memory optimization. That cheeky SQL Server is grabbing as much as possible. In fact, on my work machine, SQL was chewing through 600M RAM when I ran this image. To fix the situation we need to run SQL Server Management Studio.

Once logged in, we can adjust the memory management of our SQL Server.

Going to the Memory area we see that SQL Server can grab up to 640M RAM from the machine. Given our limitations, we can set this to something more palatable, say 500M RAM, giving the guest just that little more to run. The downside of this is SQL Server may be a little slower in responding to database requests or may timeout. However, given the VPC image will not run in our case without a little extra memory, throttling is the lesser of two evils.

Another option to gain a little extra memory is to see how much idle memory the host has (via task manager). Leaving yourself a buffer of, say 200M RAM, if the host is not close to maximum you can boost the memory allocated to the guest.

Hopefully these little tricks will get it working on your machine.

Good luck.

Review of the Latest Dynamics CRM Statement of Direction (May 2011)

A week or so ago the latest Dynamics CRM Statement of Direction was released. While there have already been a few reviews of it done I thought I would add my voice to the piece and highlight the parts that jumped out.

If you are interested in reading the full thing, you can access it here:

http://blogs.msdn.com/b/crm/archive/2011/05/12/statement-of-direction-for-microsoft-dynamics-crm-2011.aspx

The first thing that struck me was the style of the document is quite different compared to, say, the September 2010 Statement of Direction (http://leontribe.blogspot.com/2010/11/dynamics-crm-statement-of-direction.html). While the September 2010 document was more of a white paper in its appearance, this one is definitely the product of marketing. This is not to say the content is not technical or specific (some commitments are very specific), but that the look and feel has been more carefully crafted than previous versions.

 

Ecosystems

The first part of the document trumpets the success of Dynamics CRM 2011 (and why not?) and then mentions a key phrase in reference to what Dynamics CRM enables organisations to do, specifically “encourage connections across an entire ecosystem of suppliers, partners and customers”. In this context ‘ecosystem’ is equivalent to the old ‘supply chain’ of operations management. It is a term I have been hearing a lot lately. It is usually mention in the context of mobile phone ‘ecosystems’ referring to the phone OS company, the mobile phone maker, the telco, the app developers and all the pieces that connect them. I am not sure whether this is Microsoft’s market-speak or a general consensus in the industry that the chains of the past are now looking more like chainmail mesh. I believe it is a term that is going to be used a lot more in the future as organisations look to leverage more than just the consumer to sell their products and services.

“Better Together”

This is also mentioned a bit further on in the context of the philosophies driving development. In the old days we would refer to this as ‘the stack’, that is, the use of Microsoft technologies together with a view of having them compliment each other and work together. This, in turn, has led to the situation where customers openly refer to themselves as ‘Microsoft Shops’. Products no longer stack, they are simply better together apparently

Power of Choice

Microsoft are clear that they continue to differentiate between the software and where it is housed and will continue to support this differentiation. If you want to implement Dynamics CRM on your own servers (on-premise), Microsoft will continue to support this. Similarly for a third party’s servers (private cloud) or Microsoft’s data centres (cloud/SaaS). This obviously differs to, say, salesforce.com where the software and implementation choice are combined into the concept of the ‘true cloud’ when the software is run on their servers. All other implementation choices being considered the ‘false cloud’ (private cloud) or ‘software’ (on-premise). Given Dynamics CRM can be deployed any way a customer wants, the salesforce.com definition of software is a nonsense, but I digress.

The Disclaimer

Before launching into the trends driving their thinking and the more juicier, technical specifics, the document provides a disclaimer that essentially says, anything that came before it is false and this is the only true reflection of the vision Microsoft has for Dynamics CRM. Given the next Statement of Direction will likely have a similar disclaimer, a cynical person would suggest anything said in this document is only good for the next six months. The more optimistic of us would like to think the strategic thinkers of Microsoft are not so fickle and while elements may be tweaked the broad direction will remain unchanged.

Trend 1: Social Collaboration and Engagement

The document acknowledges the world of business is looking to be more social but is a little confused on how to do it. In terms of Dynamics CRM, the document is very specific. Dynamics CRM will be integrated more tightly with SharePoint, Lync (the new Office Communication Server) and Office to facilitate social collaboration with customers. They cite specific functionality such as micro-blogging (think Twitter or Facebook status updates), business activity feeds (think the Facebook wall) and social intelligence (think socialmention.com). This, again, smells of the OfficeTalk (http://www.officelabs.com/projects/officetalk/Pages/default.asp) skunkworks project I have mentioned before.

I have talked about the collaborative features of ‘the stack’ in the past (http://leontribe.blogspot.com/2011/01/what-is-this-chatter-about-social.html, http://leontribe.blogspot.com/2011/01/fun-salesforce-becomes-fud-salesforce.html). It seems Microsoft is intent on developing significant enhancements in this area, presumably to develop a product akin in functionality to salesforce.com’s Chatter or Yammer. This is great news. For all the things that can be said about Microsoft it cannot be denied that they know a good idea when they see it.

Trend 2: Deriving Rapid Value From Business Applications

This one is a little vague or, at least, I cannot tease out too many nuggets from it. They talk about

• Sales and marketing insights and the creation of proposals and presentations. These are areas in Dynamics CRM where there is functionality but room for improvement. Perhaps they are looking to develop Zap-like functionality combining BI with proposal generation (http://zaptechnology.com.au/).
• Improved service management through areas such as better service planning and multi-channel engagement. Again, Dynamics CRM has some functionality in this area but there is always room for improvement. Service planning in Dynamics CRM has not really been touched since it made an appearance back in version 3.0 so perhaps this is getting a makeover. The talk of social collaboration certainly dovetails into the idea of incorporating social media channels into customer service.
• Enhanced evaluation and provisioning of solutions from the marketplace. Given the marketplace is, at this stage, an advertising platform for the add-on solutions available but not strictly a delivery mechanism for such solutions, I expect this will change in the near future.
• Reduced effort to deploy. This is an unusual one as they talk about making it easier to tailor Dynamics CRM. Microsoft obviously have something in mind here but I do not know what it is. Perhaps the delivery mechanism for the marketplace will also lend itself to easier configuration of Dynamics CRM
• Emphasis on business adoption. This one is a bit of marketing but says nothing in terms of what is coming up

Trend 3: Optimizing Business Decision-Making

Here they give a bit more detail on the BI tools they are looking to deliver. Specifically, the ability for users to create business reports and analysis, data visualisation (which is already pretty good in Dynamics CRM 2011) and data analysis capabilities for trend analysis. This, again, sounds similar to the Zap solution.

Trend 4: Consumerization of Business Applications

To translate, in this case, they mean making the software accessible, regardless of the device being used and whether the user is offline or online. Out of the box mobility has always been limited. There is the mobile express component but this does not have the full functionality of the standard clients.

This section is very interesting. Firstly they talk about the devices they want Dynamics CRM to be compatible with:

• PC
• Laptop
• Tablet
• Phone

They then get into specifics of the functionality they are looking to achieve:

• functions of the product will adjust based on where the product is being accessed (in the office, on the road etc.)
• cross device compatibility e.g. iPad, Android slates, PC tablets etc.
• MULTI-BROWSER SUPPORT!!! By using HTML5, Microsoft are planning to create a rich client that will work practically anywhere. This is great. For those of you that follow my tweets (http://www.twitter.com/leontribe) you may remember I promised to harass Microsoft to the ends of the Earth until they had a Safari-compatible browser if I made the top 100 Most Influential Dynamics People list. I made #97 (http://www.dynamicsworld.co.uk/top-100/) and it looks like our Apple-shop friends will soon be able to easily access the product. Nice work Microsoft.

Trend 5: Extended Solution Opportunities and Ecosystems

This section talks about how Microsoft are looking to streamline the supply chain (ecosystem). Other than improving the Marketplace experience, specifics are limited. What was interesting was their statement that they are looking to enable enterprise organisations to get CRM Online. Microsoft are clearly stating they consider this a product appropriate for larger organisations (which they have done for a while but not always as directly as this). Using their tried and true strategy they are stretching up; starting with a product for the small to medium market and now playing with large companies in the cloud.

Moving to a Rapid Release Model

This is a big deal. On premise releases used to come out every two or three years. Now that CRM Online and CRM 2011 have the same code base, this is no longer practical. Therefore CRM 2011 has shortened their cycle to ONCE EVERY SIX MONTHS. The upshot of this is we will no longer see the ‘big bang’ of additional functionality we saw, for example, going from CRM 4.0 to CRM 2011. However, it will mean a constant stream of additional capabilities coming into the product.

On top of the twice-yearly updates, Microsoft will also be providing optional add-ons via the Marketplace. My guess is this is the new version of the old accelerators but, hopefully, more complete. The accelerators were great but they were, almost without exception, ‘a good start’. These add-ons sound more like complete solutions. An example might be CRM-Online fax service integration. Useful, but not for everyone.

I have my concerns about this massive shift in the release cycle given it is such a significant change. I am also concerned the ‘fixed-costs’ of putting out a release will mean time for actual innovation will be compromised, limiting the value delivered with each release. Time will tell.

Conclusions

Despite the polished veneer of the paper, this is, in my opinion, the most comprehensive and specific Statement of Direction to date. While some of the things in the paper were mentioned at the recent MVP summit, many were not and you, in reading it, are hearing a lot of this at the same time as us NDA-covered MVPs. I think it is fair to say that everything we learned at Summit, you now know via this Statement of Direction. These really are exciting times, especially for consumers.

The parts I am personally excited about are the social collaboration tools, the multi-form factor support and the multi-browser support. If you want to make a Microsoft Dynamics CRM partner shuffle nervously, ask them about running Dynamics CRM on an Apple computer. This will soon be a thing of the past.

If Microsoft get all of this right, it will be huge. If they get it wrong it will be disastrous. Given there is not much choice being otherwise, I am optimistic

Dealing With Two Surnames

Quieres este articulo en Castellano? Aqui lo es:
http://www.elblogdedynamicscrm.com/post/2011/05/10/Trabajando-con-dos-apellidos.aspx

While uncommon in English-speaking countries, people from Spanish-speaking countries often have two surnames; one from each parent. As my wife is Peruvian in heritage, we have followed this tradition and therefore the surname of my children is ‘Tribe Aviles’. Both children will hand ‘Tribe’ down to their children.

On casual occasions the father’s surname is used but for more formal situations, both are used. For example, in an e-mail my son would sign ‘Bob Tribe’ but on his passport it reads ‘Bob Tribe Aviles’.

One obvious consequence of this is the usual security question of ‘mother’s maiden name’ is useless in Spanish-speaking countries as it is in their full name. A more subtle consequence comes from trying to store this in Dynamics CRM.

What We Have To Work With

This is the default appearance of the Contact form in Dynamics CRM.

We have a ‘First Name’ field, a ‘Middle Name’ field and a ‘Last Name’ field. We have no additional ‘Mother’s Maiden Name’ field.

Method 1: Using The Last Name For Both Names

In this case, as shown in the above screenshot, I have populated the Last Name field with both names. The Contact’s name populates correctly at the top of the form and if we set the full name convention to be ‘Last Name, First Name’, it will appear as “Tribe Aviles, Bob” which makes sense. The problem with this approach is if I need to send an informal e-mail or message to Bob, I cannot address him as ‘Bob Tribe’ but must use the formal version.

Method 2: Using The Middle Name Field To Store The First Surname

After a bit of internet research, it appears this is common practice in the USA but causes a number of problems. The first one is the full name will not populate correctly and needs to be adjusted (Settings-Administration-System Settings). However, in a database where there are people with ‘true’ middle names it becomes confusing which are surnames and which are middle names. This will become impractical if we need to send out informal letters where we would need to use <First Name> <Middle Name> for people with a Spanish name and <First Name> <Last Name> for those with an English Name. We have similar problems if we need to send out a formal letter.

Method 3: Adding a New Field For The Mother’s Last Name

This one is not a bad compromise. We can send out formal and informal communication without too much difficulty. The only downside is the Full Name shows the informal format, not the formal one. also, you will need to add the Mother’s Last Name field to the searchable fields for Contact.

Method 4: Adding Fields For The Two Surnames And Combining Into The Last Name

Given I am in Australia and not South America or Spain I thought I would ask someone who is affected by this every day, fellow CRM MVP Jimmy Larrauri. He has a solution which works well for him; he adds two additional fields to CRM for the two surnames and then uses jscript to combine these into the Last Name field.

This provides all the advantages of the first method with the benefit of being able to use either of the two surnames, as desired. If jscript seems like too much hard work, you could also relax the Last Name from being compulsory and then use a workflow to populate the Last Name field, after saving the Contact record.

Conclusions

If you are working with Spanish speaking customers you may need to accommodate their needs when storing names, such as the capture of two last names. As with all design considerations, there are a number of different ways to achieve a similar outcome. The key is in understanding what information is to be stored and how it is going to be used. When this is understood, the best method can be chosen to meet the needs of the customer.

Salesforce Financials Revisited

It has been over two years since I looked at the financials of salesforce.com so I thought is was well overdue. To recap on previous analysis here are the links:

http://leontribe.blogspot.com/2008/09/valuing-salesforcecom-and-its.html

http://leontribe.blogspot.com/2009/02/salesforcecom-revisited-still.html

In September 2008 the price of salesforce (CRM) was $58.00 and the price of Microsoft (MSFT) was $27.34

In February 2009 the price of salesforce was $28.00 and the price of Microsoft was $16.15

As of today (4 May 2011) salesforce is $133.66 and the price of Microsoft is $25.81

I make no bones about the fact that my opinion is that the share price of salesforce is expensive for what it is. However, as can be seen, the market disagrees with me and that is why I am in IT and not retired on a luxury yacht sailing around the Bahamas. This is also why you should get financial advice from a licensed professional and not necessarily listen to the opinions of a CRM consultant. To be fair I am not the only one who is pessimistic on the prosperity of salesforce’ share price (http://seekingalpha.com/article/264023-how-salesforce-com-could-get-crushed-this-quarter, http://online.wsj.com/article/SB10001424052748704150604576166280156761902.html#articleTabs%3Darticle)

That being said, how are the fundamentals of the business going?

Subscription Numbers

I recently came across a little treasure known as the detailed salesforce financials (http://bit.ly/fJyolc). The last page has all the subscription numbers ever released by salesforce, including confirmation that the number of users (subscribers) has not been released since the end of 2007 (at least not to an accuracy greater than to the nearest million).

After a bit of digging, the conclusion I have come up with is this is no longer released because it covers all of salesforce’s products e.g. Chatter, force.com, Sales Cloud, Service Cloud etc. Therefore a strict comparison of numbers against, say, the subscriber numbers of Dynamics CRM is not valid as it is one Microsoft product versus the entire suite of salesforce products. To make the comparison meaningful, we need to assume that the majority of the subscriptions salesforce has is with the sales product, which may not be true.

One interesting note to be made is that if we look at the subscription and support revenue per subscriber and customer a clear trend emerges. That is, while the number of people at a customer site using salesforce products is increasing, the revenue from each one is, on average, decreasing and the overall result is the revenue from each customer is relatively flat.

Quarter	Customers	Subscribers	Average Customer Size	Revenue	Revenue Per Subscriber	Revenue Per Customer
Q2 FY08	35,300	800,000	22.7	$159,998	$200	$4,500
Q4 FY08	41,000	1,100,000	26.8	$196,517	$179	$4,800
Q4 FY09	55,400	1,500,000	27.1	$266,110	$177	$4,800
Q3 FY10	67,900	2,000,000	29.5	$306,870	$153	$4,500
Q4 FY11	92,300	3,000,000	32.5	$428,534	$143	$4,600

This would support the hypothesis that salesforce customers are bringing additional staff on to salesforce products but onto products with a smaller monthly price tag e.g. Chatter. If salesforce ever release subscription numbers for individual products we will have a better idea if this hypothesis is valid. The alternative hypothesis is that customers are downgrading their services i.e. moving from Sales Cloud Professional down to Sales Cloud Group, which I think would be unlikely.

Looking at the last two lines is interesting. In Q3 FY10, the average customer had 30 staff each spending $153 per user per quarter. In Q4 FY11, they added 3 subscribers but the average went down to $143 per user per quarter. This is consistent with simply adding three paying Chatter subscribers to the average customer and the same mix being true for new customers. To put it another way: the growth in the last twelve months can be explained simply by the upsell of Chatter subscriptions and the signing up of new customers. The model suggests that there has been minimal upsell of additional Sales/Service Cloud subscriptions to existing clients. It also suggests around 25% of the million additional subscribers between Q3 FY10 and Q4 FY11 are Chatter subscribers.

For a comparison of how these numbers compare to Dynamics CRM, check out my upcoming presentation at  Decisions Spring 2011. click here to register:

P/E Ratio

The P/E Ratio, at a given point in time indicates the number of years a share will earn back its price. Historically, if you held salesforce shares it would be your children, grandchildren or their descendants that would see the doubling or your investment. In 2008 the P/E ratio was 200 according to MSN Money. In 2009 this improved to 100. Today, according to MSN money, the P/E ration is 280.

So if nothing changes, it will take 280 years for a share buyer to get back the price in dividends or asset accumulation. Something has to change i.e. the ‘P’ or the ‘E’. ‘P’ is the price. for the ratio to come down to a ‘normal’ level, this would have to crash to about 1/20 of its current value i.e. $6-7 . The other option is a dramatic increase in ‘E’, the earnings (or profits). For comparison, the P/E of Microsoft is 10.

Revenue Growth

From 2005-2009, there was a clear pattern in the revenue growth of salesforce. This pattern being a deceleration in the growth (84%, 76%, 60%, 51%, 44% revenue growth respectively) of around 10% reduction in growth per year. In 2010, the revenue growth dropped more sharply to 21% but recovered to maintain the pattern in 2011 with a growth rate of 27%. It will be interesting to see if the growth rate drops below 20% in January next year.

Not surprisingly Microsoft’s revenue growth rate is much smaller than salesforce’s and in fact was negative in FY2010.

Margins

Salesforce has been dogged by small profit margins for years. Between 2005-2009 the profit margins were 4%, 5%, 9%, 3%, 6%, 8%. Salesforce managed to break into double-digits in 2010 with a margin of 11% but has dropped back again to 6% in 2011.

As a comparison, margins at Microsoft have sat around the 30-40% range for over five years.

Sustainable Growth Rate

This is the rate at which a company can grow its revenues without borrowing or issuing shares. This currently sits at 9%, well below their revenue growth rate of 27% meaning more borrowing or share issuing is on the cards.

Microsoft’s sustainable growth rate is, according to my calculations, around 23%, well below their current revenue growth rate of 7%.

Conclusions

Salesforce still has strong customer growth and subscriber growth but it is maintained through the collection of new customers and the upsell of low-value products. Obtaining new customers is an expensive exercise, compared to upselling existing customers and, with margins as low as they are, it may be time for salesforce to shift gears in this regard. It is true they appear to be upselling products like Chatter but really they should be looking to transition customers to the high-end Sales and Service cloud products. The numbers suggest this is not yet happening.

It terms of the P/E ratio it is the same old story. Conventional wisdom would suggest the P/E ratio is very high, meaning the market is very optimistic for the future of the product. It is not clear to me how the earnings are going to grow to such a level as to justify this optimism.

Revenue growth is, and always has been strong but is slowing. However, the growth is still larger than what the business can support meaning it will continue to raise debt and shares for at least a couple of years or until the banks and investors politely decline the opportunity.

My prediction is, with the strong push from Dynamics CRM in terms of pricing and incentive deals, the next quarter’s announcement on May 20 will show an impact on growth. This will frighten the market and we will again see the shares dip below $100. However, do not see this as advice. Benjamin Graham, the man that taught Warren Buffett everything he knows famously said “"In the short run the market is a voting machine. In the long run it's a weighing machine." What Benjamin did not tell us is how long a short run is. Based on the last four years, longer than I expected.