29.3.07

The CRM Market Is Still Strong

The market continues to expand, albeit at a moderate pace, as vendors achieve strong growth in SaaS applications and vertically focused solutions.
by Colin Beasty

Fueled by continued business confidence and a renewed focus on improving customer relationships, the market is expected to grow moderately in 2007 and remain healthy through 2011, with a compound annual growth rate of 11.7 percent, according to Gartner's latest forecast, "CRM Software, Worldwide, 2006-2011." "The market is doing great and exceptionally healthy," says Sharon Mertz, CRM research director at Gartner and author of the report. "We're certainly not going back to a few years ago," she says, referring to the market's crash during the first half of the decade.

Robust earnings reports and optimistic guidance from enterprise suite and best-of-breed vendors indicate a healthy beginning to 2007, Mertz says. Initial estimates based on total software revenue for 2006 rose from just over 14 percent projected growth to 15 percent at the close of the year. Contributing to growth estimates are strong earnings from market leaders, such as SAP and Oracle, as well as continued demand for industry-specific and best-of-breed solution provided by vendors such as Amdocs and Unica.

Adoption of on-demand solutions continues its upsurge, with Salesforce.com reporting its highest revenue to date, according to the report. In 2006, SAP also launched its CRM on-demand solution, and Microsoft offered a subscription-based service through its partner network. Continued application demand for analytics, campaign and lead management, and marketing resource management within marketing automation will also contribute to market growth in 2007.

While the CRM market is expected to slide slightly in 2007, Mertz says it's no reflection on the market, but primarily a result of the economic downturn forecasters have been predicting for this year. One market trend that's expected to continue regardless of economic conditions will be market consolidation as suite vendors extend their application portfolios, best-of-breed vendors acquire solutions that complement their strengths, and vertical industry players expand geographically. With Oracle and SAP owning nearly half the market, and 25 other major CRM vendors controlling another 30 percent, the remaining 20 percent is taken up by "hundreds, if not thousands, of vendors," Mertz says, "all of which are in business looking to provide a specialty or specific niche. They'll get gobbled up in the process, so the volatility will continue."

SaaS will become an increasingly critical element of buyer sourcing strategies and will drive market growth as it continues to further penetrate the enterprise. "SaaS is a solid option for certain lines of business and departments in larger companies," Mertz says. She also sees growth among best-of-breed vendors outperforming suite providers as buyer demand increases for vertical- and region-specific application functionality. "Growth rates among best-of-breed vendors will be higher. For suite providers like Oracle, SAP, and Microsoft, their sweet spot remains horizontal, but they'll continue to see strong growth amongst their vertical portfolios."

27.3.07

Salesforce.com Springs a Space Program

Salesforce.com's Spring '07 release features AppSpace, a veritable on-demand lovechild of MySpace and AppExchange for the business user.

by Jessica Sebor

Salesforce.com today announced a plan to piggyback on the MySpace craze with AppSpace, an online networking application for business users. Featured in the Spring '07 release, AppSpace will allow companies to collaborate and interact with customers through the use of Salesforce.com, Apex, and AppExchange applications. The secure, branded online environment is slated for release in April of this year, and will be introduced alongside other advancements to Salesforce.com's existing applications.

"Just as MySpace brought together individuals on the consumer Web, AppSpace will bring together companies and their customers on the business Web," said Marc Benioff, chairman and CEO of Salesforce.com, in a written statement. By directly evoking the former NewsCorp purchase in both the application's name and the company statements, Salesforce.com plans to ride the wave of MySpace's success. Denis Pombriant, founder and managing partner of Beagle Research, explains that this allows Salesforce.com to quickly explain the portal in a way their customers can understand. He offers the possibility that Salesforce.com is "positioning this portal to appeal to a younger generation of users."

AppSpace will be available in April as part of the Spring '07 release and will be priced starting at monthly fee of $995 per organization. As MySpace has gained popularity for the ability to share personal music, pictures, and videos online, AppSpace will enable users to swap documents, manage projects, and collaborate through Apex applications. The portal will be built on the Apex platform and will support the platform's existing capabilities, such as embedded mashups and workflow. Jeff Kaplan, managing director of THINKstrategies, says that this model provides a new way for companies to create rich communication between their brands and their customers. He says that normally when communication occurs, "it happens when something goes wrong." He adds, "This portal permits customers to be able to gauge their level of connectivity and gives them the opportunity to share information with their peers."

The Spring '07 release will also include upgrades to popular features promoted on IdeaExchange, Salesforce.com's online community, such as time-based workflow, customized search, and look-up relationships. Upgrades to Salesforce Partner Relationship Management, including enhanced partner emails, partner role hierarchies, and joint selling will also be available in spring of this year. Salesforce SFA will also be upgraded to include customizable search, recent item hovers, and connectinity with Outlook 3.0. Pombriant says that one of the most notable aspects of the release is the fact that "so many of the ideas came out of the IdeaExchange." He says, "The IdeaExchange is doing something very similar to what Salesforce.com wants its customers to do with [AppSpace]. I think that it's a great testament to the power of remaining connected to your customer."

26.3.07

The Potent Mesh

This will be a watershed year for Online Marketers Experimenting with the Web as a Channel – Here’s how to reach Beyond the Banner Ad

By Jessica Sebor

The flash-fire speed of Web-tech development and the embracing of online activities have led to explosive growth in Web-marketing opportunities. However, the proliferation of online marketing materials presents a problem with clutter: How does a business reach through the noise to grab customers’ attention? So many choices are available for Web marketers today, making decisions about the right ones is overwhelming.

“The conventional must-buy banner ads have been displaced through a deeper idea of how you can interact with your customers,” says Shar VanBoskirk, senior analyst at Forrester Research. Marketers now have the opportunity—and duty—to target information to consumers’ specific needs and wants, listen to feedback more carefully, and create interactive relationships with individual customers online. Read on for 10 tried-and-true tips for targeted approaches.

1) MOVE MORE MARKETING DOLLARS ONLINE

In the past two years the emergence of Web 2.0 has upped spend possibilities exponentially. It is often difficult to find funding internally at the same rate at which technology is developing, but marketers must move money to the Web. The attention level given by companies does not always mirror this trend. Jason Palmer, vice president of marketing for WebTrends, says,“It is not an either/or proposition.” Web marketers “will look to integrate online initiatives across all marketing activities,” shifting funding to the campaigns proven to garner the most return.

2) FURTHER INTEGRATE ONLINE AND OFFLINE EFFORTS

The technological framework of online advertising forces Web marketing to operate as its own department, which can remove it from the larger corporate marketing mix. In a world where millions of people transition seamlessly between their on- and offline lives, marketers must tighten their on- and offline efforts. This idea goes beyond just delivering across all channels. “It’s not do we have the same logo and the same color? It’s figuring out what is the best medium for that message and how do we use it? It could be a print ad, but how do we grow that online?” says Jason Katz, executive vice president of Catapult Marketing Interactive.

Tying on- and offline efforts together creates the potential for increased customer interaction that neither channel could provide alone. Consider Catapult’s campaign for Timex.When the watch company wished to start selling to a younger market, Catapult helped it create a “faces of Timex” campaign that was pushed in retail stores. The campaign encouraged consumers to upload a picture of their face to the Timex Web site to win a role in a commercial. The upload was quickly followed by a text message containing a code that brought the consumer back to the site to enter the pin number for the chance of instant wins.

This was not an instance of a message being sent out both on and offline, but of a richer experience that mixed all channels together. Through the campaign, Timex created a database of more than 85,000 new customers who kept coming back, to the tune of 91,633 repeat visits in one month. It is important to remember that not only the message, but also the customer data, should transfer fluidly from both off- and online systems. If a customer shares a preference over the phone, this information should be taken into consideration while he is interacting with your Web site.

3) USE SOCIAL MEDIA TOOLS TO CREATE CONVERSATION

Social and media can often seem like dirty words for marketers. Many shy away from blogs, threads, and social networking sites, concerned about negative feedback and branding control, but marketers now have little choice but to engage this way. “Consumers are shifting the way they think about marketers and established firms in that the user is more interested in connecting with other individuals,”VanBoskirk says.

The most important thing to remember when going forward with a social media marketing initiative is to do what makes sense for your company and your customers. Just because you can’t picture your brand on MySpace doesn’t mean you can’t tap into a peer network. Social media comes in countless forms: brand-social sites, product-based blogs, user-interactive games, posted content on larger social media sites, and more. Getting customers to participate in brand or content creation will bolster both consumer attention and retention.

To create buzz or complex conversations surrounding a product, make sure that consumers have something to talk about. Akin Arikan, a senior segment manager for Internet marketing at Unica Corporation, says companies can do so through customer targeting. Take a camera seller, for example: “If you know a person who bought a camera in the past was unhappy with the zoom, put them in contact with others who ranked zoom as the most important feature.”

4) BE HONEST

In the era of social media and Web 2.0, customers truly are king—and they’re now grasping tightly to the scepter. Users have more power over a brand than ever before and more of a propensity for attrition. For companies this means not shying away from negative feedback. The more a company tries to bury a problem, the greater the risk of being tarred and feathered.

Alister Gillett, president of Catapult Interactive, says this is especially important for companies looking to create conversations in the social computing space. Although many companies have tried veiling their brand to make it a seemingly one-way dialogue, “if you’re going to talk about us and we’re part of the conversation, then we must show that it is our company and not try to hide this fact.”

5) FIND YOUR CUSTOMERS AND HEAR THEM

Once customers are talking, it is extremely important to listen and take notes.With any form of marketing, knowing one’s customer is a marker for all efforts, and online marketing is no exception.VanBoskirk says that monitoring content on large social networking sites and personal blogs can be a means that allows companies to dip their toes into Web 2.0 without doing so in a visibly public way. “These are easy, low-risk ways to start tapping into the social computing phenomenon without having to adopt a host of new technology.”

There are marked upsides of tracking brand mentions online.Conversations that might have occurred standing in line at the coffee shop and then forgotten an hour later are now published, at least semipermanently, on the Web. Instead of having to eavesdrop a company can simply run a search.A recent study conducted by Technorati found that approximately 75,000 new blogs are launched daily, with an accompanying 1.2 million posts. Peter Kim, senior analyst at Forrester Research, wrote in another recent study that “tactics such as clipping services, field agents, and ad hoc research simply can’t keep pace.”

Forrester cites Nielsen BuzzMetrics and Cymphony as best in class brand monitoring tools; however, smaller companies can start buzz monitoring initiatives with tools like Google’s Blog Search, Alerts, and Trends, which are free but unautomated and devoid of analytical capabilities. VanBoskirk says that these tools act “similar to the way you might track PR mentions in a traditional environment.”

6) TARGETING: NOT JUST FOR EMAIL ANYMORE

Information gleaned from consumers on the Web can be used not only to shape future marketing campaigns, but also to target customers at an individual level. Due to flexibilities granted by online shopping, the buy cycle for customers is starting long before the sell cycle. Targeting has become even more important as companies must keep customers interested and engaged over many visits and an extended period of time. VanBoskirk defines behavioural targeting as “understanding the users who have demonstrated online behaviours which show that they are valuable targets for you.”

Through targeting, companies can pay the appropriate level of attention to customers depending on their value metrics and leverage behavioral and demographic data to inform the method of approach and the information delivered. When a customer clicks on a link she is more likely to stay on the Web page if there is information present that she is interested in. Solutions like interactive management tools can help analyse behavioral data on a site and then produce sites that are optimized for different customer profiles.

If a customer has visited the site in the past you know what he clicked on; the next time he is at the site these features will surface at the top of the page. This tactic can also be integrated with direct email efforts by embedding outreaches with personalized URLs dedicated solely to the person whose box the email enters. Targeting can extend as far as marketers’ imaginations. “The implications of being able to immediately act on individuals’ behavior are far-reaching,” Palmer says. “For example, target visitors that appear on the verge of defection due to their lack of recent activity.”

7) GUN FOR TRIGGER EVENTS

Trigger events represent a part of targeting in which customers are reached out to through the advent of an event that would mark the consumer ready to buy. This form of targeting is especially useful for B2B companies looking for firms to aim their marketing efforts toward. “There’s a boatload of information on the Internet today,” says Jim Dickie, a partner with CSO Insights and a CRM magazine contributing writer. “If there’s an announcement, the use of Web crawling technology that defines what trigger events are will lead me to what will give me a chance to sell to somebody.”

An increase in funding, a new product, a customer acquisition, or significant internal changes may indicate that a company should become a valuable target for your marketing efforts. Your marketing department may also choose to alert the sales team of the lead. Technorati watchlists, Google alerts, and Yahoo! RSS feeds are all free tools that may be used to do such crawling.

8) INVEST IN SEARCH ANALYTICS

As with any company activity, for Web marketing, accountability should be top of mind. Nathan Rudyk, president of Market2world, says, “It’s been around since 2003, but if marketers haven’t yet used Google Ad Words, they definitely should.” Tools like Google Ad Words (Yahoo also has a similar service), allow marketers to measure clicks and hits on your site, track where the clicks came from, and pipe the data into your CRM system to analyze its worth. This kind of analysis will aid in your understanding of customer needs and behaviors, as well as vouch for marketing spend and measuring yourself against competitors.

To get a full picture of your marketing efforts and customers, look in paid and unpaid search results, both branded and nonbranded terms. Emily Riley, an analyst at Jupiter Research, says that search marketing has come a long way from just counting paid search clicks. What should now be on marketers’ minds is “the idea of looking at the environment of search as a full cycle that a consumer goes through, not always driving them to buy.” Search analytics can give you a better idea of where a customer is in his purchasing life cycle and can help to replicate actions that work.

9) WATCH KEYWORD INVESTMENTS

As the demand for search engine marketing has increased over the past few years, the price of keyword cost-per-click has almost doubled, and this trend shows no signs of slowing. In the third quarter of 2006, the average keyword price rose 16.5 percent from the previous quarter to reach $1.48, according to the Keyword Price Index from search marketing services provider Fathom Online.With increasing price and competition, companies must be more careful about where their keyword investments go. Broad terms can be a killer for search marketing budgets. Marketers must look to invest in their most popular, more company-specific terms to increase conversion rates without inflating costs.

Palmer recommends using multivariate tests to see where marketing spend on search should be allocated.“This allows marketers to spend more time on strategic decisions that are best handled through their expertise, while technology provides the science and automation to continually optimize the results.” Marketers may also look to emerging vertical search engines that focus on media in their specific area to increase the relevance of the results.Additionally, social search engines that use peer-to-peer feedback should be considered for investment. VanBoskirk says, “The marketer today should try to figure out when and how to tap into those smaller search engines, while also leveraging sites like Google.”

10) EXPERIMENT

Even though it is important for marketers to have a numbers-driven mindset to measure, to analyze, to count, and to report,Web marketers must also sometimes step away from the spreadsheet and flex their creativity muscle. Duncan Avis, vice president of professional services firm MarketBridge, says, “The beauty of Internet marketing is it’s easy and cheap to create, launch, and manage a campaign.” The room for experimentation available online provides much opportunity for marketers to take risks they might not normally dare to in an expensive mailing or broadcast media campaign. This opportunity is best harnessed through careful measurement across all efforts to properly understand the impact of any activity your company creates or participates in on the Web.

Starting any effort with a small-scale test helps ensure that a large-scale campaign will have a positive impact. Experimentation can be especially valuable for Web 2.0 efforts, as companies often view these campaigns as more risky. Applying new kinds of media through viral efforts or social networking can allow you to interact with customers in a live environment, creating the same feedback as a focus group or a market research effort without the heavy investment. For more experimental campaigns, you can test what value resonates with your customer base and find where any pain points may be. Rudyk says that in 2007 marketers’ “overall resolution” should be to play with and test new media models. “It’s not so much about the technology, but the approach. This is the opportunity for marketers to write their own rules.”

22.3.07

SaaS Is a Four Letter Word for SMBs

Adoption of on-demand solutions by SMBs continues to increase, but many smaller companies are still wary of the concept of software-as-a-service, according to a new study.

by Jessica Sebor

Although SaaS solutions are often touted as ideal for SMBs, many smaller businesses still hesitate to explore the on-demand model, according to a new survey conducted by IDC. The study, "The Adoption of Software as a Service in Small and Medium Businesses: Perception Versus Reality," finds the market for SaaS to be growing rapidly despite SMBs' enduring fear regarding data security. IDC recommends that vendors selling on-demand solutions do so by highlighting how the applications can solve business problems rather than attempting to use SaaS itself as a selling point.

"Especially among the smaller firms, there's still a level of suspicion [surrounding SaaS]. You don't want to entrap mission critical data somewhere in outer space," says Merle Sandler, senior research analyst for IDC's SMB Markets program. However, Sandler explains that it is perhaps the concept of SaaS and not the service itself that companies are wary of. In fact, the study found that a higher percentage of companies reported that they were receiving applications delivered by a service than they were "using SaaS." This discrepancy may come from an aversion to the word "SaaS."

The study found data security concerns to be the top reason why companies will not use SaaS. This was the top concern for both small and medium businesses, followed by a fear of being tied into a service that will continue to cost the company on a monthly basis. Sandler says that for the most part, these fears are unfounded, and that solutions are much more stable and reliable than many companies assume. She says that for SaaS vendors, "You have to emphasize that the things are secure."

In spite of trepidations, IDC finds that SaaS adoption is continuing to rise. Out of the 614 small business surveyed, 5.1 percent plan on moving forward with a SaaS solution within the next year; 15.2 percent of the 418 medium businesses plan to do so as well. More vendors are developing on-demand solutions and more small businesses today have high-speed Internet connections that support them.

To best sell SaaS solutions to SMBs, IDC recommends that vendors focus on the benefits of the solution itself rather than the benefits of an on-demand solution in general. Eventually, Sandler says, SMBs will come around to the benefits of on-demand, such as low implementation costs, quick go-live times, and flexibility. "If you speak to them, it's always been more successful than they thought it would be," Sandler says of SMBs who have implemented SaaS solutions. "It's such a logical way for them to get the software. As they get more comfortable with it and have more services in place, slowly they will accept it."

16.3.07

Ramping Up to Service On-Demand

Gartner finds that the rapidly expanding SaaS market will force service providers to position themselves in preparation for the quickly changing landscape of IT software

by Colin Beasty

The market for software-as-a-service (SaaS) continues to pick up steam, having reached $6.3 billion in 2006, and is forecasted to grow to $19.3 billion by year-end 2011, according to new research released by Gartner. "The dysfunction of the client/server era is driving alternative approaches to IT development, delivery, and management, which SaaS is the most apparent version of," says Ben Pring, research vice president for Gartner. "There is a widespread consensus among the movers and shakers of the IT industry that SaaS is an important and meaningful issue which can no longer be regarded as the 'lunatic fringe.'"

Pring sees SaaS adoption broadening out from areas such as CRM and HR into new areas such as procurement and compliance management. However, the scale of change involved in moving to a SaaS approach is proving hard for many vendors to manage. "Due to the law of large numbers, traditional IT solution models are becoming victims of their own success, while the relative smallness of new approaches facilitates growth much more easily," Pring says. "For large, established IT solution providers, the SaaS market so far hasn't appeared to have enough incremental growth potential to meaningfully contribute to revenue growth. As a result, they have tended to ignore it."

This has left the door open for smaller, newer players, who are now pouring into this gap, Pring says. Incumbent IT solution providers are slowly waking up to this and are entering the market to leverage SaaS market interest. "SaaS is a manifestation of the increasing maturation of software development, deployment, and management. New technologies used in software development and improvements in the underlying development business processes are making software development a more industrialized process."


This maturation will also have a profound influence on the types of services consultants and system integrators will offer, and on the types of IT services that are sourced by enterprises. Some IT services will come to resemble manufacturing, and will have a similar development curve as most manufacturing businesses had during the last quarter of a century--that is, wide movement overseas to lower-cost production centers and overall price deflation, Pring says. Although the SaaS market is still relatively small, service providers need to make important strategic decisions now. Pring says that the scale of change that SaaS will produce requires providers to make the following changes soon so they can keep ahead of the SaaS wave:
Use solutions built on next-generation Web services, SOAs and highly automated server farms to produce multitenant, mass-customizable solutions that facilitate agility while sustaining uniqueness at a reduced cost.


Make strategic decisions around whether to offer SaaS as simply one element of a broader portfolio or to fully evolve toward a SaaS-based delivery model.
Act now because of the scale of change required to successfully exploit SaaS opportunities.
Conduct thorough due diligence to be well placed to take advantage of opportunities and manage risk as the market evolves toward SaaS.


"This potential combination of SaaS and global souring delivery models--two notions that have seemed diametrically opposite up until now--will produce powerful changes in the entire IT industry, and particularly IT service providers," Pring says.