Musical instrument maker Yamaha uses Oracle for ERP, but it bypassed the company's CRM software for Salesforce.com's on-demand product, using Tibco Software to connect its Salesforce.com apps with its ERP system. The main reason it chose Salesforce.com was because software as a service offered faster implementation and reduced complexity, says David Bergstrom, Yamaha's corporate planning manager. He's having a hard time understanding how Oracle's acquisition strategy will benefit his company. "It seems like it's just gotten more complicated for them," he says, considering the "menu of things" Oracle offers up. "It's not as simple, clean, and clear as with a Salesforce.com solution." Gartner analyst Alexa Bona says she has heard a fair amount of grumbling from Oracle customers about the maintenance Oracle provides after it acquires a software vendor. As support and other personnel from those acquired companies get laid off or move on, "some customers feel some of the skills sets are missing, yet support fees are higher," Bona says.
Case in point: Oracle Customer Aon, the $10 billion-a-year insurance company, has rolled out Salesforce.com to more than 5,000 employees worldwide. "The software option wasn't a positive one for us," says Phil Clement, head of Aon's sales systems.
By Mary Hayes
The software industry is quickly settling into a gang of four: IBM, Microsoft, Oracle, and SAP. Where will the next billion-dollar competitor come from?
Barry Libenson, CIO at Ingersoll Rand, considers himself fortunate. While the odds increase every day that the company's key software vendors will get caught up in disruptive takeovers, so far Ingersoll Rand has landed on the right side of every deal. "The companies we've aligned ourselves with are doing the acquiring," he notes, pointing to Oracle as a primary example. "The scary thing is when you're at the other end of the spectrum. Then you're at the mercy of who's doing the acquiring."
There's reason to be concerned, or at least cautious. With software industry consolidation barreling along, far outpacing any other U.S. industry, CIOs must plan carefully and think fast. Will an acquiring company stop innovating the technology you've standardized on, content to feed on a steady diet of your maintenance fees? Will a clammy-palmed salesman fronting a software giant replace your straight line to a smaller vendor's CEO? Or will the acquisition bring positive change, with a vendor's new parent investing more in research and development and giving you access to a larger, more knowledgeable support team?
Software consolidation isn't the voracious monster some people perceive it to be. True, it's driven by big vendors desperate for growth. But technology managers needn't fear that consolidation will eat away at competition or innovation in the software industry: There are still plenty of new ideas and novel approaches seeping in.
THE BIG PICTURE
When it comes to acquisitions, software dominates all technology sectors, accounting for 40% of the $298 billion in tech M&A deals done last year and half of the $306 billion in deals in 2005, according to Thomson Financial. The runner-up: Internet companies, which accounted for just 18% of last year's tech M&As.
While software always has been an acquisitive industry, the deals are getting bigger and more complex. Last year, 1,726 software companies were acquired, the highest number since 2000, according to investment firm Software Equity Group. But more impressive was the size of some of those deals: Hewlett-Packard's $4.5 billion acquisition of Mercury Interactive, EMC's $2.1 billion purchase of RSA Security, and IBM's acquisitions of FileNet and Internet Security Systems, both of which exceeded $1 billion.
These deals came on the heels of Oracle's big-bucks, high-profile acquisitions of PeopleSoft, Siebel, and Retek--as well as 23 other companies--over the past two years. IBM isn't far behind, with 22 notches on its belt over the same period. Microsoft has bought more than 25 companies in that time, though most of them were tiny startups acquired under the radar.
This year, megadeal watchers are training an eye on Cognos and Business Objects, both with annual revenue in the $1 billion range, as potential acquisitions. Business intelligence is hot, and the biggest vendors want in--hence Microsoft's acquisition of ProClarity last April. NCR's recent decision to spin off billion-dollar-plus data warehousing specialist Teradata is viewed by some as making Teradata a more attractive acquisition target to big tech companies or even a private equity firm. Siemens last week acquired UGS, a maker of product life-cycle management software, for $3.5 billion in cash from three private equity firms.
In the past four years, 430 publicly traded software companies, most of which had grown through acquisitions themselves, have been swallowed up, says Ken Bender, managing director at Software Equity Group. Also, more private investors are getting into the fray. Witness Hellman & Friedman's recent $1.3 billion acquisition of Intergraph. "Private equity firms and larger software companies are awash in cash," says Bender.
Revenue-hungry vendors are eyeing the software-as-a-service model, too, which is getting tons of interest from both the venture capital and the user communities. A buyout of Salesforce.com, one of the most successful SaaS companies, would provide a big IT vendor a splashy entrée. IDC predicted last month that Salesforce will be acquired this year.
LET'S MAKE A DEAL
Why all the big deals? Theories typically center on industry maturity, vendors in search of new growth and market opportunities, or a combination of the two. Some view consolidation as the natural progression of an aging industry, invariably dredging up a comparison to the global auto industry. But consider that both software suppliers and buyers have more cash to spend than in years past. IT budgets have increased steadily since bottoming out five or six years ago, and it's universally forecast that spending on software will continue to rise this year, as long as something unexpected doesn't derail the economy. Meanwhile, software companies, which were under Wall Street pressure to focus on profitability several years ago, have shifted back to revenue-growth strategies to capture more of those rising IT budgets. So they're buying companies with technologies that either complement their own or drive their businesses into new areas.
Gary Scholten, CIO at $9 billion-a-year Principal Financial Group, says he has highlighted software industry consolidation as a "risk issue and an opportunity" with the company's board. Scholten learned the hard way. A while back, one of the financial services company's software providers was acquired by an IT infrastructure vendor that wanted to take the software in a completely different direction, one that didn't mesh with Principal Financial's IT infrastructure. So Principal had to dump the software and transition to something else.
On the other hand, acquisition by a larger company can put a struggling software supplier on more solid financial footing and allow it to scale its architecture, Scholten says. And consolidation can actually increase a customer's influence with an alpha vendor. For example, Principal Financial's influence with Oracle has increased as Oracle has acquired companies Principal does business with. "For every negotiation we have with them, that plays a part," Scholten says. Premier customer status can mean better volume licensing deals, better access to vendor executives, and inclusion on customer advisory boards to influence the vendor's technology road map and strategic direction.
THE FEWER, THE BETTER
Despite rising budgets, the dictate to run a lean IT organization hasn't changed. Working with fewer vendors means spending less money managing relationships. As a major Siebel account and a large Oracle customer, Ingersoll Rand's Libenson says he had significant negotiations going on with both companies. Now he deals with only one. "The fewer companies I have to deal with, the easier my job is," Libenson says. And he applauds Oracle's acquisition of Oblix, which Ingersoll Rand was using for identity management. "It really legitimized the technology and helped tremendously from an integration perspective," he says.
Still, when it comes to software moving from one owner to another, integration is a major concern, along with upgrades and licensing. Oracle co-president Charles Phillips said at Oracle OpenWorld in October that there will be "no forced march" migrations from one application platform to another, even as the vendor continues its own march toward the integrated applications framework known as Fusion, the first part of which is due next year. Oracle will provide upgrades soon for its Oracle E-Business suite and the JD Edwards, PeopleSoft, and Siebel product lines. The JD Edwards upgrade will be the first in 10 years, the company says. In December, Oracle announced an umbrella software licensing scheme for all its applications, in an effort to eliminate the complexity of sifting through the various schemes of PeopleSoft, Siebel, and others.
Ingersoll Rand's Libenson has had some experience integrating Oracle's and Siebel's apps, and he'd like to see Oracle make faster progress. "But being realistic, integrating two monolithic platforms is a huge amount of work," he says.
Oracle's acquisition strategy is losing it some deals. Sport Chalet, a $350 million-a-year retailer, chose SAP's retail offering over Oracle's because of the lack of integration between Oracle financial apps and the retail apps of Retek (acquired by Oracle in 2005), says Sport Chalet CFO Howard Kaminsky.
Musical instrument maker Yamaha uses Oracle for ERP, but it bypassed the company's CRM software for Salesforce's on-demand product, using Tibco Software to connect its Salesforce apps with its ERP system. The main reason it chose Salesforce was because software as a service offered faster implementation and reduced complexity, says David Bergstrom, Yamaha's corporate planning manager. He's having a hard time understanding how Oracle's acquisition strategy will benefit his company. "It seems like it's just gotten more complicated for them," he says, considering the "menu of things" Oracle offers up. "It's not as simple, clean, and clear as with a Salesforce solution."
Gartner analyst Alexa Bona says she has heard a fair amount of grumbling from Oracle customers about the maintenance Oracle provides after it acquires a software vendor. As support and other personnel from those acquired companies get laid off or move on, "some customers feel some of the skills sets are missing, yet support fees are higher," Bona says.
Not so, argues Oracle senior VP Sonny Singh. Oracle surveys its customers periodically on their experiences with support and communications, and their understanding of Oracle's vision, Singh says. In the last year, Oracle's customer satisfaction rate, as measured by its Global Customers Program surveys, is up 16%, though he won't disclose the base number for that increase other than to say it was high.
That satisfaction is in large part because of Oracle's structure, Singh says. After companies are acquired, they're placed in the appropriate vertical business unit, such as retail or utilities. That makes it easier for customers in a particular vertical to interact with the development, marketing, and implementation folks for the software they're running, because their services are all under one vertical umbrella.
Not surprisingly, Oracle's competitors are trying to poke holes in its acquisition strategy. Marc Benioff, the flamboyant founder and CEO of Salesforce, calls Oracle "the GE of software," because it runs those software business units as separate profit-and-loss centers, much like the conglomerate GE runs its aircraft engine, plastics, and broadcasting units. "It would be a breakthrough in software management if they could make it work," he says.
Steve Mills, senior VP and group executive of IBM Software, cracks, "Fusion is about confusion." IBM should talk, having practically pioneered the big-bang software acquisition--and interplatform integration headaches--with its $3.5 billion buyout of Lotus Development in 1995.
In recent years, IBM has taken a more focused, smaller-scale approach to acquisitions. Yes, it's biggest was a doozy: the $2.1 billion acquisition of development toolmaker Rational. But that was back in 2001. Mills says IBM isn't avoiding big acquisitions--it paid $1.6 billion for FileNet in a deal that closed in August--but it's more focused on the middleware market, including software related to IT infrastructure and application integration. "It gives us the greatest leverage," he says. "If we moved outside these connected spaces, we'd have a much harder time getting return." IBM's fourth-quarter earnings results showed an 11% boost in profit to $3.54 billion; the company attributed a chunk of that growth to its 2006 software acquisitions.
Mills insists that IBM has taken great care in preserving its customer relationships during acquisitions. "We invest more in technology than prior to the acquisition," he says. "We invest more in sales and support than the company did prior to the acquisition." The antithesis, he says, is the "Charles Wang model," referring to the founder and former chairman of Computer Associates, which tore through the software industry in the 1990s with acquisition after acquisition, engendering animosity among its acquired customer bases by cutting off development, milking maintenance fees, and forcing users toward software they didn't want. "I don't think customers are distressed that acquisitions are occurring; they're distressed when the acquiring company shows no level of commitment and investment in the technology," Mills says.
But IBM can't please all the people all the time, either. David Hauser, CTO of telecom firm GotVMail and a former Tivoli customer, says Tivoli changed dramatically after it was acquired by IBM 10 years ago. In just the last four years, 15 IBM acquisitions have been absorbed by the Tivoli brand. "Tivoli became too much cost, too much hassle, and really went away from its core business of monitoring," Hauser says. As Tivoli grew, Hauser had difficulty finding information about the original technology. He finally gave up and moved to an open source network monitoring tool from GroundWork called Nagios.
THE GANG OF FOUR
Principal Financial's Scholten says he'll steer clear of a hot startup's promising new technology if that company appears to be a takeover candidate. Ultimately, it will hurt innovation in the software industry if influential customers like Principal Financial shy away, he admits.
But not all technology users think that way. "I don't think people are so focused on operational efficiencies that they're incapable of seeing when something interesting, and perhaps better, is happening," says longtime industry watcher Amy Wohl. What's more, venture capital spending on tech startups is on the rise.
Certainly, consolidation means fewer choices. When you have two main ERP options, rather than the five or six that existed five years ago, you have less negotiating leverage, Scholten says.
There's no getting around the fact that the largest software companies--IBM, Microsoft, Oracle, and SAP--are getting bigger. Some insist that a weak IPO market, acquisitive IT vendors, and buyers' desire to work with fewer vendors will make it impossible for a sizable fifth or sixth rival to emerge. "You will never see another billion-dollar enterprise software company," says Glover Lawrence, managing director at McNamee Lawrence & Co., an investment firm specializing in tech M&As. "Google may eventually compete with Microsoft, but not as an enterprise software company."
Conventional wisdom--but is it true? Salesforce predicts its revenue will exceed $700 million in the coming year. Another Silicon Valley highflier, VMware, reported that its fourth-quarter revenue rose 101% over the year-earlier quarter to $232 million, putting the company on an annual run rate of $900 million. It was the fifth consecutive quarter that VMware's year-over-year growth surpassed the previous quarter's, an exception to the rule that as big software companies get bigger, growth must slow down.
But even though VMware, acquired by EMC in 2004 for $625 million, operates as an independent subsidiary (separate sales, marketing, and R&D from the mother ship), it isn't an independent company. Even if it were, "VMware is a real anomaly," CEO Diane Greene says. For a software company of its size to grow as fast as it is, it must add a new layer to the software industry's "stack." In VMware's case, it's virtualization. For Salesforce, it's software as a service. For Google, it's selling ads. "Those new layers don't come around very often," Greene says. "There aren't that many really significant new things."
Maybe. Or maybe we just haven't seen them yet. "There's not a country in the world that's not trying to foster some sort of indigenous software industry," says IBM's Mills. Salesforce's Benioff says he's searching for the next killer app, but it won't come from his company: He thinks it will come from a developer in Shanghai, Bangalore, Eastern Europe, or some other remote place, delivered over Salesforce's AppExchange platform. "There's no way that developer is going to get to a Merrill Lynch or other big customer without us," Benioff says.
SAP is hoping for something like that with its service-oriented architecture strategy. With its SOA technology, called NetWeaver, SAP doesn't need to acquire. Instead, it's partnering with hundreds of smaller vendors whose software services snap into SAP's ERP suite, mySAP, explains Bill McDermott, CEO of SAP Americas. With big software acquisitions, "you have to rewrite the code base of the individual companies, integrate the culture and people from very different companies, and then get the customer to procure disparate pieces," McDermott says. Oracle's acquired apps aren't yet service-enabled. "So theirs is like a lung-and-heart transplant," he says, "where ours is plug and play."
Software companies essentially have two growth alternatives: innovate or acquire. SAP is hoping its growth will come from the former, by way of NetWeaver and an upcoming software-as-a-service offering that, it claims, will be different than what's currently available.
There's a lot riding on that innovation. SAP's financial results last week were disappointing: Software revenue for its fourth quarter was up 7% to 1.3 billion euros and 10% to 3.1 billion euros for the year, lower than what SAP had expected. At the same time, SAP said it's preparing a software service for midsize companies that they can test on the Web before committing, will cost them considerably less than a package software suite, and, unlike Salesforce's, will let them store data on local systems. It's unclear when the offering will be available; SAP says it will provide details within a few months.
Microsoft, on the other hand, is both acquiring and innovating. Perhaps more than any software company, it's moving aggressively beyond its core software business, into unified communications, security, and mobility. And then there are the consumer products: Zune, the iPod challenger, and the wildly popular Xbox 360, itself something of a technology platform and driven by the innovation of outside developers. Salesforce's Benioff describes Microsoft--with obvious envy--as one of the few successful "multicategory, multiproduct" tech companies.
Microsoft isn't averse to throwing around its considerable weight. In November it announced new client access licenses for several products, including Exchange and SharePoint; they require additional licenses for certain features--antivirus protection, for example. That will drive up costs for some customers, but not all: Many Exchange customers already have antivirus software in place, so they won't pay Microsoft extra for that feature.
Microsoft in the past few years also has gotten more aggressive about persuading customers to buy broader license agreements, by charging higher fees for selective agreements that cover specific products. IBM executives called a meeting with several Forrester Research analysts, complaining that through its license practices, Microsoft is trying to eat up so much of IT budgets there won't be enough left for other vendors, says Forrester analyst Julie Giera. Forrester offers coaching classes for companies entering negotiations for Vista, Office 12, and other new Microsoft apps, so they end up with--and pay for--only what they need.
"All the vendors would love to have you do an all-you-can-eat buffet," says Scott Rosenberg, CEO of Miro Consulting, which helps IT buyers negotiate software licenses. "It's kind of like those vacation packages that say, 'Don't worry, relax, you don't have to worry about scrambling for your credit card, just belly up to the bar.' But unless you drink heavily or eat like a football player, you're going to overpay."
Indeed, in this era of bigger is better, it's wise to keep an eye on not only what you're consuming, but also what's getting consumed, and by whom. A few weeks of secret negotiations between two software companies could leave a customer with an impressively bigger and better vendor, or a bellyache of uncertainty and obstacles.
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."
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."
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.”
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."
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.
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.
27.2.07
Software-as-a-service market set to double
A new report claims the software-as-a-service (SaaS) market is set to double in size during 2007, with 41 percent of respondents planning to spend part of their current budget on SaaS applications, yet only 23 percent currently do so.
By Stephen Withers
While only 8 percent regard SaaS as a strategic direction, a further 77 percent of respondents said they are open to considering SaaS on a case-by-case basis. CRM, salesforce automation and finance are expected to be the major growth areas. Substantial growth is also expected in the use of business applications via mobile devices - a field well suited to SaaS.
Fifty eight percent of respondents expected to see an increase during the the next 12 months, with a 105 percent increase in the number of staff using business applications in this way. Of those using SaaS already, 82 percent said the applications met or exceeded their expectations and business needs.
"Fifty eight per cent of respondents using SaaS recorded significant gains in operational efficiency. Forty per cent have experienced increases in revenue,” said Dr. Catriona Wallace, director, ACA Research.
One fly in the ointment is that only a minority - less than 22 percent of the sample - could accurately define the SaaS model. While it is likely that this was simply an inability to articulate the concept among current users of SaaS, we have to wonder how much of the measured enthusiasm among would-be users is misplaced.
Stated barriers to adoption include concerns about security, loss of control, and bandwidth requirements. On the other hand, on-premises applications are seen as expensive to run, with an average of 29 percent of IT budgets going on software maintenance. "Respondents also indicated they were struggling with software upgrades and staff shortages" said Wallace.
SaaS is seen as a way of reducing the total cost of ownership, and the savings made will be redirected to new hardware or hardware maintenance. (We would have expected hardware requirements to fall with the adoption of SaaS, but perhaps respondents have been forced to extend the life of existing hardware due to funding shortages.)
The research was conducted by ACA Research, and involved a phone survey of 120 senior IT executives and line-of-business managers between 25 October and 1 December 2006. Although the survey was sponsored by Salesforce.com, responses from the company's customers were calculated separately.
By Stephen Withers
While only 8 percent regard SaaS as a strategic direction, a further 77 percent of respondents said they are open to considering SaaS on a case-by-case basis. CRM, salesforce automation and finance are expected to be the major growth areas. Substantial growth is also expected in the use of business applications via mobile devices - a field well suited to SaaS.
Fifty eight percent of respondents expected to see an increase during the the next 12 months, with a 105 percent increase in the number of staff using business applications in this way. Of those using SaaS already, 82 percent said the applications met or exceeded their expectations and business needs.
"Fifty eight per cent of respondents using SaaS recorded significant gains in operational efficiency. Forty per cent have experienced increases in revenue,” said Dr. Catriona Wallace, director, ACA Research.
One fly in the ointment is that only a minority - less than 22 percent of the sample - could accurately define the SaaS model. While it is likely that this was simply an inability to articulate the concept among current users of SaaS, we have to wonder how much of the measured enthusiasm among would-be users is misplaced.
Stated barriers to adoption include concerns about security, loss of control, and bandwidth requirements. On the other hand, on-premises applications are seen as expensive to run, with an average of 29 percent of IT budgets going on software maintenance. "Respondents also indicated they were struggling with software upgrades and staff shortages" said Wallace.
SaaS is seen as a way of reducing the total cost of ownership, and the savings made will be redirected to new hardware or hardware maintenance. (We would have expected hardware requirements to fall with the adoption of SaaS, but perhaps respondents have been forced to extend the life of existing hardware due to funding shortages.)
The research was conducted by ACA Research, and involved a phone survey of 120 senior IT executives and line-of-business managers between 25 October and 1 December 2006. Although the survey was sponsored by Salesforce.com, responses from the company's customers were calculated separately.
22.2.07
Mercurial Marketing
Social networking sites have bloomed in the past year or so, but just how valuable are they to marketers and how can that value be leveraged?
by Jessica Sebor
Mothers, fathers, spouses, offspring, siblings, friends, neighbors, bosses, coworkers--for most of us these are the people with whom we develop relationships that influence, to one extent or another, how we function in society. These networks of social and familial contacts give us, among other things, many constructs for managing various aspects of life. In fact, part of how people define themselves is through these personal and professional connections. With more people living more of their lives online, new kinds of relationships--chat buddies, Friendster users, bloggers, MySpace favorites--have appeared, stretching the definition of both social and network. Social networking sites have exploded in number over the past two years, snaking their way through the Web like kudzu. It should come as no surprise that marketers have noticed and are busily cultivating methods to take advantage of this new type of opportunity.
In July 2005 News Corp. CEO Rupert Murdoch purchased MySpace's parent company, Intermix Media, for a staggering $580 million (Murdoch walked away knowing he had gotten the better end of the deal). That's about when it dawned on many e-world inhabitants that online interaction would never be the same. Today, almost half (45 percent) of Web users are active on social networking sites according to the Nielsen/Net ratings. Although MySpace, and more explicitly Facebook, has a younger user base, both are becoming more popular among an older crowd: The sites boast 36- to 54-year-old user segments of 36 and 30 percent, respectively.
At the same time, networking sites like LinkedIn cater exclusively to business professionals (see the sidebar, "Strictly B2B"). With so many people now attuned to the behavior, companies have been scrambling to stake a claim in this emerging space. Tens of millions of people--54 million on MySpace alone--now trumpet their identity, forge relationships, and engage in dialogue in the context of an online community. Where can businesses latch on to this trend? And in such personal forums, is it appropriate or useful for marketers to attempt to take advantage of social networking?
Nikos Drakos, a research director at Gartner, believes that leveraging social networks to connect with customers is not only appropriate but also crucial for companies to consider. However, he says, "When I and others say 'understand social networks,' it doesn't necessarily mean, 'go talk to MySpace.'" How one defines leveraging social networking depends on what the goal is. Viral marketing and brand promotion, for example, may be best done through established sites, as they capture the most traffic. However, this method poses some problems.
ControlTapping into large, established sites like MySpace certainly provides one option, and many companies have gone that route. With so many people visiting these larger Web sites, a company has the opportunity to win much mind share, as well as to interact with its customers individually, thereby humanizing the brand and bolstering customer devotion. Burger King crafted one of the most successful viral campaigns of the past year with the creation of a MySpace profile for its mascot, the King. The profile (really a site within a site) offers those who wish to become Burger King's "friend" the opportunity to play games and download free episodes of TV shows like 24 and Pinks, as well as fancy Burger King logo backgrounds for their personal pages and funny Burger King--sponsored videos (i.e., free advertising). The page to date has attracted more than 134,500 "friends" (or fellow MySpace users) and was credited in part in helping Burger King to boost sales 6 percent to reach two billion in FY ending June 30, 2006.
Other companies--Gatorade, Jack in the Box, and The Learning Channel--have found similar success going this route, but there are dangers and drawbacks to building into a preexisting social networking site--the model may not work well for every company. Companies without a strong brand-based message may get lost in the shuffle. Additionally, such sites allow the marketer virtually no control as to where the companies' message will go. Although loss of customer control is often the case for grass roots marketing, in the context of social networking this becomes even trickier as individual consumers expect to connect to the company directly.
A simple search for "Burger King" on MySpace brings up the company-created profile as well as mock user-generated profiles masquerading as the King or "Burger King," many with explicit language, sexual content, and negative comments about the fast food chain that would give potential customers a perception of the product the company does not, most assuredly, want. It is virtually impossible to weed out the fakes from the originals. Also, "friend" profiles connected to a social networking page can have unsavory or unflattering content. Dan Calladine, research director at ad agency Isobar, says, "If you start a club and offer people free membership, you always have to be definite about who your club is and what your club is." The wrong crowd can drive off other potentially valuable customers.
I'd Rather Do It MySelf.comMySpace, Facebook, and other such sites can serve as valuable marketing tools, but they can also be constrictive. If the framework of the larger social networking sites is not a good fit for your brand or your customers, you can cut out the middleman and create your own. Calladine says that as long as you have customers who are "really passionate and attracted to your product," a brand-based social networking site can be quite effective. "I think anybody can do it, whether they're an automotive, sportswear, or software company. If something is interesting and people want it, there's no sort of limit." Building and owning a site instead of squatting in a larger one can also provide greater freedom to interact with your customers in different ways, such as enabling blog or thread-driven dialogues between users, creating self-service features, or offering promotions, news, and updates with pertinent information.
If a company is looking to build its own social networking site, it has myriad choices; social networking sites can come in many forms. "I think social networking is really something that takes place at [the conception level]. If they're not conceived well, they won't work," says David Ring, president of Sparta Social Networks. It is important to come to the table with a plan outlining what customers might want and how to best deliver this to them. The plan should also detail what a company wants out of the investment. Companies like Sparta, a white label social networking software company, can provide the means to make this idea a reality. Ring reports that he sees more companies jumping in, looking to create branded consumer targeted social sites. A year ago, he says, most of Sparta's business was from start-ups eager to become the new Facebook, but the client profile has shifted in the past six months to major companies looking to introduce Web 2.0 into their marketing mix.
One of such client, Packet 8, a VoIP company, wanted to cut support costs and to create a forum for its users. In the spring of 2005, the company decided to try to reach those goals through the creation of a social networking site for Packet 8 subscribers. "The investment was very low in terms of getting it up and running. It was so easy; it was really just a matter of providing content," says Huw Rees, vice president of sales and marketing. The company created a site available to all Packet 8 customers, which they could link to through their account information page. The site now offers a place to meet and send messages to other Packet 8 users; the option to form online special interest groups; a classifieds page to look for jobs or housing; a blog written by Bryan Martin, Packet 8's CEO; and a forum through which users can ask questions about the product and lean on other users for technological support. The user-to-user help feature has allowed Packet 8 to see a decrease in service costs and an increase in customer satisfaction.
A fear many companies harbor is that creating a space for free user discussion surrounding businesses will equate to airing dirty laundry in public, opening up a Pandora's box of negative feedback, much of which might be unfair or exaggerated. One look at the Packet 8 site illustrates why some companies shy away from these sorts of forums. A recent post on the site reads, "The customer service is GREAT....This company is great all around and so much cheaper than my land line." However, a later post reads: "Upset???? You have NO IDEA!!!!!. . . I am LIVID with the lack of customer support I have received with my most recent problem." Rees says that the company made a decision to monitor for foul language, but not to delete any negative posts. In fact, he cites the high level of interaction in the forums as a marker of success; customers care enough to interact with the brand. Additionally, this open dialogue enables the company to hear what subscribers are saying so that it can tailor its business approach to better accommodate customer wants and needs.
To gain customers' trust it is important that they do not feel censored or that the social networking site is merely a sugar-coated advertisement to promote a purely positive image of the company. Matthew Lees, vice president of operations at Patricia Seybold Group, says, "You need to be genuine if you're going to have presence in this space. Don't be rigid with your brand. Try to be flexible to a degree that you're comfortable with." A case in point: In 2006, while the Packet 8 social networking site soared in popularity, Wal-Mart's MySpace clone TheHub was going down in flames. The site launched in July 2006 and had closed down by October. The site's failure was credited to overpromotion of the Wal-Mart brand and overly stringent control of user content. The site featured videos from "real kids" (aka hired spokespeople) talking through hangar-size smiles about how much they loved the superstore. Wal-Mart monitored all comments on the site and even sent an email to parents of users under 18 to confirm use of the network (a nail in the coffin for anyone trying to interact with a teenager). Users felt stifled--when dealing with a technology that centers on establishment of identity, a high level of restriction is often counterproductive. As with any public campaign, a failed social networking site can do serious perceptual damage to your company. Lees says of Wal-Mart, "Studies show [after the site failed] it had less trust and people are more wary involving Wal-Mart online."
Companies must also be wary of the level of connectivity they ask of customers. If a site demands a high level of interaction, expect it to be used only by the most devoted customers. It would be impossible to connect to a network for every brand an individual buys. Drakos says, "Individuals are not going to be active members of different companies. It's bad enough trying to remember your password to check your flight details." If individuals do join your network, it is important not to bombard them with untargeted offers or irrelevant messages. Calladine explains that in the context of social networking, companies must think of the exchange in terms of friendship. "If someone is your friend, even if you really like them, you don't want the friend to ring you every day, asking you for something."
Additionally, if a company creates a brand-based site targeted at its customers, the viral component drops significantly. If a person doesn't already strongly affiliate herself with a company, she will not to join its network. This effect can be countered by creating a tangential grass roots campaign driving foreign traffic to the site or Web page. Sparta does so through a YouTube video feature that allows companies to create and spread around a film clip with the logo of their Web site attached.
Your OysterAlthough the potential dangers might frighten some companies away, the proliferation of social networking sites makes it impossible (and inadvisable) to ignore the opportunity. Denis Pombriant, managing principal at Beagle Research, says, "There are a lot of cool ideas that business people are now trying to figure out how you can make money from. You certainly have the attention of millions of people. Corporations are thinking that there's got to be a pony in there." With online social networking still very much in its infancy, it's hard to tell how big the pony is or exactly what it will look like; however, for creative companies, the possibilities are quite literally endless and the potential benefits equally so.
One notable social networking development has been virtual environments like Cyworld, a Korean site, and U.S.-based Second Life. People create visual personae that can then walk around, interacting and talking to other users inside of a video game--like interface. Dell has opened up a virtual store in Second Life, which allows visitors to use virtual PCs for their second lives and physical ones for their corporeal lives. With progressions like these, it's not surprising that Calladine thinks of social networking as a kind of limitless comet: "MySpace is the very general head, but it will get to be a long tail."
Strictly B2B B2B companies' customers may not be interested in filling out personal pages about their favorite books and music. However, there is much to be gained through social networking from a B2B angle. Mark Organ, CEO of demand generation software developer Eloqua, says, "I think social networking is massively underutilized by B2B companies for generating leads." Organ sees great potential in sites like LinkedIn (a MySpace for professionals), where companies can find business connections and possible customers.
Companies like Eloqua can further automate this process through sending a trackable link in a personal email and make this more of a visible process from first connection through to the sale. Companies can make internal social networks to help employees understand whom their coworkers know and who might be available or appropriate to reach out to. Social networks can also provide great sources of information for companies wishing to connect with others in their field to stay up to date on the most recent progress and innovations.
by Jessica Sebor
Mothers, fathers, spouses, offspring, siblings, friends, neighbors, bosses, coworkers--for most of us these are the people with whom we develop relationships that influence, to one extent or another, how we function in society. These networks of social and familial contacts give us, among other things, many constructs for managing various aspects of life. In fact, part of how people define themselves is through these personal and professional connections. With more people living more of their lives online, new kinds of relationships--chat buddies, Friendster users, bloggers, MySpace favorites--have appeared, stretching the definition of both social and network. Social networking sites have exploded in number over the past two years, snaking their way through the Web like kudzu. It should come as no surprise that marketers have noticed and are busily cultivating methods to take advantage of this new type of opportunity.
In July 2005 News Corp. CEO Rupert Murdoch purchased MySpace's parent company, Intermix Media, for a staggering $580 million (Murdoch walked away knowing he had gotten the better end of the deal). That's about when it dawned on many e-world inhabitants that online interaction would never be the same. Today, almost half (45 percent) of Web users are active on social networking sites according to the Nielsen/Net ratings. Although MySpace, and more explicitly Facebook, has a younger user base, both are becoming more popular among an older crowd: The sites boast 36- to 54-year-old user segments of 36 and 30 percent, respectively.
At the same time, networking sites like LinkedIn cater exclusively to business professionals (see the sidebar, "Strictly B2B"). With so many people now attuned to the behavior, companies have been scrambling to stake a claim in this emerging space. Tens of millions of people--54 million on MySpace alone--now trumpet their identity, forge relationships, and engage in dialogue in the context of an online community. Where can businesses latch on to this trend? And in such personal forums, is it appropriate or useful for marketers to attempt to take advantage of social networking?
Nikos Drakos, a research director at Gartner, believes that leveraging social networks to connect with customers is not only appropriate but also crucial for companies to consider. However, he says, "When I and others say 'understand social networks,' it doesn't necessarily mean, 'go talk to MySpace.'" How one defines leveraging social networking depends on what the goal is. Viral marketing and brand promotion, for example, may be best done through established sites, as they capture the most traffic. However, this method poses some problems.
ControlTapping into large, established sites like MySpace certainly provides one option, and many companies have gone that route. With so many people visiting these larger Web sites, a company has the opportunity to win much mind share, as well as to interact with its customers individually, thereby humanizing the brand and bolstering customer devotion. Burger King crafted one of the most successful viral campaigns of the past year with the creation of a MySpace profile for its mascot, the King. The profile (really a site within a site) offers those who wish to become Burger King's "friend" the opportunity to play games and download free episodes of TV shows like 24 and Pinks, as well as fancy Burger King logo backgrounds for their personal pages and funny Burger King--sponsored videos (i.e., free advertising). The page to date has attracted more than 134,500 "friends" (or fellow MySpace users) and was credited in part in helping Burger King to boost sales 6 percent to reach two billion in FY ending June 30, 2006.
Other companies--Gatorade, Jack in the Box, and The Learning Channel--have found similar success going this route, but there are dangers and drawbacks to building into a preexisting social networking site--the model may not work well for every company. Companies without a strong brand-based message may get lost in the shuffle. Additionally, such sites allow the marketer virtually no control as to where the companies' message will go. Although loss of customer control is often the case for grass roots marketing, in the context of social networking this becomes even trickier as individual consumers expect to connect to the company directly.
A simple search for "Burger King" on MySpace brings up the company-created profile as well as mock user-generated profiles masquerading as the King or "Burger King," many with explicit language, sexual content, and negative comments about the fast food chain that would give potential customers a perception of the product the company does not, most assuredly, want. It is virtually impossible to weed out the fakes from the originals. Also, "friend" profiles connected to a social networking page can have unsavory or unflattering content. Dan Calladine, research director at ad agency Isobar, says, "If you start a club and offer people free membership, you always have to be definite about who your club is and what your club is." The wrong crowd can drive off other potentially valuable customers.
I'd Rather Do It MySelf.comMySpace, Facebook, and other such sites can serve as valuable marketing tools, but they can also be constrictive. If the framework of the larger social networking sites is not a good fit for your brand or your customers, you can cut out the middleman and create your own. Calladine says that as long as you have customers who are "really passionate and attracted to your product," a brand-based social networking site can be quite effective. "I think anybody can do it, whether they're an automotive, sportswear, or software company. If something is interesting and people want it, there's no sort of limit." Building and owning a site instead of squatting in a larger one can also provide greater freedom to interact with your customers in different ways, such as enabling blog or thread-driven dialogues between users, creating self-service features, or offering promotions, news, and updates with pertinent information.
If a company is looking to build its own social networking site, it has myriad choices; social networking sites can come in many forms. "I think social networking is really something that takes place at [the conception level]. If they're not conceived well, they won't work," says David Ring, president of Sparta Social Networks. It is important to come to the table with a plan outlining what customers might want and how to best deliver this to them. The plan should also detail what a company wants out of the investment. Companies like Sparta, a white label social networking software company, can provide the means to make this idea a reality. Ring reports that he sees more companies jumping in, looking to create branded consumer targeted social sites. A year ago, he says, most of Sparta's business was from start-ups eager to become the new Facebook, but the client profile has shifted in the past six months to major companies looking to introduce Web 2.0 into their marketing mix.
One of such client, Packet 8, a VoIP company, wanted to cut support costs and to create a forum for its users. In the spring of 2005, the company decided to try to reach those goals through the creation of a social networking site for Packet 8 subscribers. "The investment was very low in terms of getting it up and running. It was so easy; it was really just a matter of providing content," says Huw Rees, vice president of sales and marketing. The company created a site available to all Packet 8 customers, which they could link to through their account information page. The site now offers a place to meet and send messages to other Packet 8 users; the option to form online special interest groups; a classifieds page to look for jobs or housing; a blog written by Bryan Martin, Packet 8's CEO; and a forum through which users can ask questions about the product and lean on other users for technological support. The user-to-user help feature has allowed Packet 8 to see a decrease in service costs and an increase in customer satisfaction.
A fear many companies harbor is that creating a space for free user discussion surrounding businesses will equate to airing dirty laundry in public, opening up a Pandora's box of negative feedback, much of which might be unfair or exaggerated. One look at the Packet 8 site illustrates why some companies shy away from these sorts of forums. A recent post on the site reads, "The customer service is GREAT....This company is great all around and so much cheaper than my land line." However, a later post reads: "Upset???? You have NO IDEA!!!!!. . . I am LIVID with the lack of customer support I have received with my most recent problem." Rees says that the company made a decision to monitor for foul language, but not to delete any negative posts. In fact, he cites the high level of interaction in the forums as a marker of success; customers care enough to interact with the brand. Additionally, this open dialogue enables the company to hear what subscribers are saying so that it can tailor its business approach to better accommodate customer wants and needs.
To gain customers' trust it is important that they do not feel censored or that the social networking site is merely a sugar-coated advertisement to promote a purely positive image of the company. Matthew Lees, vice president of operations at Patricia Seybold Group, says, "You need to be genuine if you're going to have presence in this space. Don't be rigid with your brand. Try to be flexible to a degree that you're comfortable with." A case in point: In 2006, while the Packet 8 social networking site soared in popularity, Wal-Mart's MySpace clone TheHub was going down in flames. The site launched in July 2006 and had closed down by October. The site's failure was credited to overpromotion of the Wal-Mart brand and overly stringent control of user content. The site featured videos from "real kids" (aka hired spokespeople) talking through hangar-size smiles about how much they loved the superstore. Wal-Mart monitored all comments on the site and even sent an email to parents of users under 18 to confirm use of the network (a nail in the coffin for anyone trying to interact with a teenager). Users felt stifled--when dealing with a technology that centers on establishment of identity, a high level of restriction is often counterproductive. As with any public campaign, a failed social networking site can do serious perceptual damage to your company. Lees says of Wal-Mart, "Studies show [after the site failed] it had less trust and people are more wary involving Wal-Mart online."
Companies must also be wary of the level of connectivity they ask of customers. If a site demands a high level of interaction, expect it to be used only by the most devoted customers. It would be impossible to connect to a network for every brand an individual buys. Drakos says, "Individuals are not going to be active members of different companies. It's bad enough trying to remember your password to check your flight details." If individuals do join your network, it is important not to bombard them with untargeted offers or irrelevant messages. Calladine explains that in the context of social networking, companies must think of the exchange in terms of friendship. "If someone is your friend, even if you really like them, you don't want the friend to ring you every day, asking you for something."
Additionally, if a company creates a brand-based site targeted at its customers, the viral component drops significantly. If a person doesn't already strongly affiliate herself with a company, she will not to join its network. This effect can be countered by creating a tangential grass roots campaign driving foreign traffic to the site or Web page. Sparta does so through a YouTube video feature that allows companies to create and spread around a film clip with the logo of their Web site attached.
Your OysterAlthough the potential dangers might frighten some companies away, the proliferation of social networking sites makes it impossible (and inadvisable) to ignore the opportunity. Denis Pombriant, managing principal at Beagle Research, says, "There are a lot of cool ideas that business people are now trying to figure out how you can make money from. You certainly have the attention of millions of people. Corporations are thinking that there's got to be a pony in there." With online social networking still very much in its infancy, it's hard to tell how big the pony is or exactly what it will look like; however, for creative companies, the possibilities are quite literally endless and the potential benefits equally so.
One notable social networking development has been virtual environments like Cyworld, a Korean site, and U.S.-based Second Life. People create visual personae that can then walk around, interacting and talking to other users inside of a video game--like interface. Dell has opened up a virtual store in Second Life, which allows visitors to use virtual PCs for their second lives and physical ones for their corporeal lives. With progressions like these, it's not surprising that Calladine thinks of social networking as a kind of limitless comet: "MySpace is the very general head, but it will get to be a long tail."
Strictly B2B B2B companies' customers may not be interested in filling out personal pages about their favorite books and music. However, there is much to be gained through social networking from a B2B angle. Mark Organ, CEO of demand generation software developer Eloqua, says, "I think social networking is massively underutilized by B2B companies for generating leads." Organ sees great potential in sites like LinkedIn (a MySpace for professionals), where companies can find business connections and possible customers.
Companies like Eloqua can further automate this process through sending a trackable link in a personal email and make this more of a visible process from first connection through to the sale. Companies can make internal social networks to help employees understand whom their coworkers know and who might be available or appropriate to reach out to. Social networks can also provide great sources of information for companies wishing to connect with others in their field to stay up to date on the most recent progress and innovations.
Dreamforce '06 Top Five Demand Generation Strategies
Creating demand for your product or service is paramount to the success of your company. With all of the options available, how do you know which strategies and tactics will produce the best results? Join us as we explore best practices in demand generation with results even your sales team will love.
Presenters:
Richard Eldh, SiriusDecisions
Jackie Kiley, Sybase
Click To View
Presenters:
Richard Eldh, SiriusDecisions
Jackie Kiley, Sybase
Click To View
20.2.07
Top 10 Online Marketing Predictions for 2007
by Ryan Buchanan
With 2007 in full swing, here are our predictions for the rest of the year to come. In prior years we have given you a mix of business and personal lifestyle predictions, but this year we're sticking to just the online marketing world.
We busted out our omniscient crystal ball, and this is what it told us:
10. Social networking will get more and more niche.
Social Networking has blanketed the news for the past 18 months because it works. YouTube and MySpace have built loyal communities through entertaining user-generated content and great tools for communicating with other like-minded people.
However, Social Networking is going NICHE. People use specific tools to connect, recommend, rate, and communicate within their niche groups. For this reason, there are many types of Social Media now and there will be five times this many by the end of next year:
B2C: MySpace, Facebook, Gaia, Friendster, Second Life
B2B: LinkedIn, Jigsaw
Search: Digg, Delicious, Wink, Technorati
Shopping: Wists, ThisNext, Woot
Expert Communities: Blogs, Wikis
Mapping: Geosearch
Video: YouTube, TurnHere, Splashcast
Images: Flickr
9. Viral campaign Web sites will have a purpose.
Over the past couple of years, I've been forwarded hundreds of quirky sites that are experimenting with viral marketing and have no further purpose whatsoever. There are no calls to action or indications as to why these sites exist.
A few examples of pointless viral sites: Patron's SimplyPerfect, eROI's WearShortShorts, and CareerBuilder's popular Monk-e-Mail. Next year will feature more substantial viral campaign sites, like Philips's ShaveEverywhere, PassportToFlavor from Kettle Foods, and Snakes on a Plane.
8. User-generated content will be a component on most new Web sites.
Many companies are just starting to realize the great potential of Web sites with user-generated content that enable customers co-create with their brands. Ultimately, allowing users to post their stories through text, images, and video helps to build community and long-term brand loyalty. In short, it works, and companies large (Diesel-U-Music) and small (Dunderdon Workspace) will employ this strategy much more frequently next year.
7. Email marketers will demand more strategy from their marketing agencies.
From the client-side email marketer's perspective, there are only minor differences between the top email marketing software platforms. Email marketers will demand to know more advanced strategies for their email programs by asking questions like these: How does this email render in the default settings of the different email environments (AOL, Yahoo, Gmail, Hotmail, etc.)? What content shows up above and below the fold on the email preview? What content and call to action will really resonate with my target audience? How can I be a resource and still convert click-throughs into qualified leads?
6. Great content is king.
Quality content is more important now than ever before. Each of us receives dozens of email newsletters daily. There are over 100 million viewings daily on YouTube. One in twenty visits on the Web is to a social networking site where new content is generated every second. There is a glut of content, and it's only going to get more crowded.
The key point worth noting is that the few companies providing great content are huge winners because of all of the online and offline marketing channels that work together in a sort of crescendo effect, amplifying the messaging of well-positioned brands. Word-of-mouth spreads so much faster than it used to through blogs, iTunes, YouTube, MySpace, Web sites, and online press.
Fans of the TV program "Grey's Anatomy" can convert nonbelievers because the content of the show is good enough to keep them once they've heard about it. The opposite holds true of "Snakes on a Plane," which had a huge online following but bombed at the box office because the content sucked. Keep this in mind when strategizing and implementing your next viral marketing site or email campaign.
5. Most successful companies will become media companies.
Microsoft became a media company when it began its blogging program a couple years ago. The lawyers lost and marketers won; revealing the inside scoop at Microsoft was virtually the only thing that has healed the company's battered reputation.
More and more companies are starting their own blogs, helping them to become more relevant and newsworthy to a greater audience within their niche. Blogging has essentially forced companies to step into their customers' shoes and provide them with more industry knowledge and news rather than simply ramming products down their throats.
4. The Democrat majority in Congress swings the tide of online marketing. Marketers will push the envelope far more aggressively in 2007 now that the fear of death by Republican firing squad has been reduced. Moral depravity will run rampant in advertising, and the largely Democratic online marketers will revel in the end-result of their twisted creative brains.
3. Greater integration of video into all Web sites.
When I last visited the homepage of CRM juggernaut Salesforce.com, I was immediately struck by how quickly the video flash piece engaged me. Video is not just for TV and YouTube anymore. The ShaveEverywhere site proved that the use of video within viral sites is hugely engaging and effective in converting sales.
We will see many more large, medium-sized, and small businesses integrate video into their primary and campaign Web sites in 2007. One trend we will likely see will be an increase in the use of "webisodes," 3-5 minute daily or weekly video clips that entice users to come back to sites for more all-Web programming.
2. Email mantra: list segmentation + relevant content = improved results. eROI published an email study in early 2006 showing a direct correlation between smaller, more relevant lists and higher open and click through rates. Instead of sending all emails to a Main List of all of their contacts, marketers are starting to segment their lists into product categories, service categories, press lists, webinar lists, etc.
Marketers who fail to take the extra hour or two to do this list segmentation every 3-6 months will see continued email list fatigue and a resulting drop in performance. Emailers will learn that content needs to focus less on selling a product and talking at recipients, and more on talking with recipients. Updating email content and starting a conversation will be more important than ever as people move toward seeing their inboxes as sacred places that they don't want violated by one-way advertising messages.
1. Thoughtful, cause-related marketing is the biggest winner in 2007.
Pay attention. If you do this right, you will put your company on the map—and make the world a better place. This may just be the best business advice you get all year: Ask your coworker, your department, your entire company what one nonprofit they want to support—and throw a lot of energy behind it. Better yet, co-create a new program or new event with an existing, reputable nonprofit, and you'll see that your employees, customers, and prospects, as well as your kids and your spouse, will help you take this cause, and indirectly your company, to the next level.
The best example of this is a brand we used to take for granted: Dove. Dove launched "The Campaign for Real Beauty" and let the fact be known that the company no longer simply sells soap. Dove is now so much more than a set of commodity products. Dove sells real beauty; natural beauty; non-superficial beauty.
The Campaign for Real Beauty Web site features a one-minute film that shows the transformation of an average-looking woman into a strikingly gorgeous supermodel. Only by seeing this process can we truly comprehend the illusion of what are, essentially, fabricated dream girls.
The beauty of this site is that it doesn't end with just awareness of the problem. It launches immediately into an actionable item for 8-12-year-old girls to sign up for Dove's real beauty workshops. The workshops teach girls about the importance of identifying beauty within themselves in the pre-teen years, before the peer pressure to be like the mythical supermodel drives them to anorexia or bulimia.
A couple of years ago, eROI began its own partnership with Portland-based nonprofit, Friends of the Children, by co-creating an event called Friends Art Fair. In just two years, the event has raised $55,000 and has garnered 2.5 million media impressions thru email marketing channels, print media, and media sponsor KPTV Fox 12 News.
With 2007 in full swing, here are our predictions for the rest of the year to come. In prior years we have given you a mix of business and personal lifestyle predictions, but this year we're sticking to just the online marketing world.
We busted out our omniscient crystal ball, and this is what it told us:
10. Social networking will get more and more niche.
Social Networking has blanketed the news for the past 18 months because it works. YouTube and MySpace have built loyal communities through entertaining user-generated content and great tools for communicating with other like-minded people.
However, Social Networking is going NICHE. People use specific tools to connect, recommend, rate, and communicate within their niche groups. For this reason, there are many types of Social Media now and there will be five times this many by the end of next year:
B2C: MySpace, Facebook, Gaia, Friendster, Second Life
B2B: LinkedIn, Jigsaw
Search: Digg, Delicious, Wink, Technorati
Shopping: Wists, ThisNext, Woot
Expert Communities: Blogs, Wikis
Mapping: Geosearch
Video: YouTube, TurnHere, Splashcast
Images: Flickr
9. Viral campaign Web sites will have a purpose.
Over the past couple of years, I've been forwarded hundreds of quirky sites that are experimenting with viral marketing and have no further purpose whatsoever. There are no calls to action or indications as to why these sites exist.
A few examples of pointless viral sites: Patron's SimplyPerfect, eROI's WearShortShorts, and CareerBuilder's popular Monk-e-Mail. Next year will feature more substantial viral campaign sites, like Philips's ShaveEverywhere, PassportToFlavor from Kettle Foods, and Snakes on a Plane.
8. User-generated content will be a component on most new Web sites.
Many companies are just starting to realize the great potential of Web sites with user-generated content that enable customers co-create with their brands. Ultimately, allowing users to post their stories through text, images, and video helps to build community and long-term brand loyalty. In short, it works, and companies large (Diesel-U-Music) and small (Dunderdon Workspace) will employ this strategy much more frequently next year.
7. Email marketers will demand more strategy from their marketing agencies.
From the client-side email marketer's perspective, there are only minor differences between the top email marketing software platforms. Email marketers will demand to know more advanced strategies for their email programs by asking questions like these: How does this email render in the default settings of the different email environments (AOL, Yahoo, Gmail, Hotmail, etc.)? What content shows up above and below the fold on the email preview? What content and call to action will really resonate with my target audience? How can I be a resource and still convert click-throughs into qualified leads?
6. Great content is king.
Quality content is more important now than ever before. Each of us receives dozens of email newsletters daily. There are over 100 million viewings daily on YouTube. One in twenty visits on the Web is to a social networking site where new content is generated every second. There is a glut of content, and it's only going to get more crowded.
The key point worth noting is that the few companies providing great content are huge winners because of all of the online and offline marketing channels that work together in a sort of crescendo effect, amplifying the messaging of well-positioned brands. Word-of-mouth spreads so much faster than it used to through blogs, iTunes, YouTube, MySpace, Web sites, and online press.
Fans of the TV program "Grey's Anatomy" can convert nonbelievers because the content of the show is good enough to keep them once they've heard about it. The opposite holds true of "Snakes on a Plane," which had a huge online following but bombed at the box office because the content sucked. Keep this in mind when strategizing and implementing your next viral marketing site or email campaign.
5. Most successful companies will become media companies.
Microsoft became a media company when it began its blogging program a couple years ago. The lawyers lost and marketers won; revealing the inside scoop at Microsoft was virtually the only thing that has healed the company's battered reputation.
More and more companies are starting their own blogs, helping them to become more relevant and newsworthy to a greater audience within their niche. Blogging has essentially forced companies to step into their customers' shoes and provide them with more industry knowledge and news rather than simply ramming products down their throats.
4. The Democrat majority in Congress swings the tide of online marketing. Marketers will push the envelope far more aggressively in 2007 now that the fear of death by Republican firing squad has been reduced. Moral depravity will run rampant in advertising, and the largely Democratic online marketers will revel in the end-result of their twisted creative brains.
3. Greater integration of video into all Web sites.
When I last visited the homepage of CRM juggernaut Salesforce.com, I was immediately struck by how quickly the video flash piece engaged me. Video is not just for TV and YouTube anymore. The ShaveEverywhere site proved that the use of video within viral sites is hugely engaging and effective in converting sales.
We will see many more large, medium-sized, and small businesses integrate video into their primary and campaign Web sites in 2007. One trend we will likely see will be an increase in the use of "webisodes," 3-5 minute daily or weekly video clips that entice users to come back to sites for more all-Web programming.
2. Email mantra: list segmentation + relevant content = improved results. eROI published an email study in early 2006 showing a direct correlation between smaller, more relevant lists and higher open and click through rates. Instead of sending all emails to a Main List of all of their contacts, marketers are starting to segment their lists into product categories, service categories, press lists, webinar lists, etc.
Marketers who fail to take the extra hour or two to do this list segmentation every 3-6 months will see continued email list fatigue and a resulting drop in performance. Emailers will learn that content needs to focus less on selling a product and talking at recipients, and more on talking with recipients. Updating email content and starting a conversation will be more important than ever as people move toward seeing their inboxes as sacred places that they don't want violated by one-way advertising messages.
1. Thoughtful, cause-related marketing is the biggest winner in 2007.
Pay attention. If you do this right, you will put your company on the map—and make the world a better place. This may just be the best business advice you get all year: Ask your coworker, your department, your entire company what one nonprofit they want to support—and throw a lot of energy behind it. Better yet, co-create a new program or new event with an existing, reputable nonprofit, and you'll see that your employees, customers, and prospects, as well as your kids and your spouse, will help you take this cause, and indirectly your company, to the next level.
The best example of this is a brand we used to take for granted: Dove. Dove launched "The Campaign for Real Beauty" and let the fact be known that the company no longer simply sells soap. Dove is now so much more than a set of commodity products. Dove sells real beauty; natural beauty; non-superficial beauty.
The Campaign for Real Beauty Web site features a one-minute film that shows the transformation of an average-looking woman into a strikingly gorgeous supermodel. Only by seeing this process can we truly comprehend the illusion of what are, essentially, fabricated dream girls.
The beauty of this site is that it doesn't end with just awareness of the problem. It launches immediately into an actionable item for 8-12-year-old girls to sign up for Dove's real beauty workshops. The workshops teach girls about the importance of identifying beauty within themselves in the pre-teen years, before the peer pressure to be like the mythical supermodel drives them to anorexia or bulimia.
A couple of years ago, eROI began its own partnership with Portland-based nonprofit, Friends of the Children, by co-creating an event called Friends Art Fair. In just two years, the event has raised $55,000 and has garnered 2.5 million media impressions thru email marketing channels, print media, and media sponsor KPTV Fox 12 News.
15.2.07
Forbes Hails Salesforce.com's AppExchange as a 'Top Ten Disrupter' of 2006
World's first on-demand application directory called 'iTunes of business software' and included among the year's greatest innovations, powerhouses and change-drivers
Gordon Evans
Salesforce.com (NYSE: CRM), the market and technology leader in on-demand business services, today announced that Forbes magazine has included the AppExchange directory in its list of "Top Ten Disrupters of 2006," hailing it as a "revolutionary model for software distribution." With more than 500 applications available on the world's first on-demand application directory, customers are using the AppExchange as an eBay-style marketplace to browse and find on-demand applications. More than 7,500 customers in 57 countries have installed over 20,000 applications via the AppExchange over the past year. Based on this tremendous success, Forbes ranked the salesforce.com AppExchange number five on its list of Disrupters, which includes innovations, powerhouses and change- drivers such as YouTube, Nintendo's Wii, super-sized philanthropy such as Warren Buffet's $37 billion donation to the Bill & Melinda Gates Foundation, and Al Gore's An Inconvenient Truth.
"As we predicted, the AppExchange is forever changing how companies acquire and implement business applications," said Marc Benioff, chairman and CEO, salesforce.com. "To be included in Forbes list of 'Top Ten Disrupters' is a credit not only to the AppExchange, but also to the explosive momentum of The Business Web and software as a service in general. We at salesforce.com are proud to drive this revolution forward and enable our customers to easily access, evaluate and implement solutions that fit their specific business needs."
To date, more than 250 salesforce.com partners have made more than 500 applications built using the Apex on-demand platform available on the AppExchange. The AppExchange has also delivered 185,000 test drives since its introduction in September 2005.
To develop its "Top Ten Disrupters" list, Forbes.com editors and writers nominated "the people, trends and products that had a major impact last year." The final list was decided by a panel of esteemed judges, including Paul Danos, dean of Dartmouth's Tuck School of Business; Tom Stemberg, founder of Staples and a venture partner at Highland Capital; Clayton Christensen, a Forbes.com columnist, professor at Harvard Business School, author of The Innovator's Dilemma and founder of the consulting firm Innosight; Scott Anthony, a managing director at Innosight and co-author, with Christensen, of Seeing What's Next; and Arlyn Tobias Gajilan, the Leadership editor at Forbes.com.
To view the complete list of Disrupters, visit: http://www.forbes.com/2007/01/22/leadership-disrupter-youtube-lead-innovation- cx_hc_0122lede.html.
Apex and the AppExchange
Apex is the on-demand platform for the next generation of business applications. Apex reinvents traditional customization and integration and enables a whole new generation of on-demand applications that go beyond CRM. All Apex components and applications can be easily shared, exchanged and installed with a few simple clicks via salesforce.com's AppExchange directory, enabling all the innovation that Apex unleashes to benefit the entire on- demand community.
The Apex on-demand platform is generally available today. The Apex programming language is available today for developer preview, and is currently scheduled to be available in beta to salesforce.com customers later in 2007.
About salesforce.com
Salesforce.com is the market and technology leader in on-demand business services. The company's Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. Apex, the world's first on-demand platform, enables customers, developers and partners to build powerful new on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The Business Web across the enterprise. All Apex components and applications can be easily shared, exchanged and installed via salesforce.com's AppExchange directory, available at http://www.salesforce.com/appexchange. Customers can also take advantage of Successforce, salesforce.com's world-class training, support, consulting and best practices offerings.
As of October 31, 2006, salesforce.com manages customer information for approximately 27,100 customers and approximately 556,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Avis Budget Group, Inc, Dow Jones Newswires, Nokia, Polycom and SunTrust Banks. Any unreleased services or features referenced in this or other press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase salesforce.com applications should make their purchase decisions based upon features that are currently available. Salesforce.com has headquarters in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM." For more information please visit http://www.salesforce.com, or call 1-800-NO-SOFTWARE.
NOTE: Salesforce.com is a registered trademark of, and Apex, AppExchange, The Business Web, and Successforce are trademarks of, salesforce.com, Inc., San Francisco, California. Other names used may be trademarks of their respective owners.
Gordon Evans
Salesforce.com (NYSE: CRM), the market and technology leader in on-demand business services, today announced that Forbes magazine has included the AppExchange directory in its list of "Top Ten Disrupters of 2006," hailing it as a "revolutionary model for software distribution." With more than 500 applications available on the world's first on-demand application directory, customers are using the AppExchange as an eBay-style marketplace to browse and find on-demand applications. More than 7,500 customers in 57 countries have installed over 20,000 applications via the AppExchange over the past year. Based on this tremendous success, Forbes ranked the salesforce.com AppExchange number five on its list of Disrupters, which includes innovations, powerhouses and change- drivers such as YouTube, Nintendo's Wii, super-sized philanthropy such as Warren Buffet's $37 billion donation to the Bill & Melinda Gates Foundation, and Al Gore's An Inconvenient Truth.
"As we predicted, the AppExchange is forever changing how companies acquire and implement business applications," said Marc Benioff, chairman and CEO, salesforce.com. "To be included in Forbes list of 'Top Ten Disrupters' is a credit not only to the AppExchange, but also to the explosive momentum of The Business Web and software as a service in general. We at salesforce.com are proud to drive this revolution forward and enable our customers to easily access, evaluate and implement solutions that fit their specific business needs."
To date, more than 250 salesforce.com partners have made more than 500 applications built using the Apex on-demand platform available on the AppExchange. The AppExchange has also delivered 185,000 test drives since its introduction in September 2005.
To develop its "Top Ten Disrupters" list, Forbes.com editors and writers nominated "the people, trends and products that had a major impact last year." The final list was decided by a panel of esteemed judges, including Paul Danos, dean of Dartmouth's Tuck School of Business; Tom Stemberg, founder of Staples and a venture partner at Highland Capital; Clayton Christensen, a Forbes.com columnist, professor at Harvard Business School, author of The Innovator's Dilemma and founder of the consulting firm Innosight; Scott Anthony, a managing director at Innosight and co-author, with Christensen, of Seeing What's Next; and Arlyn Tobias Gajilan, the Leadership editor at Forbes.com.
To view the complete list of Disrupters, visit: http://www.forbes.com/2007/01/22/leadership-disrupter-youtube-lead-innovation- cx_hc_0122lede.html.
Apex and the AppExchange
Apex is the on-demand platform for the next generation of business applications. Apex reinvents traditional customization and integration and enables a whole new generation of on-demand applications that go beyond CRM. All Apex components and applications can be easily shared, exchanged and installed with a few simple clicks via salesforce.com's AppExchange directory, enabling all the innovation that Apex unleashes to benefit the entire on- demand community.
The Apex on-demand platform is generally available today. The Apex programming language is available today for developer preview, and is currently scheduled to be available in beta to salesforce.com customers later in 2007.
About salesforce.com
Salesforce.com is the market and technology leader in on-demand business services. The company's Salesforce suite of on-demand CRM applications allows customers to manage and share all of their sales, support, marketing and partner information on-demand. Apex, the world's first on-demand platform, enables customers, developers and partners to build powerful new on-demand applications that extend beyond CRM to deliver the benefits of multi-tenancy and The Business Web across the enterprise. All Apex components and applications can be easily shared, exchanged and installed via salesforce.com's AppExchange directory, available at http://www.salesforce.com/appexchange. Customers can also take advantage of Successforce, salesforce.com's world-class training, support, consulting and best practices offerings.
As of October 31, 2006, salesforce.com manages customer information for approximately 27,100 customers and approximately 556,000 paying subscribers including Advanced Micro Devices (AMD), America Online (AOL), Avis Budget Group, Inc, Dow Jones Newswires, Nokia, Polycom and SunTrust Banks. Any unreleased services or features referenced in this or other press releases or public statements are not currently available and may not be delivered on time or at all. Customers who purchase salesforce.com applications should make their purchase decisions based upon features that are currently available. Salesforce.com has headquarters in San Francisco, with offices in Europe and Asia, and trades on the New York Stock Exchange under the ticker symbol "CRM." For more information please visit http://www.salesforce.com, or call 1-800-NO-SOFTWARE.
NOTE: Salesforce.com is a registered trademark of, and Apex, AppExchange, The Business Web, and Successforce are trademarks of, salesforce.com, Inc., San Francisco, California. Other names used may be trademarks of their respective owners.
Total Recall
Email marketing turns out to be highly effective at connecting with and gaining mind share with small businesses, second only to magazine ads; marketers must tailor tactics to the B2B target.
by Coreen Bailor
SMB-focused B2B marketers overlooking the email channel take note: Small business decision-makers are highly engaged with email marketing, according to the Jupiter Research study "Email Marketing: Assessing Relevance and Use in Reaching Small Businesses." In fact, of the 501 small business decision-makers surveyed in February 2006 Jupiter executive poll, 58 percent of respondents signed up to receive email newsletters. Fifty-four percent completed an email customer satisfaction survey, 33 percent clicked on an email marketing offer, and 19 percent purchased from an email marketing offer.
Additionally, while magazine ads had a higher recall rate than any advertising tactic among small-business decision makers surveyed (31 percent), 26 percent of small-business decision makers recalled most recently noticing email marketing messages for goods or services relevant to their businesses, according to the report. That percentage makes the medium the most remembered form of online advertising rated.
"Unlike email marketing, magazine ads typically serve branding purposes and often are not used as a direct response vehicle to provide an immediate call to action," the report states. "Email marketing tends to remain with users for a longer period of time over other types of conventional and more expensive forms of advertising and marketing, making it the most efficient tool in terms of driving recall."
Magazine and email ads were trailed by trade show or convention (21 percent), newspaper (18 percent), television (17 percent), search engine online/sponsored (16 percent), radio (5 percent), online banner ad (5 percent), and billboard or other outdoor ad (2 percent). "When people recall marketing messages they will probably remember the brand and it will be familiar to them next time they're thinking about making a purchase," says Sonal Ghandi, lead Jupiter analyst on the report.
The report also examines the type of targeted marketing approaches leveraged by B2B and B2C email marketers. B2C email marketers have a higher propensity to segment customers based on geographic (56 percent) and demographic data (56 percent) than their B2B cohorts (52 percent use geographic data, 45 percent use demographic), according to the report. However, B2B email marketers are more likely than B2C email marketers to target customers using more sophisticated segmentation techniques like clickthroughs (24 percent B2B; 17 percent B2C), customer profitability (22 percent B2B; 15 percent B2C), and customer service contact frequency (21 percent B2B; 17 percent B2C). These figures are based on a Jupiter/e-Rewards survey of 97 B2B email marketers and 156 B2C email marketers.
Much of the reasoning behind stronger interest in more sophisticated segmentation methods among B2B email marketers surveyed lies in the need to stand out in the sea of email marketing messages they receive and grab their targets' limited time, according to Ghandi. "Because of a businessperson's time, being that they're at work or they're running a business, they have a lot of things that they're juggling at the same time, so you want to be able to use that message that you're sending them effectively," she says. One could also argue, however, that B2C marketers face a similar plight of getting through to their desired market as they also have to find ways to differentiate themselves among the vast amount of messages consumers receive and compete for consumers' limited availability.
One of the tactics that Ghandi suggests B2B marketers examine is the frequency and timing of messages. "It's better to send your email messages based on what the purchase cycle for a particular product is," she says, adding that this is clearly true in the B2C environment also. "If you sent them an email at the beginning of the consideration phase you have to know when they will be at the point where they're making a decision in the cycle to target them again," she says. "Knowing the purchase decision making cycle for your product is important, and targeting [customers] with email messages according to that cycle is the key."
by Coreen Bailor
SMB-focused B2B marketers overlooking the email channel take note: Small business decision-makers are highly engaged with email marketing, according to the Jupiter Research study "Email Marketing: Assessing Relevance and Use in Reaching Small Businesses." In fact, of the 501 small business decision-makers surveyed in February 2006 Jupiter executive poll, 58 percent of respondents signed up to receive email newsletters. Fifty-four percent completed an email customer satisfaction survey, 33 percent clicked on an email marketing offer, and 19 percent purchased from an email marketing offer.
Additionally, while magazine ads had a higher recall rate than any advertising tactic among small-business decision makers surveyed (31 percent), 26 percent of small-business decision makers recalled most recently noticing email marketing messages for goods or services relevant to their businesses, according to the report. That percentage makes the medium the most remembered form of online advertising rated.
"Unlike email marketing, magazine ads typically serve branding purposes and often are not used as a direct response vehicle to provide an immediate call to action," the report states. "Email marketing tends to remain with users for a longer period of time over other types of conventional and more expensive forms of advertising and marketing, making it the most efficient tool in terms of driving recall."
Magazine and email ads were trailed by trade show or convention (21 percent), newspaper (18 percent), television (17 percent), search engine online/sponsored (16 percent), radio (5 percent), online banner ad (5 percent), and billboard or other outdoor ad (2 percent). "When people recall marketing messages they will probably remember the brand and it will be familiar to them next time they're thinking about making a purchase," says Sonal Ghandi, lead Jupiter analyst on the report.
The report also examines the type of targeted marketing approaches leveraged by B2B and B2C email marketers. B2C email marketers have a higher propensity to segment customers based on geographic (56 percent) and demographic data (56 percent) than their B2B cohorts (52 percent use geographic data, 45 percent use demographic), according to the report. However, B2B email marketers are more likely than B2C email marketers to target customers using more sophisticated segmentation techniques like clickthroughs (24 percent B2B; 17 percent B2C), customer profitability (22 percent B2B; 15 percent B2C), and customer service contact frequency (21 percent B2B; 17 percent B2C). These figures are based on a Jupiter/e-Rewards survey of 97 B2B email marketers and 156 B2C email marketers.
Much of the reasoning behind stronger interest in more sophisticated segmentation methods among B2B email marketers surveyed lies in the need to stand out in the sea of email marketing messages they receive and grab their targets' limited time, according to Ghandi. "Because of a businessperson's time, being that they're at work or they're running a business, they have a lot of things that they're juggling at the same time, so you want to be able to use that message that you're sending them effectively," she says. One could also argue, however, that B2C marketers face a similar plight of getting through to their desired market as they also have to find ways to differentiate themselves among the vast amount of messages consumers receive and compete for consumers' limited availability.
One of the tactics that Ghandi suggests B2B marketers examine is the frequency and timing of messages. "It's better to send your email messages based on what the purchase cycle for a particular product is," she says, adding that this is clearly true in the B2C environment also. "If you sent them an email at the beginning of the consideration phase you have to know when they will be at the point where they're making a decision in the cycle to target them again," she says. "Knowing the purchase decision making cycle for your product is important, and targeting [customers] with email messages according to that cycle is the key."
13.2.07
Online ad spend tops $1 billion
by Asher Moses
Australia's online advertising market grew 61.5 per cent last year, with the full year spend just topping the $1 billion milestone.
The stellar growth rate suggests it will not be long before advertising spending online exceeds that of all other mediums.
The figures were released today by the Audit Bureau of Verification Services - part of the Audit Bureau of Circulations - and greatly surpass the 40.3 per cent growth rate projections made by PricewaterhouseCoopers in its 2006 report titled Australian Entertainment and Media Outlook: 2006 - 2010.
Comparative figures showing last year's advertising spend for competing mediums, such as newspapers, were due to be released next month, PwC partner Steven Bosiljevac said.
In 2005, advertisers spent $620 million on online advertising, which was markedly lower than the newspaper, magazine, radio and free-to-air television spends of $3.79 billion, $978 million, $898 million and $3.216 billion, respectively.
But behind the high dollar figures were flat 2004-2005 growth rates of 5.1, 9.3, 6.6 and 2.4 per cent respectively, the PwC report said.
These pale in comparison to the 61.5 per cent growth enjoyed by the online market last year (up from a 2005 growth figure of 59.6 per cent), suggesting it won't be long before online is the dominant medium.
"Now that the $1 billion mark has been broached, we expect to see 2007 figures soar," Internet Advertising Bureau general manager Patty Keegan said.
Jack Herman, executive secretary of the Australian Press Council, played down concerns that so-called "old media" newspaper publishers were being driven out by new online players.
"What we are seeing is a proliferation of media rather than the new media driving the old media out," Herman said.
He said the "established", larger media players still enjoyed the lion's share of online advertising revenue, so the threat posed by the internet was not as pronounced as some have speculated.
Australia's online advertising market grew 61.5 per cent last year, with the full year spend just topping the $1 billion milestone.
The stellar growth rate suggests it will not be long before advertising spending online exceeds that of all other mediums.
The figures were released today by the Audit Bureau of Verification Services - part of the Audit Bureau of Circulations - and greatly surpass the 40.3 per cent growth rate projections made by PricewaterhouseCoopers in its 2006 report titled Australian Entertainment and Media Outlook: 2006 - 2010.
Comparative figures showing last year's advertising spend for competing mediums, such as newspapers, were due to be released next month, PwC partner Steven Bosiljevac said.
In 2005, advertisers spent $620 million on online advertising, which was markedly lower than the newspaper, magazine, radio and free-to-air television spends of $3.79 billion, $978 million, $898 million and $3.216 billion, respectively.
But behind the high dollar figures were flat 2004-2005 growth rates of 5.1, 9.3, 6.6 and 2.4 per cent respectively, the PwC report said.
These pale in comparison to the 61.5 per cent growth enjoyed by the online market last year (up from a 2005 growth figure of 59.6 per cent), suggesting it won't be long before online is the dominant medium.
"Now that the $1 billion mark has been broached, we expect to see 2007 figures soar," Internet Advertising Bureau general manager Patty Keegan said.
Jack Herman, executive secretary of the Australian Press Council, played down concerns that so-called "old media" newspaper publishers were being driven out by new online players.
"What we are seeing is a proliferation of media rather than the new media driving the old media out," Herman said.
He said the "established", larger media players still enjoyed the lion's share of online advertising revenue, so the threat posed by the internet was not as pronounced as some have speculated.
2.2.07
SaaS and Web 3.0
Pointing the way
by Kim Kobza
How will Web 3.0 enhance the customer relationship in a way that Web 2.0 cannot?
Broadly speaking, we think of Web 2.0 as including a second generation of Internet-based services likr social networking sites, wikis, and communications tools that allow individuals to collaborate and share information online in ways previously unavailable. Media, government, and business are quickly learning that Web 2.0 is creating an expectation of being able to interact with brands and issues that are most important to customers.
But Web 2.0 interactions, while insightful to many companies, do not always allow business to glean the full value from customer interactions. In other words, they do not create the predictability and enduring value that is characteristic of other business processes like traditional CRM.
The reason for this is simple. The raw dialogue that is the byproduct of Web 2.0 technologies often lacks the structure and predictability that creates comfort for customers who would like to be a part of a broader community (a social network), but who may feel threatened or simply inconvenienced by unstructured communications.
Should one have to participate in a blog to express a great product idea or enhancement to service delivery that is important to one's quality of life? Should one have to read through other blog entries to submit a meaningful input, or to submit one's own opinion to scrutiny (and sometimes ridicule) just to share a common experience?
The answer--and the promise of Web 3.0--is no! In Web 3.0, media, government, and business will have the ability to create communities with their customers by using advanced systems that will enable the support of communities that create predictability and structure--much as communities in a physical world. Customers will be able to share all forms of user-generated content--video, documents, text, surveys, images, SMS, and IVR files--collected from all types of devices including computers, PDAs, cell phones, TVs, and devices of the future--and to interact with the community members and sponsoring organization, all with a promise of meaningful, high-value interaction.
Also important, the community sponsors will have the ability to manage all forms of content and to support the customer interactions, all from one platform. They will be able to make solid business decisions based upon accurate data and innovative ideas, and to respond immediately so that they convert the value of community into business value. Web 3.0 will enable media, government, and business to build meaningful, rich communities using a business delivery model that is well known to most businesses today: net-native SaaS. Companies like Salesforce.com, Netsuite, and SAP have paved the way by educating customers to the benefits of outsourcing applications, services, and secured hosting in a bundled offering delivered on an "as needed" basis.
The benefits of an SaaS model are trumpeted as (1) speed to market, (2) cost avoidance in solution development and support, and (3) avoidance of development and adoption risk often associated with more traditional software development initiatives, a high percentage of which often fail. Nowhere are these attributes more relevant than to organizations that desire to build social networks with their customers. Speed is important because most organizations just cannot wait to meet the demands for servicing customer interactions. Failure to act will mean that customers will turn to blogs, emails, wikis, and other forms of interaction as they become increasingly frustrated with an organization's failure or inability to listen.
Cost avoidance in traditional solution development and support is also important in building systems that support large-scale customer networks. "Build your own" is a high-risk proposition in that few companies can accurately prognosticate the future of social networks. What is designed and built today may not serve competitive needs tomorrow. And it is not clear that after spending millions of dollars to build in-house systems, customers and employees alike will adopt the technology. Traditional development is a high-risk, high-cost response to the demand for customer interaction inherent in Web 2.0. But there are important examples where SaaS is already making its mark in the emerging demand for enterprise social networks.
Leading early examples of SaaS applications have emerged in media. Broadcast networks, print, and cable media are all confronted with having to serve large audience demand for video sharing, comment collection and reporting, and mobile dialogue. And they are largely responding. In 2006, ABC's implementation of SaaS-based technology allowed viewers to submit questions for President Bush--via the Web, or even mobile phones if they liked--directly to the network and ABC's staff in turn was able to collect, sort, review, and immediately publish selected user-submitted videos into on-air programming to complement George Stephanopoulos' interview with the president.
Similarly, CBS recently turned to an SaaS-based solution to conduct an audience engagement campaign during Katie Couric's evening news debut, which asked viewers to contribute suggestions for Couric's signature sign-off. In less than 24 hours, more than 40,000 viewers--at a rate of sometimes more than eight per second--responded to the call to action by offering their opinions and feedback online. Networks are learning how to repeat these experiences across news, sports, and entertainment programming on a systematic basis. But like business, they do not have much time to retain competitive positions threatened by communities built on highly available, low-cost Web 2.0 technologies.
Web 3.0 will enable business to quickly embrace scalable, repeatable, and consistent methods of building social networks with customers and to manage those networks. By using SaaS businesses can meet the rising demands for customer interaction in a way that delivers immediate and tangible business value. SaaS is a simple solution to the universal problem of how to bridge the gap between traditional CRM and the demand for social networks created by Web 2.0 technologies in a way that honors the needs of business processes.
by Kim Kobza
How will Web 3.0 enhance the customer relationship in a way that Web 2.0 cannot?
Broadly speaking, we think of Web 2.0 as including a second generation of Internet-based services likr social networking sites, wikis, and communications tools that allow individuals to collaborate and share information online in ways previously unavailable. Media, government, and business are quickly learning that Web 2.0 is creating an expectation of being able to interact with brands and issues that are most important to customers.
But Web 2.0 interactions, while insightful to many companies, do not always allow business to glean the full value from customer interactions. In other words, they do not create the predictability and enduring value that is characteristic of other business processes like traditional CRM.
The reason for this is simple. The raw dialogue that is the byproduct of Web 2.0 technologies often lacks the structure and predictability that creates comfort for customers who would like to be a part of a broader community (a social network), but who may feel threatened or simply inconvenienced by unstructured communications.
Should one have to participate in a blog to express a great product idea or enhancement to service delivery that is important to one's quality of life? Should one have to read through other blog entries to submit a meaningful input, or to submit one's own opinion to scrutiny (and sometimes ridicule) just to share a common experience?
The answer--and the promise of Web 3.0--is no! In Web 3.0, media, government, and business will have the ability to create communities with their customers by using advanced systems that will enable the support of communities that create predictability and structure--much as communities in a physical world. Customers will be able to share all forms of user-generated content--video, documents, text, surveys, images, SMS, and IVR files--collected from all types of devices including computers, PDAs, cell phones, TVs, and devices of the future--and to interact with the community members and sponsoring organization, all with a promise of meaningful, high-value interaction.
Also important, the community sponsors will have the ability to manage all forms of content and to support the customer interactions, all from one platform. They will be able to make solid business decisions based upon accurate data and innovative ideas, and to respond immediately so that they convert the value of community into business value. Web 3.0 will enable media, government, and business to build meaningful, rich communities using a business delivery model that is well known to most businesses today: net-native SaaS. Companies like Salesforce.com, Netsuite, and SAP have paved the way by educating customers to the benefits of outsourcing applications, services, and secured hosting in a bundled offering delivered on an "as needed" basis.
The benefits of an SaaS model are trumpeted as (1) speed to market, (2) cost avoidance in solution development and support, and (3) avoidance of development and adoption risk often associated with more traditional software development initiatives, a high percentage of which often fail. Nowhere are these attributes more relevant than to organizations that desire to build social networks with their customers. Speed is important because most organizations just cannot wait to meet the demands for servicing customer interactions. Failure to act will mean that customers will turn to blogs, emails, wikis, and other forms of interaction as they become increasingly frustrated with an organization's failure or inability to listen.
Cost avoidance in traditional solution development and support is also important in building systems that support large-scale customer networks. "Build your own" is a high-risk proposition in that few companies can accurately prognosticate the future of social networks. What is designed and built today may not serve competitive needs tomorrow. And it is not clear that after spending millions of dollars to build in-house systems, customers and employees alike will adopt the technology. Traditional development is a high-risk, high-cost response to the demand for customer interaction inherent in Web 2.0. But there are important examples where SaaS is already making its mark in the emerging demand for enterprise social networks.
Leading early examples of SaaS applications have emerged in media. Broadcast networks, print, and cable media are all confronted with having to serve large audience demand for video sharing, comment collection and reporting, and mobile dialogue. And they are largely responding. In 2006, ABC's implementation of SaaS-based technology allowed viewers to submit questions for President Bush--via the Web, or even mobile phones if they liked--directly to the network and ABC's staff in turn was able to collect, sort, review, and immediately publish selected user-submitted videos into on-air programming to complement George Stephanopoulos' interview with the president.
Similarly, CBS recently turned to an SaaS-based solution to conduct an audience engagement campaign during Katie Couric's evening news debut, which asked viewers to contribute suggestions for Couric's signature sign-off. In less than 24 hours, more than 40,000 viewers--at a rate of sometimes more than eight per second--responded to the call to action by offering their opinions and feedback online. Networks are learning how to repeat these experiences across news, sports, and entertainment programming on a systematic basis. But like business, they do not have much time to retain competitive positions threatened by communities built on highly available, low-cost Web 2.0 technologies.
Web 3.0 will enable business to quickly embrace scalable, repeatable, and consistent methods of building social networks with customers and to manage those networks. By using SaaS businesses can meet the rising demands for customer interaction in a way that delivers immediate and tangible business value. SaaS is a simple solution to the universal problem of how to bridge the gap between traditional CRM and the demand for social networks created by Web 2.0 technologies in a way that honors the needs of business processes.
Head to Head: NetSuite and Salesforce.com
The companies release customization platforms for on-demand, a move that reduces IT risk, yet could spell trouble for midmarket CRM providers.
by Colin Beasty
Looking to dispel the long-held notion that on-demand applications aren't customizable, Salesforce.com and NetSuite both unveiled their first customization and development platforms in October 2006. The vendors have, in the process, placed themselves at the forefront of the next big development in on-demand CRM.
At this past year's DreamForce conference Salesforce.com announced Apex, the company's on-demand programming language and platform that enables third parties to write and run code on the Salesforce.com multitenant, shared architecture. Developers can build applications and software components of any type (not just applications associated with CRM) with Apex, and have Salesforce.com store and run them for a fee. "It gives them total control over the entire system," says Chairman and CEO Marc Benioff.
Just two weeks later NetSuite released SuiteFlex, its own customization and development platform that enables the creation of third-party applications on top of NetSuite. "We're adding the final layer in terms of programming extensions to tailor the entire interface to a vertical industry or the business processes," says Mini Peiris, vice president of product management.
Although the two customization and development platforms look and sound familiar, Rob Bois, research director at AMR Research, says each company's reasons for launching the products vary. "Salesforce is clearly targeting the enterprise segment by tackling the customization problem that has always been associated with SaaS solutions. SuiteFlex is more about customization tweaks, allowing companies to customize their NetSuite products for the verticals they operate in."
NetSuite's Peiris agrees. "The core functionality is already included in the NetSuite platform," she says, referring to the company's CRM/ERP/e-commerce suite solution. "Who wants to take on the complexity of adding that functionality? We're focusing on allowing customers to verticalize their NetSuite products via third-party vendor apps."
NetSuite's built-in ERP functionality, combined with its new customization and development platform, "puts them on the same playing field as Salesforce," says Denis Pombriant, managing principal of Beagle Research. "They're going toe to toe with Salesforce," although he doesn't see NetSuite being "as aggressive with third-party vendors." This, according to Pombriant, could be because Salesforce's AppExchange had a nine month head start--it was released in January 2006.
Regardless of the similarities and differences, both announcements are a clear indication of the next big trend in on-demand, and diminish another "knock against SaaS," Pombriant says. "This style of delivering business applications is the wave of the future. This is more than just a technology, this is a different business model that will carry us through the 21st century."
The ability for companies to now write, publish, and take code from other third-party on-demand vendors and run it on Salesforce.com or NetSuite servers allows them to focus on driving value from their software investments. "It greatly reduces the risk involved in purchasing these solutions," says Bruce Richardson, chief research officer at AMR Research. "It makes upgrades and customization that much easier, and enables the IT department and CIO to focus on innovation and business process."
The announcements should also set off warning bells for the rapidly diminishing legacy midmarket CRM providers. For years these vendors have served the midmarket by offering solutions that weren't as expensive as enterprise CRM solutions, but are more customizable than on-demand. "Their argument has always been that you can't customize on-demand. Well, now you can," Bois says. "That would make me nervous."
by Colin Beasty
Looking to dispel the long-held notion that on-demand applications aren't customizable, Salesforce.com and NetSuite both unveiled their first customization and development platforms in October 2006. The vendors have, in the process, placed themselves at the forefront of the next big development in on-demand CRM.
At this past year's DreamForce conference Salesforce.com announced Apex, the company's on-demand programming language and platform that enables third parties to write and run code on the Salesforce.com multitenant, shared architecture. Developers can build applications and software components of any type (not just applications associated with CRM) with Apex, and have Salesforce.com store and run them for a fee. "It gives them total control over the entire system," says Chairman and CEO Marc Benioff.
Just two weeks later NetSuite released SuiteFlex, its own customization and development platform that enables the creation of third-party applications on top of NetSuite. "We're adding the final layer in terms of programming extensions to tailor the entire interface to a vertical industry or the business processes," says Mini Peiris, vice president of product management.
Although the two customization and development platforms look and sound familiar, Rob Bois, research director at AMR Research, says each company's reasons for launching the products vary. "Salesforce is clearly targeting the enterprise segment by tackling the customization problem that has always been associated with SaaS solutions. SuiteFlex is more about customization tweaks, allowing companies to customize their NetSuite products for the verticals they operate in."
NetSuite's Peiris agrees. "The core functionality is already included in the NetSuite platform," she says, referring to the company's CRM/ERP/e-commerce suite solution. "Who wants to take on the complexity of adding that functionality? We're focusing on allowing customers to verticalize their NetSuite products via third-party vendor apps."
NetSuite's built-in ERP functionality, combined with its new customization and development platform, "puts them on the same playing field as Salesforce," says Denis Pombriant, managing principal of Beagle Research. "They're going toe to toe with Salesforce," although he doesn't see NetSuite being "as aggressive with third-party vendors." This, according to Pombriant, could be because Salesforce's AppExchange had a nine month head start--it was released in January 2006.
Regardless of the similarities and differences, both announcements are a clear indication of the next big trend in on-demand, and diminish another "knock against SaaS," Pombriant says. "This style of delivering business applications is the wave of the future. This is more than just a technology, this is a different business model that will carry us through the 21st century."
The ability for companies to now write, publish, and take code from other third-party on-demand vendors and run it on Salesforce.com or NetSuite servers allows them to focus on driving value from their software investments. "It greatly reduces the risk involved in purchasing these solutions," says Bruce Richardson, chief research officer at AMR Research. "It makes upgrades and customization that much easier, and enables the IT department and CIO to focus on innovation and business process."
The announcements should also set off warning bells for the rapidly diminishing legacy midmarket CRM providers. For years these vendors have served the midmarket by offering solutions that weren't as expensive as enterprise CRM solutions, but are more customizable than on-demand. "Their argument has always been that you can't customize on-demand. Well, now you can," Bois says. "That would make me nervous."
31.1.07
Salesforce.com and Deloitte Consulting Ally
The companies forge a strategic alliance that may bolster Salesforce.com's efforts to add more enterprise-size organizations to its client roster.
by Coreen Bailor
Salesforce.com is pairing with Deloitte Consulting in a strategic alliance that may enhance the on-demand CRM giant's ability to further penetrate into larger organizations. As part of the alliance, revealed on Tuesday, Deloitte will incorporate Salesforce.com's on-demand CRM apps and the Apex on-demand platform into its consulting services.
Salesforce.com's alliance with Deloitte will help give enterprises the confidence they need to develop, customize, integrate, and deploy on-demand applications with consultants that can help them address their global requirements, according to Bobby Napiltonia, senior vice president of worldwide channels and alliances at Salesforce.com. "The largest enterprise businesses worldwide are realizing they too can take part in on-demand success," he said in a written statement. "With Salesforce Winter '07 and the Apex on-demand platform, companies are able to extend the benefits of on-demand applications to any part of the enterprise."
"Salesforce.com's on-demand model can help change the way large organizations approach their customers," said Paul Clemmons, Deloitte Consulting principal and emerging solutions leader, in a written statement. "We look forward to working even more closely with Salesforce.com to help our clients in their efforts to realize significant results from their on demand applications. The Salesforce.com Apex on-demand platform represents an opportunity to expand the benefits of on-demand computing across many facets of an enterprise."
The announcement dovetails with the findings of a study unveiled today by Nucleus Research and KnowledgeStorm, a search resource for tech solutions and information. More than half of the 198 organizations surveyed use on-demand solutions, and nearly two-thirds plan on implementing an on-demand offering in the next year, according to the study. "This survey shows that the on-demand model is beginning to outgrow its image as a small business solution that, while cost-effective, couldn't scale reliably," Jeff Ramminger, executive vice president of KnowledgeStorm, said in a written statement. "Now, companies of all sizes can take advantage of the efficiencies of these types of solutions."
Salesforce.com has been trying to move up-market for a while, says Timothy Hickernell, associate senior analyst at Info-Tech Research Group. "At some point in this process, software vendors do need to have credible system integration partnerships to get their foot in the door of large firms. The key will be to see how many resources Deloitte--and other SIs--ultimately put towards this partnership, such as full-time consultants trained and certified on Salesforce.com's technology."
by Coreen Bailor
Salesforce.com is pairing with Deloitte Consulting in a strategic alliance that may enhance the on-demand CRM giant's ability to further penetrate into larger organizations. As part of the alliance, revealed on Tuesday, Deloitte will incorporate Salesforce.com's on-demand CRM apps and the Apex on-demand platform into its consulting services.
Salesforce.com's alliance with Deloitte will help give enterprises the confidence they need to develop, customize, integrate, and deploy on-demand applications with consultants that can help them address their global requirements, according to Bobby Napiltonia, senior vice president of worldwide channels and alliances at Salesforce.com. "The largest enterprise businesses worldwide are realizing they too can take part in on-demand success," he said in a written statement. "With Salesforce Winter '07 and the Apex on-demand platform, companies are able to extend the benefits of on-demand applications to any part of the enterprise."
"Salesforce.com's on-demand model can help change the way large organizations approach their customers," said Paul Clemmons, Deloitte Consulting principal and emerging solutions leader, in a written statement. "We look forward to working even more closely with Salesforce.com to help our clients in their efforts to realize significant results from their on demand applications. The Salesforce.com Apex on-demand platform represents an opportunity to expand the benefits of on-demand computing across many facets of an enterprise."
The announcement dovetails with the findings of a study unveiled today by Nucleus Research and KnowledgeStorm, a search resource for tech solutions and information. More than half of the 198 organizations surveyed use on-demand solutions, and nearly two-thirds plan on implementing an on-demand offering in the next year, according to the study. "This survey shows that the on-demand model is beginning to outgrow its image as a small business solution that, while cost-effective, couldn't scale reliably," Jeff Ramminger, executive vice president of KnowledgeStorm, said in a written statement. "Now, companies of all sizes can take advantage of the efficiencies of these types of solutions."
Salesforce.com has been trying to move up-market for a while, says Timothy Hickernell, associate senior analyst at Info-Tech Research Group. "At some point in this process, software vendors do need to have credible system integration partnerships to get their foot in the door of large firms. The key will be to see how many resources Deloitte--and other SIs--ultimately put towards this partnership, such as full-time consultants trained and certified on Salesforce.com's technology."
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