Thinking Bigger

After a long build-up, I think we’re finally at the real beginning of a new era in computing. The previous (nearly) 10 years have laid an important foundation, by which I mean on-demand computing, but if you thought that was it, I think the next few years could blow you away.

Take a look at the driving forces in computing today — they at least include economics, technology and population, and that’s probably just scratching the surface. Most interesting in my mind is that CRM is really the driving force for much of what is happening and much that will happen.

Here’s how I see it: Economics has always been a major driver in our business, but I think we’ve seen it kicked up a notch. Old school economics were about productivity, and the technology sector responded with increasing computing power (thanks to Moore’s Law) and the software to consume it and thus provide the productivity.

Today, however, economics is being driven by population — more people than ever are becoming computer literate, and that literacy is a great marker for improving living standards, which naturally drives needs for most things CRM.

Bottom-Up or Top-Down?

In the last few years we’ve seen a lot of movement along the lines of Web 2.0 and CRM 2.0, which is good, but will it be enough? The thing few people really want to admit is that CRM got started as an attempt to organize the front office, not necessarily service the customer. Tools were put in place either to help managers bring scientific management principles to sales (SFA, or sales force automation) or to organize the chaos of customer service.

We all know the story. Along the way the customer changed — we found our voice and our wallets and became demanding — and CRM began to get out of sync with the market. That’s when vendors began throwing software at the problems like a hiker offering his backpack to a charging grizzly. For the moment the bear is barely sated but far from fooled.

The latest wave of social networking and community solutions offer a tantalizing view of a future in which vendors and customers collaborate and co-create value, but as good as it is, I have my doubts. I think there’s still too much software development from the bottom up when we need to be thinking a bit more from the top down — strategically.

Certainty vs. Probability

As good as many of today’s CRM 2.0 technologies are, they still suffer from a point solution mentality. A vendor might say, “I see a business problem and I can fix it, regardless of the fact that the problem might be part of a cascade of issues.” Like the story about a butterfly flapping its wings in the Amazon rain forest and influencing the rain patterns on the east coast, there are more moving parts than can be modeled with any precision.

Dealing with customers is part social science. We can have all the physics envy we want, but it won’t change the fact that where physics has mathematical certainty, social science has the bell curve and probability. Nonetheless, we can do a better job in customer-facing applications if we take a bigger picture view of what we are doing. We need to think more about the process than we think about solving the point problem. The companies that I see working on the bigger picture today include, Oracle and nGenera — to name only a few — and each has taken the view that some kind of platform is required to bring everything together.

Own the Brand

By far, Salesforce has demonstrated this understanding best. With the AppExchange and, the company has brought forth a logical platform that supports whole business processes by bringing applications together. I am less sure that the partners recognize this and their responsibility for inventing a new future — they seem more interested in the short-term need to integrate a couple of applications for a specific engagement.

You can’t blame the partners because they’re paying the bills, but you can say this is an opportunity for future growth. My counsel is for groups of vendors to band together to own and brand a business problem and its solution. By problem and solution, I mean something like order to cash in pharmaceuticals, for example; something less specific will not attract the firepower needed or present the opportunity to make the effort worthwhile.

Oracle may be on the same line. So far, Fusion looks more like an attempt to stitch together a crazy quilt of CRM 1.0 acquisitions, but there is great potential within the architecture to do more on a process level. I think the next few months — and announcements from Oracle — will tell the tale.

Then there’s nGenera, which buddy Paul Greenberg blogged about the other day. nGenera appears to be taking the bull by the horns and is buying up companies (the latest one is Talisma) in an attempt to craft end-to-end customer-facing solutions. Whether nGenera will fare any better than any of the other companies with the same strategy that have graced the scene in the last few years remains to be seen. Given the work already done on many fronts with XML (extensible markup language) and Web services, I’d have to say these guys bear further looking into.

Lastly — and this cannot be overstated — as the demand for customer-facing solutions accelerates, engineers in other parts of the world are seeing the same needs and opportunities, and they are watching from places with lower labor costs. What happens next is largely in our hands, but I would like our chances better if we thought bigger.

Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant’s research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is working on a book and can be reached at [email protected].

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