Social CRM - Analyst Studies

This is the first in a 2-part series on social CRM. These discourses (if I may dare to call them that) mirror the presentations I have been making at my workplace on this topic. In this part, I will focus on defining it, elaborating its importance, how it fits into an organization’s overall CRM roadmap strategy, its related industry trends and the key issues & challenges faced during social CRM adoption. In part 2, I will attempt to do a product and talk in detail on various use cases that have been successfully implemented by the industry in general in this area.

Social CRM has become such a popular buzzword today and in a way its popularity has lead to an overall misunderstanding and misuse of the concept. Various definitions of the concept exist. Forrester and Gartner have simply expanded the traditional definition of CRM (business processes supporting sales, marketing and customer service) to include the concepts of collaboration and communities to come up with their definitions on the social CRM. The one that is most popular and most commonly referred to today is the one by Paul Greenberg: social CRM is the company’s response to the customer’s ownership of the conversation.

This graphic by the Chess Media Group nicely represents the circle of social CRM evolution (though it has more detail on the listening aspect than on targeting and analysis aspects).

The importance of social CRM is often highlighted using the following: improved customer service, new market segment exploration, improved communication efficiency, improved customer targeting, decreased sales & service cost and increased R&D and innovation. Various statistics have been citied to draw attention to this concept:

1. 30% of Google search results on the world's top 20 brands provide links to Social Media on the 1st page*
2. The internet accounts for only 10% of total sales, but Social Networks influence > 40% of all offline sales*
3. 85% of the students currently enrolled in U.S. colleges and universities have profile pages on Facebook*
4. By 2012, spending on social software to help sales, marketing and customer service processes will exceed $1 billion worldwide**

References: *HBS Social Media Report, Edelman Customer Index Report
                      **Gartner - Social CRM: The Next Generation of Customer Innovation. March 30-April 1, 2011

Strengthening relationships with customers, enhancing brand awareness and establishing interactive relationships with customers were given as the top 3 reasons by CxOs for investing in social media in Gartner survey conducted this year.

If one were to study the use of social CRM within the larger CRM operating framework, then there has been various innovation use cases put to good use. Within marketing, Ford Fiesta has my top vote (see http://media.ford.com/article_display.cfm?article_id=30158) and the MyStarbucks idea finishes as a close second (http://mystarbucksidea.force.com/). Drugstore.com has won several awards for its use of social media towards delivering customer service (http://www.rightnow.com/blog/client-success/taking-home-the-gold). As a social CRM, e-commerce social shopping application Groupon is an easy winner and doesn’t even need explaining. There are many other examples of companies having deployed social media successfully. A bigger list is here, courtesy a Gartner study (Google them to find out more):

Social CRM is not without its list of challenges. Most organizations do not have a social CRM strategy or definition in place and nor have they defined the metrics about current social CRM capabilities that would service as a baseline for improvement. Secondly, there is inherent difficulty in establishing a social CRM strategy in the face of fierce hype from industry magazines and software and service vendors. Expectations for social CRM today clearly exceed the measurable benefits. In Gartner’s technology hype cycle report last year (for sales force automation), social CRM is expected at least 5-10 years away from mainstream adoption and per their study is in a phase of inflated expectations. Thirdly, poor organizational readiness for self-service has emerged as the biggest stumbling block in the increasing drive toward a more cost-effective self-service offering. While there are those who are ready to use social media as a business strategy, they have simply not changed enough themselves to be actually in a position to best use it. Fourthly, most organizations have 3 or more social CRM initiatives running in parallel, often only loosely coordinated. There is no dominant trend as to which department within an enterprise will eventually run a social CRM program. Today that department is definitely for sure not the IT department. There are other technological limitations as well. For one, language complexity and content sources can be an obstacle. Social conversations are often unstructured and include text, images, videos, emails, blogs, tweets and other types of data types that are not part of a database. Separating noise from an authentic social signal, a critical aspect to helping a company better understand their clients is also a challenge today and this can get past the listening tools as well. Seamlessness is yet another issue. Social consumers channel hop during conversations, and companies need to be able to efficiently and effectively follow their conversation and pick up where they left off. Deep integration with the web and with contact center experiences is required to pull this off.

Despite all the challenges and issues around it, social CRM is here to stay. Large investments are unneeded to begin social CRM unlike its enterprise CRM counterpart; social CRM applications are installed and used by organizations of all sizes, including companies with only five employees, though social CRM by itself can’t be a company’s entire CRM strategy. A huge adoption has already taken place these industries: high tech, media, consumer goods and retail. This is particularly true for the NA geography. The next wave is in the telecommunications, education, banking, insurance, pharmaceuticals and automotive industries.

More on the products and use cases in the next fortnight's blog.

An Introduction to Business Transformation

Management and technology’s tools and techniques are only a means to achieve a higher goal of business success and competitive positioning. These tools keep changing over time, but the end results must be achieved successfully all the times. Business Transformation fits exactly there. It’s a management sponsored (or at least a closely-backed by management) activity to do with aligning of an organization’s programs relating to people, process and technology more directly with its business strategy and vision. This initiative moves towards an outcome-based end-state such as a dramatic improvement in customer services or a drastic increase in company profits.

The focus in Business Transformation is on discovering new ways to perform business innovatively and not on finding ways to refining or automating existing business processes.  Therefore this is a more radical re-thinking initiative than a mere business improvising exercise.  Business Transformation assessments therefore start with answering the most fundamental questions:  “Is our mission relevant in today’s world? Are business benefits of our programs aligned with that of the company’s strategy and vision?”

Business Transformation as earlier mentioned has 3 aspects to it: people, processes and technology. Leavitt's famous diamond actually went to refine this and a modified version of it actually goes on to add a 4th aspect which is strategy. The key-takeaway to this framework is that every element in each of these aspects affects every other. Business strategy is the primary driver in this framework and the other 3 aspects are governed by this 4th aspect’s encompassing role. Processes represent the mechanics of the organization, its structure and the governing systems.  The people dimension deals with elements such as organizational culture, education, training, motivation and reward systems. The third aspect, technology is to do with the use of computer systems and other forms of communication technology in the business.

The use of information technology is a major contributing factor towards achieving Business Transformation objectives. It helps enable all the other aspects of a Business Transformation initiative. In fact, several disruptive technologies are actually changing the way work is being performed. Social media, cloud computing and Web 2.0 are today’s examples and ERP systems and wireless communication were major disruptive forces of yester years.

The two biggest hurdles to executing a Business Transformation program effectively are:
1. Lack of/No Change Management: Poor setting and handling of expectations. No support from the senior management for such exercises.
2. Executing it as one-off project: No strategy alignment or long-term perspective planning and execution. No change in management thinking.

Business Transformation was an extremely popular initiative around the mid-nineties. The majority of Fortune 500 companies were then either doing a Business Transformation program or in the process of initiating one. However, it become apparent very soon that the programs executed were much less radical in nature than what was originally proposed for in the framework and that more often than not, Business Transformation became a mere way of justifying downsizing and increase managerial control. The interest in Business Transformation began to wane then and then started giving way to Business Process Management (BPM), an initiative more to do with process optimization.

Business Transformation is still a huge market today, somewhat fragmented with multiple players and growing at a fast pace. Accenture leads the pack in terms of market share and the other consulting biggies have a considerable large footprint in this space. India’s large services players are trying very hard to get into this space (as well as into products and platforms) given that shrinking margins and rising costs is killing the cost arbitrage advantages that they had. They now need to understand how to get into value arbitrage model.

Agile Debates: On Distributed Development, Talent And Metrics & Measurements

I attended the 2011 NCR Agile conference a few weeks ago. This was the second such Agile conference I was attending within an year's time and what brought me back weren't the speakers or the interactive sessions alone. It was largely the debate & discussions on different ways of getting software done right and the networking sessions where you could actually discuss potential challenges & issues on your software development techniques with others in the practicing community.

There was one such discussion I got into with one of the speakers at the conference that was to do with distributed software development. In my 8 years at Tata Consultancy Services, I had mostly worked on a distributed offshore/onsite or a multi-shore model but always using the traditional waterfall method. In my 2 years at a product startup, we used agile and always worked out of the same floor and so we never had to face the challenges of distributed agile or scrum. However, from my TCS days, I recalled that the biggest challenges we had were to do with communicating enough, communicating correctly and ensuring enough visibility for all teams across locations. And we used different techniques to make this work. For starters, we tried to enforce an onsite/offshore rotation policy so that everyone on the team is acquainted with one another as much as possible. We also tried ensuring that all victories even the small ones are celebrated and that any sincere effort never went unnoticed. However, most importantly, what really made distributed software development successful were our onsite & offshore coordinators. These 2 people could make or break the projects and in no uncertain terms were their jobs the 8-hour-a-day type. These were almost cross-functional specialists in a sense and their skill-sets spanned across ensuring operational excellence and managing client relationships and team members. I found the ones who were more good with people to be much more successful than the ones who were simple more good technically. The gentlemen I were discussing this with didn't take it too kindly. For one they were both these coordinators on a not-so-successful distributed scrum project and they were both technical leads on the project. However, more importantly, they didn't think that specialists such as people managers or project coordinators had any place on teams practicing Agile software development where the emphasis was on everyone doing everything.

I could actually relate this to 2 other speakers at the conference where while one mentioned that one of the dangers of agile was that everyone seemed to be focusing on generalists and trivializing the importance of specialists and the other mentioned that agile is simply another process of getting software done and that the process is irrelevant given that it was the outcome that eventually mattered.

The other debate I got into was to do with if developers in product companies were better at their jobs than those at service companies. This is largely true at least from what I have observed. However, the real question  to ask is if product companies are as effective as service companies. I know a zillion more failed product companies than I do service companies. If we are really smarter than our counterparts in service companies, then we should be doing much better than them at making profits. I know that this could be an apple-to-oranges comparison and that the balance sheet isn't everything but the cash reserve our top 5 India-based service companies have could put some of the most famous global product companies to shame.

There was yet another interesting discussion on metrics and measure of performance of projects doing agile. For one, collecting even simple metrics takes effort and given that the real value is in the delivery of software, should one be spending time on data collection at all? I believe that it is worth the time and that it is also best kept simple and easy to measure. They have many advantages: they help us know where we are, on what we can make further continuous improvements and help promote this transition.

This has been a long post. At the end of it all, I just want to say that continuous improvement is at the core of all this and that the process isn't everything. The process is just an enabler and we should just keep it that way. From that perspective perhaps the philosophies across most software development methodologies aren't that different after all. Its just that some have more boxes and arrows on their diagrams than the others.

On Alliances

The traditional definition of an alliance has been the following: the pooling of resources and effort across multiple entities with the objective to achieve a competitive advantage in the marketplace. However, the ability of an alliance goes much beyond that. It is to do more with the the creation and the integration of new competencies out of the already existing stocks of prior competencies held by the organizations in question.

You could forge an alliance for a variety of reasons such as for marketing, R&D, technology. design and more popularly to create distribution channels. If one looks purely at brands and marketing, forging alliances have become critical because of changing trends. There are technological changes taking place at a rapid place with increasing globalization and constantly evolving consumer needs. In today's era of globalization, partnership with local firms to distribute and sell products under the local brand name achieves gaining a foothold in the market. In the case of evolving consumer needs, an important part of marketing then becomes identifying new consumer trends and the creation of products. Partnering therefore can not only reduce time to market but also make up for the lack of innovation focus within the company.

The most commonly cited example on alliances in classroom and various case studies is that between Microsoft, Intel IBM and Apple. When the PC industry began, competition existed between Apple and the IBM-Microsoft standard. IBM created and set out an open architecture standard that allowed any other computer manufacturer to build a clone of the IBM 'PC' itself and other software manufactures to deploy software to the IBM platform. This marginalized the Macintosh platform completely and the IBM PC became the de-facto standard. However, IBM and Microsoft fell into a dispute on operating system adoption where IBM was more interested in pushing OS/2 while Microsoft wanted to launch Windows. Microsoft then formed an alliance with Intel and launched Windows. Other PC manufacturers adopted this making Wintel the dominant standard thereby marginalizing IBM completely. IBM's open standard actually then worked against IBM's favor. IBM then went into an agreement with Apple to develop its new line of chip architectural design. Eventually, Apple realized that IBM support for it wasn't as good as they would have like it to be and adopted an Intel standard. The eventual implications of this are actually yet to be seen. It may be that the Mactel standards will be more aggressively pushed out by Intel in an attempt to marginalize the Wintel standard!

Alliances are about increasing the size of the pie rather than increasing one's share in the existing pie itself but they are not without challenges. What gets in the way more often than usual in establishing successful partnerships is to do with overcoming the 'proprietary mindset'. Partnerships require one to be willing to give something in order to get something and that requires a more 'collaborative mindset' than anything else. Also over 50% of all alliances have been failures. However, the average Fortune 100 company has over 60 alliances and given that these are Fortune 500 companies that we speak of, they must be doing something right.

SMEs and SaaS

Everyone is talking about the Small and Medium Enterprise (SME) and the Software as a Service (SaaS) space today. But is there enough understanding on what IT means for the SMEs and more importantly, if the market is really that huge, then why aren’t we seeing enough SaaS adoption in this space already?

For consistency’s sake, we need to define what a SME in India is given that there is no legal definition in the country to this yet. Let’s assume this to be an entity that has a turnover of under 1 billion (100 crores) INR. SMEs then by this definition contribute in terms of value to over 50% of the county’s total exports and account for over 95% of industrial units.  Secondly, they are growing in leaps and bounds across all sectors and have been instrumental to India’s growth story. Conservative estimates have put annual growth in the SME space at over 20% across all sectors for the last 2 years.

To serve this space means to play the volumes game. The typical client will require about 11-15 licenses of the software in question. Next, the SME requires a complete pay-as-you- go model with minimal upfront investment, minimal installation time, minimal training and a solution that is completely outsourced and managed by the software provider.  They don’t want the overhead of managing an IT department. Additionally the software should be able to integrate with third party customer software as required and data migration (both in-out and out-in) should be extremely simple.

Not enough IT players understand the SMB sector completely and therefore this also makes this an underserved market.  This is mainly because most players today don’t have a SME version of their software. Their version of software is the enterprise type that is traditionally heavyweight, expensive with large upfront fees and requires a try-to-implement-forever approach.  Also what is lacking is the SME’s ability to prioritize & understand what IT can do to facilitate their growth.  Therefore there is some amount of educating required in this space.

Of Contact Centers and CRM Evolution

A contact center’s objective is to combine all customer communications to provide a consistent and complete customer experience. Irrespective of the channel that the customer chooses to pursue: whether it is via a website or a discussion forum, a chat message, a short message service (SMS) or even a telephone call, the agent needs to be empowered to experience the customer request.

The contact center today is not there with this yet and will therefore have to develop multichannel capabilities that will need to be delivered as a standard feature and not as a complex customization. Online communities support need to proliferate. Blogs, discussion boards, social networking (with special emphasis on feedback management), wikis and collaboration tools to enable customer self service. And knowledge solutions, real-time analytics and decision support to enable the agent better serve the customer.  Customer data integration is an important requirement here that will enable a 360 degree view of the customer and her/his experiences.

Lets take a look at what technology, a contact center needs. A contact center has essentially the following components to it and some of them can be rather tightly coupled with the others.

   1. The Customer Interaction Management (CIM) suite of business applications that will manage the customer interaction process. Some amount of Business Process Management (BPM) will have to be inbuilt into the CRM for workflow management.
   2. Contact Center infrastructure, not restricted to Interactive Voice Response (IVR) systems, Computer Telephony Integration (CTI), SMS and Payment gateways alone.
   3. Optimization tools for the Contact Center such as call recording solutions, back-office software, training and quality assurance tools.
   4. Analytics tools to gather business intelligence and customer insight.

CRM applications are increasingly becoming more complex. Automated proactive alerts, BPM and integration support for multiple interfaces are now becoming standard features. While most CRMs today are primarily being used for handling service requests and as knowledge-base solutions, social networking support and predictive analytics are fast catching up.

Though it is a well known fact that any hosted CRM needs to have some sort of SaaS support for it to be successful, pure-play SaaS-based CRMs still have a long way to go before they can start dominating the CRM market. Today, Salesforce CRM is available only as SaaS. Microsoft Dynamics has now gone online and offers a cloud version as well. However, SaaS based CRMs have historically worked great for low-volume and simple contact centers and therefore there is a dying need for SaaS CRMs to have more complex and customizable features.

A paradigm shift is therefore waiting to happen with SaaS based CRM solutions. Gone are the days when the contact center was only about blended solutions, simple CRMs that primarily handled service requests, and IVRs. The market is out there and the future is waiting. After all, the objective of a good Contact Center is always to enhance the customer experience, isn’t it?

Why Do Indian Tech Product Companies Struggle?

This was in the news last week: technology product companies are coming of age in India. I was just wondering, we have been a software services powerhouse for quite some time and Bangalore is even known as India’s Silicon Valley. Hell, I even worked in one of the World’s largest software services company for almost 8 years. But how come, we don’t have a lot of technology product companies that are famous enough to be recognized worldwide? I then took up a stab at this and came up with the following:

The first and most obvious answer has to do with talent. While we have some of the best and brightest engineers all right, most of them would rather work at a large software services provider than work at a small unknown product startup. As if hiring wasn’t difficult enough already, the typical Indian mentality is to progress up to a non-technical path very quickly. After all, if I as a software programmer ever told my to-be in-laws that 10 years into my job, I am still into software programming and working for an unknown product startup, then it would simply be a matter of shock to them.  After all wasn’t I good enough to become an account manager or delivery manager at a TCS, Infosys or Wipro by then, or at least a project manager at one of these companies perhaps?

Having experienced and great software programmers in your technology product company is extremely critical to building good products. While not everyone has to be a superstar, you have to have the right mix of them.  Product companies also have a very strong engineering led approach that is missing in most service companies that typical have a very strong marketing driven approach.

Secondly, we never quite had the Steve Jobs, the Bill Gates and the Larry Elisions. These visionaries were extremely important in the advocacy that was required for a market to be created. The software services industry on the other hand had people such as a Narayana Murthy and a FC Kohli.

Thirdly, Indians also exhibit another typical behavior. We are more to do with think small and then scale up. We are true conformists to tradition. So therefore most of us have never been trained to think disruptively. This is essential to building a successful global products company and Zoho has done this so well with their SaaS strategy which they did much before Google and Microsoft could launch their office products online.

Fourthly, regulation and infrastructure has still catching up to do. A 512 Kbps Internet bandwidth connection is still un-available in some of India’s tier 2 and 3 cities and even if it is, it is either not extremely affordable or reliable. On the telephony front, regulations have been a constant inhibitor to inhibition. Coming from a customer services solutioning standpoint, these 2 stand out to me first: 3G is yet to take off on a serious note and VoIP calling to telephones are still a strict no-no.

However for people who understand all this, India clearly has the cost advantage. Much lesser capital is required to launch a product startup today in India than in most other developed countries. Also if you are launching a product company in India that Is specific to Indian requirements only, which is actually a great idea to pursue given that the Indian economy is doing better than any other developed countries currently, then you need to make the markets work for you in India by adding localization to your products.