This is it. The first of what will be seven or eight posts on the CRM Watchlist 2012 Winners. I have to say that is was the toughest year yet - because I was tougher on how they were picked and because the choices were incredibly difficult because of the all around variety and quality.
The Opening StatementI need to re-emphasize something. This is an impact award. That means that the companies I chose will, at least as far as I'm concerned, have a significant impact on the market and with customers in 2012. I have specific weighted criteria - outlined in the pre-season post here. Each criterion has several components that go into the score. Also, this is a CRM related award, so for example, when I'm looking at management of companies, I'm looking at CRM management primarily, not necessarily the overall management team. Though in companies, where the senior management broadly has a major impact on the CRM direction etc. I take that into account.
I also need to emphasize that the panel of judges is one person - me. Thus, there is a lot of subjective coloration to the choices. I can't deny that. But there is an entire year of research beyond it, years of being in the space and significant research since November for especially all the finalists to come to these conclusions.
Now the quasi-disclaimers.
- Of course many of the companies who won - and who didn't win but were finalists - and who were candidates but didn't make it to finalists - have been or are clients of mine. That's because most of the industry has been a client of mine at one point or another. Many companies that didn't even make the candidates list have been clients of mine too. So there.
- Several of the winners are companies with close friends of mine. Very close friends. In the past I would, mostly unconsciously, (or subconsciously, if Freudianism is something you place faith or trust in) leave them off the list. This year, I didn't. But, you'll have to trust me, they were subjected to the same rigor and standards as any of the other candidates and finalists. Some made finalist, some didn't. Some won, some didn't.
I also had to make a change in how I provide the results. To some degree, I went back to the plan that I had in 2010. For various reasons, there were several companies that I thought would potentially provide some serious impact in 2012 but for one reason or another I can't make them winners. So I'm bringing back the "6-months checkup." These companies will be noted and a sentence or two written because they have the potential to have an impact but fall short for reasons that can range from not doing something they need to of real importance to just an insufficiency of information. This was one place where if the companies provided me with the questionnaire, I usually got what I needed if I couldn't find it myself. But, in a few cases, the lack of info was why I didn't put them in the winners circle.
The scoring itself worked this way. If you reached a certain number - you won. If fell below a certain number, you lost. If you were in-between, judgment call. No company that fell below the lower thresh hold number made it to this list, no matter how big. None. Everyone on this list was a solid winner or those of the judgment calls I chose.
Some General Winner ObservationsThere were some surprises this year. As you know the highest scoring company is the only "rank" I reveal except for the winners, the wait and see, and the losers (by omission). There were some DEFINITE total shockers in this one including companies that fell off the end of the earth, other companies downgraded to the wait and see list. The biggest surprise though was the highest scorer, which for the first time wasn't salesforce.com. In fact, it was none of the Big Four. It will be revealed all in due time. It was pretty close to the #2 (who's name won't be mentioned) but it was a clear #1. It will be in the post that covers that company. There are multiple posts to come - could be as many as 8, but we'll see.
The posts will look something like this.
- Big Four Part 1A - Salesforce, Microsoft
- Big Four Part 1B - SAP, Oracle
- Complete list of all winners with links to their sites and the six-months review second tier names, a few observations in general but that will be all.
- Beginning of reviews of the rest of the winners (about 6-7 posts). This is where the substance will be.
The Big FourThese are the obvious and the no-brainers. They are pretty much going to be on the list even when their score is subpar - though not if they went below the redline for elimination. None of these four did that.
Thus, the Big Four - SAP, Microsoft, Oracle and salesforce.com. Their impact is year over year and long term in addition to whatever they do within a particular fiscal year. They meet all the criteria, all the standards that I could possibly throw at them and of course, I'm watching them closely at all times. However, this year, only two of the four were locks and the other two were in the "barely made the judgment" level. What I'm going to do in this post, is reveal and review the first two of the winners and then the second two the next day. No surprises - SAP, salesforce.com, Microsoft and Oracle are the first 4 winners in the 2012 CRM Watchlist Awards. Today, salesforce.com and Microsoft.
Okay. Let's rock and roll.
The First Round of Winners
Salesforce.comNo way to leave out this company. In 2011, by publicly identifying themselves with the "social enterprise", salesforce.com unveiled their most significant messaging since they made the decision a decade ago to be the "business web." To them, the social enterprise is a cloud based technology ecosystem that would enable a company's business processes, rules, strategies and programs, and supplier/vendor/partner/customer value chain. To start filling the obvious gaps in their portfolio, they went on an unprecedented acquisition tear, with Heroku (technically 2010, but the beginning of their surge), DimDim, Radian6, ModelMetrics, Assistly, and Rypple. These all filled different gaps for them but one that made them more "enterprise" and less pure CRM and more collaborative and less purely operational. They made one really important hire in the social realm - top gun Steve Gillmor (of Techcrunch and the Gillmor Gang) and several other very significant executive hires including Bruce Richardson, the spectacular John Wookey, and David Kellogg who began to fill in the talent gaps for their push into what I call the "collaborative value chain." They did a major revamp and escalation of what was a badly damaged analyst relations program - putting it back in the hands of someone who is among the most respected people in the enterprise world, their VP of Product Strategy - John Taschek. Within the space of a few months with some excellent supporting staff - influencer relations was back on track.
But, In my thinking about salesforce, this was less a year of new messaging than a year that I saw them address things that they needed to - opening up their proprietary platform via Heroku and its Java and Ruby on Rails commitments; situating their platform as a service as just that a Platform as as Service (PaaS) - not as a competitor to Microsoft Azure and Amazon's EC2 - which they (Peter Coffee in particular) see as Infrastructure as a Service (IaaS). They also managed to put to rest one of the biggest albatrosses around the neck of SaaS and the cloud - the perceived problems with data security (note I said "perceived" not "actual") with the announcement of the data residency option (DRO) which, at least as far as it represented, allows companies to choose where they want their data to reside down to the field level - and still have the benefits of the multitenant applications/services that salesforce provides.
It didn't stop with that either. At Dreamforce 2010, Mark Benioff changed his pitch to the crowd from its previous enterprise focused pitch to a more amorphous "anyone" when it came to discussing customers. My interpretation of that was that they were opening their applications back up to small and midsized businesses because there was an addressable market with a lot of good upside that they already had some expertise and talent to address. Turned out that I was right.
This wide-open marketplace led to some promising and very different initiatives. Just last month, they announced the existence of widely promoted private beta of do.com - a cloud based task and project manager that was built on the foundation of one of their smaller acquisitions - ManyMoon. What made this interesting it was focused around both business and personal task and project management and was collaborative in nature - invite others to participate on a small scale. It has built into it, Chatter-like activity streams that made it different than others of its kind and salesforce is committed to continuing the development of this well received service.
All this said, there are still some things that salesforce needs to do to meet their own messages even halfway. At Dreamforce 2011, monsieur Benioff announced that he was going to create an externally focused capability for Chatter so that customers can participate in conjunction with employees or each other. But this isn't a community. It's a social network and doesn't function like, say, a Best Buy customer community. Not only does the distinction have to be clear, but salesforce is going to have to step in to play the game either by acquisition (think a Lithium type company - or Lithium for that matter, here) or by putting together a team that knows how to build that capability. They shouldn't underestimate the Oracle, RightNow acquisition in that regard. RightNow has a modest but capable community component that is partly homegrown and partly due to their HiveLive acquisition. Oracle knows the difference between community and social networks - and the business value of each. I'm not sure that salesforce does or, if they do, are moving fast enough to take care of the ecosystem gap.
Which brings me to another issue and its one they need to solve if they are to adhere to their social enterprise vision. They still need a "marketing cloud."
There is some irony in that. Other than the fact that they are missing the functionality outright in their offering, they are confused and fuzzy over how to "get one" despite their thankful recognition that they need a marketing cloud. Initially, they announced that Radian6 would be their "marketing cloud" which I promptly jumped on as ridiculous and actually underestimating what Radian6 could do for them.
Then at Dreamforce 2011, salesforce announced a strategic partnership with Infor for multiple reasons, among them it was rumored and said in an Infor press release, that Infor would be the Marketing Cloud. But Charles Phillips was unaccountably cut off before he finished what he had to say at Dreamforce and then I heard MB in a private briefing for influencers, press, analysts call Radian6 "the marketing cloud" - again and announce it again in a bigger way at Cloudforce in NY - which I promptly shot down. So the confusion remains. This is a story and a timeline they need to get straight and get it straight fast. It's a big hole.
Finally, they need to do one more thing to enhance and support their ecosystem. Aside from homage to analytics, they need to build their analytics capabilities significantly in 2012 with an eye to being able to help support customer insight capabilities at companies. This is a no brainer and yet, not something that they do all that well - and considerably more poorly then SAP or Oracle. With the Radian6 Insight Platform, they might be able to do that - via partnerships since I don't see lots of evidence of native capabilities.
But, boy, do they deserve to be on the Watchlist. They are probably the only enterprise services company I know that has fanboys. I'm not a fanboy of anything - except the Yankees and that's just a fan, no boy. But I do admire what salesforce is doing and how they are moving. 2012 is a year I expect to see more of the same, which means a great year for the company and its constituents - fan boys or enterprise customers. I heart salesforce.
MicrosoftThe classic enigma in a puzzle in a riddle or whatever order that classic is in. This is a company that drives all kinds of passions good to bad.
So to make it perfectly clear, I think that Microsoft belongs on this list though some of their scores in my ratings were a little low but others were off the charts. This typifies my dilemma and my frustration with the company that has bottomless potential that it may or never may achieve.
First, the upside. The Microsoft Dynamics CRM product is a good product - and can be a very good product for many businesses. They have core functionality in two of the three pillars of traditional CRM - sales and customer service, only lacking marketing, something that most other companies (though not Oracle) lack - though not for much longer. More on the marketing side later.
Not only is Microsoft Dynamics CRM a really good product for what it has (though as we'll see in the downside - missing some crucial pieces), but its delivery model - either on demand or on premises - is what it has to be in a world that is transitioning to the cloud but is still several years away from a cloud-dominant position.
They own some verticals - sports for example, which while not gigantic businesses are caché companies. What most people either don't realize or forget is that the aura of sports teams is far greater than the size of sports teams. Even teams as large as the Yankees don't really fall into anything but the upper end of the midmarket in their size category. But the power of owning verticals like that can support the intangibles that drive sales.
But the other thing that is a HUGE potential upside for Microsoft and its CRM products and more generally why you can't count them out, despite some of the naysayers, is the assets that they already own. Think of the following:
- Strong foundation in CRM - They have a strong customer base with Dynamics CRM that can't be written off. They have more than 30,000 customers and over 2 million users with 12,000 partners to service their CRM ecosystem. That is nothing to sneeze at.
- Microsoft Azure - Azure, the child of $9.5 billion spent for R&D, is a complete cloud provision system in the competitive realm of Amazon's EC2. This is the backbone of Microsoft's (and many other companies I would expect) cloud services in the near future. At their Convergence confab last year, they indicated that Azure would be fully available (GA) in 2013, but in limited theaters as of now.
- Unified Communications - I'm convinced that with the acquisition of Skype, the partnership with Nokia, the well done Mango version (7.5) of Windows Mobile, Lync and of course Azure as the backbone, they are positioning themselves to own the Unified Communications world much as they owned the OS via Windows for so many years. I wouldn't underestimate them here. This can be a powerful impetus to get them back on top since the revolution that we've undergone in the last several years has been a communications revolution impacting business, not a business revolution. He who owns Unified Communications owns the business world. Imagine Skype with its 570+ million customers and an API which is provided that encourages third party development of applications and services. Right now the API is kludgy and you can see the dearth of apps that exist as a result.
- Kinect for business - This is an oddly important initiative for Microsoft for multiple reasons. Not only does it cross the consumer chasm into where normally their enterprise applications reside, but it provides them with one of the points for the potentially unifying message about Microsoft being an technology ecosystem that can support how (you) live (see this 2007 post.
Thing is that these are big-time capabilities and when it comes to CRM they have a base that is surprisingly large. There are three things to consider when thinking about their impact in 2012.
- They want to target the enterprise for their CRM product which is no small feat. This means a huge deployment of resources in 2012, which, I have to say, they seem to be prepared to make.
- They need to provide meaningful social functionality for their enterprise applications, especially customer facing apps. They are not even at table stakes at this point, but they have the very capable Bill Patterson on that particular case as part of his mandate, so I expect that big issue will be rectified. It has to be. This isn't a matter of choice.
- They need to just get better at thought leadership. For whatever reason, they don't provide the depth of thought leadership a company their size ought to provide. That has to change in 2012 - period.
Microsoft is a definite on this list though these considerations loom large in their ability to have a real impact. They need to spend 2012 doing what they have to so we can stop scratching our heads year after year. Not only do they have way too much to offer, but my scalp can't take it anymore.
Next up: The Big Four Part 1B: SAP and Oracle