Okay Here Goes - CRM Forecast 2010 - Part I

Just so you know, this year, I’ll do even better than last year (notice by adding the word “even” it makes it seem like I did really well last year but will improve over that sterling performance. Looking Back at CRM 2009 Forecast and decide whether “even” is justified or just a psychological ploy). One of the reasons for that is because of refinements to my incredibly good algorithm that drove my forecast last year.  The old version was:

eu + gw (l*bl)/i = fw, where eu = eye use; gw = guesswork; l=luck; bl=blind luck; i=intuition and fw = forecast wisdom.

But I’ve been working diligently on the algorithm – you can never be too right now can you? – and I’ve come up with some real improvements that I think can decrease the inefficiency of the forecast by at least 20X what it is today. That would be this:

(eu*cl) + gw(l*bl)*ts/20 = fw where eu = eye use; cl = contact lenses; gw = guesswork; l = luck; bl = blind luck; ts = total speculation; and 20 of course equals the amount to decrease the inefficiency by.

Of course, this is a HUGE breakthrough in analyst forecasting that I don’t think can be underestimated. Its so big that I’m giving this formula to the world so that you can predict almost anything you want by plugging the specifics into these parameters.  For example, I found that the Mayan calendar is actually off and the world will end in January 2013, not December 2012 as previously thought.

Okay, now on to the forecast. Like last year there are things to note, three to be exact:

1. The number in parentheses ahead of the forecast is the likelihood of the event happening reflected in 1 – 10 in which 1 is not real likely – in fact as likely as Tiger Woods….no I won’t go there.
2. Once again, I have the right to invoke the Pundit Immunity Clause (PIC) which has undergone significant revision with the November meeting of the Pundit Standards Committee made up of a bunch of people who think they know everything. It now reads: “In the event of an incorrect forecast, or a specious speculation, as a pundit, I invoke my right to not be criticized or maligned or physically, mentally, emotionally or spiritually assaulted – or just have my butt handed to me.”
3. Because of the ungodly size of this post, I’m going to do the splitscreen thing again.  The first half of this post (with the LATAM forecast from Jesus Hoyos and the first 5 “predictions”) will be on ZDNet (here in other words). The second half (starting with #6) will (simultaneously) be published on PGreenblog.  Both of these will magically appear on the sites at 7:00am ET on Monday morning, December 21 so if you’re reading this, happy week and more especially, Happy Holidays to one and all.

Okay, so watch for my invocation of the PIC throughout the year and let’s get ready to rumble (or possibly, bumble)

First, before I begin, I want to give you a holiday gift.  Let’s give a big rousing and warm welcome to Latin American CRM thought leader, Jesus Hoyos, who I’ve invited to give you his perspective and forecast for Latin America in 2010.  If you remember, Jesus already contributed to PGreenblog on a state of the state of CRM in Latin America back in March 2009. There, he was taking a look at the “as is” state of LATAM. Now I’ve invited him back to look at the “to be” state of LATAM in 2010.

Jesus, take it away, hombre.

My Latin American 2010 CRM Forecast

Doing a forecast of CRM trends and vendors success will do is always a challenge in the Latin American market due to the many differences between countries and regions. When you look at Latin America, you need to see it in 5 regions - Brazil, Mexico, Southern Cone, Andean, and Central America/Caribbean. If you look at most of the IDC or Gartner reports regarding the CRM market in Latin America, most of the time Brazil has like 45% of the market, Mexico around 25% and the rest is divided among the other countries. And it is very clear that Brazil owns the CRM market, since Oracle, SAP and Salesforce.com are quite busy selling CRM in Brazil.  The Oracle and SAP conferences last year where done in Sao Paulo and Rio, respectively. I do not see this changing.

My forecast won't be about growth and vendor success (this will be part of another post), my forecast will be about how some CRM trends will evolve in Latin America. IDC and Gartner have good reports about the CRM market in Latin America.

Let's start with Social CRM.

The recent Facebook growth in Latin America represents a unique growth for many. This is a good opportunity for CRM vendors to start building Social CRM applications for the Colombian, Mexican and Argentinian markets. These applications need to be specific to each market due to the differences between countries. What I see here is that if CRM vendors do not to start moving into this area of social media, many marketing and digital agencies will close this gap. During 2009 I have seen many agencies producing social CRM widgets, landing pages and web applications which collect customer and prospect data. In 2010, I see this trend to continue, agencies will own the social media and social CRM market place, unless CRM vendors start producing mechanisms to create social CRM applications.

Cloud and SaaS

I see growth in this area, but not a major growth in SaaS. I see many companies doing private cloud computing and hosted implementations. The fact that the enterprise data is outside the country is still a security concern.  Some countries have some regulations against this, but at the end, it is a cultural gap and lack of understanding about SaaS. According to a MundoContact's 2009 CRM and Call Center study (read my review here in Spanish), 22% of call centers in Mexico are using SaaS CRM applications. This figure is due to the expensive upgrades and budget cuts for maintenance fees from the on-premise CRM applications. I expect this 22% percent to increase in 2010.

OpenSource

Tools like SugarCRM, vTiger, Joomla, Wordpress and Asterisk will continue to dominate the Small and Medium Enterprise (PYMES - pequeñas y grandes empresas) market. Pricing is key here. These implementations are a mix of SaaS, hosted and on-premise. Most of them are hosted in local data centers in each country. I expect these tools to do very well in 2010 as hosted solutions.

Local CRM vendors

I have compiled a list of local CRM vendors, and these vendors are doing very well in the region. Some are specific to each country and others are expanding to other countries. All of them provide  functionality and processes unique to the region, such as collection functionality. Due to pricing and local support, these vendors compete very well against the major CRM vendors. However, some of these local vendors only provide hosted or on-premise solutions. In 2010, these vendors need to provide SaaS solutions or they won't be able to compete any more with the major CRM vendors.

In summary... General CRM market

In 2010, many companies will implement CRM solutions for tactical reasons, either to retain customers or generate leads. Therefore, the CRM solution needs to add value and needs to be a SaaS solution, but my guess is that it will be a hosted solution in Latin America. This is where the market is heading in Latin America. I see a growth in solutions that provide campaign management, social CRM applications, sentiment analysis and customer retention. This will require solutions that provide analytical functionality and ways to execute customer campaigns in any channel (traditional and social media). I do not see any growth with telemarketing or customer service solutions, in 2010 companies will not focus on administrative or operational CRM solutions. Don't take me wrong, many companies will still need to implement traditional CRM, but it won't be the priority.

Thank you, Jesus. You da man!

Now it’s my turn.

The Next 12 Months….

1. (7)Social Marketing technologies and strategies emerge as important aspects of corporate thinking – This one is apparent in oh, so many ways its almost overwhelming. Ironically, viewing the world from the lenses of traditional CRM – marketing was the last to get onboard with social thinking and it was notable that PR and marketing/advertising firms in 2007-08 were in a panic trying to figure out how to engage these new breed customers who were demanding to be marketed to in ways that only the Cluetrain Manifesto seemed to have understood. But in 2009, the world began to move and things began to shift toward seeing marketing as the “first line of conversation” rather than something related to spinning and pushing messages at a population inundated with 3000 of them a day.  This took the strategic form of increasing budgets and recognition of the same in the more “bi-directional forms” of marketing such as Interactive Marketing.  In fact, according to a very good post on Brian Solis’s blog (thank you Brian), Forrester released a report on “Interactive Marketing by Industry 2009-2014” in the last few days that all in all pointed out that interactive marketing spend is expected to grow 16.6% CAGR from now through 2014 and that it will reach a $55 billion number by 2014.  This would include social media, mobile and email marketing among other categories. My partner and friend, CRM influential Bruce Culbert, has this to say about the trend toward social marketing: “In 2010 Social Marketing will explode. The ability for companies to integrate the social channel of preference of their prospects and customers into the marketing mix will become even more import as social networks replace e-mail as the communication channel of preference for many potential customers. Additionally consumers and businesses are becoming more comfortable with having a dialogue and an interchange with their product, service and solution providers over social channels once reserved for private and personal conversations. Businesses see the potential in being able to get real time feedback (by monitoring social channels, think Twitter, review sites, forums and others) on marketing campaigns, product offerings and then using that information to modify and enhance programs and offers in real time while capturing new customer interest.  In 2010 Marketing will lead the way in monetizing social media by increasing campaign reach with Share to Social features of e-mail, increasing reach and effectiveness by using social channels as a complement to already established channels in the marketing mix, like e-mail, phone, text etc……and by monitor campaign performance in real time beyond click thru and open rates by obtaining reaction and feedback in real time thru social channel feedback and adjusting campaign messages, offerings and calls to action to improve overall ROI. After all marketing’s job is to get the right offer to the right person at the right time over the right channel.  The Social channel is now firmly in the marketing mix for business.” (Back to me now) What makes this interesting too, is that the technology vendors are becoming aware of it with companies like Oracle, Eloqua and Marketo, all making moves to integrate social capabilities through various approaches.  For example, Oracle is building a “someone like me” capability accessible by the touch of a button by a customer which accesses and scores customers who resemble the inquirer by their likes, dislikes, purchases, social info etc. using a Siebel customer record, which is something I never thought I’d see.  Eloqua is doing a vertical integration with the Pedowitz Group’s Sweet Suite, a full blown social media monitoring capability that not only provides the actual text of the conversations but scores them related to the customer data in the Eloqua database.  Marketo is hooking themselves up to Helpstream to provide service-related customer communities and the ability to capture and analyze the data associated with that (we’ll hear more of this later). In other words, we’re at the cusp of a potential major leap in social marketing thinking, practices and technologies that bodes well for 2010.  This is one area that I’d be putting some time and effort into as apparently are a lot of companies and as are the technology vendors.
2. (9)Mobile CRM becomes a top priority for business and technology vendors – even more than 2009 - This one is no surprise really. This was already growing in 2009, oddly driven in the enterprise by the iPhone, which is barely enterprise ready at this point.  For example, at the recent SAP Business Influencers Summit, they demonstrated a significant number of mobile apps and the SAP commitment to mobile via Sybase’s iAnywhere product and Syclo is dead serious (wisely). But interestingly, despite their widely announced alliance with RIM, the apps demonstrated that I saw were all iPhone apps. This is neither bad nor good. It just is. Most CRM vendors have iPhone apps now and are also moving to Blackberry apps. SalesLogix for the Blackberry is an accomplished SFA application. SAP and Oracle both provide Blackberry apps. I haven’t seen much in the way of CRM on Windows Mobile yet though Microsoft (duh) has a virtually never publicized Dynamics CRM client for their platform (at least version 3) and CWR Mobility has one for version 4. Maximizer as a company is perhaps the most accomplished when it comes to mobile CRM spanning multiple platforms for their remarkably robust sales force automation mobile apps.   So the foundation is there, and the interest by the vendors in the technology and the practitioners in some untethered way to access mostly SFA applications is there. But what makes this particularly interesting is that there is also what began as a consumer-driven desire to access social networks such as Facebook via mobile devices that is beginning to take root in the business world. This is currently typically in the form of Twitter feed access using for example Tweetie 2 (I HIGHLY recommend this one) on the iPhone as a Twitter client. But increasingly, companies like Oracle are getting beyond the reproduction of their own CRM applications on the mobile platform (something that is still entirely necessary, BTW) and providing social apps applicable to business. For example, Oracle and Swedish Rail have an application that allows you to use the points you have in a loyalty program to purchase items  including tickets that are not only shipped right to your iPhone when you’ve used the points to buy them but can be redeemed via the iPhone. You can make reservations and  have your itinerary delivered to your iPhone. The kicker is that if you want to your chosen friends cab see where you are going delivered to Facebook for public or semi-public scrutiny.   Swedish Rail then gets all this new data about your transactions and interactions and can use it to create targeted offerings on the spot. But the mobile market goes beyond this, because the social vendors like Neighborhood America (INgage Networks after Jan 1, 2010) are devoting mobile CRMish applications for the market that they see out there too. Okay you say, the vendors are jumping on the bandwagon, what about demand? Well, Yankee Group analyst and mobile goddess/expert Sheryl Kingstone back in September did a study that found that 27 percent of all enterprises placed mobile apps (not necessarily CRM per se to be fair) as first on their agendas.  This was the #1 item. The interest in this is what’s driving vendors to build all this.  In 2010, I see this continuing and perhaps picking up some velocity. Watch for an explosion in mobile CRM in particular. If you want to look at a framework for the future on this, check out Sheryl Kingstone’s “Energizing the Anywhere Enterprise."
3. (7)Technology companies embrace “social” versions of multiple parts of the enterprise value chain including (and especially) CRM, SCM, and maybe even ERP – As more and more technology vendors integrate social features into their applications, and as customer-centric processes and practices increasingly permeate businesses, there is no reason to think that “Social” isn’t going to be incorporated into other areas of the value chain. For example, Take Vetrazzo’s use of salesforce.com’s force.com platform for development of services and applications for their company use. They used Chatter’s unique feature which allows subscriptions (via RSS feeds) to any data object in a system to develop order management, inventory management, and ERP.  Or look at how IBM’s social software suite, Lotus Connections treats profiles.  Rather than the standard “fill in your personal info” and that constitutes the profile, they incorporate human resources information like position, who the profiled person reports to, what projects they are working on and other HR info that makes for a much richer profile.  Additionally companies like SAP are working with their customers to extend what has been historically Supplier Relationship Management to a social side version that provides communities for suppliers and visibility into multiple systems and updates to system activity included shared services. The form it is taking is a “collaborative value chain” (my term) that integrates the customer’s collaborative and other interactions into a company’s value chain. You see its practitioner form in the co-creation of value that results from the customers and companies working together to come up with solutions to customer problems or requests. Procter and Gamble’s KPI for 50% of all ideas coming from external sources is a good reflection of the thinking that’s leading vendors to integrate the back office as well as the front office with the necessary customer channels that In other words, vendors are starting to think strategically about how social customers impact other areas of a company beyond sales, marketing and customer service.  Watch for an exponential leap in the discussion though not in the execution of this over 2010.
4. (8)Companies are moving toward creating ecosystems to fill out social CRM portfolios – This is a trend that is never surprising. Given the demands of the social customer and the new demands on business, it has been hard for any one company to provide a complete solution for a particular company’s needs by themselves. Rather than just seeing an opportunistic partnership here and there, there is a growing trend toward long term strategic alliances that fill out portfolios. Witness Marketo’s not only linking up to Helpstream but salesforce.com’s Twitter integration (NB: an odd choice) as well, providing a “socially inclined” traditional 3-pillar CRM suite as part of their new ecosystem.  This is increasingly the case with other vendors announcing partnerships with companies filling out their social CRM portfolios. This is reflected with the premier partnership that NetSuite announced with InsideView; the integrations we’re seeing with Twitter from pretty much every vendor; on the other side, the recent announced integration between salesforce.com and Get Satisfaction; and the announcement of the partnership between Neighborhood America (soon to be called INgage Networks) and Microsoft in the public sector. This is pretty much the way that Social CRM is being realized. No one is really building a complete suite, nor have I heard anyone who is claiming to. Nor does anyone need to. When the need arises, so does the partnership. Integration built via these partnerships is the way that Social CRM technology ecosystems are being created to fulfill customer engagement strategies. Given the ubiquity of standardized web services, no reason that this shouldn’t be the case. This is going to keep on rolling merrily along in 2010 (as am I).
5. (9)Open Source as a factor in CRM will no longer be a differentiator – First, let me level-set here. I’m talking about CRM, not social platforms like Drupal, operating systems like Linux, etc. For a long time CRM has had an ongoing discussion on open-source v. proprietary means of providing CRM applications. What’s been interesting about that is that the entire time the discussion was occurring and people were considering open source as part of their criteria for vendor selection, only one open source vendor really grabbed hold and held tight. That would be SugarCRM.  But with most vendors integrating at least some open source applications, services and coding into their portfolios, and no other open source vendors than SugarCRM really impacting the market, open source as a factor has moved to moot. I know, I know. There are apps like Vtiger out there that are competent and good, but honestly, they just don’t have the market hold that SugarCRM has.  So my prediction for 2010 is that SugarCRM will remain the only open source vendor with any traction, and as a result, because Open Source CRM as a differentiator will no longer be useful, this will force SugarCRM to compete as a vendor with a difference in other ways. They’ll figure that out, but what it will do is eliminate the Open Source v. Proprietary CRM argument and make open source as a differentiator so first decade for CRM. 2010 will be the year it moves on to a non-factor in selection.

Okay now on to PGreenblog for the rest of the forecast.