The CRM Watchlist Part II: The Usual Suspects

I have to imagine that Kevin Spacey is getting sick and tired of the use of his movie's title for pretty much everything related to a regular event.  So this "Sigh" is for him. Sigh. In the first CRM Watchlist 2011 (long) post I covered the Big 4. In round 2, we're going to look at the tried and true companies from the CRM side who you would almost expect to make it. There are a couple of twists this time around as you'll see. Or, as the case may be, won't see.  But then, they could be mentioned in a subsequent post too.  Heh. Heh. I love suspense.

The Tried and True - & Welcome Back

Stable. Solid. Occasionally innovative. Very smart. Customers like them.  This tends to be how they are described and why they made the CRM 2011 Watchlist (or the 2011 CRM Watchlist. Or....).  But there are some blemishes on their often tanned skins.  But when you look at them, generally, you're gonna say "niiiice tan." Here goes.

NetSuite

Year after year,  I say the same thing about NetSuite.  They know their market - the upper end of the midmarket and, rather than going too far astray, they (smartly) decide to increase their capabilities to serve that market - unlike many of their greedy brethren.  They don't have much when it comes to social functionality.  However, they haven't needed to up to now, because they are the deepest SaaS based "full service" suite (except for, of course, marketing) in the marketplace and are attentive to detail like no other. For example, if you are a European NetSuite user and there is a VAT tax increase (heaven forbid!), NetSuite will have that pushed to you in 24 hours or so - no sweat. You really don't have to do anything about it.  Their back and front office functionality is nearly complete in the traditional sense - and they have, through their OneWorld products, successfully been able to localize their capabilities, giving them a worldwide market that they can actually support. You get the idea.  This is a genuinely worthy company to be in your mix if you need complex capabilities and you're in the upper midmarket in particular. Interestingly, not being all that social still doesn't keep them from being innovative. In fact, in April 2010, I attended a launch of theirs and saw the first native iPad app from any CRM-related vendor at all - a NetSuite native app developed by an agricultural equipment provider that used them.  They've even gone as far as having one of their partners Online One, releasing a full featured (oh, you...) ERP NetSuite based app for the iPad a couple of weeks ago.  They've bought into the cloud (being a SaaS company doesn't exactly make that much of a stretch.) Before I get too much further, keep in mind this is a primarily an ERP company that added CRM several years ago and improved it with their then CRM+ product, so that they could provide the full range of applications needed by the companies in their world. Their original name, for example, was NetLedger, due to their financial (accounting) applications.  They don't entirely think like a CRM company, which works for them. Proof? The proof that all CEOs and CFOs, and shareholders love. Revenue growth which in the 3rd quarter of 2010 was up to nearly $50 million, up 19% from 2009 3Q. Ahhh. And, speaking of CEOs, they have Zach Nelson, who is perhaps my favorite CEO to hang with and also a solid solid player - guy not only knows what he's doing but can articulate the vision of the company on a stage really well.  The other co-founder, Evan Goldberg, who is also CTO, is a brilliant technology visionary who can take that vision and execute really well - yet, who knows that outside of NetSuite and a few others? But all of this has been the case for years and not much has changed for them between 2010 and 2011 - and that's where we start to get to something of a conundrum. Their product strategy based on incremental evolution - and adding what customers ask for - has served them well through 2010. But, there is a real question as to whether or not this will serve them well in 2011. While, as you can guess, I admire them greatly, I also know that the table stakes have changed and they have to rise to the occasion in 2011. Which means they have to deal with a question - a strategic product matter and some issues - related to marketing primarily. What do I mean by that?  I'll keep it short and simple. On the product side, I said table stakes have changed. Which means that while up to now, you could provide a traditional product portfolio and do quite well, that is no longer going to be the case. Social channels have become mainstream. Customer participation in those channels has become mainstream. Companies now need the ability to:

1. Provide social inputs for the customer
2. To engage customers outbound in the social channels that the company doesn't control
3. To capture the information conveyed about the company's brand in those internal and external channels
4. To analyze that information to get greater and more granular, richer customer insights that help the company make the right decisions on how they are going to engage those customers.

NetSuite has to be able to provide the enabling technology for all or some of this. As of now, they have an in-name premier partnership with InsideView that seems to be from what I can find (admittedly limited) mostly in name. Not much going on there on either side to promote it. This gives them social sales intelligence at a high quality. Beyond that I find nothing that indicates that social anything is a NetSuite priority - which in 2011 will start to hurt them.  Again, social is now mainstream. Not marginal. Mainstream. Center. Middle. BIG stuff. They have to deal with this - and they may be but I don't know that. And find no evidence either. Their issue- the same sophomoric behavior that I blasted the industry for in my Dreamforce post last week. They can't seem to leave the "we took clients from company x" and "company y sucks" approach that much of the industry falls prey to.  They particularly focus on their perceived competition (well, actual competition to a large extent) SAP and Sage, which ironically, generally are the two companies who take the much preferred high road in this. While, I'm sure that NetSuite thinks their nyah, nyah 5th grader just becoming hormonal efforts are funny and, I suppose, they think productive, no one in the industry nor are any customers really laughing.  Show me ONE customer who made a buying decision based on the attacks on another company and I'll show you a customer that needs someone fired. I'm a big fan of NetSuite as you can probably tell - tough love included. I think that they are a company to watch closely, belong on this list of luminary companies. I also think that 2011 is their transition year - the year that social becomes traditional for them. I hope.

RightNow

RightNow is a model of consistency and yet, manages to remain a fresh face in the market.  They are one of these companies that once they get it, which sometimes takes awhile, they not only get it, but they implement and execute it. Whatever "it" may be. A perfect example is their current Cx platform. This is a robust platform that focuses around customer service (regardless of what you might think or hear) - which is of course, where the core customer experience is typically identified (though, in reality, represents a more emotionally charged part of the customer experience, not necessarily the bulk of it). Their acquisition in 2009 of HiveLive was a wise one, giving them an unfinished but flexible, social/community platform that they could mold and sculpt to their own specifications. That year, they also added multiple customer success managers to their employee base indicating an important change in culture that was focused around customer engagement, rather than management. So a focus around customer experience was in the pores of the company. Yet, in their messaging, rather than focusing around customer experience as a strength in itself, especially when it bears on their core - customer service - they went off kilter and tried to declare the end of CRM, one way or the other. They did this in 2009 and in 2010 - for no reason except to differentiate themselves from other CRM vendors - which wouldn't be necessary if CRM had ended or no one cared about it anymore. Why differentiate yourselves from vendors in a dead industry?  However, luckily for all of us, including RIghtNow, CRM is $13-$16 billion market that actually didn't pay much attention to that declaration and continues on in good health and growing. Despite that odd glitch, we're talking about a company that genuinely matters. They are long time veterans when it comes to producing high quality customer service applications and have, unlike most of their competitors, some real strength in the public sector with over 150 public sector clients that have stuck around for years.  They don't rest on their laurels and have, over the last two years, added really robust analytics for customer insight; a platform to build communities for customer service; a strong self-service web suite; and improved traditional contact center services including voice-related applications and multichannel agent support; and they reside in the cloud - and don't make the claims to be a cloud provider additionally - to their great credit. But what might have been the most important thing they did in 2010 is they did something when it comes to contracts with customers that should redefine how software vendors work with customers. If it doesn't, shame on the rest of the industry. What I'm talking about here is their CSA -their Cloud Services Agreement. This is something that is currently unique but should be the model for all other vendors in the industry - a service agreement that puts company skin in the game.  RightNow commits to 3 year fixed price with right to renew another 3 - yet client only has to commit to one year; an annual termination for convenience, meaning the customer has the right each year to terminate if they perceive that RightNow didn't deliver as expected; rollover usage - unused units can be rolled into next period for seasonal peaks; automatic indemnification - RightNow offers indemnification to customers w/o customers asking for it; customers can annually rebalance usage to meet their changing needs; etc. What this reflects is RightNow's willingness to treat the customer as a partner, not, as I've often said, the object of a sale. Its things like the CSA and RightNow's knowledge of the changing marketplace and their actions accordingly that make them a company to watch in 2011.  If they can just steer clear of ragging on CRM....seriously.

Sage

Sage is a company that keeps chooglin' merrily along, not really engaged in the internecine wars raging among the very competitive vendors, making some progress on products each year incrementally without making anything too dramatic of it.  They are very good at recognizing their market - small and the lower end of the midmarket - and productizing accordingly. When it comes to CRM, they have really 3 products - ACT! which in its 2011 incarnation is about as close to CRM without actually being it as a product can get; Sage CRM for the small business that grows beyond what ACT! provides and SalesLogix which is in now in the cloud and is designed to hit that lower midmarket sweetspot. Noticeable among the new aspects of say, ACT! are embedded (in an iframe) social content such as Facebook/Twitter/LinkedIn profiles of your contacts or company information. Also now offered as native are web-based business services (for a price) such as Swift e-marketing, even though ACT! is still a desktop application.  Its things like this and the use of REST-based architecture that makes the Sage CRM applications (not to be confused with the SageCRM application, or not totally confused then) always worthwhile for small and little midsized businesses to be considering. Where they really shine is providing an online user experience that is genuinely excellent. The websites are smartly designed and easy to navigate, and the language is clever, without being too....pithy. They are also smart enough to recognize reality when it comes to customer behavior too. They've built communities using Lithium to for SalesLogix and ACT! that are superb examples of service communities that other vendors could emulate. Where Sage tends to be far too slow (and I'm using the word deliberately here) is in the areas of thought leadership, though please don't equate that with analyst relations or PR.  Ryan Zuk who handles AR/PR does a great job at dealing with the analysts and influencers in ways that get Sage noticed. But they fall off is in the thought leadership space - they aren't providing any visionary direction to the SMB world though they could. After all, Sage as a whole is a huge player (over $5b in revenue), perhaps the largest technology vendor devoted to the SMB world, but they aren't out there doing the educational spade work that needs to be done to inculcate the space to the value of SCRM and CRM.  Too bad. They really have an opportunity here but they are somewhat old school in their approach, though the recognize the impact of the social customer. We'll see if they are doing course correction on this in early February when there will be an analyst day in Boston. I'll report back. Sage is a company that belongs on this watchlist with very good SMB products.They've come a long way from their far too long client/server days.  Check 'em out. But you might have to listen closely. They talk quietly.

SAS

One thing about SAS that has always been the case. You want to work there. Really. No. Really. They are always among the top 20 of the Fortune magazine 100 Best Places to Work in America and this year 2010 they came in first. Not surprising their historic churn rate is something around 3 percent - perhaps a little less. To sustain that low an employee-quitness rate for that long is something akin to someone in the National Basketball Association achieving a lifelong triple double or hitting 1000 home runs in a major league baseball career or... what would be the european football/soccer...rugby analogy here? Help me out. In any case, in 2010, SAS launched something that basically put them on this particular Watchlist map. That would be their Social Media Analytics product. Keep in mind, when it comes to analytics, business intelligence etc. it would be hard pressed to find someone better at SAS than it. That's what they do. They are a privately-held $2.3 billion company that focuses on number-crunching in ways that vary as much as a human can stand. Delivering the numbers on premise, in the cloud, on demand. Check. Got them all. Delivering customer intelligence, business intelligence, anti-fraud pattern matching, marketing automation heavy on analytics - check. Got all of that.  But until this year, they didn't deliver the enterprise-grade social media analytics that were needed in the market. No one was really delivering it. But the customer intelligence group inside of SAS developed and launched the product in April 2010 and voila. they are on the map - and not just mine. The SMA product scales and for an enterprise product, needless to say (he says), that's critical. It is able to analyze to a large extent the online presence and conversation going on about your brand and does it with depth and speed and with actually good reporting tools.  It, like every other product of its ilk, overstates the influence of Twitter (used by 6% of all Americans. A big number but still only 6%). Why? Because, as they said about why climb the mountain - because its there.  Its online, its measurable so you overemphasize because its online and measurable. But, as far as SAS SMA product goes, its a minor sin compared to its overall value. SAS also, to less fanfare, but equally importantly, launched their Customer Experience Analytics tools as an on demand offering, their 19th product to go into cloud cover (including their Social Media Analytics and Marketing Automation apps, now services).  In other words, they are responding to the demands of the market. And the market is responding in return. By August 2010, customer intelligence product sales worldwide were up 64% from the same period the year before - a huge leap. But honestly, that wouldn't be enough to get them onto the Watchlist if that's all they had. But they  are moving on improving what has been an historic weak spot for them - market impact/thought leadership (to be fair, weak in the realm of CRM). They are focusing a lot of energy on revamping their own external relationships with customers and the way that they interact with them; with influencers/analysts/journalists who they are reaching out to more than ever before; and they are establishing partnerships with companies that in the past would not have been on their radar and now are deadcenter - such as social customer service provider, Sword-Ciboodle. While they still have a long way to go in this kind of outreach - many of their competitors are still ahead of them here, they are making rapid progress, though because the social customer is now mainstream they will have to step it up even more in 2011.  Luckily they have people like Angela Lipscomb talking to influencers and that truly helps.  Here's a tip, vendors. Listen up.  One thing that's always important isn't just keeping the influencers in the loop, but they should also actually like who they deal with. SAS has that one nailed. Their Customer Intelligence group is smart, savvy, attuned to contemporary trends. They work at a great company. So the only issue is will they continue the efforts in 2011? Because if they don't continue, and in fact, don't double their effort, its going to be a long year. The competition is going to be that tough. But if they do, you'll see why I think they are a company to watch.

CDC Software - Pivotal

These guys are my surprise of the year. They had been off my radar screen for literally about five years - that's FIVE, 5, cinco, cinq years. I hadn't heard anything from them, nor had I covered them for any particular reason. They had disappeared so completely that I contacted Anthony La Paglia's unit (Without A Trace - get it? Huh? Huh?) just to see what happened. Then roughly a year ago - well, actually a little less, I think, Pivotal, CDC Software's CRM product showed up with something that they were calling a Social CRM application. Needless to say, I was intrigued, so I requested a demo from Ehab Samy the product director in charge of this effort. I was taken aback. I saw a product, though it had shortcomings, actually integrated social channels with traditional CRM service based and sales focused activities and tasks in a context sensitive way. So, to explain that in American lingo, you could read a tweet and right from the tweet on your desktop open up a menu that would allow you to start a case or convert the tweet to a lead - which would trigger the appropriate workflows and security settings and business rules based on what you chose to do. In other words, a genuinely integrated Social CRM product. The only problem, though there will be some public announcements I presume about this, is that it was strictly on premise, a curious decision at the time, given market trends, customer requests - and one that got curiouser and curiouser (thank you Lewis Carroll) as time went on. They also began to do some of the outreach they needed to regain the time they spent after the crash of Olympic Flight Their more traditional CRM products are no slouches either, but are in process of a major overhaul so the future for Pivotal is pretty exciting. Their SCRM product alone, for its innovation, intelligence and integration puts them on the map.  They are going to need to take it to the cloud for them to get to where they need to be by the end of next year and stay on the map.  They also need to extend their market presence considerably more than they have though they have made strong efforts in their outreach and have good referenceable customers already. But they have five years to make up for.  All in all, though, good start. They belong on this list and are my 2010 most pleasant surprise.

SugarCRM

This one might be the toughest one of all. SugarCRM, which is no question in my mind, an important company on the CRM canvas, didn't make my threshold numbers, falling short in a couple of areas that kept them down. But, that said, this is another (and the last) subjective decision, once again proving numbers aren't the whole story.  I have to include them on the Watchlist because they belong there, despite what are some definite shortcomings.

They belong on this list for two reasons. Their SugarCRM 6.1 release is actually a very good platform and is their most flexible ever. They managed to drive a whole boatload of mobile and social functionality into the 6.1 release with:

1. A SugarCRM iPhone client that actually handles both SFA and customer service functionality.
2. An iPad client that utilizes the screen real estate quite nicely that handles the same functions.
3. A semi-SCRM capability using their cloud connectors for external social data from sites like LinkedIn and Facebook.
4. They use Qontext, an enterprise 2.0 application that plugs into the Sugar platform for internal collaboration. (Qontext recently contacted me to take a look at them, which I'll do after the New Year. I'll let you know what they've got).
5. They've integrated with Outlook 2010 with the 6.1 release.

Needless to say there is a lot more that Sugar 6.1 makes available including globalization and of course improvements on the traditional CRM functionality that they offered in the past.

They also have continued to maintain some thought leadership in the space thanks to the CRM Outsiders blog run by Martin Schneider which, while a little too (though understandably) Sugar-centric, still allows for the use of Martin's prodigious agnostic analytical skills - being one of the best former technology analysts out there in a past life of his.

They have Sugar Exchange their version of an applications marketplace. If a SugarCRM partner gets an application certified, they are able to list it on the Sugar Exchange and provide it for free or a fee. SugarCRM takes nothing from that. They provide the medium to support their partners - a refreshing approach.

Finally, they have some seriously dedicated implementation partners - companies like Redpill Linpro in Norway who I had the great pleasure of meeting when I spoke in Oslo last spring.  They pulled 150 customers to the event which shows some at least European market strength.

All that said, I am still puzzled by SugarCRM.  To their credit, they seem to have dropped their "Open Source is our true differentiator" mantra of past years, but I can't really figure out a clear direction that they are going in. They clearly are responding to the trends, yet when I speak to customers Sugar is not foremost in their thoughts. On the thought leadership side, I see them at their conferences (I'll be speaking this year at SugarCon 2011 in April in San Francisco, if you want to drop by) providing some thoughtful information on social CRM; I read CRM Outsiders, and see cogent analysis.

But....

All in all, I can't pin down a clear vision for them or really focused direction, though I'm sure they have one. More importantly, I don't see them having the market impact that they should have, given what they offer. I'm not alone in that. Conversations with other analysts/thought leaders/influencers/journalists and customers confirm that. For a company this far along, they are not having the impact they should.

The other minus is one that has been repeated here many times. They have undertaken some ill-conceived, though cute, attacks on their competition, failing to take the high road and instead swinging low into the "nyah nyah" stuff which I've mentioned several times in this post alone.

However, they belong on this list because their pluses clearly outweigh their minuses even though the market impact minus is a big one. They are an intelligent bunch with a platform that while not getting the publicity that other platforms like salesforce gets are still worth considering even when thinking about Social CRM in particular - which is not something I can say that often.  But they are on the edge, too. 2011 is a key year for them. To me, make or break. I'm rooting for make, betting on it too but its truly up to them.