Gartner's Social CRM(ish) Magic Quadrant: So....

Gartner's Social CRM(ish) Magic Quadrant: So....

Summary: There's good and bad in everything. Sometimes the good outweighs the bad, the bad conversely can outweigh the good.

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There's good and bad in everything. Sometimes the good outweighs the bad, the bad conversely can outweigh the good.  Rarely, but occasionally, we have perfect balance.  But sometimes, the thing that contains the good or the bad is actually what needs to be judged, not the good or bad within it.

Hold this thought.

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Whether you like it or not, in the world of business, especially technology, but pretty much all business, subject matter experts of varying kinds have a lot of clout (that's with a "c", not a "k.").  They could be analysts, journalists,, academicians, consultants.  But they are influential - and, regardless of your opinion of their category, they know a lot - or at least there are substantial numbers of individuals who know a lot.

Yet, they are often derided as self-aggrandizing usually by someone else with a different set of self-interests.   Are they self-interested? Sure. Everyone is. Are they self-aggrandizing - meaning they are willing to bend the truth to their interests? Some are, some aren't. As a class are they self-aggrandizing? You can't possibly answer that except in a glib and probably inaccurate way. The reality is that, all of these influential subject matter experts have self-interest at the heart of what they do and honestly, there is nothing wrong with that, unless it bends the truth.

But that self-interest can lead to mistakes too.

Not willful bending of the truth.

Mistakes.

Typically, I've found, especially recently, a lot of times it's the critics that are doing the broad brush stroke tarring ("oh, it's the consultants who are like that" or "analysts are stupid f---wits", etc.) that are the self-aggrandizing ones.  And/or the kinds of cynical individuals that I personally just don't want to hang out with.

Hold this thought

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Gartner Group: Smart, Powerful and Sometimes Confusing

I've had a love/scratching my head relationship with Gartner Group.  I think some of their analysts like Michael Maoz, Chris Fletcher and Ed Thompson for example (there are several others) are awesome - both as analysts and as human beings.  I think that they provide a valuable and important service to the market even if they like all of us, make mistakes - mostly because they are the 800 lb. gorillas and when push comes to shove, 800 lb. gorillas can get clumsy.

What they say is also subject to endless speculation from people like me. They are probably the analyst firm most analyzed by other analysts -with their commentators from independent, boutique firms or even their larger direct competitors.  Which, to their credit, means they set the framework for the market  - though not always, to be sure. However, that also means their errors can be magnified because they are so scrutinized.

But one thing is certain. When they speak, the vendors, other analysts and practitioners listen, whether or not you like what they say. A large number of vendors over the years told me that one of the most significant reasons that they engage Gartner is because customers call Gartner to find out what they think about those same vendors and dealing with them is one of the ways you stay at least middle-of-mind, if not top-of-mind.  Plus in the case of their good analysts, their suggestions are spot on and helpful, when they are doing the consultant "thing" for their clients.

Don't kid yourself. Customers do call them, probably more than anyone else in a similar position, and their opinion matters to the customers who do make those calls (which would seem somewhat obvious, no?). We're not talking insignificant numbers of customer calls either.

So when Gartner puts out a Magic Quadrant, the industry listens and an incredible number of vendors vie for a place in it. A place as a Leader in the upper right quadrant of the four is often a cause for rejoicing - and, of course, press releases.

Which is why the Social CRM Magic Quadrant has me scratching my head.  Though I think I have the answer to my conundrum.

The Social CRM Magic Quadrant

Don't get me wrong. When Gartner put out the first Social CRM Magic Quadrant in 2010, I was really glad though I can't say I agreed with a lot of their particular decisions about who went where.  But it was another point for validation of the industry. What concerned me though was that the overall functions of companies that were chosen were all over the map.  But, hell, it validated the industry, cuz Gartner did it. So I went along with it, duly noting pretty much in all my presentations that they did, indeed, validate the industry with this piece of work.

I figured that in 2011, with the next one, the market would have at least somewhat sorted itself out. Thus, there would be a more coherent line of reasoning for their choices that went along with their basic criteria for participation that would provide us with a better technology company distribution than what we had in 2010.

So imagine my surprise when in fact, despite some very good content in the document, I found the company selection was more fractured than even 2010 with the vast majority  - and I do mean vast majority  (14/20 - 70%) - in the niche player category, which is meaningful. At least to me.

But before I get into that, I want to get into the definition of Social CRM technology -which you would think, has some bearing on the choice of Social CRM technology companies.

Social CRM

Recently, I've been seeing an occasional post that is declaring social CRM dead or that there is a new sheriff in town.   The reasoning is that companies are moving away from the term and no one is using the term (huh?) and that it isn't being implemented at a corporate level.

In any case, there is something that needs to be said about this that addresses something that needs to be said about the Social CRM Magic Quadrant.

Social CRM isn't going away - any more than CRM went away. It's the same Cassandras who were saying no one cares about CRM anymore a few years ago, now saying that Social CRM has gone down the tubes.

Understand something, especially when it comes to Social CRM. It is an extension of CRM, an evolution made necessary by the communications revolution that has rocked the 21st century and transformed how we interact forever.   Yet, the bulk of the world, while impacted by it, isn't actually engaged in it  - yet.  The social customers we speak about so happily are not the majority of the world's customers. But there are 5.3 billion mobile subscribers out there, from the richest gated enclaves to the poorest water-deficient villages.  So, most of the world is communicating some way that they hadn't been just a decade ago.  While there are hundreds of millions of social customers, who are technology savvy and understand how to use it to their peer-trusting advantage, there are also billions of people who simply communicate via mobile and social channels. Facebook has 750 million registered members, which is, think about it, 12% of the world's population, more or less.

So, when we talk about social CRM we are speaking about the customer facing strategies, systems, programs, and technologies that businesses need to engage the customers in a mutually beneficial way.

My complete definition of Social CRM, much of which has been accepted by the industry, much to my surprise and delight (thank you very much for that), is:

"Social CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It's the company's programmatic response to the customer's control of the conversation."

That's an ideal Social CRM definition.  What most have focused on is the last sentence, I think because it might be tweetable (lets see....76 characters. Eminently tweetable).

Also, what most, including Gartner here, have focused on is the technology. Which is, of course, the battle that we all had to fight with CRM. Those of us, (consultants, analysts, thought leaders, subject matter experts, journalists) who were (and are) members of the "strategy first" camp, have had an uphill battle for years in getting people convinced that CRM and now SCRM as its evolutionary antecedent is a strategy that is supported by a technology.

But that doesn't mean, we should be strategy purists and ignore the SCRM technologies out there, because they exist and can't be ignored. They are a prominent factor in the decision making of companies when it comes to their customer engagement strategies.

It's here at the level of Social CRM technology where Gartner targets their effort at an SCRM Magic Quadrant.

So, let's roll with that and take a look at the SCRM Magic Quadrant for 2011.

The Magic Quadrant - What Constitutes One?

In order for me to really dissect this one, I had to understand how Gartner differentiates a Magic Quadrant from their other, less sexy, research model - the MarketScope. In a document entitled, "Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market" there is a clear distinction as to why they produce one over the other.

"A market's current phase helps determine which model we use to assess it.

Magic Quadrants depict markets in the middle phases of their lifecycle.... MarketScopes rate vendors that focus on the important aspects of an emerging or mature market..."

With this knowledge in hand (needless to say, I'm just picking a couple of the key points in the document. Its not as simple an assessment or difference as just those two or three sentences), I began to take a close look at the Social CRM Magic Quadrant 2011.

The Social CRM Magic Quadrant 2011

I'm going to break it down a few ways. First, look at how Gartner decides which Social CRM vendor belong in the running - which means their criteria.  Then a look at their analysis of the market. Then, the companies that are in it as representative of my thinking re: the Magic Quadrant this year. Then I'll mercifully come to a conclusion, allowing all of you to breathe again.

Criteria for Inclusion

Gartner identifies three requirements for companies to qualify for possible inclusion in their MQ:

1.     The primary use/marketing of the app must be in the customer-facing departments that are the traditional CRM pillars - sales, marketing, and customer service. The value chain (customers, partners, supplier, employees) must be supported.

2.     Revenues above $10 million.

3.     30% revenue growth or higher in 2010

4.     Five verifiable client references that are in live production

As we'll see later, these limitations are greatly stretched in a drive to have a magic quadrant with sufficient definable social CRM companies.

What Constitutes a Social CRM Company?

If you look at the Gartner definition of Social CRM, there are a lot of things to like about it.

  1. They identify it as primarily a strategy.
  2. They focus on the considerably more customer-centric approach of Social CRM v. traditional CRM.
  3. They shift the focus from customer management relationship to customer managed relationships (my phrasing here).
  4. They recognize the importance of customer engagement v. customer management.
  5. They are clear that the applications must support the "ceding of control to the community by providing varying levels of autonomy and engagement levels."
  6. They are clear on the idea of deriving mutually beneficial value for company and customers
  7. They understand (at various points in the document) the one-to-many, many-to-many conversations that are going on and that they have to be encouraged.
  8. They see the range of applications deemed Social CRM need to have social channels that allow for internal and external customer participation and interactions.
  9. They see that insight and trust are two returns that are important to the success factors that are derived from Social CRM.

Social CRM: The Applications

Yet, despite these very smart and clear points of definition, if you review the companies that made their MQ, they are all over the map and often don't even meet the criteria that Gartner set out for inclusion on the Social CRM MQ, which is not only puzzling but brings at least one fundamental issue into view.

For example, the categories of the company (often self-described) that are included are, among others:

  1. Social media monitoring
  2. Community Platforms
  3. Enterprise Content Management
  4. Social Software
  5. Sales Intelligence
  6. Review Engine

None of which, from my standpoint, are necessarily Social CRM applications.  When it boils down to it, Social Media Monitoring is just that - Social Media Monitoring. It doesn't meet the criteria for Social CRM - which is not agnostic when it comes down to components - unless it at least integrates with traditional CRM functionality and can show that it does.

The difference is that I see Social CRM as an evolutionary extension of CRM when it comes to the technology.  (there are VAST differences when it comes to the strategy).  That means that Social CRM applications and services take the transactional and operational requirements of a business into account and need to either provide them as a suite or there should be integration between the traditional capabilities of CRM and the new social channels and capabilities and analytics that social technologies can provide.  This is a non-negotiable requirement in my eyes.  Or else it's just what it is - Social media monitoring, or enterprise content management or whatever.

But apparently this isn't the case with Gartner. A deep read of the report makes me think two things:

1.     That Gartner thinks that Social CRM applications are defined by the impact of the technology on sales, marketing or customer service and

2.     That "integration of (social) processes with traditional, operational CRM applications" needs to occur over time but isn't necessarily a game-breaking part of the immediate requirements for this year's Magic Quadrant.

While it is true that there is a general, universal impact the applications must have on the customer facing departments - and that is a requirement to be considered Social CRM - the provision of the traditional functionality via integration or by building it into your suite - is also necessary and, for Social CRM, a gamebreaker if not there.  Otherwise there is nothing to distinguish it from varying forms of specific social software.

This softness actually seems to lead to the company soup that the new Magic Quadrant seems to throw in the pot.  And if you look at it, Gartner makes a stretch to include the companies it does (more on this later).

What I mean is, how do you include companies that make the SCRM MQ that:

  • Include several companies that both a. don't integrate at all with traditional CRM and at the same time have a "narrow social CRM vision."
  • Despite their requirement of 30% revenue growth in 2010, are included in the Magic Quadrant with the following quotes:

"Gartner estimates a 20% (revenue, given the sentence before) growth rate in 2010."

"(*****) grew its overall revenue by 22% in 2010."

"Gartner believes revenue was essentially flat."

All of which seem to disqualify those companies by Gartner's own standards for inclusion - yet here they were in the MQ 2011.

In other words, without beating the point to a pulp, Gartner was stretching the limits because the field was so scarce. The paucity of choices was palpable. The immaturity of the Social CRM technology market was in evidence by the companies that didn't meet their criteria and by the 70% of the vendors included were there as niche players.

I'm not trying to nit-pick. Though, given the power Gartner holds, their work has to be nearly immutable.  I'm getting to a point where I think Gartner and I may fundamentally disagree on where the market is.  Though, who knows, maybe not?

Before we get into what that means, in my eyes, let's do a little detail work.

A Very Few Observations on Vendor Choices.....

I'm not going to include the niche players. There are several of them, who, if thought of as categorical players e.g. InsideView for sales intelligence that I think are good choices. Very briefly, since that's not the subject of this piece, really, here's a few brief thoughts about a few of the standouts in this latest SCRM MQ.

I think that Attensity as a visionary - e.g. up and comer - is a decent choice in large part because their social applications are of a high quality and they integrate deeply with traditional CRM.

I think that the inclusion this year of salesforce.com in the leadership quadrant is perhaps one of the smarter moves in this years SCRM MQ.  Their move toward the social enterprise as announced not too long ago at Cloudforce events around the country, also highlights their move toward Social CRM as the customer-facing component of the social enterprise. This is almost as important as their move away from a pure CRM applications vendor to a platform provider was several years ago.  Salesforce is perhaps the only company that I'm pretty comfortable with.

While I think that Lithium and Jive need to be included in the Magic Quadrant somewhere, I think that I would have included them as challengers because both of them are beginning to integrate with the companies that provide traditional CRM functionality, though they are both at the beginning stages of this process. Their own applications, community platforms are very powerful in a B2C or B2B environment respectively, but they still don't incorporate the backend operational capabilities that are critical to a Social CRM application, though they increasingly incorporate the analytics. There is a reason that Lithium calls itself a Social Customer Suite and no longer a Social CRM suite.  Because that's what they are.  To me, they would be far better choices as a challenger than Bazaarvoice, which, while an excellent application, doesn't even come close to a Challenger level in this particular Magic Quadrant - even with a strong product review heritage, superb analytics partnerships, but no integration with traditional CRM applications.

But This is the Kicker....

With all this analysis, I go back to the original paragraph of this briefing. Sometimes when thinking about the box, you have to question the value of the existence of the box itself.

Meaning, with all the good and the not as good that I've outlined here, what I think, given the following:

  1. The vast amount of niche players included in the report
  2. The significant number of included companies that don't even meet the stated criteria for inclusion.
  3. The lack of a clear distinction between Social CRM, social media monitoring, social software etc. that seems to be helping drive the choices of companies
  4. My thinking on the necessity for integration or provision of traditional CRM functionality for a company to be able to call itself Social CRM or to be called that.

is that we are in an emerging market, that, after around 2-3 years, still isn't clearly defined. This may be partially due to the massively disruptive nature and scope of the communications revolution that we've been undergoing - and the frequency and speed/acceleration of the speed of change and the increased volume of products, services and thinking in its evolution. This is VERY hard for companies to keep up with.

But regardless, by Gartner's own standards, Social CRM should be the subject of a MarketScope on an emerging market, rather than a Magic Quadrant on a middling one.  This isn't to say that Gartner doesn't deserve some kudos for taking a bold step and putting out a Social CRM quadrant. Its simply that they did it too soon. As a result of its premature existence, we see a a niche player focused, somewhat all over the map set of inclusions that tend to throw a bit of confusion into the state of things, rather than give it the clarity it needs or deserves, and that's something that Gartner can do as one of the small handfuls who are uniquely positioned in this industry to do so.

I can't wait for 2012.

Topics: CXO, Enterprise Software, IT Priorities, Software

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3 comments
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  • The problem with Gartner is ....

    As you say, Gartner is (still) the premier influencer analyst, the one most serious journalists (a dying breed) will quote.

    But Gartner's customers are all large enterprises, and mainly US enterprises, so when Gartner says "This is the way the world is" they really mean "This is the way US large enterprises are". But that subtlety gets lost in translation, so when Gartner says that Company X is the market leader, or Trend Y is hot, people believe it applies to all countries and all business sizes, which it patently doesn?t. The US market leader for many product categories will never have been heard of by small companies in the UK, and probably never heard of at all in France.

    John Paterson
    Really Simple Systems
    www.reallysimplesystems.com
    JohnPaterson
  • RE: Gartner's Social CRM(ish) Magic Quadrant: So....

    It?s great to see you emphasize the true definition of Social CRM that includes both traditional capabilities of CRM and the new social channels and capabilities and analytics that social technologies can provide.

    Like you, I have no doubt in my mind about the value and heavy weight that Gartner?s MQ reports carry, however what is key to add is that their framework for developing the MQ criteria is highly influenced by the customers inquiries they get and the majority of these inquiries are from IT. That is why you see Gartner asking for criteria such as the need to provide both an ?on-premise? and ?SaaS? delivery model, when we all know providing both models is costly and slows down innovation.

    The buyers of Social CRM and Social Enterprise Software are mostly business owners that feel their current company IT infrastructure does not meet their organizations needs to engage with customers and move at the speed that consumers demand. So thanks for brining light to the 800-pound gorilla. I guess that?s why they call you the ?Godfather of CRM?.
    azita.martin@...
  • RE: Gartner's Social CRM(ish) Magic Quadrant: So....

    I question why one must pay a large fee to participate in this quadrant. The steep "pay to play" fee takes away credibility.

    Really smart article. Good for you for having the chutzpah to write it. We are hearing a lot about what will happen to these [currently powerhouse] analyst firms if they don't change their model.
    blakeMlandau