Clash of the titans

Clash of the titans

Summary: The future direction of technology needs rests more and more with clients and their ad agencies of record. A showdown is looming between the giant hi tech and and advertising industries...

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'The next big thing is already here' Samsung spot by 72 and sunny

The tectonic shifts in the way companies do business are rooted in technology and connectivity, but the actual technology is rarely part of new innovation. This may seem counter intuitive, but the reality is that most technologies are designed to serve subsets of companies - accounting, marketing or HR being obvious examples.

'The suite always wins' has been the mantra of MISO vendors (msft, ibm, sap, oracle) for decades, with ERP (enterprise resource planning) forming the backbone of large companies since the late seventies, typically augmented by complimentary components that feed into other parts of the business. Historically human resources tech has been like widget supply chain until recently  - keeping tabs on the human components of the firm, making sure there are the right number and that they are performing to produce the work pieces they are installed for.  

We're leaving an era where the old guard MISO technology vendors, with a combined worth of a trillion US dollars, are fighting to retain their recurring 'maintenance model' revenue suite models, which fund next generation research and development in the face of increasingly modular, agile and powerful digital transformation options enabled by cloud, software as a service month by month seat licenses and of course mobile.

ERP transformed global commerce last century, and the next generation of this complex and costly but invaluable technology, goes MISO's logic, are real time, in-memory analytical tools that will immediately tell you what your customer and prospects are thinking, their propensities, buying patterns, thoughts about relevant contextual topics. and connect to supply chain and social channels for end to end transactions, to lapse into jargon speak.

What's wrong with this picture is that ERP was and is all about automation, weaving finance/accounting, manufacturing, sales and service customer relationship management into a river of transactional data that participants worked on at various points, like people putting together cars on Henry Ford's production lines under one roof. The cost of doing business factors in maintenance of the production line, tools, humans (now robots) and raw materials. 

Into this world came the (now ancient) Web 2.0 read/write web, mobile, open source collaborative code and large scale human interaction digital networking. Simplistically the MISO giants are betting their farms on being able to parse all the data this brave new world creates, and feed the ERP beast of their clients with it to enhance production.

Today the half billion spending world of global advertising is colliding with the trillion dollar MISO cash cow, and there is going to be significant fall out.

Looking at the way firms do business from a different angle, western society brands are large defined by highly sophisticated collaboration with AOR (Agencies of Record) - advertising agencies that play a fundamental role in motivating the consumption of well researched products by prospects and customers. This relationship is growing far more important in our fragile economy: global firms like Apple, Burberry and Nike demonstrate the immense power of brand positioning and perceptions, while the revolution in BTL (below the line) and particularly TTL (through the line) enabled by digital possibilities is slowly transforming the advertising industry. TTL is what most interested marketing people understand the concept of the social enterprise/business to be - greater agility from greater connectivity and context but on a platform, not a software suite.
 
The old guard MISO heavy iron has co existed with the fast paced world of marketing strategy and tactics to provide the correct numbers of projected widgets that can be sold for decades. Today the half billion spending world of global advertising is colliding with the trillion dollar MISO cash cow, and there is going to be significant fall out.

TV still dominates the delivery of eyeballs to advertising agencies and their brand name clients, but our digital connections are increasingly important: advertising titan Google's profitability demonstrates this reality. We're leaving the tech world's social hype era - and as Larry Dignan, Dennis Howlett along with Brian Profitt over on ReadWrite among others have written, technology companies modeling an entire social enterprise/business haven't worked well. 

Valley VC's have been licking their chops over a 'Multi-Hundred-Billion-Dollar Destruction Of Wealth' for the last twelve months as the MISO old guard yield to a newer generation of SaaS saving money for clients, with the VC backed startups pocketing next generation profits, as this piece last fall on Seeking Alpha by 'modernist'  'Enterprise Titanic Approaching Iceberg: SAP' luridly proposes. 

Software companies can help their customers identify paths to innovation - usually with much peppy behavior - but it is historically Ad Agencies which have helped firms find their mojo, and then hit the right tone with their customers. The automation of CRM (customer relationship management) typically means phone trees, long waits with terrible music and script reading, lowest cost employees somewhere on the planet who don't have answers to your questions. That's a tech human process interface at its worse - contrast that miserable experience with advertising at it's best: AdAge agency of the year 72 and Sunny (who are based in Amsterdam and LA) brilliantly undermining Apple's mobile fan boy audience with TV spots and digital follow through for Samsung

Finding the right tone and messaging is more and more important in our fast moving times - digital documents and filing cabinets, creaky enterprise user interfaces and unhappy legacy enterprise vendor relationship financial memories are common place in the tech world, and they just don't cut it in comparison to an Ad agency hitting sales out of the park. Now those ad agencies are getting into the technology business to create the tools they need, and work with vendors on their terms or make their own. Publicis owned Razorfish, also an AdAge top ten firm, create a lot of software these days... 

There has been much clueless posturing around the word 'social' over the last three years, starting with the catch all 'social media' followed by various vertical definitions with Social slapped on as a prefix. Tech has a dubious history around 'the next big thing' - remember when SOA (Service Oriented Architecture, not Sons of Anarchy!) was the future and you had the get on the bandwagon quick? There are a whole set of other issues around big marketing and advertising company shortcomings, but from where I'm sitting (and somewhat colored by a previous career as a brand advertising creative) it is marketing innovation and agility that is eating the world, to paraphrase Andreesen, and the software industry is going to be increasingly downstream from that.

 

Topics: Collaboration, Social Enterprise

About

Oliver Marks leads the Global Digital Enterprise Team at HP, having previously provided seasoned independent consulting guidance to companies on effective planning of business strategy, tactics, technology decisions, roll out and enduring use models that make best use of modern collaborative and social networking tools to achieve their business goals.

These are Oliver's views and not those of his employer HP.

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