CRM Watchlist 2014 winners:
This is a first. In prior years for those of you who followed the Watchlist, you know that I tended to do the reviews of the winners by loosely grouping them (except for the Lifetime Achievement winner) into ad hoc categories that were determined by the nature of the companies that won. So we’d have marketing automation companies or customer service focused. For most of the winners, that is going to continue. I’ll figure out the categories as I go and we’ll review from there.
But this year, with the emergence of the “Elite” winners — those who stand out among even the winners for the impact they make and should continue to make — I’m going to make a change. The “Elites” will get the first reviews and others will be reviewed in the categories as always.
The only characteristics that commonly apply to these winners in the Technology Vendor and Consulting/SI categories are that in their part of the business world, be it the whole thing or a significant piece of it or a domain their impact is nonpareil. They are a dominant player in the universe of CRM related (in the broadest “ish” definition) business and top of mind in discussions that might involve them.
To be a Watchlist Elite, you really have to have stood out in a way that distinguished you among the distinguished. All the winners of the Watchlist are stars. To win this year was unbelievably difficult. Companies that were honorable mentions, would have, for the most part, been winners last year. Companies that won should be pretty damned proud of themselves. The Watchlist Elite were those whose scores were exceptionally high – high enough to separate from the general pack of winners by a pretty significant amount.
Keep in mind, there is no set number of Elites, just as there is no set number of winners. It’s all in how you score. If you reach a certain number, you win. If you reach a certain much higher number, you are an Elite. I can’t tell the final score of any company until I plug in the numbers due to the weights that are assigned each of them. But, to be fair and candid, while the results are granular numbers, I’m the only judge and while I judge in quarter points, it’s still a subjective, even if fine-tuned decision on my part on whether someone gets a score 8.25 or 8.5.
In my defense, I’ve done this for seven years and have highly specific things I’m looking for, so there is little randomness to the number. An 8.25 for one company is generally awarded for the same reasons I award the same score as an 8.25 for another company. Also, it’s all in context. For example, does your mission and vision apply to what you do in a way that can be generalized and communicated to the customer base and prospects that you appeal to. That base is different for, say, Xactly, than it is for Blackbaud. That is all taken into account when I’m doing this. And it gets more granular than that. So, while it is subjective, it’s also fair – at least, I think it is. And it is my award, after all. :-)
So, Watchlist Elites, congratulations. Now, what isn’t different is that I’m going to do to you what I do with each company who wins the Watchlist. Tell the world why you won and tell the world what I think you can do better to improve your impact in the business market. As I said last year, this might be the only business award the winners dread winning because it goes “Hey! You win!! Congratulations! Now here’s what’s wrong with you...” But rest assured, a company that wins the Watchlist is a company that deserves accolades and to be an Elite – well, in a class with very few others.
Let’s get this show on the road. I’m going to do the Watchlist Elites in 3 posts since they are so large to begin with. First up, will be the Elite Generalists – those companies that are having a huge market footprint in more than one or two areas. That is Microsoft and Salesforce. Then the second post will be the three other Elite vendors – Blackbaud, Infusionsoft and Xactly who are dominant in a particular market area. The third one will be the two consulting/SI Elite winners – Accenture and Ernst and Young Advisory – with their vast transformative efforts in multiple domains.
On to Salesforce and Microsoft.
There are five technology vendors who this award as we begin to see separation from the pack for the first time. They won for very different reasons. For example, in the case of Salesforce and Microsoft, their wins apply to the largest possible market and the impact that they are having on it and potentially will have on it. In the case of Xactly it’s because they have become a dominating force in a specific very important area. In the case of Blackbaud, it’s an unparalleled vertical dominance relative to all verticals that distinguishes them. Finally in the case of Infusionsoft, it’s an overwhelming presence in a market size that makes them standout. But there is much more than that in each case, because it has to do with my thinking and assessment of not just where they are but where they are going and what they need to do to get there. Let’s find out.
The Elite Generalists
There are two Elite Generalists – Salesforce and Microsoft. It’s pretty obvious why I think. They cover all aspects of industry and all areas of customer life though Microsoft arguably is stronger in B2C than Salesforce is. They don’t dominate a market, they dominate the market. They are distinct from the other three vendor winners who are each dominant in a particular market.
Salesforce – Highest Score Ever
Salesforce at the top of the list is no surprise. They were there for 4 of the previous 6 years, only usurped the last two by the always surprising (Elite winner) Blackbaud. But not only are they back on top this year, they are the highest scorer in the history of the Watchlist. I’m going to go as far as to say, without the absolute score, the only company on a scale of 100, to ever achieve a score above 90. Ever.
The interesting question is why? For real detail on this, I would suggest you read my post on them for Dreamforce here, but in sum, it’s pretty simple. This incredibly ambitious company has a remarkably clear understanding of the market, a stubbornly adhered to vision that they haven’t ever wavered on, and have delivered on that vision to the market. They resonate like a perfectly pitched tuning fork in the markets they attack and for the most part, though we’ll see what “for the most part” means, deliver on their promises.
Think about what they released at Dreamforce – Salesforce1 which is a platform that combines and interlocks what were the pieces of Force.com, Heroku and Exact Target’s platform, Fuel. It is close to the realization of their vision of over a decade ago – at least the technology framework for that vision. Couple that with their overarching message about the Internet of Customers and combine that with their continued march on the marketplace as they produce the kinds of products that people like using, more often than not; couple that with their highly visible public image as a very cool company that people want to be associated with, and you have a company that has what may be one of the highest profiles in the history of technology – on par with Apple, Microsoft, Google and IBM.
But what often gets lost in the bright lights is that Salesforce is a very well-run company too. They have a strong conservative financial profile – tight compliance with all the required regulations. They have a series of internal processes that are the governors of outcomes at the company. Follow the process and things get done; don’t follow them and they don’t. There is a clear downside to that kind of approach though, which is, without a culture that minimally reflects the mores and thinking of the employees it has and addresses the metaphors of the era and more simply, the likes and dislikes of its employees, puts the company In a position to become victim to the processes that govern it and thus, innovation, excitement and interest in working for the company can, let’s say, dissipate.
Salesforce has seemingly overcome that. Let me tell you a story. I was talking to a guy at Dreamforce last year who had been a senior director at another giant enterprise technology company. He had just been to this other company’s conference at the Moscone Center right before he quit and went to Salesforce. His words to me were (paraphrased but accurate): “I can’t believe that the two conferences were in the same place they are so different. The excitement, the energy here is so much greater. This company (he meant Salesforce) creates electricity! It’s so great to work here. I feel like we are destined to get where we are going!”
Seriously. That’s what he said. That’s why the processes that govern the rather conservative interior can work, because the employees buy into the vision deeply.
Salesforce was a disruptive force when it came to the creation of software as a service (SaaS) and the cloud as a viable delivery option in the market. It changed how companies created, deployed and paid for software forever. While their “No Software” mantra is a little disingenuous, it does reflect an attitude and approach that they are carrying on today.
Dreamforce 2013 was a nodal point for Salesforce. Not because it means we are seeing any dramatic reinvention of the company – we are not. Also, it’s not because we are seeing any major new disruptive innovations from Salesforce either. We aren’t. What we are seeing (or at least I am seeing) is the maturation of their vision into a practical reality – an actual platform that all business applications can run on. This is in combination with an extension of the vision around their self-named “Internet of Customers” and their commitment to digital transformation and the Internet of Things.
Lest you think these are just words, I will assure you they are not. See Esteban Kolsky’s “stake in the ground” piece on Digital Transformation and pay attention to the millions of dollars that companies like Elite winners Accenture and Ernst and Young Advisory are committing to digital transformation practices which involves real people doing real things to get real outcomes from the efforts produced by investing in strategy, programs and technology systems. The Internet of Things? There is enough being written about that to qualify as big data by itself. It’s permeating how we live – how we work, our health, our driving, even our playtime (check out the Xbox One, for example) – still primitive but on the way. Salesforce1 in its most ambitious sense intersects all this from the perspective of business technology. Salesforce is not the be all and end all of this as a standalone company, but they are a significant piece of an evolving ecosystem that is leading us to the interconnected world we all keep riffing on. They have as much impact as they do because they are now realizing their longstanding efforts in a practical form via their technology platform without losing sight of the vision. (There’s probably a joke in there somewhere...sight, vision?).
But that doesn’t exempt them from having to do a few things to make sure they can maximize their impact and continue their evolution from the disruptors they were initially to a mature force of economy. (No company is a force of nature. Sorry.)
Let’s see what that is.
What they have to do
- Fix the misshapen messaging –Lets begin this section with an egregious example of misshapen messaging - the name that they’ve inexplicably decided to give their Marketing Cloud. Bluntly, salesforce needs to stop calling the Marketing Cloud “the Exact Target Marketing Cloud” which is both an insult to Radian6 and Buddy Media, and just simply a ridiculous name for it. It is the salesforce.com Marketing Cloud or the Salesforce Marketing Cloud, but decidedly not the Exact Target Marketing Cloud. Naming it that gets Salesforce nothing and at the same time kind of makes me wonder, “Wait, now who bought who again?” Maybe, if they are reluctant to use their own name, they can sell naming rights like a stadium and it can be the Hormel Sausage Marketing Cloud. This is a representative example of the misshaping of their messaging which has seemed to evolve over the last year or so – particularly around the Burberry Marketing Cloud. It isn’t that the messaging is wrong but it is not as spot on as Salesforce usually is. There is an interesting indicator of why this occurs when you look at who is on the Salesforce executive team list. As of 1/25/2014, the CMO is NOT listed on the executive team, which makes no sense to me. That said, given Salesforce’s iconoclastic history, though conservative internal workings, they may have their reasons. Whatever the reasons, there needs to be a concerted effort to simply resculpt what isn’t broken but bent a little out of shape before it gets worse. For more details on what makes me say that beyond Exact Target Marketing Cloud, please refer to my Dreamforce post (see above.)
- Make the Marketing Cloud whole; Use Pardot and Exact Target more effectively – one of the gems that was acquired with Exact Target was Pardot, which had one of the best marketing automation products for the midmarket before their acquisition by Exact Target. It doesn’t scale to the enterprise, but a. Salesforce has the engineers to get it there and b. the story is that Salesforce has an abiding interest in the midmarket and is willing to invest in their efforts there. So, it makes no sense to drive Pardot to just the Sales Cloud and focus it on demand generation e.g. lead scoring and lead nurturing. If there is one thing that the marketers of any company big enough to have marketers' needs to have it is campaign management, something noticeably lacking in the discussion at Dreamforce. While it is commendable to do something that reflects the current trend identified about five years ago by Peppers and Rogers – the alignment of the objectives in sales and marketing – it is necessary for Salesforce to take advantage of the full measure of Pardot and build out the Marketing Cloud with clearly defined or at least clearly publicly identified campaign management and other marketing automation features. Additionally, something that came as a surprise to me when I did a paid advisory day with Salesforce in 2013 was that Exact Target has a highly competent customer interaction engine. Though it’s not at the level of Infor’s Epiphany, it’s pretty damned good. What makes it particularly valuable to Salesforce’s Marketing Cloud is that it identifies and tracks and allows response to customers’ interactions in real time. It is a true customer interaction engine. This is a major advantage for a 21st century marketing technology offering and a strong differentiator when it comes to what companies need to do for supporting the kind of personalized (not personal) customer experience that leads to increased engagement. (Could I have used any more buzzwords than I just did? But true nonetheless). Think about it. If the Salesforce overarching message is around the Internet of Customers, then it seems to me that having a customer interaction engine available in your marketing cloud would be of great interest to the company. So far, not so much. Salesforce needs to really nail the Marketing Cloud when it comes to its product ecosystem and its messaging around it. Time is tight on this one.
- Get moving on verticals – For a long time, since 2011 in fact, Salesforce has been harping on their interest in vertical industries especially public sector. First, back then, they made a claim that they would have hundreds of process maps for vertical industries. Then there was a claim back in the olden days of 2012 that they were going to train 1000 integrators and partners for application development and deployment just for public sector alone. I have no idea how close they are on this objective, but what I do know is that given the flexibility of their platform and given the opportunity in a number of key verticals (e.g. Health Services, hospitality, sports etc.) they lag considerably behind Microsoft, SAP and Oracle in this specific regard. (I said that of course to get their goat as the old saying goes). There are multiple verticals including public sector but certainly by no means even close to exclusively, that are awaiting companies that can design appropriate applications and provide useful focused services. Salesforce is one of the companies that is well positioned to do that, but they need to show they are doing that, not just talking about it.
- Think much more about ecosystems – There is no doubt that Salesforce has been very successful with many of their strategic partnerships and with their apps store. No doubt at all. Yet the 21st century marketplace demands that they do more than that – and with the theme being the Internet of Customers – what that “more” is becomes apparent. They have to start thinking about an ecosystem of products and services, tools and consumable experiences to define how they go to market. Unfortunately, they don’t really think that way because they have been successful as is. But it’s time for them to rethink their alliance strategy and spend the next two or three years working these changes through. For them to be a platform as a service (PaaS), to provide the underpinnings to interconnected Internet of Customers that they are talking about, having a marketplace and a handful of strategic partners is not sufficient. Not when their competitors are already thinking about ecosystems. There is still time, but not that much.
The thing is, even with these things to do, Salesforce remains the company that the competition gloms onto. Recently, I had a company that was building a CRM application. When I asked them what it was for - their answer was "to beat Salesforce." While that's a cute rah, rah thing, I told them it wasn't exactly what they should be doing when it comes to building a product. But it tells you how far Salesforce has permeated the market's consciousness. They remain the company to beat, and this year, with the Watchlist, nobody did.
Last October there was an analyst summit for the people who have an interest in covering Microsoft’s business applications among other things. There were about 70 analysts who heard Microsoft outline their plans for the present and the immediate future. I’d have to say that most of them walked away extremely impressed. I know I did. I made that quite clear in a post I did on the event which brought out a lot of the Microsoft haters who, I have to say, actually made some of the most ludicrous and just plain stupid comments I’ve ever read anywhere. But, even with the baseless noise, the point about Microsoft remained. Microsoft was and continues to be on a significant upswing in 2014 – one that can bring them to a dominant role if they play their cards right. Note I didn’t say “the” dominant – I said “a” dominant. They can be a potent force in business applications – in particular, CRM.
It’s taken a long while but there are coming up with a. some fundamental realizations about their position as a company; and b. some idea of how to set their future.
One reason that I’m betting on them is because they have a board-level corporate commitment to CRM and because they have their focus around a CRM ecosystem, not just a bunch of products and they understand the resources that this cash rich company can bring to bear in the present and in the future – so taking a long view in addition to executing on immediate tactical necessities is well within their purview.
But Microsoft is a complicated company and to bet on them as a Watchlist Elite because of their CRM practice alone is a mistake. There is a larger context to see this view. A bigger window to look out of.
Their declaration that they are no longer a software company but a devices and services company in 2012 was their first public step in identifying what they are. As I’ve said for almost seven years over and over again (and it bears repeating one more time), they are the only company on the planet that can support your life’s choices end to end. It's business, pleasure, work, play — day to day, over time. They have the technology to help you with it. I’m not commenting on the quality. Just the breadth and scope of their offering is unique. Name another company that has this breadth if you want to take a crack at it.
Think about it. They have the cloud infrastructure with Azure, the cloud applications with Office 365 and the recent releases of Microsoft Dynamics CRM. They have the communications framework with Skype, Lync and a whole variety of other media applications. They have tablets with the not so great Surface 2 touchscreens and the partners’ tablets like the well-received Dell Venue 8 Pro. They have the Xbox One which is not a gaming console but a unit that can run your house. They are consolidating and aggregating lifestyle activity with the increasingly popular HealthVault which has over 142 apps that sync with it and even more so 226 devices – which makes it an aggregation point in a health and wellness ecosystem that can be shared with medical personnel or a family member.
In other words, devices and services supporting your life’s choices end to end are a true ecosystem.
Their messaging began to reflect this with the Surface 2 ads from last fall which, even though Surface 2 devices aren’t very good as far as I’m concerned, this ad was very good in reflecting that overarching message – a new, appropriate Microsoft vision. In this case, it was “the Surface 2 is the one device for everything in your life.” It's a start. Though not the device I’d choose. J
What makes their winning the Elite designation for CRM cogent though isn’t just this transformation. This is a CRM award (in the broadest sense of the word) They still have to have a CRM product that meets the needs of the market as it is and all the requisite efforts at the company to support it via marketing, sales, service, partnerships and alliances, product roadmaps and even the corporate culture to support it – and a management team that is savvy enough to understand the present and the future and operationally sharp enough to get things done.
Microsoft is one of the two generalist companies which has the goods in all of the categories.
Since Bob Stutz came to Microsoft about 18 months ago or so, they have turned the CRM products on their heads with (among other things):
- A revamp of the sales product from top to bottom including the user interface. It's not the Outlook-clone you used to....love or hate.
- Major improvements in the customer service product including integration with Skype (meh) and Yammer (good integration)
- Three significant acquisitions, Netbreeze for multilingual social analytics; Marketing Pilot for integrated marketing management; and most significantly, Parature for customer service (this month in fact)
- Significant partnership deals with companies like Moxie with several other strategic partners in the works
- OEM of the InsideView product
What they have to do
But as always, they can have a much greater impact if they do a few things
- Unified communications - I’ve been on this one for them for several years, apparently without a lot of traction. They own roughly 13 products ranging from Skype to Microsoft Azure, to Office 365, Lync, Xbox One, Windows Phone, etc. that can be identified as part of a unified communications portfolio. If they saw things this way, meaning that as a company, Microsoft could provide you with the communications underpinning you need as a company or a customer or an institution to communicate with your customers/constituents/peers on whatever channels they are looking to communicate on – a true omnichannel approach – they could dominate the market the same way they dominated operating systems and productivity. This might not be CRM but in fact is a key component in all interactions with customers in an omnichannel world. Microsoft needs to finally get off the dime and get themselves in gear here. Azure is good enough now to compete with Amazon Web Services (the technology is good enough) and that alone should get them going – because no one else is.
- Better integrations for their own applications – As Microsoft continually increases their breadth and depth in CRM and begins to identify the kind of CRM ecosystem that is critical to foster 21st century business, they, both historically and presently have known that they can’t do it alone. So they acquire companies that make sense or partner with others that make sense. But in order for them to compete at the level they are in a position to now, they have to make sure that they integrate their offerings be they partners or acquisition based, sometimes at the micro-level and sometimes strategically. For example, if you open up Microsoft Dynamics CRM as of now, you’ll see a Skype integration. However, when you click on a phone number to make a call from Dynamics CRM it opens Skype up as a second application and then makes the call! Ugh. Who wants that? It is not an unknown feature of technology for a call to be made from the app itself. Google is a great example of a company who knows how to make that seamless. These are small details but they are the details that distinguish applications as either kludgy and not a pleasant experience or easy and makes me want to use it. Table stakes. On the bigger side, Marketing Pilot is by no means integrated into the Microsoft Dynamics CRM suite yet and that is an error to be corrected. Again, table stakes at this point.
- Compete at the level of “marketing cloud” - As of this writing, there are at least three Marketing Clouds that are making noise and several other quieter ones. Microsoft is none of these. Salesforce’s Marketing Cloud; Oracle’s Marketing Cloud and Adobe’s Marketing Cloud are making the most noise. There is also a strong push from Teradata Applications (formerly Aprimo) to dominate the Integrated Marketing Management space. Some of the quieter ones out there, particularly Infor’s overall marketing portfolio have a shot at becoming high profile and players in 2014 if they do some things. But Microsoft, even with the acquisition in 2012 of Marketing Pilot, is not making the noise that they should and, in fact, is barely visible on the horizon. This is a shame because Marketing Pilot, despite its lack of visibility has a strong, almost overwhelming (in both the good and the bad sense.
- Integrate Parature asap – The acquisition of one of my favorite companies, Parature (and a past Watchlist winner) announced in January 2013, was a red letter day for Microsoft CRM because it immediately vaulted Microsoft from a “meh” customer service player, though with a lot of upside given their soon to be “Leo” release of Dynamics CRM, to an immediate contender - provided that Microsoft can integrate Parature seamlessly and pretty quickly and spends the effort to scale it to enterprise level capability. Parature is a contemporary product that is built lean and strong – entirely attuned to contemporary omnichannel requirements and yet, not wasting itself on the hypish parts of social channels, but only the parts of social that foster business outcomes of value. As a result they have a customer base that loves them. But, as with any acquisition, the customers wonder “what’s going to happen to me.” So two things that Microsoft has to do over the next few months. Make a strong appearance at Parafest, the Parature annual shindig (I’ll be keynoting it this year along with customer service guru and good man, Shep Hyken) to talk to the Parature faithful, and invest the funds into scaling the product and sussing out the strong features that will.
- Devices and services; CRM – If Microsoft is going to be what they are claiming to be – a devices and services company, they have to take a page out of the Salesforce book. They need to start emphasizing their focus around devices, services, and the Internet of Things when it comes to CRM. They clearly have a technology perspective on it – all you have to do is see what they are doing with the underappreciated Microsoft HealthVault and the incredible number of devices (141) and apps (226) it syncs or connects with . While it’s not perfect by any means (see my post on “The Internet of Pings”), it is a clear indicator that Microsoft understands the relationship between devices, services, applications, and the Internet of Things. Look at one of the other three most important initiatives – it is the Xbox One which they’ve designed as a multimedia system for the home rather than a gaming console a la Sony’s PS4. CRM needs to be seen in this context – devices, services, Internet of Things (see this excellent post at MyCustomer.com on CRM at the Internet of Things). For example, the Amazon Kindle Mayday video customer service is yet another Amazon potential disruption – this time of customer service. Microsoft, with the acquisition of Parature, the existence of Azure and ownership of Skype (among other things) may not be the disruptor here but has the opportunity to jump on this and become a market leader in customer service (see the implications of the Amazon Kindle’s Mayday for customer service in this free Forrester Research report). But to do this, they have to align their product evolution, culture and messaging to this concept. I’ll be writing something much more extensive on this later. For the time being, I’ll just suggest that Microsoft move quickly before someone else – including Amazon or Google does. Neither of them have CRM worth crap at this point. But that doesn’t mean they won’t. Thirty-six billion dollars by 2017(according to Gartner Group) is a bit of an incentive, I would say.
- Take advantage of the vertical strengths they have – I’m no longer in the business of predictions, because I think that they are somewhat ridiculous (though I enjoy making them), but if I were a betting man, I’d say that highly specialized, sophisticated applications of CRM both horizontally, and vertically, are where things are going. Microsoft has some real strength in the verticals re: CRM, yet would you know that? No. Sports, public sector, healthcare, etc. are all within their domain. But they say nothing. They also have the means with their toolset of developing vertical applications directly via CRM so there is no excuse from either a product development or a marketing/messaging standpoint for them not to move much more “robustly” into the verticals they are already strong in and into other ones that they can play in.
Yet, one thing is incontrovertible, unless you are a blind Microsoft as Evil Empire hater. Microsoft is refreshed, refocused and ready to take its place as a dominant force. I'm counting on it for 2014 and beyond.
Up Next: The 2014 CRM Watchlist Elite Vendors II: Blackbaud, Infusionsoft, Xactly