Previously on the Watchlist:
Okay, people of Earth, this is it. The last one. I’m sure you ALL watched the NCAA college basketball tournament, right? I know you did. And how many of you won Warren Buffet’s $1 billion prize for your brackets? That’s right. None of you.
What’s this have to do with the Watchlist, you might ask? Not much really, but to stretch the NCAA basketball analogy as far as I can, this is my Final 3 — the consulting and SI companies that made the winners list — two repeats and one for the first time. The irony is that it is the $104 billion gorilla, IBM, that made it for the first time, while their tiny dancer brethren, Solvis Consulting and The Pedowitz Group (TPG), took it home for the second year in a row each.
What characterized all of them, size notwithstanding? All of them are great companies — they don’t just do their jobs well. Each of them, as you will see is quite different in the things that make them great, and each of them has unique challenges to face in the coming year or so but all in all, they made the grade where 35+ others of their ilk didn't. So that tells you a lot about their chops, which in each case and in very specialized ways in two of the three, they have made a significant impact in their market.
Let’s dig down in this, our final CRM Watchlist review for 2014.
IBM, you would think, becomes a Watchlist winner simply because it's so big, it's bound to have an impact. While size having an impact is generally true — and if there is one thing generally true for this $104 billion, 100+-year-old behemoth — is that it…is…BIG, that isn’t the case when it comes to winning the Watchlist. Size is only a tiny consideration in how much of an impact I think a company has to have to make the Watchlist. IBM has so much more going for it.
Before I get too deeply into IBM, it pays to take a quick look at the market they're participating in, because their contemporary strategy is determined by that market and, the market itself is impacting how IBM does what it does, and how it has to do what it has to do.
This is a market that is dramatically changing. The watchword for companies at the scale of IBM — either on the consulting side, the technology side, or the buyer side is “digital transformation.” The consulting companies — especially the big boys — are “re(business)modeling” their practices and altering their revenue models, based on a lot of industry movement, and changing business requirements. For example, in the last year, we’ve seen Accenture, one of this year’s Watchlist Elite winners, accelerate the growth of their Accenture Interactive practice, which is a creative/digital agency. We’ve seen Ernst and Young Advisory, another of this year’s Watchlist Elite winners, develop a 2,500-person digital transformation practice. Capgemini followed suit and announced a “consolidation of their digital efforts” in February — a wise move on their part. One of our winners this round, IBM, has IBM Interactive, which you will hear more about below. In other words, these larger firms are fully aware we have entered an age where the customers have transformed from the much smaller base of social customers, to digital customers who, truthfully, might be a majority. Look at the numbers that are easily available after a ten second (or less) search.
- 90 percent of all customers say that purchasing decisions are influenced by online reviews (Dimension Research)
- 41 percent of all Chinese shoppers shop online; only 1 percent haven’t ever. (PwC, 2013)
- 90 percent of American adults have mobile phone; 58 percent of American adults have a smart phone; 42 percent have a tablet (Pew Internet Research, 2014)
- Global ecommerce sales for 2013 were $1.2 trillion. It’s expected that it will hit $1.85 trillion by 2015. (e-Marketer, 2013)
That was a quick search that almost overwhelmingly proves the point. The digital customer, who represents a majority of the customers out there, is replacing the social customer, who was a powerful minority player — but was still in a minority. More and more of business/customer interactions are being conducted online and an increasing percentage of those are being carried out via mobile devices.
IBM is aware of that and, under ordinary circumstances, you would (and should) ask, so what? But when this is combined with the active execution of their expansive and incredibly smart (and almost beautiful) vision and mission, with a serious dose of their available resources, and you have something that can potentially provide mind-boggling results.
Their vision and mission is focused on being a great corporate citizen – and training and educating their staff to be great corporate citizens. Their values statement is based on the belief that “a company culture based on core values not only helps our business, but also defines the role that we can and should play in society.”
If one were a cynic, one could say, "Okay, so what? Companies say stuff like that all the time but they don’t do anything like that." But, in the case of IBM, they say and do what they say they are going to.
Their core values are geared around the following:
- "We identify and act upon new opportunities to apply our technology and expertise to social problems"
- "We apply our existing programs and initiatives on a global scale to achieve maximum benefit."
- "We empower our employees and others to serve their communities"
- "We integrate corporate citizenship, transparency and social responsibility into every aspect of our company."
Again, words. But they back it up with actions. The best known initiatives are their Smarter Planet and Smarter Cities initiatives, which are focused on the use of technology for environmental improvements and increased efficiencies in the cities and on the planet more generally. Less known, though, is their program to send selected IBM employees to poverty stricken or underdeveloped areas of the world to use IBM resources to support the construction of improvements in areas that need them — e.g., water resources, schools, etc.
I could wax rhapsodic all day about the good works of this rather remarkable company, but at the end of the day, they are a business and I have to look at this through the lens of their customer-facing actions and their impact on the market and with future and present customers.
This is where this giant gets interesting because if they do some of the things below which will bring them into conjunction with market conditions, and, maybe Jupiter (just kidding), they can be more than just a big player, they can skyrocket themselves to a leading position.
Aside from their astonishing culture, they are well positioned when it comes to thought leadership vehicles. The gem in their jewelry box is the Institute for Business Value (IBV) which is one of the most trusted and respected research organizations in the business world. In fact, they were the second recipient in 2013 of the CRM Watchlist Lifetime Achievement Award. If IBM takes advantage of this without impacting the vendor agnostic nature of the IBV, they can position themselves well for a huge future impact.
They also have a highly accomplished leadership that has been in the customer-facing business world for a long time. Leading the Digital Front Office practice is Paul Papas, a longstanding industry veteran who has been doing this for over 25 years. He is tied strongly to IBM Interactive, which is IBM’s digital agency — and the IBM Customer Experience Lab.
And there are some highly promising things to point out in this regard.
If you look at their Digital Front Office practice, this seems to be where IBM’s business future (at least in the customer-facing universe) lies. It encompasses CRM strategy (apparently), customer experience, creative work (e.g., user interface/user experience design), customer engagement and at least marketing, if not sales and service, technology. There may be more to it, but that’s unclear to me. At the moment, it is nascent but it is the right move in the right direction to bring IBM GBS into alignment with their competition and the market and the thinking of the buyers that they target.
CRM itself remains a bit of a conundrum, without any clear picture of what they are providing to the marketplace. But one place that they have an opportunity to put a stake in the ground — along with several other companies already doing that — is around marketing.
They seem to be making moves in that direction with their acquisition last week of Silverpop, known for their strength in email marketing and their personalization tools. This, in combination with their acquisition of Unica and their ownership of Coremetrics seems to point to something resembling a "marketing cloud" that will try and compete with those from Adobe, Salesforce, and Oracle among others. While this is a timely move, it remains to be seen if a) this is even true, and b) how well they pull it together. The time is short, and the companies they own are a unique set of companies that don’t really follow the path that the others have followed. However, it can be a smart move for a company with the resources that IBM has at its disposal.
There is no way to measure the impact that IBM has on the global marketplace because it's that vast and that important. Their commitment to being a great corporate citizen and giving their staff the empowered (or super-powered) capabilities to help them accomplish that citizenship is perhaps the world’s best effort. Nonetheless, there are always a few things that they have to do continue the market impact in the world of customer-facing technology, strategies, and programs. Of course, with my big New York mouth, here they are.
What they need to do
- Improve their CRM market presence — This is a company with a solid history of doing good work consistently for their clients. They have also done good research in CRM via the IBM Institute for Business Value (IBV) on CRM with their very often quoted two-parter From Social Media to Social CRM. (You can get Part I here and Part II here.) But they have little to no presence in the CRM world. Ironically, they have a strong relationship to SugarCRM and use SugarCRM as their defacto CRM platform offering. Even more to the point, they replaced 67,000 seats of Siebel with SugarCRM between 2012 and 2013. But in their submission, when it came to partnerships, they didn’t even mention SugarCRM anywhere. Couple this with their mention of a specific Oracle practice related to CRM but no other, though they have partnerships with the aforementioned SugarCRM, Microsoft, and SAP among others and you get the disconnect. They have to spend 2014, especially now that they’ve acquired Silverpop, in reassessing their organizational structure, their active presence in the CRM industry, and their efforts to make an impact in the world of either CRM or customer-facing activities associated with it – perhaps around their Digital Front Office initiatives.
- Social business is so 2012 – Back in 2011, I lauded IBM for being one of the first companies for putting their money where their mouth was and actually not only preaching social business but undergoing a massive transformation of the IBM culture to empower its 400,000 employees around their relationships to each other, the company, and its customers. In other words, do what they have to make this 100+ years old company a social business. And they are still working on that – it’s not easy to turn a ship of that size. But when it comes to social business as an offering for clients, that’s just passé. Social business was a blip on the evolutionary business radar on its way to digital transformation and any messaging and positioning and, oh yeah, offering that doesn’t focus on digital transformation or some permutation thereof, misses the 2014 and beyond boat. Think of it this way: Accenture, Deloitte, Capgemini, and Ernst and Young Advisory (EYA) have entire practices devoted to it. To its credit and off to a good start, IBM has its Digital Front Office practice which seemingly encompasses CRM. But there is more than the front office involved in a digital business transformation at significant scope. So a Digital Front Office practice is a start but it needs to be a tsunami at IBM as they continue their own trek toward that transformation of their culture and practices to meet the requirements of 2014 to the foreseeable future. But even if they don’t do more than a few enhancements to their cultural transformation, their messaging needs to reflect digital transformation and not social business any longer.
- Fix their analyst relations silos – I’m going to make this anecdotal but it has a universal point. Much as they like to tout their analyst relations program – and it is big – it is highly siloed, and shows something of a lack of understanding of the 21st century notion of “influencer relations.” For example, I’ve been contacted by a minimum of five (possibly more that I can’t remember) analyst groups at IBM and none really are directly appropriate for me except the one that is associated with “social software” (IBM Connections) — and my interaction with them is minimal. I’ve been contacted by their small business group, their midsized market group, their server group, a special group that was associated with smart something or another a few years ago and of course social software. I was also contacted by someone whose job was to make sense of which analyst groups should contact who. I heard from him once and then once again when something went wrong and that was that. I wasn’t invited to IBM Connections this year, which would be fine and not even be a problem except that it was that I fell between the cracks, having gone there for the last three years; meaning they dropped the ball. Not the nicest feeling either, to be entirely honest. More germane, I never get briefed by them at all. Never. That said, I do want to praise Michelle Henry for at least taking care of the Watchlist submission and keeping me informed via press releases, etc. I get the emails every now and then. Look, I’m not trying to diss IBM here. They are a HUGE company doing remarkable things. But they need to get this far better coordinated and they need to make sure that there are briefings from the right groups with the influencers who are going to impact them — not just Gartner, etc. I am honored that they chose to be a part of the Watchlist and I hope that they continue. But the AR/IR area is an area that IBM’s sheer size and scope creates problems for. They have shown something of a lack of understanding when it comes to the new influencer landscape. While they have highly organized and well-developed (and budgeted) programs for the traditional analyst organizations, they are seemingly random in how they deal with the boutique firms or the independents. For example, as I mentioned above, they just acquired Silverpop a couple of days ago, but unlike every other marketing cloud player, I have heard nothing from them. This isn’t a personal gripe. No one I know has heard from them. While they do engage some of the independent influencers as bloggers via their midsized company analyst group, they are seeing them as bloggers not analysts (to use a term that I really don't want to use). They just don’t have this together the way it should be. It needs focus; it needs rethinking; it needs concentrated and centralized handling. They need to do this now. Fast would be best. They are losing out on an opportunity that all their competition takes solid advantage of.
Solvis Consulting makes it again as one of those amazing companies that continues to gain influence and garner accolades in a highly specific market — that of Latin American (LATAM). They remain, after winning the Watchlist for the second time last year, the leading, most influential CRM consultancy in the region.
In the last year, their momentum continued unchecked — in most areas. For example, they won deals throughout Latin America with big names like Aeromexico, Telvista, Movistar, Unitec, and I can go on. What makes many of their deals interesting that they have long-standing ramifications. They're an ongoing source of revenue for Solvis.
Keep in mind, Solvis Consulting is a true consulting organization — and with one notable exception (more shortly) — take the same organizational direction as most of the larger consultancies in the area of partnerships in particular. They choose their partners incredibly carefully and incredibly well. They vet them for the Latin American market specifically. That doesn’t mean just an understanding of Spanish and/or Portuguese but they also consider the vendor’s knowledge of Latin American cultures, their ability to support the technology in the region, and their willingness to be partners as opposed to their willingness to let Solvis be a reseller — a huge difference in perspective. Solvis isn’t just implementing technology — though they are doing that — but they are strategists who are developing CRM (aka Social CRM) programs for a particular market that they understand deeply and live in.
What makes a company like Solvis successful is that they believe in their approach and themselves. They have no qualms about characterizing themselves as the experts they actually are, without arrogance.
One of the ways that this manifests itself is through their workshops and educational efforts. For example, they have an offering that they call “Social Media Education Services,” that has two core seminars. The first is called “How to Establish a CRM Strategy,” which covers core CRM fundamentals. The second is “How to Apply Digital Marketing and Web 2.0 initiatives…” which expands CRM strategy to the web. These are key concepts that Solvis Consulting has the confidence to teach, given how important these are to contemporary business efforts at any company. Though, given what they are teaching, I think I’d change the name of the Educational Services. Calling it “Social Media” is short-selling what they provide.
They have expanded their presence in Latin America, and beyond their existing activities in Mexico, Peru, Argentina, and Colombia, they added an office in Venezuela.
The results of their careful thinking and planning has been the new deals that they won, often against much larger competitors. Defeating larger competitors has been a hallmark of this company as long as I’ve known them.
As I’ve mentioned before, they have the foremost thought leader in CRM in Latin America, Jesus Hoyos, who has a significant presence as an influencer not just in Latin America but in the United States as well. He has been more operationally involved in the company over the last year so his content production has fallen a bit, but his influence is as great as ever.
Okay, now that one difference between them and a large consulting firm – their culture. I’ve spoken about this every year and every year it bears repeating. They have the most tightly knit culture I’ve ever seen; a culture of family (literally) and friends. The partners and their spouses work for the company as do a significant number of veterans of the founders’ past from Cambridge Technology Partners.
For example, in 2013, to solve the good problems of growing pains, Solvis Consulting hired two senior folks – Valentin Valle as a Director of Business Development (Mexico) and Strategic Accounts, and Magali Vasquez as a Director of Delivery for all CRM/SCRM projects. What do they have in common? Both are friends of the company from the Cambridge Technology Partners days.
But this incredibly friendly — family-friendly — environment has forced what I think is an inflection point – one that has rolled over from last year. Actually, two.
What they have to do
- Time to make decisions – for real – Over the last year, for varying reasons, they didn’t make what would be a transformative decision for the company. Unfortunately, as companies grow, the highly personal culture they might have been able to maintain tends to go away as more intricate relationships, a larger volume of business activity, a larger customer base, more complex processes and increased compliance (among other things) become necessary. This means that the family environment is hard to maintain. Yet the benefits of the smaller and much closer knit culture of friends and family is so much better when it comes to waking up and being happy about going to work in the morning. There may be some area for compromise in some ways. I can’t speak to it. But to put it simply, Solvis Consulting has reached an inflection point when it comes to deciding what changes to their culture have to occur in order to continue to grow. I said it last year, and I’ll say it again this year, but more emphatically: Time for a change. What that change is to be is up to them. While the choices are clear, the outcome isn’t.
- Retool thought leadership – In Latin America, Solvis is best positioned to capture mindshare with an infrastructure to support thought leadership (see above). But in the last year or so, due to pressing operational needs, they haven’t produced at the level they used to. Time to rectify that. They need to produce and own the content that can define how the customer-facing market in Latin America needs to look over the next several years. That means the buyers and the vendors. Suggestion: customer engagement.
- Possible expansion? – This is one to begin thinking about. They have some trickle-through into the US. They might want to consider some expansion into the US market. I say this without a “must” or “need to” definitive statement. It’s a thought, given their traction – and best affected by partnering with US-based companies who will reciprocate in the appropriate situations – including vendors.
Solvis Consulting continually amazes me at their straight-out clout when it comes to LATAM. They have a lot to be proud of because they have figured out what to do and the business model that works in the environment they are in. They do so much right and that’s why regardless of their decisions, they will remain a huge impact player in Latin America — for years to come.
The Pedowitz Group
What a pleasant way to end the Watchlist for this year (and last year too). I get to review a company that I have a great deal of regard for — both personal and professional. Like Solvis Consulting, they impact a highly specific area of the market but unlike Solvis, it’s not geographic. It’s all areas associated with marketing technology. In that arena, they are champs — unlike any other company who either specializes in it or has a practice in it.
They call themselves, a little awkwardly I think, a Revenue Marketing Agency, and for better or worse they are focusing their efforts around being just that. Their hypothesis (which bears out) is that marketing has to be transformed from a cost center to a revenue center. What makes this particularly germane to contemporary practice is that over the past five or so years, we have been seeing a change in the business world which has been leading to the alignment of marketing and sales efforts at company after company; one that has manifested itself by marketing departments being assigned revenue-related KPIs. Peppers and Rogers were the first to identify it in their white paper, The New Power Couple, in 2009 and the Aberdeen Group followed it with the market research called, weirdly, The New Power Couple in 2011 that both defined the trend and supported it with the research that justified the validity of the trend.
The Pedowitz Group (TPG) is the company that not only has embraced the transformation going on, but actually built a sustainable business model around that trend — one that they’ve been successfully executing on since it was identified.
What makes them unique is their willingness to embrace the full range of services that marketing technology suggests. That doesn’t just include implementation of marketing technology nor even just the programmatic planning that goes into optimizing the use of the technologies, though it does include all that. It also includes strategic services such as organizational design and change management.
What also makes them as successful as they are is that:
- They are conversant on, as of now, 25 marketing technologies and have been Marketo’s #1 partner for two years running and one of Eloqua’s leading partners in 2013 (again). They are also allied with Salesforce.com/Exact Target/Pardot, HubSpot, and multiple others.
- They have very selective hiring — leaning toward crème de la crème — that’s reflected in their average consultant Net Promoter Score (9.1/10, which is a spectacular number if you buy into NPS). They have over 300 marketing automation technology certifications.
- They have a solid, repeatable methodology that they call RM6 — an approach based on addressing, facilitating, training in, executing, and managing six core elements needed to become a revenue marketer. Even though I know the elements, it’s their methodology so you’ll have to go here to read about it.
- They have maintained a huge library of content to support thought leadership in Revenue Marketing with the capper being a book written by TPG partner Debby Qaqish called Rise of the Revenue Marketer.
- They’ve managed to gain their experience serving over 1,100 clients over the past seven years. Their clients have won 69 awards for one thing or another related to the marketing work that they’ve done in conjunction with TPG.
- For a company their size, they are smart and responsible corporate citizens, following the salesforce.com 1/1/1 model, which is an integrated philanthropy approach that says you provide one percent of your employees time for volunteer work and community engagement; one percent of your product by donating and discounting services; and one percent equity, meaning you provide capital via grants or otherwise to worthy products.
All of this leads to a company that has been numbered among the fastest growing companies in the US and has exhibited exceptional performance time and time again.
However, me being me, I have to end the Watchlist this year with some suggestions on what TPG has to do to get to the next level, and I mean beyond incremental.
What they have to do
- Step up its analyst relations/influencer relations program…more – A year ago, I suggested that they develop an analyst/influencer relations program. To their credit, in the last year, they started a formal relationship with Forrester with the ambition of becoming a leader in the Forrester Wave for marketing agencies. They regularly brief Forrester, Gartner, and SiriusDecisions. All a nice step forward. But nowhere near enough. This is “old school” and doesn’t get you where you need to go over time – and time isn’t all that stretchable in this digital era. There are boutique firms and independents out there and media people who play the role of influencers that need to be regularly briefed. While it’s a bit of a burden for a smaller company to brief a larger group, TPG is well positioned to become the leader in their space, not just an influential organization. That means 110% not 50%. They need to step it up.
- Be mindful; be specialized – The marketing technology world is roiling, changing every day. IBM buys Silverpop in preparation most likely for a marketing cloud of their own; Adobe announces the Digital Marketing Cloud; Oracle gets set to announce a marketing cloud. Marketing optimization and marketing as the first line of engagement are now spewing out technologies such as InsideView and Lattice Engines (both formerly focused on sales enablement/optimization) and Thunderhead (focused on customer engagement). While there is no company on the planet that is better prepared than TPG when it comes to marketing technologies, staying ahead of these markets is something that I strongly suggest. Start chatting up those companies in the space.
TPG remains one of the most intriguing solutions providers/consultancies/strategy providers that I deal with year over year because they do what they do so well. I see little in the way of them continuing to grow and to impact the market they serve increasingly. The only question that remains is how much they want to do it in what period of time. It’s pretty much up to them.
Well, folks, that’s it. The CRM Watchlist 2014 comes officially to a close with this review and the only thing left to cap it off is the Yearbook which will be put together and made freely available in a few weeks — or as soon as I can get to it.
Thanks so much for sticking it out all these months and reading all this stuff. It’s a lot and I appreciate the fact that you actually read it.
Remember, the cycle continues with Watchlist 2015 which is now open for registration. Please email me at email@example.com. I’ll send you the registration form and the rest flows from there. Looking forward to your participation later this year.
I’m taking a day or two off and then on to CRM Idol 2014. Stay tuned for much more this year too. Something else to announce I hope by the fall. Should be a great ride in 2014 and beyond.