Woody Allen has this great thing he says about immortality:
“I don’t want to achieve immortality through my work…I want to achieve it through not dying.”
I’ve come to the conclusion that my work on these Watchlist reviews are going to take me so long, I’m going to have to achieve immortality by not dying – just to be able to finish this year’s Watchlist.
Now, a commercial.
On Wednesday February 20, 2013 at 7:00am ET, the CRM Watchlist 2014 registration process began. Yep, right in the middle of the 2013 reviews. Progress (and time) wait for no man (or woman). What that means is that if you are a technology company or consulting/systems integrator business that does "customer facing" things, which means software or services products/solutions, you become a candidate for the CRM Watchlist 2014. That means that:
Previously on CRM Watchlist 2013:
This isn’t an “easy” category because, truthfully, it’s three categories at once. But they have a relationship that is unimpeachable. All three of the categories and the companies that they represent are pillars of what needs to be done at multiple levels in the 21st century business world. Core stuff.
Yeah, okay, pretty lame, but that's the best I can bring for an overview.
As anyone who has been around the CRM world at any length whatsoever knows, sales was the original driver of CRM the technology and CRM the strategy. While the battle around “CRM the strategy” was lost a long time ago (though it is still a strategy – just not perceived that way), CRM technology in the traditional sense is typically identified with sales force automation.
Yet, Social CRM, the new evolution of CRM (which can go back to being called CRM) was driven by customer service, partially because the massive escalation of customer demands on companies has put more than just the traditional customer service representative in the position of providing service to the customer. This forces changes in the company’s operations and culture, because of the required empowerment of employees to allow them to respond with some ability to act when dealing with this new more demonstrative customer. Customer service, rather than a pillar, becomes an envelope around sales, marketing and customer service’s traditional pillar-like departmental functionality.
What this led to is an uncomfortable relationship between the use of “social” channels and sales. For a long time (in Silicon Valley terms, that’s more than 6 months), there have been attempts to fit Twitter and Facebook external outreach to sales. The broad discomfort of putting “social sales” into the pillars of Social CRM and even just the integration with social communications channels and traditional sales functions have always been a bit dodgy. But there is an area that actually works and that’s an area that is defined either as sales intelligence or a broader set called sales optimization.
Sales intelligence at its simplest is the use of the structured data of an internal database or Hoovers and Reuters corporate information in combination with the capture and organization of unstructured data that is focused around individuals, companies, and events that potentially can impact a sales deal. It is a specific subset of social listening but combined with the more traditional transactional and demographic data that sales has used forever to figure out how to sell better. It can reach the level of being a great contributor to insights around customer (read: B2B customer) behaviors and actions that impact the direction that a sales deal might go in – allowing the sales person to have much better success with the next steps they have to take to “influence” a deal.
Thanks in particular to the work of Blanc and Otus’s Joan Levy, an excellent PR and analyst relations manager, I’ve “known” Xactly for about 3 years. They’ve made a couple of attempts at the Watchlist in the past, but this is their first win. And frankly, not only did they deserve to win, but they’ve crafted the pieces to knock it and their particular market out of the park.
For those of you who don’t exactly (with an “e”) know what they do, Xactly is the leader in what I think are important niche markets: incentive compensation management and sales compensation. They have a 100% cloud-based, pretty much complete platform to create and administer compensation programs which, as anyone in sales knows, are the lifeblood of company after company. While they cover the gamut of pieces needed to craft a custom or even good out of the box comp program, more important than any pieces of the components is their approach to compensation planning and systems. It is that compensation’s focus should be around reward, not management of dollars. Which I love them for.
To that end they have spent the last several years building systems that are deep and able to handle complex compensation schemas yet navigable and via cloud delivery both easily consumable and affordable for the most part. They’ve attempted to spend some tealeaf reading time so that they could stay on top of trends that might impact them.
So, for example, they’ve added gamification to their newest release of Xactly Express, their emerging companies focused solution. That means the standard stuff that you would expect – contests, leader boards, badges, social streams. Even though this isn’t a foundational component, it is a good example of how you can do something that actually makes sense in the context of your product in your market. It’s a level of smart applicability that indicates crisp thinking, not just “gamification for gamification’s sake.”
They are laser-focused in the compensation market and there is no doubt that they are staying that way. With their focus there, they are able to provide the enablement of workplace performance (which is not strictly CRM but it is part of the collaborative ecosystem necessary to provide value for both the business and customer) via not just the compensation, but the ability to monitor the performance relative to the KPIs set up for the compensation’s realization.
The laser focus has given them the opportunity to crank out the kind of thought leadership material that can give them mindshare in this growing market. They have multiple assets in different media formats that describe the practical and strategic side of incentive compensation. To their credit, they don’t stray beyond that. They are visionaries in the context of their marketplace. Big fish, modest pond.
They have a tight, complete company with a notably great culture. Many companies that I deal with provide homilies to their cultures and while they may or may not have a great culture, they don’t prove it, they merely say it. Xactly proves it. Interestingly, their culture, in part, reflects their beliefs on compensation. Compensation is based on reward, not financial management. So for example, they incent their staff with a formal program that provides everything from iPads to cash to trips to stock options. But they also have a non-profit arm, XactlyOne, for Xactlians (their name for the employees of the company), dedicated to service in their community (San Francisco area). XactlyOne raises money for worthy causes like Turning Wheels for Kids or Relay for Life. Of course, as is the nature of a growing contemporary company, they’ve injected the aforementioned gamification not only into their applications, but into their culture with contests, leaderboards etc. –another way to reward performance.
This culture hasn’t been unnoticed. In 2012, they were named one of the best places to work by the Great Place to Work Institute (GPWI) – an accolade which appeared in Fortune Magazine.
I could go into a lot more, including an extensive product review – let’s save that for another day. The Watchlist is an impact award and products are just a part of the factors that go into a big footprint on an industry and customer base. This company has nailed all the elements and, truthfully, has only to tweak some things.
Let’s see what they are…
From the time that I met Lattice Engines two years ago, I knew they were going to get somewhere. They had a unique value proposition (unique at the time) – one which combined what InsideView does with what Oracle attempted to do with Sales Prospector and added their own signature capabilities. What that meant is that Lattice Engines was able to ascertain what was the best possible route to take, intelligence to have, moves to make and team to provide the most likely successful result when it came to closing a sales deal.
“Big deal,” you say, “lots of companies claim that." Well, some do, but the thing that made this compelling besides their components and their approach to what I’m saying is sales optimization, is that they had measurable results to prove it. Even though the results are confidential, suffice to say, there were significant increases in sales volume, value per deal, etc. in enough clients to convince me that they are on to something.
So how do they do this thing?
Their core product is called salesPRISM and to dumb it down a bit, it’s able to do three things:
I emphasized their product here, even though I make the point in the Xactly analysis that product isn’t the focus per se of the CRM Watchlist – an impact award – yet in this instance, to some extent it is – they are a juiced super sales optimization suite that has solid measurable results in an area that measurable results have often been either specious or non-existent. That’s meaningful – and has impact.
But they are a young company – with some pressures due to substantial backing from Tier One venture capital firms Sequoia and NEA. Results are expected sooner rather than later. They’ve nailed the product and a few other aspects that do them proud – a highly capable management for example – but they are at one of those inflection points where they have to push even harder than they have with all 140 plus employees involved.
What they need to do
When Forrester first came out with the Wave around process-based CRM, I saw it as an artifice. I mean, who would want to be thinking about CRM that way? Process in my head meant the idea of having an engine to “keep the ordinary, ordinary” no matter how complex an activity that turned out to be. That meant a strong workflow creation toolset and a business rules engine that could handle complex flows. That meant a company that put time and effort into deeply understanding the nuances and variances of business processes in different vertical industries and in different contexts.
I still think that process-based CRM isn’t a legitimate category – in part because there are so few players that meet the criteria that something like that would require. But interestingly, two of the best at doing that are Watchlist winners this year – industry heavyweight Pegasystems and up and coming slugger BPMonline. Which does tell me there is something valuable about companies who can provide that specialized an approach to CRM.
Let’s see what we have here.
Two years ago, BPMonline was the first EMEA winner of CRM Idol, a competition for emerging companies in the customer-facing space. They were our Kelly Clarkson, so to speak. One of the prizes was to guarantee them a spot as a winner of the CRM Watchlist for 2012. But this is (forgive me if you’re not a baseball fan here) like saying that a Rookie of the Year is going to get attention. Of course they are but what about when they are no longer rookies?
Well, BPMonline figured that they didn’t have to believe in a sophomore season jinx – and they did what every other potential candidate had to do – submit a questionnaire – and guess, what, unlike most of the others – they won. This time without guarantees.
It’s not really all that surprising. This is a company with 3500 customers in 35 countries. They have 350 employees plus (note the increments of 35 here…grand plan in the universal scheme of things?). They have a headquarters in London but their true base is in Kiev. They are doubling their office space there because of their rapid growth. They have managed to get the attention of large consulting firms like Capgemini, though there is a lot more to do there. They have a reseller channel of over 250 partners. They are no longer an emerging technology company; they have emerged. There are reasons for that:
They've come a long way in a year. They've made it as a player on the stage and have shown themselves to be young potential force for a long time. But that doesn't mean that they don't have things to do. The impact they will have in 2013 can be magnified extensively if they start to do them.
If BPMonline does even half of what I suggest, they will be a shoo-in for the CRM Watchlist in 2014. Seriously.
Pegasystems has a long heritage in the Business Process Management technology world – they have been the market leader in that space for many years. They were and are so strongly invested in that world that they used to talk about “dead CRM” as part of their messaging to try to establish the dominance of BPM over CRM – which, actually is not really in competition – they are different animals with complementary characteristics. It could be explained away if one wanted to – they were an engineering culture that did what engineering cultures do – operate in the “build it and they will come mode.” Which meant that they would specialize in the things that going into building it, not what happens when “they” actually decided to show up.
But Pegasystems turned out to be very different than the standard engineering company. First, they are able to read the trends and respond accordingly and with the flexibility necessary in a technology world that makes rapid and sometime breathtakingly pinpoint pivots. Second, they were able to admit that they had erred – something that companies in the technology world are loath to do – and stupid not to.
They started mending their rip by buying Chordiant in 2010. (Here’s the collective view of Forrester on that acquisition) which gave them some strong CRM functionality (marketing automation, multi-channel contact centers); some vertical power (insurance) and some street cred in CRM. They saw this, at least in the eyes of Forrester as a way of bolstering their capability around customer experience. I would agree and that’s what makes them interesting. Customer experience is the right brained polar opposite twin of the highly left-brained process centric thinking that dominated their past. They weren’t reducing their power in the process world. But they began to see that processes weren’t agnostic. In fact, though I can’t say this is their view, more mine, the best processes are those that are impacted by customers and that impact them. Hardly agnostic.
Much of this 2010 turnabout was driven by the communications revolution that drove social media’s ascension to business thinking and Social CRM’s morphing of CRM into its new format. The channels that were not easily parsed to allow processes to automate them, were big and unruly. To the vast credit of Pegasystems, they got it – and they acted on it – and have been working with their increasingly flagship product – PegaCRM to make it something that not only handled the more standard and somewhat routine operational processes and capabilities of “classic CRM” but also could begin to tame the more wooly, crazy unstructured conversations out there on the social web, and interactions that were necessary between customer and company.
So, why does that make them a Watchlist winner in 2013?
For one, because no one else is doing that at the level of complexity that Pega is. What the hell does that mean, you might ask? Or might not. Well if you do, it means that one of the hallmarks of all good process-centric CRM companies, typically focused on customer service to start, is their ability to “keep the ordinary, ordinary.” That means being able to handle the 90% of queries that are not complaints in an easy, repeatable and hopefully automated fashion, regardless of the channel of communication
Complexity gets added with the rise of social channels but the concept remains the same. What makes Pega a bit different is that they are also trying to “make the extraordinary, ordinary” too. Meaning that they can anticipate the queries or even the complaints and deal with them via the use of predictive analytics so the next best action is suggested, not just reactively but proactively.
Are they fully there yet? No, but they have made progress and it’s a technology that even with gaps elsewhere puts them on the hot side of an impact heat map – to create a very clumsy metaphor.
They are also expanding their bet on CRM and rather than just resting on their serious chops in the customer service arena, are moving into sales and marketing, with available applications. They are able to use their best technologies and knowledge of process to allow them to spread both broad and deep.
For example, in the deep category, they rely on their technology to provide some strong market differentiators. In customer service, they have dynamic case management – which is a near real time highly unified action-focused enablement for solving complex service cases. In both marketing and sales, they use their process knowledge and predictive capabilities to support a well-documented next best action” facility – a way of determining what action to take with a campaign (marketing) or with an opportunity (sales).
But they also go long with deep process and workflow knowledge for multiple vertical industries – including insurance, financial services, telcos, and healthcare among others. SAP probably has deeper vertical process maps (and more) but the quality of Pega's process maps and G2 about the specific industries they cover is laudable.
But they aren’t quite where they can be yet either. They are into Year 3 of their revival of the dead CRM and there is a lot to do around their messaging and thought leadership, despite their active participation in the industry, thanks to the leadership of Steve Kraus– a really good "acquisition" who was former GM at KANA.
Keep in mind, they are placing some pretty big bets too. Maybe not at the level of Microsoft and Windows 8, but nonetheless, big enough. They are investing in areas they don’t have a proven expertise – sales and marketing – which means they need to prove it with the mindshare and market share.
Don’t get me wrong. They have a strong sales product to go with their customer service product. (I haven’t seen the marketing product yet so I can’t comment on it.). But that isn’t enough to make them competitive to the more established players there. In addition, they have been a BPM company and to make inroads even deeper than they have in the CRM world, they have to overcome their public image – engineers who love process more than they love humanity – in a manner of speaking. Totally untrue, but it’s a public image that lingers.
Last year, they won in Customer Service; this year they win in the more eclectic side – process-centric CRM along with BPMonline. I’m not ready to put them in the suite category like an Infor, let’s say, but they do deserve something for their efforts beyond customer service. So let’s see what they have to do to make an uber-impact in 2013, rather than just an impact.
There’s a lot here because, of the companies in this group, Pegasystems is the one that has pivoted the most in the last several years and is the largest and most established of the lot. But they are also resource rich, smart, and have solid products. They are also actually interested in making this work both in market share and mind share. I bet they do. I know they'll take the next best action in 2013.
Analytics, especially predictive analytics, is hot. Superheated, turbocharged, jet engine…hot. There is nothing better than being able to reasonably forecast the behavior of a customer down to the individual’s likely next actions. But equally as good is the ability to capture a customer’s moods and emotional responses to a brand or an action and then be able to ascertain the need to respond and the how to respond in conjunction with the value to the business of that interaction.
By no means has this reached an exact science, but more and more we are seeing companies who are using the power of predictive analytics (Oracle, SAP, Pegasystems, Lattice Engines to name a few) and companies that are doing sentiment analysis that is tied to business rules and workflows so that the analysis becomes actionable quickly.
This is the world that our Analytics winner this year, Clarabridge lives in. They don't do predictive, but damn it, they do the other stuff so really well. Stay attuned to this sector. Its heat will burn blue-white for the next several years (he said smiling and confidently.).
Clarabridge is just simply a winner. When I was doing my scoring, there was no doubt about the outcome after I was about halfway through (though they hadn’t achieved the threshold yet.). I know this company. They do some brilliant things – and arguably some of those things better than anyone else.
Yet, they could do even more than they are. Greater scope, reach, more customers, a power player – all within reach.
They are a bit enigmatic. Have you ever run across those people who you think you know and they make you think you know them, but when you sit down and think about it, you don’t really? You know only what they will tell you about themselves – and that’s just enough to be satisfied but not enough to really KNOW them?
That’s Clarabridge. So some of what I write here is impressionistic. But here’s what I do know of them and what I think is the power of this excellent company.
All of which is good, but they aren’t as ubiquitous a presence as they could be because in certain areas they move slowly, or little. If they decide to deal with the lacks they have – because I wouldn’t classify them as “problems” they should be able to accelerate to the point that prospects on the one hand and people like me on the other, will say, “Clarabridge? Oh yeah, I know them really well.”
Clarabridge is going to have an impact and be part of the buzz in 2013. No doubt. But rather than a low-zzzzzzing impact it needs to be at the level of earsplitting. I’ll be furious…no, mad….no, irritated…no, kind of peeved if they don’t make it that this year. I'll let their outstanding platform figure out which I am if they don't it. But do the above, take a little chance, invest and the journey won’t be sentimental – it will rock. I'll be happy, no...ecstatic; no...wait...joyous. Hey, they actually CAN figure that out. No matter what, they win in 2013. But I think they can go all the way.
That’s it: next up the social guys – Attensity, Get Satisfaction, Gigya, Jive, Lithium and Nimble.