One thing that impressed me about Dreamforce was Salesforce’s ability to be creative, to invent something completely unexpected to announce in Chatter.  Whether Chatter will be any good when it is released next year is debatable but Salesforce did what it was supposed to do in bringing out a big new idea for its assembled customers.

Most importantly, the Chatter announcement made a mockery of the attempts by SugarCRM and Microsoft to anticipate and respond.  I think those efforts fizzled because they were largely expecting a more conventional set of announcements than they got.

It was like baseball.  If you’re a pitcher and you have a batter with a 3-2 count sitting on a fastball you might throw one but it might be better not to, instead opting for a breaking ball.  If you have to throw the heater you want to make sure it’s  just out of the zone to make the batter question whether to swing or take what ought to be ball four.  Lots of good hitters end up striking out in that situation because they’re momentarily frozen.

Some of that happened at Dreamforce and parenthetically, I have to commend Oracle for wisely deciding not to anticipate Salesforce’s announcements with a truth squad though they certainly could have.

So now Salesforce has this new, new thing to explain and about six months to do it.  I have to say that the idea both new and not new and getting your head around it might be challenging, I know it was for me.  Let me try again to describe it now that I have slept on it a bit more.

Think about social media, specifically Twitter and Facebook for they are the closest analogies.  Social networks operate on three key elements, according to Salesforce and I have no strong objections to this model.  The elements of success in social media are people, content and applications.  Social media are only valuable if lots of people use them (the network effect) and they use these media to get content or to use applications.

That’s fairly abstract but think about Facebook whose content is supplied by users who provide all the details of their lives including photos.  Facebook is the largest photo sharing site on the internet, I am told.  So notes about your life and photos, that’s pretty much the content side.  The other bit is applications.  We use applications on Facebook to enrich our experience and to get more information and content from others.

The people at Salesforce remind me that the content and applications are only valuable if they are in circulation, if they are used by members.  Like a relay race, it doesn’t matter which person is running, what does matter is how fast the baton moves around the track.  In the same way, if information is static because it is stored on a network drive somewhere and few people know about it, then it has much less utility than if it was being used by many people.  The more people that use applications and data within you company to do business the more value they have.
Now, where is all this information and where are the applications.  Of course they are in your in-house repositories, in the data center.  But there is also information stored in people’s heads that has potential value such as the deep backgrounds of employees, their skills and things they know that may not directly impact their jobs.

But what if that information too could be surfaced and stored for easy applicability?  In Chatter all of that information is easily rendered as well as information about information and all of it can be subscribed to.  In an earlier post I offered the idea of subscribing to the data of a sales forecast so that when it changes the subscriber is notified.  It’s not much different from becoming friended on Facebook – you get updates when something changes on a friend’s page and it is your decision whether or not to use it — that’s what makes social media work.

Social media is like a big exception machine notifying you about the deltas in life.  It’s management by exception and it gives you the ability to keep up with a lot without devoting much attention to the minutia.  If you think something is important you post it and your friends or followers have the discretion to decide if it’s worth absorbing.

This model could do a lot for business if implemented properly but there are many if’s associated with that statement.  The if’s will begin to be filled in by the first strategic use cases and with them we should begin to get an idea of best practices and all the rest.  That will be extremely important.
Not long ago I read Niall Ferguson’s “The Ascent of Money” in which there was an intriguing quote from George Soros, the billionaire financier and philanthropist.   Soros said, “Every bubble consists of a trend and a misconception that interact in a reflexive manner.”  But what are product innovations if not bubbles that attract attention and money for a time before the bubble bursts and we move on to new bubbles, new paradigms?  The experience economy was such a bubble and customer experience is its misconception.  Social media in business is a bubble too.  What will its misconception be?

I tried to make a lot of meetings on the show floor at Dreamforce and I was not successful in making most of them.  To the vendors I didn’t reach I hope we can set up a briefing and I hope you understand.

It has been a while since our industry saw anything like Salesforce.com’s just announced Chatter.  Technically, we’ve not seen anything like it period.  True there are aspects of Chatter that are already reflected in other products on the market but I am speaking about the novelty of the proposed application that was announced yesterday at Dreamforce.

Chatter is a pure innovation; you can tell that it is because most of the people I hang with – myself included — are trying to figure out if it is fish or fowl.  I am writing this in advance of a keynote this morning that will, no doubt, add some heat to the discussion but I wonder how much light.

I am not ready to pronounce anything about Chatter and since the product won’t be out for at least three, and possibly closer to six, months I am reserving judgment for now.  Nonetheless, some initial impressions are in order, otherwise why am I here?

Chatter is part of what Salesforce has dubbed its fourth cloud and although they describe it as a collaboration tool, it is really all about intelligence, hence the name.  I doubt that Chatter will ever be able to capture bin Laden but, aimed at the internal mechanism of a company’s business processes, it ought to provide some lubrication to those processes.

I think lubrication is a good – though scarsely the only — way to look at Chatter too.  Chatter offers the promise of providing greater transparency to a company’s inner workings, which should result in better decisions and fewer surprises.  For instance, Chatter makes each data item an active, or perhaps it is better stated as non-passive, element in a company’s decision-making.  In the forecasting realm, a deal’s size, completion date and other attributes will now be active in that, if and as they change, they could make their new statuses known to others.

So, a sales manager might subscribe to a sales person’s whole forecast or just the big deal that is supposed to close this quarter.  A change with an immediate alert will give the representative, the manager and others in the organization more time to react to the news and possibly affect the outcome.  Currently, an organization that reports its forecast once a month might lose four weeks on the follow up but Chatter would make the response more or less instantaneous.

Chatter is not the only product capable of this feat.  In this scenario I can see other products doing similar things, for example Right90, which specializes in forecasting.  Other scenarios will bring other products to mind and that is one spot where the debate rises over how revolutionary Chatter really is.  Some?  A lot? Not at all?

Then there’s the question about whether or not this is a good thing.  The answer?  Sure.  Maybe. I dunno.  When you peel the onion on this you discover how nuanced Chatter is.  There are dials and settings to deal with that prevent a subscriber to data’s changes from being overwhelmed by background noise – don’t show me all deals, just the ones that will pay off my mortgage, for example.

Chatter and noise are two well-chosen terms from true intelligence gathering and they certainly deserve to be part of the conversation.  It is interesting to me that Chatter’s focus is internal decision-making and not the vast ocean of data that exists outside a company’s walls.  The decision about focus makes the task at hand far more manageable and signals the importance of reducing the siloed nature of information that is still alive and well decades after that term was first coined.

By its nature, information will always be siloed – there is too much to know and too many people who may need to know it for information to be perfectly democratized.  But Chatter does something close to solving the problem by making data active rather than passive and automatically subscribable rather than purely reportable.  It is that subscribability (to coin a phrase) embedded in a company’s information processing milieu that is so intriguing and potentially powerful and it is the lubrication that I alluded to at the beginning.

It is also one aspect of what makes this announcement something that we haven’t seen in a while.  It is close to a pure innovation, the kind of thing that makes people like me scratch our heads or like the three blind men and the elephant, want to run our hands all over it and make tentative first declarations about what it is.  If this kind of innovation is back, does this mean the recession is really over?  I hope so.

Salesforcce turned an important corner with the introduction of Salesforce Chatter a social platform intended to incorporate popular social media like Twitter and Facebook deeply into the fabric of modern business.  I am not sure this is the perfect social model for social CRM but it certainly complies with the growing need for CRM and vendors in general to do a better job of listening to their customers.

The next big move in enterprise software will have to accommodate the shift from ever expanding markets to situations that are more zero-sum for the simple reason that customers behave differently in the zero-sum world – more like retail customers.

Chatter strikes me as a social media monitoring solution and that can be valuable in a variety of situations.  I’ll report more as the keynote evolves.

Random notes

not a lot of new stuff announced yet.  Looks like tomorrow will be the big day, I hope.  We know they’re going to announce Chatter at some point.

Lots of non PCs mostly Mac’s here.  Wonder how much Linux is here.  Non-PC, non-windows machines are a telltale sign of Microsoft’s waning influence.

Oy veh!  Dreamforce hasn’t opened its doors officially but there’s plenty of howling going on outside.  Yesterday, I reported that Microsoft had set up an ersatz truth squad for the event and today SugarCRM joined the act.  As I did yesterday, I reprint the entirety of the email I got below.

Commentary:

I don’t think the way to rise above a competitor is to quote him or her extensively as SugarCRM does here, but I acknowledge that some of this is just my New England roots showing.  I recall some rather cheesy stunts by Salesforce in the early days like giving out Krispy Kremes in LA outside the Siebel user group meeting or driving a little van around the streets of Canes (France) with the No Software logo on it at the European version of the same.

Seems like the whole industry is on pins and needles as Marc Benioff prepares to take the stage this morning.  The competition is looking for a way to stem a tsunami and users want more, more, more.

A couple of years ago in New England we had a football team that had a perfect regular season (thanks, Giants!).  During that run the Patriots were beating other teams by what almost looked like college basketball scores.  Some people were alarmed about the Pat’s lack of sporting etiquette for some of the lopsided scoring but the discussion settled down when some sage person said, and I am paraphrasing here — We’re professionals.  If we don’t want the Patriots to score so much, it’s our job to stop them.

The same thing applies here, the competition saw this coming for the last decade and they all took their time reacting to the disruption that is SaaS and Cloud Computing.  If you want to stop Salesforce, make a better product.  Forget the cute book ideas and truth squads.

Hey Denis,

Marc Benioff has a few zingers for SugarCRM in his new book “Behind the Cloud”:

“We knew that we had truly emerged as the market leader in the eyes of the industry when we arrived at Dreamforce 2006 to find that a handful of employees from a small CRM company had set up a mock protest outside the convention center. I’m not really sure what they were protesting, and it was a small, low-budget, and poorly executed rip-off of the types of tactics we had invented, but that wasn’t the point. The point was that we knew not to get ruffled.” - Page 65 of “Behind the Cloud”

We are sorry we disappointed Marc during our previous visit to Dreamforce. 

He even challenged us to “step up the innovation”:

“We did not want this company to get free PR on our coattails! Ignoring this escapade worked well. A blogger asked a Dreamforce attendee if she had seen what was going on outside when she arrived, and she replied that it must have been some kind of Salesforce.com stunt. (Note: if you are going to compete with someone at his or her own game, always remember to step up the innovation.)” - Page 65 of “Behind the Cloud” by Marc Benioff

If you insist Marc. 

In continuing its long love affair with the industry’s most down-to-earth CEO and our commitment to staging “small, low-budget, and poorly executed rip-off [tactics]”, SugarCRM is currently distributing 1,000 copies of “Behind the Smokescreen: The Untold Story of How Salesforce.com Still Manages to Sell 1999 technology 10 years later” at Dreamforce today. 

You can get your hard copy on the sidewalks outside Moscone (look for the people dressed as big books;).

Or you can read the eBook here: www.sugarcrm.com/smokescreen With an endorsement from North Korean leader Kim Jong II (“A great guide for any entrepreneur, CEO, or Head of State looking to promote openness and freedom”), Behind the Smokescreen is a response to the magical Salesforce.com marketing that has transformed the company’s service from .com ASP to On-Demand SaaS to Cloud Computing without being apple to run its service on Amazon EC2 ,Microsoft Azure or other cloud services.

To celebrate the release of the book, SugarCRM is offering a free data migration for Salesforce.com users through the end of the year. Registrants will have a chance to win a free Motorola Droid.

SugarCRM hopes that the publication of this book “step[s] up the innovation”. 

Please contact me if you would like more details. Or you can contact me on Wednesday through Christine McKeown of Schwartz Communications at (510) 501-7333

Regards,

Martin Schneider

“There is a Japanese belief that business is temporal, whereas relationships are eternal. That’s true, One day you compete. The next day you partner. One day someone is your subordinate; the next day he or she may be your superior. At its finest, business is friendly competition, just like a game of tennis.” -       Page 39 of “Behind the Cloud”

In the olden days, before Marc Benioff got a speaking slot at this year’s Oracle Open World, there was a little time between a company’s big announcements at its user group and the commentary by the competition.  Usually the analysts and press got the first word but now it seems that competing vendors want to get right in there before the concrete has time to set.  Such was my thinking a moment ago when I got an email from Microsoft saying in part:

“Over the next few days, there will likely be a number of cloud computing and CRM industry announcements. Microsoft Dynamics CRM, as an industry leader, will be accessible to comment on news, and will be also posting perspectives and general industry observations at the Microsoft Dynamics CRM team blog. In addition, you can watch the Microsoft Dynamics CRM Twitter account at: @MSDynamicsCRM.”

More proof that we live in a networked, instant-on, 24-hour news cycle world.

Ok, a few days ago I made a churlish comment about Virgin’s sliding scale for onboard internet use.  I am sitting here in a Virgin plane heading to Dreamforce blogging for free (free for the holidays, thanks Google).  My MacBook is also being powered by an electric plug just under my seat.  How nice and convenient!  Grateful as I am I STILL think the airline ought to be able to standardize on a single price for airborne internet rather than the sliding scale they are now using — or will use after the holidays.  But boy is this nice.

Lots of people (OK, three) have asked for meetings while at Dreamforce next week.  While I want to see everyone, the reality is that my free time is very limited.  So, the best way to get me into your booth is to call my cell 617-901-2072 to set something up.  The best time for me is Thursday afternoon.  I hope that helps the three of you — you know who you are…

Sage convened its fall user group meeting in Atlanta this week.  The event was set in the cavernous Georgia World Congress Center, a complex of three starship hangers left over from the Intergalactic Olympics.  The facility is beautiful and very big.

Sage estimated attendance at between 2500 and 3000 people and despite that number of people, the place looked under used.  As you might expect in a recession, Sage officials told me that many companies sent fewer people to the event so that overall attendance was down somewhat year over year though the number of companies sending employees was relatively constant.

It is important to distinguish between the Sage partner event, Insights, held in May and the user group meeting called Summit.  Since Sage sells exclusively through a partner channel, it makes most of its product and policy announcements at Insights each year.  At Summit, the company focuses more on end-user training and adoption and there is less hard news coming out of the event.

Jodi Ueker-Rust, President, Sage Business Solutions Division, gave a keynote on Monday that emphasized three directions for Sage and they were meant to cover both front office CRM and back office ERP products.  Rust said the most important directions for Sage included support for increasingly mobile users, emphasis on social media and business intelligence, but the speech seemed short on detail and the CRM group has been executing on all three for a while, score one for the front office.  I sat down with Joe Bergera, GM, Sage CRM Solutions and Larry Ritter, EVP Sage Business Solutions Division for a discussion about the CRM business; here are some highlights.

My impression of the messages flying around is that there are two different Sages.  One is dedicated to making prudent decisions about moving over to SaaS (let’s call them the front office gang) and the other is digging itself into an untenable position in premise-based solutions, I think of them as back office.

Sage front office folks have long been leading adopters of social media for internal use, with good results.  The company uses communities built into product specific sites for ACT! and SalesLogix and the officials told me that a significant amount of traffic for CRM products now arrives thanks to Twitter and other inbound social media these days.

Even more impressive to me is that some CRM products automatically survey new customers at the 60 and 120 day marks just to better understand customer use and tribulations, if any.  I don’t know if other vendors are taking this step but it strikes me as the kind of aggressive customer outreach a vendor has to have especially if the purchasing process is retail oriented – i.e. without a sales representative and maybe without much implementation help.

Sage is doing a lot with community data and I wish more companies would realize that social media is about the outbound and sexy Twitter and Facebook applications as well as inbound community applications.  Analyzing customer input and data collection is still in its infancy for Sage but Bergera and Ritter tell me they are beginning to see a difference in product uptake that they attribute to social media.

Good for them, I say.  It’s nice to see a vendor drinking some of the Kool-Aid we’ve been mixing up.  But they haven’t stopped with basic social media blocking and tackling.  One of the more interesting things I discovered is that Sage has produced about 16 short product videos that it deploys on YouTube.

I am a big believer in using this kind of video as a way to develop thought leadership and leverage social media.  There’s nothing social per se about a video but once it has a url on YouTube it is likely that it can become viral through social media and this is what Sage executives tell me is going on.

It is also good to see Sage keeping to its 2010 strategy to bring its diverse CRM products into tighter alignment.  So far, the big deliverable has been the ACT! 2010 version introduced in September.  ACT! has made great strides in the last few years moving up market from simple contact management and adding low end SFA functionality and then some.  The addition of e-marketing, for example, has enabled sales people to better generate leads than prior generations of the products.

I am not an ERP expert and a great deal of any Sage conference is focused on accounting and finance.  Having grown by acquisition, the company has highly specialized ERP solutions for construction, real estate and other sectors that I don’t know much about.

Sage is a big organization with 14,500 employees, 27,000 partners and $2.55 billion in revenues generated by 5.8 million customers around the world.  It would be nice to see the company step up more vigorously to embrace SaaS in the front office as a long-range goal even if they don’t plan to make any partners or customers convert over night.  The competition form Microsoft, NetSuite and now Salesforce make it necessary.

The current approach, at least by the back office group, is to stick to their guns, vowing to be an on-premise company leveraging the “software plus services” mantra, which is phony.  It serves no one very well and a more positive message to partners and customers, IMHO, would be to acknowledge that SaaS is an important direction and vow to take customers and partners there when the time comes.  That positive message doesn’t commit anyone to anything immediately but it begins the thinking process for what will be inevitable at some point.

Leveraging Web services is a good place to start but at some point the Web will be leveraging the premise-based applications.

Under normal conditions I find Virgin Airways to be a pretty sharp group.  They offer an appealing rendition of a commonplace service polished up to make the commodity appealing once again.

Air travel has been beaten down from its once lofty status into something barely recognizable by anyone old enough to recall the golden age that Spielberg and DiCaprio conjured up in “Catch Me If You Can”.  Back then air travel was glamorous, relatively expensive and considered a real luxury.

Richard Branson brought some of that feeling back when he launched domestic service with Virgin America.  To show you how much we’ve lost in the airborne sardine cans operated by United, American, Delta and others, all Virgin had to do was show up with uncrowded departure lounges and room for kneecaps and I for one swooned (I am especially partial to my knee caps).  Food on demand from the little console in front of me is nice but I have this lingering memory of Air France…never mind, I digress.

In any event, this makes it all the more difficult to report on a rare bone-headedness by Virgin.  I got an email today inviting me to fly with them before January 15^th and to receive free WiFi service but the offer left me unimpressed.  I like free WiFi but have only used it once since I just started flying with Branson’s company.  That flight took me from San Francisco to Boston and for the price of $12.95 I was able to post three blogs and pronounced myself both productive and satisfied.  No more though.

According to today’s email, Virgin Air sells WiFi access (the regular price) based on the duration of the flight.  The longer you fly the more it costs.  This is interesting on so many levels.  First off, I can buy a flight from Boston to San Francisco or to many other places for about the same money.  The cost seems more related to the number of times the wheels get pulled into the belly of the plane than anything related to distance.  Why is WiFi priced in tiers?

Ok, I know you’re probably saying you know of a great rate from Boston to Detroit or something so I won’t perseverate.  Distance isn’t my main point anyhow.  Take a look at the Virgin fee schedule direct from their web site:

$5.95 for flights less than 1.5 hours and redeyes

$9.95 for flights between 1.5 hours to 3 hours

$12.95 for flights 3 hours or more

The WiFi charge is based on how long you are in the air – and how likely you are to be awake — not some daily or per flight rate.  What I find most irritating about this is that few of us hop on a plane with a fully charged laptop battery and older batteries are less likely to hold a charge for three hours long.  I know there are wonderful new mini-laptops that have nine-hour battery life but the majority of flying laptops don’t.  The price exceeds the probable utility of the service on long flights so it is as if the whole pricing structure changes while you are using the service.  I might be able to use my computer for between two and three hours – on a three-hour flight that will cost me ten bucks on a longer flight it will cost thirteen.  Say what?

So we have a price curve that looks like it rises rather than falls.  Sure they’re charging less for redeyes based on the assumption we’ll sleep but they’re making up for it on the coast-to-coast flights.  Why?  I know what it costs to buy a router and I’d say all the routers in the Branson fleet have been fully paid for already.

As I write this, I am in a hotel room because I am traveling on business.  The hotel makes money charging me $9.95 for the whole day and some hotels have already discounted to nada just to get my head on a pillow.  Could we possibly agree that $9.95 is a fair price for any flight, any time and that $12.95 is just a little bit piggy?