Putting Experience Back into Customer Experience

Gavin Heaton

Founder
Disruptors Co

Gavin is the Founder of Disruptors Co, one of Australia’s leading independent strategy and innovation companies. Gavin advises firms on strategy, marketing, product development and innovation. He is also a member of the Orbits program, the influencer network of award winning analyst and advisory firm, Constellation Research. Gavin advises boards and leadership on innovation strategy, marketing, data-driven product development and corporate venturing. Gavin is on the board of Vibewire, a youth-led social enterprise based in Sydney, Australia and on the Technology Advisory Group for Good2Give – the workplace giving platform. ...

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Yesterday I wrote about the importance of reading mean tweets. It’s a post about the rough and tumble nature of online conversation and what can happen when you step out into the gaze (and full throttle voice) of the social web. And then today, almost on cue, comes what BuzzFeed calls the most epic brand meltdown on Facebook ever.

It began with an appearance on Gordon Ramsey’s reality TV show, Kitchen Nightmares. As you can see from the footage from the show, the episode did not play well for the owners of Amy’s Baking Company Bakery Boutique & Bistro in Scottsdale, Arizona.

No doubt, BuzzFeed did a great job of amplifying an already hot story. But a story can only take you so far. It needs to be stoked. Fed. It needs to be cultivated, fanned and coaxed to become a raging fire.

And that’s exactly what is continuing to happen.

With each comment on Reddit, Yelp or even BuzzFeed, for every tweet and mention on Facebook, owners Samy and Amy step into the breach to fan the flames of this conversation. They continue to take brand experience to a new level with each and every comment or tweet. Take a look at some of the Facebook comments and conversations captured on the BuzzFeed page by way of example.

I am always fascinated at the way that people behave under pressure. Some deal with scrutiny gracefully. But not all of us are able or willing to. And I admit, I was drawn to this unfolding drama … to the flaming tentacles that lashed at every passing message. And then suddenly, the kraken appeared and I became part of the story. A small moment where the story was not part of someone else’s drama, but part of my own.

And I must admit I was a little flattered. To be singled out here, on the other side of the planet, for my limited cameo appearance. But all jokes aside, there are salient lessons here – not just about social media, crisis communications and brand management.

What intrigues me is that certain point where the social media experience eclipsed the brand experience.

I can already imagine this restaurant becoming a Mecca for an inverted kind of customer experience where diners choose to expose themselves to the Samy and Amy experience unplugged. It has happened before and can happen again. But maintaining this level of performance comes with a cost. And there are precious few who can continue to operate at that level indefinitely.

Where will this go? Who knows. But it is a brand performance that few will forget in a hurry.

 

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Calling All Innovators in Disruptive Technology - SuperNova Awards Application Now Open

The first awards to recognize pioneers, leaders, innovators who use technology to transform business

We at Constellation Research are pleased to kick off the third annual SuperNova Awards for innovators in disruptive technology. If you have completed a project that produced a disruption within your company or industry we want to hear your story!

The SuperNova Awards are the first and only independent technology awards to recognize leaders in innovation and disruptive technology. This annual search for innovators celebrates the leaders and teams who have overcome the odds to successfully apply emerging and disruptive technologies for their organizations.

This year we’re continuing the SuperNova Award tradition, and searching for the boldest, most transformative technology projects out there. If you or someone you know has what it takes to compete in the SuperNova Awards, fill out the application here: http://www.constellationr.com/content/supernova-awards-application

Learn more about last year's winners:

• Lynn Hemans, Director, Industry and Competitive Insights, Taco Bell
• Jason Williams, Community Manger, Ipswitch, Inc.
• Chris Salles, Director of Store Labor, Guitar Center
• Miguel Angel Lozano Martinez, Corporate Innovation, CEMEX
• Leerom Segal, President & CEO, Klick Health
• Meagen Eisenberg, Vice President, Demand Generation, DocuSign
• Cari Cook, Executive Director, Delta Delta Delta
• Steve Haindl, Senior VP and CIO, ARI

About the SuperNova Awards

All entries are evaluated by our all star cast of judges which is comprised of the top enterprise technology journalists and thought leaders. Compelling applications stand to gain additional exposure as the judges may write case studies and articles about such applications.

Who can enter?

The awards are open to end users only. End users at vendor companies may enter the awards. We will disqualify any vendor applications.

Timeline

• May 1, 2013 application process begins. Submit applications here: http://www.constellationr.com/content/supernova-awards-application
• July 22, 2013 last day for submissions.
• August 15, 2013 finalists announced and invited to Connected Enterprise.
• September 1, 2013 voting opens to the public
• October 30, 2013 Winners announced, SuperNova Awards Gala Dinner at Connected Enterprise 

Judging Process

The judging process is comprised of two phases.

Phase I: Judging panel reviews applications to determine SuperNova Award finalists

Phase II: Voting opens to the public. A combination of the public and judges votes will determine the winners of the SuperNova Awards. Judges votes are weighted at 75% of the total. 

Winners are announced at the SuperNova Awards Gala Dinner during Connected Enterprise.

Judges

A notable list of technology thought leaders, analysts, and journalists will judge the SuperNova Awards. See the full list of judges here: http://www.constellationr.com/content/supernova-award-judges

Categories

Award categories center around Constellation's business research themes. Award categories:

• Consumerization of IT & The New C-Suite
• Data to Decisions
• Digital Marketing Transformation
• Future of Work
• Matrix Commerce
• Next Generation Customer Experience
• Technology Optimization & Innovation 

Awards Ceremony

The SuperNova Award Winners will be announced live, on stage, at the SuperNova Awards Gala Dinner on October 30, 2013 on the first night of Constellation's Connected Enterprise.

Rewards

Finalists in each category will be awarded one complimentary ticket to Constellation's Connected Enterprise.

Winners in each category will win a one-year subscription to Constellation’s Research Library.

More information about the awards including FAQs here: http://www.constellationr.com/content/supernova-award-guidelines

 

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The Intersection of News and Social Conversation

Partner, Sensei Marketing
Partner, Sensei Marketing

Sales & marketing veteran with almost 30 years’ experience and now 1800 digital projects to his credit for clients including Morgan Stanley, AOL, Hyatt Gaming Management, Snyder's of Hanover, Hitachi, the Home Depot, Kraft Foods, Drees Homes, American Idol, and hundreds more, including leading agencies around the North America.     ...

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For news media, as with any industry, social media is a double-edged sword. It offers journalists tremendous opportunity to gather and disseminate information quickly; however, it can just as easily derail the flow of news with rumor and rhetoric. The Web, and the access it grants to the "people on the street," is a powerful resource for broadcast news providers such as CNN; however, it's also a disruptive force that requires vigilant management.

Is social media leading or following the news we report and consume?

Twitter, the ever-popular micro-blogging social network, is among the top sources for news organizations seeking to gather and share information; I turned to Lila King, CNN's Senior Director for Social News for some insights. After all, CNN was recently listed among the most engaged brands on Twitter according to a study conducted by InfiniGraph and Dr. Natalie Petouhoff, and sponsored by Nestivity, an aggregation platform for social conversations.

I reached out to Ms. King to better understand the role of social media in modern news delivery. Below is a transcript of the interview.

Fiorella: CNN seems to have created a niche among cable news programs as "the most socially connected." Was this a strategy designed and executed based on a master plan or did it evolve naturally based on audience engagement?

King: Well, part of me wishes I could tell you that it's all part of a well-articulated strategy set out years ago in a warm, wood-paneled room high on an executive floor. But we both know that'd be crazy-talk. I think a lot of our success on Twitter comes from starting early, from producers and enthusiasts all around the network digging in and learning how the new platform works, and then broadening that out over time to include CNN'ers of all stripes.

Fiorella: Many challenge that cable news stations such as CNN that broadcast news are not really engaging their audience. What is your response to that sentiment?

King: Broadcast news organizations are very good at one-way communication, and that's not really how the Internet works. We can always do better at cultivating conversation and interacting with our audiences. As professional journalists, our training and experience would tell us that the best thing we have to offer is a steady stream of pronouncements on the truth, which on a platform like Twitter translates to rat-a-tat-tat headlines and links back to stuff we have and know. And there is a place and a need for that, and we fill it and that's not something to beat ourselves up about.

But I also think the criticism ignores a higher-level order of engagement that comes when news organizations like CNN listen to and reflect the social conversation in their decision-making and storytelling every day. CNN launched iReport way back in 2006, the same year Twitter got started, with the central idea that the terms of the new digital world required us to learn how to listen and involve our audiences in what we do every day. You may not see it directly in streams of @ replies from @cnnbrk, but the social conversation is absolutely woven into the way CNN works every day.

Fiorella: How would you characterize CNN's engagement strategy on Twitter?

King: The guidance we give to journalists who run our Twitter accounts, both big and small, is dead simple: "Act like a human." In other words, when you are on Twitter or any other social network, be the expert, curious, interesting, responsible journalist you are and that humanity will shine through.

That mantra gets interpreted in different ways depending on the role and goals of the account. For our big flagship accounts (@cnnbrk and @cnn), whose primary responsibility is to share what we know and how, being human is about striking the right voice and tone. For show accounts, it's about listening and creating a framework for the audience to get involved. For individuals, it's about cultivating relationships and revealing who we are.

Fiorella: Many claim that news is no longer news but entertainment, especially when news channels engage on social channels such as Twitter. Do you see a difference between news and entertainment today and what impact does that have on your engagement strategy?

King: Look, news is and always has been a combination of what people are talking about and what news editors think needs to be talked about. You might call the former "entertainment," but I think that's overly simple. Social data tells us what we're into more instantly and clearly than we've ever been able to see it before, and as news editors we shouldn't be shy about using that data to help shape what we cover and how (and how much we tweet about it). The trick is balancing social chatter with news judgment and a good editor's sixth sense for a big story.

You know who's the all-time champion here? Jake Tapper. His Twitter stream is a crazy mix of scoops and sports scores and good reads from the competition, with the occasional picture of a lost dog (Twitter's version of service journalism?). And he plays a quip-y hashtag game with his show audience most days. But all told, his The Lead show on CNN is news with a capital N and there's no way around it.

Fiorella: Social media channels such as Twitter have become intertwined with how news is delivered. It helps spread the message but can also derail it just as quickly. What strategies or tactics are in place to ensure that the channel continues to add value to your audience?

King: Fact-checking and verification has never been more important as it is today, when social media means any random rumor can spread around the world in no time at all. At CNN, we consider it our responsibility to verify social media before we share it or use it on our platforms. Mostly it happens through the iReport team, who will often live-tweet the verified social media of a big event as it's developing.

Fiorella: Given the speed at which news travels, and the competition among media to be the first to report the news, how seriously does CNN take audience commentary via Twitter?

King: We listen to it, but we're not cowed by it. It's foolish not to listen to what people have to say about you, but it's just as foolish to think that's all there is.

Fiorella: How does CNN's team use Twitter as a source to identify (or verify) news and trends?

King: If you walk through the 5th floor newsroom at CNN's headquarters in Atlanta, you see a whole lot of Tweetdeck and other tools for monitoring Twitter. Journalists who are responsible for covering and following areas of the world essentially mainline Twitter on their beats, and use it as both a tip line and search tool for eyewitnesses and first pictures. The verification mostly happens outside of Twitter, using time-tested means like interviews and cross-checking with other facts. You know, reporting.

King's responses showcase the fact that the industry has embraced social media, but seem to be riding the trend currents instead of acting from a prepared communication blueprint. "From the onset, cable news revolutionized news distribution with their 24/7 format, and they continue to innovate with social media by finding new ways to connect with their audience," shares Henry Min, the founder and president of Nestivity. "I've seen a lot of on-air calls to actions to tweet or follow the news and/or on-air personalities. What I'd like to see is a move beyond the one-to-many communications model. What if news topics became a deeper on-going dialogue with the people and organizations we love to follow? News, thoughts and opinions would no longer be a fleeting moment in the social sphere, and viewers would have the opportunity to become active participants."


Add your thoughts to the conversation: Has social media benefited the way you view the delivery of cable news programs? Has it improved it? What's the future of cable news as we increasingly embrace Web-based communication technologies and platforms in our daily lives?

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Simon Says: No WebRTC Devices. But Life Has A Way

Alumni: Constellation Research
Constellation Research

Dr. Brent Kelly is a Vice President and Principal Analyst at Constellation Research and President of KelCor, Inc. He focuses on the unique intersection of unified communications, social business, cloud services, video and mobility.  Dr. Kelly provides strategy and counsel to key clients including Chief Information Officers, Chief Technology Officers, investment analysts, venture capitalists, technology policy executives, sell-side firms and technology buyers. Prior to joining Constellation, Dr. Kelly served for 10 years as a partner at Wainhouse Research where he was the primary author of most of the firm’s unified communications reports and forecasts. Dr. Kelly is a regular presenter at Enterprise Connect (formerly VoiceCon), the communications industry trade show where his well…...

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While attending the 2013 Aastra analyst event in Dallas in early, May I had the good fortune to sit next to Simon Beebe, Vice President of Product Management at Aastra. Among Simon’s responsibilities are all of the communications endpoints Aastra makes, including Aastra’s line of SIP phones and BluStar video devices. Aastra is a significant player in the communications endpoint market, shipping millions of SIP-based telephony handsets to carriers and service providers every year in addition to bundling them with Aastra’s own PBX sales. Two thirds of Aastra’s handsets are sold for use in third-party communications systems.

So, it was with interest that I approached Simon on the idea of a WebRTC-based endpoint device. With his knowledge of endpoint design and manufacturing, I wanted to get a sense as to whether he saw any merit in the idea of a future in which some enterprising person or group creates a dedicated WebRTC device.

Clearly, WebRTC is in its early, and some would say “heady”, days. Simon really saw no drivers for creating a WebRTC-based standalone endpoint that could sit on the desktop. The discussion centered around the bill of materials (BOM) required for such a device and the reality that like any communications device, there would be some real manufacturing costs associated with it. In his mind, Simon could see no real need or advantage for a WebRTC-based dedicated device.

This discussion caused me to reflect back on the early days of SIP. In those days, few would have imagined that SIP-based IP device demand would surge in the market, and that SIP phones would ultimately displace analog and digital devices as the endpoints of choice in the enterprise.

In the 1993 movie classic, Jurassic Park, Dr. Ian Malcolm’s character, played by actor Jeff Goldblum, makes a very insightful statement, “Life finds a way.”

If we apply this phrase toward innovation and disruption in the technology world, while not all ideas will survive and thrive, some do, and they change how we live and work. WebRTC has the potential to be a very disruptive force in how we work and engage with one another. Furthermore, with WebRTC released out “into the “wild”, so to speak, anyone on the planet can now begin to innovate and evolve how we communicate using WebRTC as a basic building block. The barriers to entry are almost null.

If we now return to the idea of a WebRTC-based communications device and applying the phrase “life has a way”, I would not be surprised to see some innovating people and groups of people develop purpose-built WebRTC endpoints. In the enterprise and home office space such a device has utility for three key capabilities:

1. It can be always on (as opposed to a PC or tablet, which is sometimes turned off). Thus, it can always be ready to make and receive communications events.
2. It can have a great speakerphone, which is a capability that many find useful.
3. It can be used to connect with 911 or other emergency personnel at any time without the need to turn on or boot a communications device.

While I agree with Simon that there will be some materials and labor costs to make a WebRTC-based device, I think enterprising individuals will “find a way” to one day bring such devices to life. For a possible precursor to such a device, just look at Google’s Chrome Book – a device dedicated to Web browsing. Both Google and Mozilla have developed operating systems – Chrome OS and Firefox OS respectively – to work exclusively with Web applications. Given that WebRTC is based on browser technology, it seems like a small evolutionary step to make a purpose-built communications device to enable WebRTC-based communications and engagement.

Join Brent Kelly for the webinar: Ten Things CIOs NEED to Know About WebRTC
Date/Time: May 23, 2013 8:30a.m. PT/11:30am ET
Register: https://www3.gotomeeting.com/register/895954862

Related Research

• Ten Things CIOs Should Know About WebRTC

 

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A Minute is a Long Time–On the Internet

Gavin Heaton

Founder
Disruptors Co

Gavin is the Founder of Disruptors Co, one of Australia’s leading independent strategy and innovation companies. Gavin advises firms on strategy, marketing, product development and innovation. He is also a member of the Orbits program, the influencer network of award winning analyst and advisory firm, Constellation Research. Gavin advises boards and leadership on innovation strategy, marketing, data-driven product development and corporate venturing. Gavin is on the board of Vibewire, a youth-led social enterprise based in Sydney, Australia and on the Technology Advisory Group for Good2Give – the workplace giving platform. ...

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They say that a week is a long time in politics.

That was certainly the case when there was a “daily” news cycle. Any announcements or revelations needed to be revealed in time for stories to be written, edited, photographs to be prepared, processed and newspapers to be printed. Breaking news was the domain of the more instantaneous broadcasters like radio and TV. And even then, only the most explosive news items would break programming.

But the web changed all that.

It has taken two decades at least, but the internet has now thoroughly transformed the way that we source, gather, verify and consume news. There has been a breakdown between those that produce the news, those who are the subject of the “news” and those who consume it. And the structures which once provided certainty, built trust and way points for navigation in a chaotic and busy world have, in the process of this disruption, been swept away.

These structures have been replaced by data.

Data about data.

In a way, it was ever thus.

And the new arbiters of this data – our navigation beacons are themselves built of data. Google. Facebook. Twitter. LinkedIn. Pandora and Amazon. They sound like the names of ancient gods straddling the primordial chaos – but they are massive enterprises designed not to serve, but to create value. Revenue. Share holder returns.

So think about what happens in an internet minute (see the infographic from Intel). Every minute of video. Every byte of uploaded photo data. And every tweet costs someone somewhere something. The question for you today is what does it cost YOU?

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Your Manifesto for Success

Gavin Heaton

Founder
Disruptors Co

Gavin is the Founder of Disruptors Co, one of Australia’s leading independent strategy and innovation companies. Gavin advises firms on strategy, marketing, product development and innovation. He is also a member of the Orbits program, the influencer network of award winning analyst and advisory firm, Constellation Research. Gavin advises boards and leadership on innovation strategy, marketing, data-driven product development and corporate venturing. Gavin is on the board of Vibewire, a youth-led social enterprise based in Sydney, Australia and on the Technology Advisory Group for Good2Give – the workplace giving platform. ...

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It’s a cliché to say that the only constant in life is change. And yet, like all clichés, it reveals a deep truth that we all must grapple with. Business owners and entrepreneurs are well aware of the underlying truth of this cliché – yet are often the most unprepared for the disruption that comes with change.

When the events of life and business overwhelm – when the technology becomes challenging and the customers too demanding – having a document that sets out your business and personal beliefs can provide you with a vital anchor. Even better – it can help you make decisions in the most pressured of situations. It’s called a “manifesto for success” and you should write it today.

But what should be “in” your manifesto? One of the best that I have read is the Incomplete Manifesto for Growth by designer Bruce Mau. And in Bruce’s spirit, I would encourage you to imitate – drift – and begin anywhere. But make sure you DO. Here is Bruce’s manifesto:

Allow events to change you. You have to be willing to grow. Growth is different from something that happens to you. You produce it. You live it. The prerequisites for growth: the openness to experience events and the willingness to be changed by them.

Forget about good. Good is a known quantity. Good is what we all agree on. Growth is not necessarily good. Growth is an exploration of unlit recesses that may or may not yield to our research. As long as you stick to good you’ll never have real growth.

Process is more important than outcome. When the outcome drives the process we will only ever go to where we’ve already been. If process drives outcome we may not know where we’re going, but we will know we want to be there.

Love your experiments (as you would an ugly child). Joy is the engine of growth. Exploit the liberty in casting your work as beautiful experiments, iterations, attempts, trials, and errors. Take the long view and allow yourself the fun of failure every day.

Go deep. The deeper you go the more likely you will discover something of value.

Capture accidents. The wrong answer is the right answer in search of a different question. Collect wrong answers as part of the process. Ask different questions.

Study. A studio is a place of study. Use the necessity of production as an excuse to study. Everyone will benefit.

Drift. Allow yourself to wander aimlessly. Explore adjacencies. Lack judgment. Postpone criticism.

Begin anywhere. John Cage tells us that not knowing where to begin is a common form of paralysis. His advice: begin anywhere.

Everyone is a leader. Growth happens. Whenever it does, allow it to emerge. Learn to follow when it makes sense. Let anyone lead.

Harvest ideas. Edit applications. Ideas need a dynamic, fluid, generous environment to sustain life. Applications, on the other hand, benefit from critical rigor. Produce a high ratio of ideas to applications.

Keep moving. The market and its operations have a tendency to reinforce success. Resist it. Allow failure and migration to be part of your practice.

Slow down. Desynchronize from standard time frames and surprising opportunities may present themselves.

Don’t be cool. Cool is conservative fear dressed in black. Free yourself from limits of this sort.

Ask stupid questions. Growth is fueled by desire and innocence. Assess the answer, not the question. Imagine learning throughout your life at the rate of an infant.

Collaborate. The space between people working together is filled with conflict, friction, strife, exhilaration, delight, and vast creative potential.

____________________. Intentionally left blank. Allow space for the ideas you haven’t had yet, and for the ideas of others.

Stay up late. Strange things happen when you’ve gone too far, been up too long, worked too hard, and you’re separated from the rest of the world.

Work the metaphor. Every object has the capacity to stand for something other than what is apparent. Work on what it stands for.

Be careful to take risks. Time is genetic. Today is the child of yesterday and the parent of tomorrow. The work you produce today will create your future.

Repeat yourself. If you like it, do it again. If you don’t like it, do it again.

Make your own tools. Hybridize your tools in order to build unique things. Even simple tools that are your own can yield entirely new avenues of exploration. Remember, tools amplify our capacities, so even a small tool can make a big difference.

Stand on someone’s shoulders. You can travel farther carried on the accomplishments of those who came before you. And the view is so much better.

Avoid software. The problem with software is that everyone has it.

Don’t clean your desk. You might find something in the morning that you can’t see tonight.

Don’t enter awards competitions. Just don’t. It’s not good for you.

Read only left-hand pages. Marshall McLuhan did this. By decreasing the amount of information, we leave room for what he called our “noodle.”

Make new words. Expand the lexicon. The new conditions demand a new way of thinking. The thinking demands new forms of expression. The expression generates new conditions.

Think with your mind. Forget technology. Creativity is not device-dependent.

Organization = Liberty. Real innovation in design, or any other field, happens in context. That context is usually some form of cooperatively managed enterprise. Frank Gehry, for instance, is only able to realize Bilbao because his studio can deliver it on budget. The myth of a split between “creatives” and “suits” is what Leonard Cohen calls a ‘charming artifact of the past.’

Don’t borrow money. Once again, Frank Gehry’s advice. By maintaining financial control, we maintain creative control. It’s not exactly rocket science, but it’s surprising how hard it is to maintain this discipline, and how many have failed.

Listen carefully. Every collaborator who enters our orbit brings with him or her a world more strange and complex than any we could ever hope to imagine. By listening to the details and the subtlety of their needs, desires, or ambitions, we fold their world onto our own. Neither party will ever be the same.

Take field trips. The bandwidth of the world is greater than that of your TV set, or the Internet, or even a totally immersive, interactive, dynamically rendered, object-oriented, real-time, computer graphic–simulated environment.

Make mistakes faster. This isn’t my idea — I borrowed it. I think it belongs to Andy Grove.

Imitate. Don’t be shy about it. Try to get as close as you can. You’ll never get all the way, and the separation might be truly remarkable. We have only to look to Richard Hamilton and his version of Marcel Duchamp’s large glass to see how rich, discredited, and underused imitation is as a technique.

Scat. When you forget the words, do what Ella did: make up something else … but not words.

Break it, stretch it, bend it, crush it, crack it, fold it.

Explore the other edge. Great liberty exists when we avoid trying to run with the technological pack. We can’t find the leading edge because it’s trampled underfoot. Try using old-tech equipment made obsolete by an economic cycle but still rich with potential.

Coffee breaks, cab rides, green rooms. Real growth often happens outside of where we intend it to, in the interstitial spaces — what Dr. Seuss calls “the waiting place.” Hans Ulrich Obrist once organized a science and art conference with all of the infrastructure of a conference — the parties, chats, lunches, airport arrivals — but with no actual conference. Apparently it was hugely successful and spawned many ongoing collaborations.

Avoid fields. Jump fences. Disciplinary boundaries and regulatory regimes are attempts to control the wilding of creative life. They are often understandable efforts to order what are manifold, complex, evolutionary processes. Our job is to jump the fences and cross the fields.

Laugh. People visiting the studio often comment on how much we laugh. Since I’ve become aware of this, I use it as a barometer of how comfortably we are expressing ourselves.

Remember. Growth is only possible as a product of history. Without memory, innovation is merely novelty. History gives growth a direction. But a memory is never perfect. Every memory is a degraded or composite image of a previous moment or event. That’s what makes us aware of its quality as a past and not a present. It means that every memory is new, a partial construct different from its source, and, as such, a potential for growth itself.

Power to the people. Play can only happen when people feel they have control over their lives. We can’t be free agents if we’re not free.

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Monday's Musings: The Controversy Surrounding Gartner's CRM Market Share Analysis

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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The Gartner Market Share Analysis:CRM Software Report Raises Questions On Accuracy of Market Sizing Reports

The recent Gartner report “Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012” has generated some controversy among the enterprise software set.  The report and other reports such as these, are often used for bragging rights by vendors and for buyers to gauge vendor viability.

This specific report attempts to rank CRM software spending by vendor using total software revenue worldwide.  The good news – the numbers are directionally correct with Salesforce.com claiming the top mantle from SAP this year with $2.525 billion in CRM revenue (see Figure 1). The bad news – many question the accuracy of the actual revenues numbers as listed in the press release, especially for the Microsoft Dynamics CRM business.

As Scott Bekker at Redmond Magazine reported, “Gartner put Microsoft’s CRM revenue at $1.1 billion, up from $900 million in calendar-year 2011.  That’s a sizable bump. As of May 2012, Microsoft was only claiming that all of Dynamics, which includes Microsoft’s established ERP products as well as CRM, amounted to $1 billion in annual revenues.”

Mssr. Bekker makes a polite but astute point.  The 26% bump in CRM revenue is significant.  However, the total revenues are questionable.  In any modest observation, that kind of overall growth in the Microsoft Dynamics unit would have Microsoft CEO, Steve Ballmer, shouting from the tops of Mount Ranier and probably have Kirill Tatarinov next in line to be Microsoft’s CEO.

Figure 1. Gartner’s Recent CRM Software Spending by Vendor, Total Software Revenue Worldwide, 2012 (Millions of Dollars)

Not to violate any copyright laws, despite fair use laws, here’s a link to the full table found in their press release. A recreated table below shows the rankings.

Bottom line it shows Microsoft in 4th place for CRM with over 1.1B in revenue.

Organization

2012 revenues

2012 marketshare (%)

2011 revenues

2011-2012% growth

salesforce.com	2,525.6	14.0	2,004.6	26.0
SAP	2,327.1	12.9	2,325.1	0.1
Oracle	2,015.2	11.1	1,870.0	7.8

Microsoft

1,135.3

6.3

900.9

26.0

The Market Sizing Game For Vendors And Legacy Analyst Firms Flawed With Faulty Methodology

In reality, the market sizing game for enterprise software is both an art with some science.  Having played this role as a vendor in an Analyst Relations capacity in a past life, one knows that executives can not disclose such financial information directly to a research or market sizing firm.  The research analysts must play a guessing game with the software executive and ask 100 questions to zero in on a number.  Unlike hardware, where individual counts are more obvious, software revenue sizing requires analysts to dig deep into financial statements and any conversation where growth rates have been discussed.  Revenues are hidden in bundling, suite sales,  discounting schemes, channel revenue deals, OEM arrangements, and inter-company transfers.  To complicate matters, SaaS revenue calculations can differ from how on-premises revenues are calculated.  Analysts must also determine the truthfulness of vendors who are trying to indirectly guide analysts to the “right” numbers.  In short, this is hard work.

As assumptions are built on previous numbers, one false guess in a previous year, cascades and geometrically inflates or deflates a set of future numbers.  In the case of these CRM numbers, one may speculate that past executives may have provided a higher number than actually generated, resulting in the current alleged inaccuracies.  Another speculation may come from previous and current analysts who may only focus on one area of the business and not have the total picture on the Microsoft Dynamics overall business.  There are many points of inaccuracy that can occur with software revenue market sizing and every legacy analyst and market sizing firm works hard to avoid these situations.  For market analysts, dissecting revenue from vendors such as SAP and Oracle is often difficult as these numbers and break outs are masked with multiple acquisitions and product lines.

To be clear, the SAP and Oracle numbers also seem inflated.   These numbers have been inflated over decades.  Given that these vendors also have many other lines of revenue aside from CRM, it’s hard to gauge the accuracy of their numbers without some digging.  Now one would assume a market sizing firm should be doing this right?

The Microsoft Dynamics CRM Revenues Do Not Meet The General Sniff Test

Using publicly available data, one could build out a model based on the original financial model for the Microsoft Dynamics business starting with the two major acquisitions that created the foundation of the Microsoft Business Solutions division.  Here are some assumptions for the sniff test:

• Great Plains Software drove $225M of revenue in 2002. Microsoft acquired Great Plains Software in April 2001 for under $1B. At the time, Great Plains Software revenues for fiscal year 2000 ending in May was $195M. The  2001 revenues were estimated to be $225M by most reputable analysts.  Microsoft paid five times earnings for the acquisition.
• Navision brought in $210M of revenue in 2002. Microsoft acquired Navision in 2002 for $1.3B. At the time the 2002 revenues were projected to be $210M.  Microsoft paid a bit over six times earnings for this acquisition for the Axapta and Navision products.
• Enterprise software vendors have grown in the double digits over the past decade. The enterprise software market has achieved an average growth rate per annum around 10% over the past decade.  Even at 6%  growth over 12 years, the revenues of the acquisitions would double.
• Conservative estimates assume Microsoft at least doubled its ERP business in a decade. Microsoft’s products at a minimum have doubled their revenue since acquisition.  The combined revenues could conservatively range from $750M to $950M for just ERP software alone.
• Most of Microsoft’s acquisitions drive ERP revenue not CRM. Over 90% of the Great Plains and Navision revenues were in ERP so little exists in CRM revenue overlap.
• Constellation keeps close tabs on Microsoft Dynamics revenues. Constellation Research estimates that the Microsoft Dynamics overall revenue sits between $1.47B and 1.56B for 2012. This data comes from following the division as an analyst and market watcher since 2001.

Has the ERP Business Shrunk or Has the CRM Business Grown Gangbusters?

While the above numbers are general assumptions, a few quick questions emerge:

• Is Microsoft Dynamics overall revenue just under $2B? Even if Microsoft’s Dynamics ERP acquisitions performed in the single digit growth range, $750M in ERP revenue added to $1.135.2B in CRM revenue would have the Microsoft Dynamics business near $2B.  Did Microsoft Dynamics really generate under $2B in overall revenue for 2012?  If this was true, I doubt the Microsoft Business Solutions team would want to hide this major accomplishment.
• Did Microsoft Dynamics ERP perform so poorly? If Microsoft’s Dynamics CRM business really generated $1.135 B, then did the ERP business significantly fall behind its competitors?  If this is true, then the ERP business has performed more poorly than one had thought.  Based on publicly available information, this does not seem accurate.
• Did someone inflate numbers in the past or is Gartner not doing its job? Maybe numbers inflated in the past have caught up with current numbers.  The 22% growth rate sounds reasonable, yet the denominator may be inaccurate from previous years forecasts.  Did someone miss this at Gartner in the past?

What’s clear is that Microsoft Dynamics has not achieved $2B in revenue in 2012.  As one can tell, the numbers in general do not meet any reasonable sniff test.  Either the CRM numbers are off or the ERP numbers are off.  Microsoft Dynamics may have achieved $1.5 to $1.6B in 2012.   While the accuracy of these assumptions could be off, one could say these at least meet the sniff test.  A team putting together CRM numbers would most likely compare with the ERP numbers and the total revenues in order to complete a cross check.

The Bottom Line: Transparency In the Industry Would Simplify Everyone’s LIfe

Unfortunately, what we have in the Microsoft Dynamics CRM revenue number is a scenario where the lack of revenue split transparency has create a windfall of revenue for research analyst firms covering market sizing.  Every vendor on the list: Salesforce.com, SAP, Oracle, Microsoft, and IBM must play this Kabuki theater once a year.

In fact, the time and money spent by vendors and analysts to play this game, could be better spent building better software, offering more value to clients, and focusing on more strategic analyst interactions.  Whether the numbers here are accurate or not, this begs the question, why play the game? Why not just disclose the actual numbers and save everyone the trouble?  Remove this non value added part of the research industry, once and for all.

Your POV.

As a buyer, do you trust any of these numbers?  As a competitor, do you know these numbers better than we do?  If so, let us know what assumptions are off, what’s right.  Are you tired of playing the hot or cold game with market sizing firms with numbers you can’t disclose?    Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Related resources and links

2010 Calendar Year Q2

2010 Calendar Year Q1

Software Insider Index™ (SII): 2009 SII Top 35 Enterprise Business Apps Vendors™

2009 Calendar Year Q4

2009 Calendar Year Q3

2009 Calendar Year Q2

2009 Calendar Year Q1

Software Insider Index™ (SII): 2008Software Insider Index^TM (SII): SII Top 30 Enterprise Business Apps Vendors^TM & SII Top SaaS Business Apps Vendors^TM SII Top 30 Enterprise Business Apps Vendors™

2008 Calendar Year Q4

2008 Calendar Year Q3

2008 Calendar Year Q2

2008 Calendar Year Q1

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Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

Copyright © 2001 -2013 R Wang and Insider Associates, LLC All rights reserved.
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Will the Affordability Care Act be a Catalyst for HCM Analytics?

Alumni: Constellation Research
Constellation Research

Yvette Cameron was VP and Principal Analyst at Constellation Research, Inc. focusing on next generation HCM processes and technologies, and is founder of NextGen Insights. Yvette is now a Constellation Research alumna. , Title: Big Ideas CRM concepts will transform HCM processes for new levels of Employee Engagement and Business Results Companies are investing heavily to understand and optimize their customer relationships, but less so with their employee relationships. We must apply the tenets of CRM to HCM processes to understand, engage and align the workforce, because customer success begins with employee success. From “Command and Control” to “Engage and Inspire” Traditional work practices and business structures are evolving at an unparalleled rate. New thinking and disruptive…...

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HR leaders on the fence about investing in an analytics platform may now have the  justification needed for moving forward, courtesy of the US Federal Government and its impending Patient Protection and Affordable Care Act (PPACA), which goes into effect on January 1, 2014.  With complex requirements and potentially significant financial consequences, the PPACA will require many employers to move beyond standard tracking and reporting platforms to more advanced, real-time decision support tools to proactively manage the many aspects of this complex legislation.

 

Fundamentally, the PPACA is about reducing the number of uninsured Americans  (numbered at more than 50 million in 2010) while attempting to address the affordability and quality of that healthcare coverage overall.  State-level health insurance exchanges (HIX) are being formed to make available the minimum requirements across benefit coverage and cost-sharing standards, while employers grapple with tradeoffs in health benefit plan designs and premium costs vs. the federal tax credits and subsidies available to low- and middle-income workers.

For employers, the requirements of the PPACA quickly get complicated with look-back and ongoing calculations of hours worked and future hours, benefits eligibility vs. enrollment, premiums to wages ratios, and evidentiary reporting to government agencies.  Non-compliance with this still-being-clarified legislation can lead  to significant penalties for employers, not to mention the many downstream impacts on employee relations and employer brand.

For some organizations, calculating and paying the penalty will be the quickest route to compliance while others will want to weigh various workforce modeling scenarios to determine their best approach (provide coverage as intended, reduce worker hours for a percentage of employees, etc.).  Leading payroll and workforce management platforms such as ADP, Ceridian and Kronos are actively enhancing their software to deliver the calculations and reporting required by the ACA, often including the ability to anticipate when benefits eligibility will be triggered based on future labor schedules.

Across the many mandates of the PPACA, (employer mandates, healthcare tax credits and individual mandates), behaviors at work will change that will affect the costs – both direct and hidden – of compliance choices.  Shifting workers to part-time will result in increased unemployment claims; additional part-time staff may be hired to fill the gaps of the reduced workforce; turnover may be adversely affected; workforce tax credit eligibility can be affected and additional training and ramp-up time needs to be factored in.  As they evaluate the direct costs of their compliance alternatives such as benefits premiums, labor expenses and penalties, employers must also take into account these and other indirect or hidden costs associated with their choices.

Getting to a clear understanding of the direct and indirect costs requires complex analysis and modeling, a prime use case for an analytics platform.

One of the players in this market is Equifax,  which recently augmented its Equifax Workforce Solutions division with the acquisition of analytics technology provider eThority in 2011.  Leveraging the eThority platform, Equifax is introducing a new solution called the “Affordable Care Act Impact Analysis and Management” tool to help employers model and monitor the impacts of PPACA on their business. The tool enables employers to see costs (including labor, benefit premiums and potential fines) at group or detail levels based on different modeling scenarios. It also highlights the associated costs resulting from anticipated new hires and increased unemployment claims that can offset savings from those initial scenarios, a level of analysis that many traditional payroll and workforce software providers are not offering.  Equifax can also leverage the data reported to them by thousands of employers across the country, representing tens of millions of workers, to report on labor and payroll trends across regions, industry and other segments, further augmenting the modeling scenario evaluations.  As desired, Equifax also provides additional consulting services including evaluation of new assumptions as well as overall program management and audit support.

The modeling platform is interactive, adapting to changes in law and assumptions. Delivered via subscription or available on premises, employers can access data beyond their own workforce data to make better, more informed choices with regard to how they will achieve compliance with PPACA mandates.

Investing in an analytics platform can bring more than just workforce insight and modeling capabilities: it can be a powerful tool in managing risk and compliance across the entire enterprise.  In the case of the Affordable Care Act, it may be the only tool that will effectively support employers in their daily need to monitor and manage the complexities of this legislation.  The requirements of PPACA actually begin before January 2014, with employers needing to make decisions and communicate benefit options, costs and coverage to employees during the Fall Open Enrollment schedule. Employers should be evaluating their options now, and the availability of new tools like the Equifax ACA Impact Analysis and Management solution are timely additions to the market.

Filed under: ADP, Analytics, Ceridian Dayforce, Equifax, GRC, Kronos Tagged: ACA, Affordable Care Act, analytics, Ceridian, constellation research, Employment, Equifax, Governance, GRC, HCM, Health insurance exchange, healthcare, HR, HR Tech, Human resources, Patient Protection and Affordable Care Act, PPACA, workforce analytics, workforce planning, Workforce Technologies, yvette cameron

 

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Constellation’s Connected Enterprise Kicks Off October 30 in San Francisco

Preliminary speaker list announced

You’re invited to join the Constellation Research team for Connected Enterprise this October 30 - November 1, 2013 at The Ritz Carlton, Half Moon Bay, CA. Connected Enterprise is Constellation’s annual innovation-focused executive summit featuring inspiring keynotes, in-depth market maker interviews, best practices customer panels, visionary industry futures, and executive level networking.  This year's theme celebrates "Moving Beyond The Art of the Possible"

Connected Enterprise Details (#CCE2013)

• When: October 30 - November 1 2013
• Where: The Ritz Carlton, Half Moon Bay, San Francisco Bay Area
• Who: Innovators, Thinkers, Catalysts. All innovation-minded executives welcome.
• What: "TED meets Aspen Ideas for the Enterprise". All-inclusive retreat. Think hard, play hard.

Our Third Year, and We’re More Excited Than Ever

Constellation’s Connected Enterprise brings together the brightest minds in the enterprise to discuss the present and future of innovation, technology, and society, and is the must-attend conference for innovators, and early adopters of technology.  In our third year, we continue the Connected Enterprise tradition, and have brought together a group of visionaries to deliver keynote addresses that will challenge attendees to ask new questions about leadership, technology adoption, and existing business models.

Headliners  - Connected Enterprise 2013 

Jane McGonigal, Chief Creative Officer, SuperBetter Labs

Jane is a world-renowned designer of alternate reality games (ARGs) — games designed to improve real lives and solve real problems.  She is Chief Creative Officer for SuperBetter Labs, and  she is the New York Times best-selling author of Reality is Broken: Why Games Make Us Better and How They Can Change the World.  As a TED 2010 speaker, her speech attracted over 1.7 million views, and she has keynoted the Game Developers Conference, SXSW and Google Zeitgeist Americas.

Chris Meyer, Founder, Monitor Talent

Chris is a leadership thought-leader who’s mission is to anticipate and shape the future of business, a goal he has pursued as entrepreneur, executive, consultant, author, and as the leader of Ernst & Young's Center for Business Innovation. Chris' fourth book, Standing on the Sun, was published by Harvard Business School Press in February 2012. The Financial Times called it "The antidote to pessimism of the post-crisis world." Chris' previous books include the BusinessWeek Best Seller Blur: The Speed of Change in the Connected Economy and Future Wealth— the book on which Monitor Talent is based.

View full speaker list here: http://connectedenterprise.ontrackevents.com/speakers.cfm

Check back soon--we’ll be frequently updating the speaker list with innovation thought-leaders.

Sponsorship Information:  Official Sponsors will be announced the first week of July.  There are limited spots for sponsors as this event is geared towards business and technology buyers.

Contact us at [email protected]

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Event Report: One Year Later, Ceridian Dayforce HCM Delivering on its Vision

Alumni: Constellation Research
Constellation Research

Yvette Cameron was VP and Principal Analyst at Constellation Research, Inc. focusing on next generation HCM processes and technologies, and is founder of NextGen Insights. Yvette is now a Constellation Research alumna. , Title: Big Ideas CRM concepts will transform HCM processes for new levels of Employee Engagement and Business Results Companies are investing heavily to understand and optimize their customer relationships, but less so with their employee relationships. We must apply the tenets of CRM to HCM processes to understand, engage and align the workforce, because customer success begins with employee success. From “Command and Control” to “Engage and Inspire” Traditional work practices and business structures are evolving at an unparalleled rate. New thinking and disruptive…...

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Last month I attended Ceridian’s annual analyst forum, where members of the executive team shared their vision and strategies for the future. Ceridian HCM CEO David Ossip put an interesting spin on the role of HR in the future when he stated,

“The value of HR isn’t in becoming a strategic partner. The goal of HR should be to help the company create the most effective workforce.”

This sentiment reflects the pragmatism of a team committed to innovation with tangible value; a focus on the processes, tools and information needed to create and maximize the value of the workforce.  Below are the highlights I took away from this most recent analyst briefing.

• Ceridian continues its pivot from an HRO service provider to SaaS technology provider. With the advent of cloud services and the ability to centralize the skills and knowledge needed for optimized compliance and support, it only makes sense that businesses would look to the cloud for specialized support of processes such as Payroll and global HR. With Dayforce HCM, Ceridian is helping its customers move from former “lift and shift’” HR Outsourcing (HRO) deals to the advanced benefits of software in the cloud coupled with centralized specialization and compliance support. The platform itself includes capabilities for messaging, analytics, workforce activities, mobile access via native iOS and Android support, and other foundational items necessary for comprehensive HCM support, with collaboration advances underway as described further below.
   
• Accelerating customer momentum validates the data-fueled platform. Available in the US and Canada, momentum is strong, with over 700 clients live on the Dayforce platform (of more than 1000 total clients), with roughly 30-50 clients going live each month. Approximately 15% of the live Dayforce HCM clients are those that have migrated from core Ceridian applications. One of the key benefits touted by the Dayforce clients is their ability to view and act on data BEFORE the time is worked, before payroll is processed, tackling potential problems before they happen. Other benefits include the ability to see fully burdened costs before the time is actually worked, and soon, to manage the rolling eligibility requirements of the PPACA (Patient Protection and Affordable Care Act), all through a real-time engine designed to support compliance and information needs proactively, not reactively. Batch processes or after-the-fact alerts will eventually become the purview of “legacy” vendors unable to keep pace with the demands for instant data analysis and decision support.
   
• The unified, end-to-end HCM platform is emerging, but still a year or more away. Today the Dayforce HCM platform delivers core HR, Payroll, Workforce Management (Time & Labor, Absence, Leave Management) and Benefits functionality, targeted primarily to North American operations. Expanded global HR support is on the roadmap, but for global payroll, clients can immediately tap into payroll services across almost 60 countries via Ceridian’s international payroll solutions (IPS). Through this managed services offering, consolidated payroll results across global and local payroll providers can be fed back from the IPS aggregator to Dayforce payroll for global reporting. Support for more strategic talent management processes will begin with the launch of Dayforce Recruiting, targeted for Fall 2013. Ceridian today has a standalone recruiting offering, but that solution will be sunsetted as the next generation recruiting offering from Dayforce becomes available. The initial Dayforce recruiting solution will support managing the candidate’s status and progression through the recruiting lifecycle. (However, I also expect to see some innovations in scheduling and onboarding from this development team that demonstrates at every opportunity the advantages of a unified platform and real-time rules processing.) In 2012, the analyst community was advised that advanced compensation and performance management was slated for 2013, but recruiting has now taken top priority for the Dayforce HCM team. As a result, these and other investments in strategic talent management will be pushed out to 2014. There are no current plans for delivery of a learning offering (LMS) and we can expect partner solutions to fill this gap for the next few years.
   
• The experiential platform takes center stage over transactional systems. The Dayforce HCM team introduced Engage, its new social platform due later this year that will become the new front-end User Interface (UI) for its applications. Ceridian clearly understands that social enablement is more than just conversations, it’s about getting real work done. In fact, collaboration is viewed as such a fundamental component to today’s workforce processes that Engage will be included in all Dayforce HCM offerings at no additional cost. Clients not yet ready for such collaboration in their core workforce can simply turn it off, accessing it in the future as desired. Continued investment will be needed before it achieves competitor status in this space, as the current focus is largely engagement via activity streams, but the initial offering of Engage will be a good first step toward both augmenting and transforming traditional work processes through social collaboration. While I agree with David Ossip that the “mobile” hype is giving way to broader considerations of “accessibility,” I do not agree that “social” is giving way to “activity streams.” The term “social” often has a conversational, non-work-related connotation; however the idea of purposeful social – social collaboration that is contextual and event-support driven – is an entirely intuitive and evolutionary approach to getting work done.  Activity stream integration is important (and the initial Engage offering will include single sign-on (SSO) to facilitate this with Salesforce Chatter and Microsoft Yammer), but collaboration should also happen at the transaction itself; at the point of need.  It's  too early to know the depth of social support planned by the Dayforce team or how it will integrate more deeply with broader social enterprise networking tools.
   
• Contextual content will increase in prominence. This is a continuing and interesting play for Ceridian: their EAP (employee assistance program) services via LifeWorks, acquired by Ceridian 1998. Usually we think about EAP services as a pool of resources available for employees to call when needed, or as a repository of research and information available through onsite and internet access. This market is transitioning, however, from SaaS-based solutions to a focus on more contextual content delivered to the end users (a push rather than a pull model). Ceridian has a vision to evolve its LifeWorks offering by embedding EAP content into talent-related events in the Dayforce platform, ensuring context-relevant information at the time of need. Such a move will begin to move Ceridian into the knowledge enablement space of vendors like Infor Enwisen and Peoplefluent (formerly Authoria), but they’ll have a network of EAP counselors driving much of that content development behind their offering. Ceridian’s social platform and context engine requires additional development to achieve its full potential. Regardless, it is good to hear that team thinking about enabling transactions with contextual content as they build out the future Dayforce HCM talent management offerings.
   
• Continuing core investments demonstrate customer commitment. Mindful of not disenfranchising its core customer base, Ceridian continues to invest in its current applications and other service lines including international payroll, pay cards, tax filing and others. It should also be noted that Ceridian not requiring a forced migration to the Dayforce platform, allowing clients to move as appropriate for their needs.

The Bottom Line

As I indicated in my write-up last year, Dayforce HCM is positioned to perform well in a market ready for process transformation.  It has delivered a large amount of functionality in the single year since the acquisition, and net-new customer uptake validates its market readiness. Strong leadership, an unwavering commitment to customer success for new and install base clients, and innovative approaches to traditional processes make Ceridian a viable and disruptive force to watch in the HCM market.

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