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Customer relationship management software meets Web 2.0.
Cesar Bacani, CFO Asia
July 9, 2008
Sensing that the "software-as- a-service" pitch is losing its zing, customer relationship management (CRM) vendors have discovered a new angle: Web 2.0.
The major CRM vendors, including Oracle, SAP, Salesforce.com, and Microsoft, are adding on a host of features designed to allow sales and marketing people to work together in new ways and to discover better ways to sell to Internet users. In May, Oracle embarked on an aggressive push in Asia with the launch of Oracle Siebel CRM On Demand Release 15. The software focuses on social networking and other Web 2.0 features, which figure prominently in the industry's latest buzzword, "social CRM."
Not to be outdone, Salesforce.com is touting its own additions. "We were one of the pioneers of Web 2.0," says Doug Farber, vice president for operations, Asia Pacific. "Our Web 2.0 capabilities such as mash-ups and windowing have always been the key to our success." Salesforce has teamed up with Google and launched an enhancement it calls Salesforce for Google Apps.
It all sounds hopelessly techie, but behind the jargon lies a set of powerful tools, say analysts. The term "Web 2.0" has various definitions, but at heart it means using the unique features of the Internet to collaborate, interact socially, and aggregate information in new ways (think of social networking sites such as MySpace and Facebook), as opposed to the read-only characteristics of Web 1.0.
Blogs and Wikis
In theory, the new features allow CRM users to put their thoughts in diary entries and hold a running conversation with others within the CRM system (blogs), and create marketing documents that other CRM users can enrich with their own ideas and experiences (wikis). Users can subscribe to online news, podcasts, and other Internet resources (RSS), combine them (mash-ups), and publish them across the CRM network.
Web 2.0 tools also give marketers the information they need to manage relationships with online consumers, whose numbers are growing daily. William Band, a vice president and principal analyst at Forrester Research, argues that there's an opportunity for companies to spread their message to customers through blogs and social networks like MySpace and Facebook. For example, with RSS feeds CRM users can track what influential bloggers are saying about the company and its products. They can respond and air the company's side, and use the comments to fine-tune marketing campaigns. A datamining program can trawl the Internet for mentions of the company, providing aggregated feedback for marketing and sales drives.
Among the major CRM vendors, Band says Oracle and its Release 15 are in the vanguard of social CRM, at least for now. "I've talked to different vendors quite a bit lately and most are just starting to talk about it," he says. "Oracle CRM On Demand is the one application where the vendor is taking steps to add social networking capabilities to its offering."
Release 15 does have a new look. The front-end has been redesigned as colorful, content-rich web pages, with various windows for real-time news feeds, updates from social networking sites, and blogs, videos, and an internal instant messaging system. Simon Banks, general manager, CRM on Demand, Oracle Asia Pacific, says that the previous version, Release 14, could pull together information streams from various websites and layer them to create one integrated chart, for example, but users needed to customize these themselves. "What we've done with R-15 is prebuild applications on top of Web 2.0 standards and tools and technologies," he says.
Consider the pre-built Messaging Center. This allows users to exchange instant messages within the CRM system and attach sticky notes and other documents. "We know that unstructured information about customers or prospects typically doesn't get captured by a CRM system, staying instead in a sales person's head or getting written down somewhere and getting lost," says Banks. Users can attach the information to the file they keep about the particular company or customer, which may also be accessed by others within the CRM system.
The other pre-built windows allow users to stream real-time information into their home pages, including stock quotes, updates from social networking sites like LinkedIn, and videos. The streamed data can be copied and appended to customer profiles, disseminated to other salespeople as needed, and stored in a customer data warehouse. "Customers have a comprehensive analytical environment," says Banks. "It's not just snapshot information — it's trend information, it's movement and opportunities over time that you can only get with data-warehouse type capabilities."
Google in the Mix
Both Salesforce.com and SAP, however, say that all these Web 2.0 features, and more, are already available in their respective CRM products. They just don't make too much noise about them. "We now have an opportunity with Google Apps, so you can go into Salesforce.com and you'll have access to all the Google Apps capabilities, whether email, chat, spreadsheets, Word documents, blogs, networking sites, and all those kinds of things that are standard on the consumer Web," says Salesforce.com's Farber. The enhancement, dubbed Salesforce for Google Apps, was made available to Salesforce.com subscribers in April at no additional cost.
But unlike the Oracle Siebel CRM product, which is automatically upgraded to the latest release for all subscribers, Salesforce.com users have to sign up for Salesforce for Google Apps, and not everyone is doing so. This approach gives clients the flexibility to adopt Web 2.0 technologies for CRM systems at their own pace, and to decide whether they need to adopt social CRM at all. On the other hand, clients that could potentially gain a lot from Google Apps may not switch over out of inertia, ignorance, or for other reasons.
The Google partnership is consistent with Salesforce's business model, which is to let third parties develop applications to extend the capabilities of its products. Such applications are typically available for subscription — at additional cost — on AppExchange, Salesforce's virtual market that currently offers more than 800 business applications. Among them: Web data mining, real-time sales dashboards, and analytics, including Cognos 8 Business Intelligence.
Applications outside of AppExchange can be integrated into Salesforce.com, too. One example is SAS Customer Intelligence, a set of sales and marketing analytics modules sold by specialist SAS Institute. "We can also sit on top of other CRM systems by major vendors such as Oracle and SAP," says Luke Soon, principal, customer intelligence, Asia Pacific. SAS focuses on predictive analytics and does not have an endto- end CRM offering like the three CRM vendors. Some SAS clients, says Soon, are choosing to use the SAS customer intelligence modules, which include Web analytics, digital marketing, and marketing performance management, to supplement or even replace the analytics engines inside the CRM system they have deployed.
Unlike Salesforce.com, SAP puts together all parts of the CRM environment for the user from products it has developed on its own or acquired, an approach similar to Oracle's. This gives the vendors more control over the quality of the user experience. Salesforce.com does some screening of the applications sold on AppExchange, but subscribers sign up for third-party products, including Google Apps, at their own risk.
SAP, which is better known as an enterprise resource planning (ERP) vendor, launched a CRM On Demand Solution in 2006. "Both our on-demand and on-premise CRM are fully supported by Web 2.0 technology," says Rob Delnoij, regional CRM solution principal, SAP Asia Pacific, including Japan. The focus, however, appears to be on integration. Last year, SAP launched Business by Design, which puts together CRM and ERP functionalities for delivery as software- as-a-service.
So where does all this leave the Asian enterprise? Fortunately for CFOs, experimenting with software-as-a-service CRM is not too costly. Subscriptions start at US$65 per user per month for the top-of-the-line enterprise edition. Salesforce.com's Group Edition, which has narrower capabilities, can be priced as low as US$9 per user (minimum five users) on special promotion terms.
Beyond the cost factor, there are other considerations, such as the vendor's capability to extend Asian language support, set up Asia-based servers to ensure rapid loading times, and deploy robust security systems. The major vendors are making progress in these areas. Salesforce.com, for example, is building a data center in Singapore that will go live at the end of the year. Oracle and SAP have extensive customer-service experience and in-house and outsourced staff across Asia, which they are leveraging for their CRM on-demand services.
Is it too early for companies in Asia to move to social CRM, given that just 14 percent of the region's 4.1 billion people are online? For those targeting middle-class and affluent households, the time may be right. Internet use in some of Asia's richest markets is already quite high — 71 percent in Korea, for example, 70 percent in Hong Kong, 69 percent in Japan, 67 percent in Taiwan, 60 percent in Malaysia, and 53 percent in Singapore. Some 210 million people in China are online, too.
The new tools may be useful inside of companies, too. "The impact of Web 2.0 within the company is as big as or bigger than that outside the company," Oracle's Banks argues. "You can't collaborate on email or in a traditional CRM application because it's hierarchical — you report to someone who reports to someone else. At the top you can see everything, but you have trouble seeing things across." In traditional CRM, he adds, salespeople must be forced to input data — and even then, some keep information about their best contacts and prospects to themselves.
"With some of the social CRM applications you'll start to see from us," Banks promises, "salespeople will be able to correct their own sales campaigns and then publish those campaigns to their peers. It's almost like a YouTube within the enterprise, where people in the company can start to collaborate properly." The theory is that salespeople will input even their best contacts because they will see how having complete information helps them and the entire company. And if they don't, some social CRM applications in the pipeline can automatically mine emails and other company systems for leads and prospects. Independent vendors like Visible Path already offer this service.
"The assumption has been that companies know what the customer wants and how best to deliver it," says Steven Davidson, Asia Pacific leader at IBM's Global Business Services unit. "That is beginning to change as companies realize that the customer is someone they have a two-way communication with." The earlier companies integrate Web 2.0 technologies into their CRM systems, the faster they can get that conversation going.
Cesar Bacani is a contributing editor for CFO Asia.
Click here to see a list of CRM software-as-a-service offerings by major vendors.