Author: Gerardo A Dada

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The Criticality of Company Culture

Courtesy Andreas Nilsson
Courtesy Andreas Nilsson

Last month 1 to 1 magazine published my article “The 10 rules of Customer Centricity” that talked about how customer centricity needs to be a company strategy, not a motto for the marketing team.  My last post about Why I joined Bazaarvoice talks about the Bazaarvoice culture and how it was a key factor for me to join this company. Again, culture should not be something that is done by HR, framed and then ignored – its central to a company’s strategy.

The book The Discipline of Market Leaders is one of my favorite books on strategy, I encourage you to read it. It makes the case for three central disciplines that define a company and its primary operating model and its product strategy. The book talks about three main disciplines: Customer intimacy (think Nordstrom), Product Leadership (think Apple) and Operational Excellence (think Dell or McDonald’s). Companies can’t do all three, they need to pick one and run with it.

Culture = Strategy

Company culture is strategy. It defines your company. It defines who you hire. It defines what you value and reward as an organization. It defines how you create products and services. It defines who you are. It determines your success.

The Engineering Culture at Motorola

Motorola has been for many years one of the most innovative companies in the planet. While I was working there I had the opportunity to visit the Motorola Museum. I was amazed about the number of firsts: From the first car radio (did you know this is the origin of the name -as in Moto- Rola?), the first square TV to almost everything RF/radio related in the world including the system that provided communication to the Apollo XI Lunar Lander.

Then it hit me: Motorola had invented so many markets yet it had been unsuccessful in maintaining market leadership. The company invented the cell phone and by then it had secondary market positions both on the cell phone business as in the infrastructure side. The answer, for me, was the company culture.

An interesting fact: Motorola employees wore badges of different colors based on the number of patents under each employee’s belt.  Engineers worked with pride with a silver or golden ID badge.  People knew you had to be an engineer to be successful at the company.  There were POPI (protecting our proprietary information) audits at every office ensuring nothing as trivial as an org chart or was left at your desk.

As much as Motorola excelled at creating products, it failed at bringing them to market.  I saw tons of technologies that should have been successful like the Canopy broad-range internet access network. But most of these failed because marketing was not a core competency.  The engineering -centric culture is killing the company. I really hope it can transform itself quickly enough and be a leader again.

The Product/Launch Culture at Microsoft

My four years at Microsoft were some of the most amazing of my career. Ultimately, I decided to leave because of culture. Everyone knows Microsoft hires type-A personalities. Many people know there is a performance grading curve for employees and that the performance measurement is exclusively focused on the fiscal year at hand.

All these factors result in a culture where there is no room – especially in a company this size- for long-term planning or for learning and optimizing a project. It is all about launching new stuff. From my first few weeks I was surprised by the number of emails that announced new things – new products, new initiatives, new marketing campaigns. There was no discussion about monitoring, learning, optimizing. Projects need runway to mature and become successful.

Marketers received a plaque with over a dozen slots for adding badges for each product they launched. I was part of the Visual Studio 2005 launch team. After the product was launched in November 2005, many people left the team starting with the GM. After all, they had a successful product launch under their belt. It was time to get promoted and move to another group. A former boss and one of the people I admire is John Smolucha who shared an analogy about the Columbia shuttle launching and immediately everyone in Houston command center going home.  How would you feel if you were an astronaut?  “Houston?….Houston?… we have a problem.” . This is how many projects felt at Microsoft.

A great example of this culture is Bing. Microsoft search engine became MSN Search which became Live Search and is now Bing Search – all over just a few years. Maybe next year a new GM will come on board and will re-launch it as something different.

The Culture at Bazaarvoice

It just makes sense: if you focus on making your employees happy, you will be able to attract (and retain) the best talent and everyone will be motivated to do their best job. Customer service experts know happy employees translate to happy customers. The rule applies equally to every area in the organization.

This is how Bazaarvoice defines its culture (from the website):  “To us, culture is more than perks and free sodas. It’s the way we work with each other and create a place where people want to work every day, have the opportunity to rapidly innovate, and foster an environment that brings out our best.”.  There are many blog posts about culture for you in the Bazaarblog.

In Brett’s words, “The importance of focusing on culture is greater than ever.  I spend around 15% of my time focused on culture, and I believe it is largely responsible for our success as a company.”

As I was finishing this post, I read Behind the Cloud, Marc Benioff’s book about building Salesforce.com which reinforces this idea:  “My summers at Apple had taught me that the secret to encouraging creativity and producing the best possible product was to keep  people fulfilled and happy. I wanted the people who built salesforce.com to be inspired and feel valued. “ (Page 11).

Kip Tindell, CEO of The Container Store, recently said in an interview ” It was Milton Friedman who said, “the only reason a corporation exists is to maximize return for the shareholders.” Well, no. Not really. We actually put the employee first. We don’t even put the customer first. Now, you know we love our customers. But we put our employees first. We believe that if you put the employee first and take better care of them than anybody else, they will take care of the customer better than anybody else. And if those two are happy, if you have the happiest employees and customers around, ultimately your shareholders are very, very happy as well.”

I’ll end this post by summarizing on one point: Culture is not a task for HR or for a marketing VP. It must come down from the top and lived by everyone in the organization:  your culture is your strategy.

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Joining Bazaarvoice

BV Logo

It’s been almost three months since I joined Bazaarvoice as Sr. Director for Product Marketing. It has been a very rewarding and fun experience. But let me start from the beginning:

I worked for Vignette in a similar role for about a year and a half. Then the company was acquired by Open Text and I was offered a position to run strategic communications, which I did for a few months. My team included PR, AR, social media and a new CXO/executive relationship program.

This was a very exciting position from the perspective that it was all about influencer marketing. However, I had significant differences of opinion with the senior management team in terms of strategy, company culture and marketing position. Once I started working on that position I felt like I was an evangelist for a religion I did not believe in. Almost at the same time, Bazaarvoice presented me with a unique opportunity.

My Social Media background

For the last almost 10 years I have been working with social media and online communities. At Motorola we created the first mobile developer communities back in 2001 for the earliest smart phones. Developers have relied on peer-based online and offline communities for learning and support. Then I had the unique opportunity to lead Microsoft’s community strategy starting in the developer division and as the driver for the Broad Customer Connection initiative company-wide. Looking back, we did some pretty amazing stuff back then that would still be considered leading edge today.

During my time at Vignette, I helped the company transition from Enterprise-content management to a vendor that uniquely understood how to manage both enterprise content and social media content. The Vignette social media strategy was looking good until the acquisition.

Four Areas of Social Media

I see four discrete aspects of social media as they relate to how companies interact with it.

  1. First there is the Social Web made mainly of social networking sites: Facebook, Twitter, Linked In, Flickr, eVite, eBay, Slideshare – etc. There are many case studies about how companies are using these tools to connect, listen, respond, interact with customers. I have a pretty cool story I will share in a future blog post.
  2. Peer support communities proved their value many years ago. This includes developer communities, support forums, NIkeID and others that are mainly knowledge based or break-fix.
  3. Social media in the enterprise, better known as Enterprise 2.0 took the concepts of social media and Web 2.0 into employee Facebook-like applications converging with collaboration and knowledge management. SharePoint and Salesforce Chatter have a good chance of dominating this market.
  4. Standalone marketing community sites. Often times these appear as complements to brand sites, as promotional micro sites or as standalone sites that aim to capture a conversation, increase engagement and somehow magically produce business results. I feel like this is the least mature aspect of social media. This is the space where I will focus the rest of this post.

Build it and They Will Come

The initial idea was great. Essentially marketers love the idea of being the center of attention, of hosting the conversations around their brand and their market. If your business is selling guitars online it would be very compelling to be the Facebook of musicians and host the space where they would gather and chat about stuff, giving you “permission” (in Seth Godin’s terms) to market to them and turn them into buyers.

The problem: Facebook won. Music aficionados are on Facebook. They are probably also fans of organic food, classic rock, the Gap, etc. But they don’t think about these brands when they want to discuss topics related to these markets (food, music, clothing) because their conversation is happening on the social web, where their friends are today. In Jeremiah Owyang’s words “fish where the fish are”. 

Think about it from your perspective: how many things are you passionate about, how many brands you like. Do you maintain a profile in each of these brand’s communities? Are you active there? Or do you do all your social webbing on Facebook and twitter?

The idea sounds great but it’s a myriad. I recently blogged about this in what I think is a controversial post that includes some informal research about the failure of online marketing communities.

Where’s the beef?

For the last two years companies have been hiring social media experts. Many of them are good communicators, experts in the use of social media tools but lack the track record of driving real business results. Companies realized they needed to do something in social media and given their lack of experience CMOs had to trust social media experts and give them free reign to do whatever they wanted. They wanted a social media strategy.

Last year companies started asking themselves, after doing this for a few months, Where is the ROI? How much should we invest next year in social media? How do we know what tools to use? Facebook fans don’t make payroll. Business week published an article “Beware of Social Media Snake Oil” based on ideas from David Armano. A year ago, my presentation at Web 2.0 focused on the lack of measurement and idea that you don’t need a social media strategy because social media is a tool that should support business objectives.

Some stats: (about a year old) . eMarketer found 84% of marketers don’t measure social media ROI at all. A survey I did with the Marketing Leadership Roundtable shows only 12% of Web 2.0 initiatives are rated as effective. The Marketing Sherpa Social Media benchmark shows social media has been most effective at influencing brand reputation and awareness, improving search engine rankings and increasing traffic. 

Social Media has produced soft benefits: awareness, participation, customer feedback. There is no question Social Media is a great tool to interact with customers, listen, broadcast and solicit feedback. What about making real money?

Enter Social Commerce

Social commerce is the practice of leveraging customer interactions to drive real business value. It started by taking customer’s opinions to help other customers make decisions on what to buy: ratings & reviews. Today, ratings and reviews are one of the primary drivers of eCommerce sales. Think about the last time you bought something on Amazon. As soon as I land on a product page I scroll down past all the traditional marketing content to land directly on ratings and reviews.

Now social commerce leverages not only opinions – also knowledge (questions and answers), experiences (stories), the Social Web, mobile shopping and a number of innovative tools. The direct correlation to business results is proven: higher sales, lower costs, reduced returns. For more stats see www.bazaarvoice.com/stats . Furthermore, social commerce can help companies breathe customer oxygen to understand the voice of the customer and derive insights that transform every aspect of the organization.

The secret is in what I call contextually relevant community. It is about using social media in a way that is relevant to the user based on their intent (what they are trying to accomplish) and their desired experience (i.e. the websites where they go to accomplish this). Social Commerce makes relevant, trusted advice, opinions, knowledge and experiences available to people as they look for products, decide what to buy, or learn how to use a product.

The conversation is not about what you had for lunch last week or the pictures of your dog: it is about the relationship that exists between you and the brand: the products you like, the people that enjoy products like you , your knowledge about these products, experiences you have had with them. It is contextually relevant to the brand as well.

Why Bazaarvoice

Leaving a global, public company with hundreds of millions of dollars in sales, in a job where I was innovating how to work with influencers and had three directors reporting to me to a small startup in Austin was a difficult decision. There were tradeoffs and risks.

Today I am 100% confident I made the right decision. There is energy and passion at this company. I work with really bright people. Our executives are smart. Brett, CEO inspires me. I enjoy every day at work. My wife told me after two weeks I am a different person at home. She loves Bazaarvoice too.

It’s good to be part of a successful company. Today, Bazaarvoice serves over 600 of the leading brands globally, including over 50 of the top 100 retailers in the U.S. We are hiring as fast as we can. There are probably 80 open positions on our website today. We have close to 10 full-time recruiters. Our ability to grow is only limited by our ability to hire top-notch people.

If you have heard about Bazaarvoice you probably heard about the culture. Our CEO has made it a priority. Proof? The vacation policy is entirely based on trust: “take as much as you need”. Many employees enjoy the weekly massages, guitar hero in the game room, free snacks, etc. Others enjoy the wacky sense of humor. Austin Business Journal named Bazaarvoice the number one place to work in Austin. All the pampering reminds me of the dot com days, except that this company is a real business that is growing on solid footing based on delivering real value to our clients.

Steve Joined Bazaarvoice a few days after I did. We have similar views.

At Bazaarvoice I can employ my experience in product marketing, my passion for customer centricity  my background in web technologies and  e-commerce and my 9+ years of experience working with social media. It’s a pretty good fit.

In these first three months, my team has delivered tremendous value for the organization. We are making a difference. I feel very proud of what we have done. I feel super excited about where we are going. Fasten your seatbelts. It will be a fun ride.

Hey, if you have read so far – thank you. This is a long post. I owe you one. Leave a comment. Say Hi. My promise is to blog more often. Here and on bazaarblog.com

Gerardo.

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The question no one is asking

Can you Build a Community?

I have had the privilege of working with online communities for over 10 years. In the technology world, online communities -mainly forums- are a fundamental part of how people learn, share and help each other with technical questions.

As companies evolve their thinking about how how to leverage social media, CMOs are realizing social media is not a strategy, but a tool to support a strategy. This was one of the central points for my Web 2.0 presentation almost a year ago. The freedom that social media strategists enjoyed to experiment (and spend) without any ROI measurment is coming to an end. As Mike Svatel told me yesterday, pageviews don’t make payroll. Continue reading “The question no one is asking”

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7 Steps to a Successful Trade Show

It seems every good marketing plan needs to include industry event participation to be complete. Sometimes we go to trade shows to leads, sometimes because “you have to be visible” and sometimes because we went last year so we signed up for this year as well. Yet , in my humble opinion most marketers do a poor job at events.

Here are my 7 suggestions to make your trade show participation a success.

1. Define a Strategy – Why are you going to the event in the first place? Are you there for awareness? to drive leads? to engage with press and analysts? defining a very specific and clear goal is the first step to a successful event. Think about the number of leads you will get in relation to the total costs for exhibiting (booth, travel, opportunity cost, etc.), the right conclusion may be not to be at an event.

2. Refine your Value Proposition – Have you ever walked a show floor? think about how you scan booths as you walk by. Most people probably spend two or three seconds reading the signage on a booth before deciding if it is something they are interested in – otherwise they will continue walking and scanning. Next time you go to a trade show study how people walk by the aisles.

This means you have about 8 words to tell people why should they stop and talk to you. You have one chance to get their attention. I find it amusing how bad we marketers are at this: most booths have meaningless slogans like “High Performance Digital Solutions” – what does it mean? what exactly do you sell?  why should I care? You could play bulls##t bingo walking a trade show.

3. Focus – Attract the right people. Surely you have studies the event prospectus and you know what kind of people will be attending. From here, based on your strategy, you need to decide what titles/roles and company profiles you want to talk to. We are too quick to think in terms of booth visitors, coming up with ever more creative giveaways. Handing out t-shirts will surely keep your booth busy, but will it attract the type of people you want? Would the qualified buyer you wanted to talk to walk by because your team was too busy handing out t-shirts to everyone?

4. Time Management – For most companies, the goal of trade show participation is to generate leads. This means three things: first, qualify every visitor to your booth. Second, spend as little time as possible with non-qualified leads: be courteous, hand out a datasheet or a giveaway if they request one and move on. Third, spend quality time with qualified leads but not too long: once you know the lead is a viable prospect, you have provided valuable information to increase their interest and captured their contact information, it is probably smart to move on to the next customer. There will be more time later to continue the conversation with this customer, do an in-depth demo or needs assessment. Of course, you need to use your judgement based on your product and buying process, customer interest and how busy your booth is.

5. Ask, don’t tell.  Good sales people listen 70% of the time. Do the math: you only need to speak 30% of the time. Most booth staff are too quick to jump into a sales pitch and a demo as soon as someone walks by. After qualifying a person ask them why they stopped, what problems they are trying to solve, what solutions they have considered, how much they know about your company and your product and what specific questions they have. This will accomplish a couple things: first, you will come across as more genuinely interested in helping the customer; second, you will know enough to tailor your presentation or demo to the specific needs of the customer; and third, it will save them from spending 5 minutes listening to a pitch that makes no sense at all.

6. Follow Up. Marketers do a terrible job at following up on trade show leads. Often, what happens after a trade show is that a spreadsheet with names and contact info is sent to the sales team or to the telemarketing team where they go to a black hole. If you involve sales from step 1 when you are defining your strategy, you should have a follow-up strategy and plan weeks before the event. At the very least send each prospect an email thanking them for attending, providing useful resources and contact information. Tink about creative ways to engage customers in the form of a poll, a free analysis, a white paper, or some other high-value material.

7. Learn.  Trade shows are great opportunities to learn about the market, trends, your competition, and above all  to learn about customers. Often times, the most valuable conversations I have had at an event have been during lunch or dinner when I go to the main meal room and seat at a table with 9 customers or industry peers that I had not met before. Yet, most booth people miss this opportunity: as soon as booth duty is over they have lunch together as a pack. Make the most of every opportunity to meet customers. Some times, I seat at more than one table during lunch to maximize my opportunities to learn – and to have an extra dessert :-)

Have fun at your next event!

 

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Web and Social Media Trends for 2010

With only a few weeks left in the year, this is a good time to think about what are the top trends that will impact the Web, social media and customer engagement.I have posted this on the Corporate Social Media strategist group on Linked In, but would appreciate any comments on my blog.

These are the trends I think will be important in 2010:

1. Content is set free and is continuously evolving. What started with RSS feeds continues to accelerate. Content will increasingly be syndicated, aggregated, tagged, rated, mashed-up, re-published, filtered and transformed. Technologies like REST APIs and open ID are enabling this trend.

2. Browsers are dead. Well, not really, but a browser-PC combination is no longer the main way people experience and interact with Web content. Mobile devices, car systems and other internet-enabled devices will continue to grow in importance.

3. Social media maturity. Organizations starts to see social media as a tool that supports a strategy, a new way to engage customers, employees and partners,  one that is fundamental to any  business and that becomes an integral part of your job. Twitter plateaus, new tools emerge but there is more consolidation.

4. Semantic Web. With so much content available online, tools that help find relevant content become more important: tagging, rating, filtering, recommendations, folksonomies, semantics. The focus needs to be on simplicity.

5. Key challenges need to be solved. Openess will result in a new focus on privacy and  giving people control of what and how their information is shared. New technologies introduce new security concerns: viruses, spoofing and hacking in social networks, authentication across multiple sites (passport was not a bad idea, after all), tiny URLs make it impossible to know where you are going before you get there. At the individual level trust and authority become more important, creating an opportunity for reputation management systems, badges, and federated identity.

This is just a starting point, and of course these things won’t happen in 2010 only: they have already started and will go on for some time.

What do you think? What am i missing? I look forward to your comments…

Thanks,

Gerardo

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Web Industry Trends

A few days ago CMS Wire gave me the opporutnity to do a guest post summarizing what happened at Content World, which they published here. I am re posting here as you may find some of the observations inetersting in terms of the trends in web strategies:

Open Text Content World is coming to a close today. Like most user conferences and industry events, I find everyone gets the highest value from connecting with other people. Everyone loves the networking, sharing stories and best practices, bouncing ideas, building friendships and having fun. The breakout sessions and PowerPoint decks are almost secondary.

I would like to share some of my observations from this week resulting from talking to partners, colleagues, customers and friends. These are the topics and trends I identified. 

Focus and Consolidation

Everyone is being tasked to do more with less. Many customers I talked to are considering, in the middle or completing projects to consolidate multiple web properties into one to drive cost savings and have a batter grip on their web strategy.

There is a growing concern that tactical departmental social media deployments can make this problem worse. During a session, I asked the audience how many had made an audit to find how many social media sites existed in their organization, no one raised a hand.

Social Media is Everywhere

I think every single customer I talked to had a strong interest in social media. For most of them, finding a way to leverage social media is becoming a requirement in their organization; and while some companies have had great success others are being cautious about their approach. On one side, there are concerns on compliance, safety, governance and control.

On the other side, applying social media inside the firewall produces very real but also hard to measure or soft results. Everyone seems to agree with the concept we have been promoting since early this year about social media not being a strategy but a tool to support a business strategy. 

Portals are Cool Again

A few months ago, Portal was a term many wanted to avoid: Portals were perceived to be aging technology from the 90’s. Now, I see Portals re-emerging as the operating systems of the enterprise (a term I borrowed from John at Sutro Software)- providing a unified and personalized user interface to multiple applications and information sources.

There was a lot of interest in the vision of the social intranet, which was presented in the general session and a number of breakouts – a vision that is reality at Motorola who shared details of their intranet in one of the event’s favorite sessions.

Convergence

The worlds of Knowledge Management, Portals, Collaboration, Social Media and document management are converging. The lines are blurred. Organizations need modern collaborative processes to get things done and to capture the collective intelligence (and IP) of the organization, they need to make this information safe, meet compliance requirements and provide a simple and integrated user interface for users.

Enterprise 2.0 is Becoming Strategic

The role of many people I talked to was evolving and the value of these solutions to the organization is being recognized. A few years ago collaboration and document management were considered to be IT infrastructure, now with the addition of Enterprise 2.0 elements and other innovations, these solutions are considered key company assets that can transform organizations, impact productivity and directly affect the success of the organization.

Use of Video is Maturing

It was very interesting to hear how the use of video is maturing in large organizations. Video is being used in many ways: as an engaging way to connect with customers and employees, as a training tool, as a universal communications media that does not require translation and as a way to connect more personally with people.

I find that many companies are starting to think about how to more effectively deliver video (one of our customers has 200,000+ people going to their video-enabled intranet home page every morning) and more effective ways to manage video assets from a storage, security and consistency perspective.

If you think about the array of solutions that were talked about in Content World (from WCM and DAM to records management and compliance) it is easy to come to the conclusion that they serve very different use cases and are being implemented in different areas of an organization.

However, when you take it one level higher, everyone at this event was thinking about how to store and manage content (making it safe, compliant, managed and accessible) and how to improve the way people experience and interact with content (make it more personal, relevant, social and pervasive).

Storing and Managing Content

To me, storing and managing content is something companies have to do. The biggest value and potential for impact in an organization, however, is in improving the way people experience and interact with content.

That is what is unique. And hard. And difficult to measure. But also very exciting. This is where social media, widgets, rich media, personalization, mobility, content recommendations and other exciting technologies can help. Inside and outside the firewall.

The Present and the Future

A summary of the event would not be complete without talking about VCM 8. It is a major release. There are too many stories to tell. Which goes back to my first point about how people get the most value of these event by learning from each other

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The Online Marketer’s Quest for Web Effectiveness

Online marketers, like most other professionals, are expected to do more with less – especially in challenging  economic times. Onlinemarketers are trying to find out how to increase Web site and campaign effectiveness, which can be measured in terms of unique visitors, click-throughs or leads. Marketers in eCommerce companies have a bit more focused goals, focusing on conversions and average order value, often acheved via up-selling and cross-selling.

Key to meeting these objectives is to ensure people visiting your Web site or receive email communications from your company are presented with the most useful information and the most powerful offers for them. In this quest of finding the best message, the best offer, the best banner ad, marketers have tried a number of different tools from personalization to analytics to a/b testing. It is easy to get too exited about these tools, but at the end of the day, it is critical to understand these are only tools to improve relevance.

Relevance is the key to Web site effectiveness. But how to make your messages more relevant? Most studies show Web site visitors have very limited patience: if they can’t find what they need in three clicks, they are gone. This means you have one or two chances to give each individual customer exactly what he or she is looking for: the product they want, the answer to the question they have, the information they need. This post aims to provide an overview of the tools available to increase relevance.

The first step is Analytics. You can’t improve what you can’t measure. Analytics can tell you how many people are visiting each page or consume each of the resources that you make available  on your site, what are the most common click-through paths, exit pages and many other useful data points. Unfortunately, most organizations don’t have the people or the time to properly study the analytics data to derive business insight and to act on this insight. maybe because it is hard to show ROI for these activities outside of media and online commerce.

One of my favorite phrases is “Your opinion (as a marketer), while interesting, is irrelevant“. No matter how smart you are, you can only guess what will be most attractive for your customers. therefore, one of the fundamental principles of marketing communications is to test everything. In this age it is inconceivable to run a banner ad without at least testing a few messages. Testing multiple messages takes very little effort and, in my experience, the results often surprise you. When testing 4 or 5 different banner ads, it is not uncommon to find a 5x difference in performance. The same applies to direct mail, email promotions, etc.

But testing banner ads and messages manually is very time consuming, although certainly worthwhile for large campaigns. This is where a/b testing comes in. A/B testing tools automate the process of presenting multiple offers to customers, sometimes based on a specific segment, reporting results in real time and adapting your site to use the message that proved to be most effective in tests.

MVT Testing take this concept further by testing multiple variables: message, color, position, offer, etc. – and all their possible permutations. MVTcan be incredibly powerful to fine-tune offers and promotions in any website. As good as they are, adoption of A/B and MVT tools has been very limited, mostly in eCommerce companies. As with analytics, resourcing is part of the problem.

A/B and MVT have their own challenges: First, it is still for the most part a manual process. Second, you could be testing all the wrong things – the process still requires someone to decide what messages or what elements to test. Last, these tools require some time to run (the more variables in play the longer it takes for MVT to produce statistically-valid results) and they are focused on past behavior.

This is where a new breed of tools come in: Content Recommendations, offered by companies like Vignette, Omniture, Loomia and others. While there are differences between how these products work, the fundamental premise is the same: to observe customer behavior, and to automatically determine what is the most relevant content, product or offer for a particular customer based on what similar customers have found to be useful.

A short story to illustrate: An architect builds an office complex with multiple buildings a parking garage, a cafeteria and other services.  The buildings open to the tenants but there are no concrete pathways between buildings, the architect has left all the open space covered in grass. After a few weeks, the paths that people take to go from one building to the other are clear from the wear in the grass. Over time, the grass is gone in these paths. The architect then paves thee paths with concrete. He did not try to guess which way people would walk. He observed and acted on actual behavior. Recommendation technologies pave the path between website visitors and the content they want.

Now a specific example: An online tax service is trying to make their website more useful. During tax season, many customers would go to their site and look for “Form 1099”. Traditional search tools would use a keyword-based algorithm to find the web pages and documents where the keyword “Form 1099” occurred more often. Instead, Recommendations technology observes that most visitors who type “form 1099” in the search box actually end up opening, downloading and printing a file called IRS1099-A.pdf and then spend some time in a page labeled “how to fill your tax return”, so it presents these two resources at the top of the search results, even though the keyword may not even appear i the actual page or file. This scenario is what is being called social search.

Another advantage of Recommendations is that it can adapt in almost real-time to changes. Imagine a celebrity appearing on TV on a Friday afternoon wearing some very chic aluminum sunglasses. Everyone who is watching the TV show wants to buy these sunglasses. The first visitors to your eCommerce site would have to navigate a bit to find the exact product, but after a few visitors buy the item, recommendations technology “paves” the way for other visitors, a process that could take minutes. Your analytics person or campaign marketer could be asleep or on vacation and recommendations technology has learned from customers  and adapted the site to show the now very hot item in the most prominent position.

As with any new technology, there are differences between the offerings from recommendation technology vendors. There are a couple key aspects to consider when evaluating them:

  • The observation technology – it can go from the very simple (clicks-based) to te very advanced (some measure over 30 heuristics).
  • The algorithm to determine what to recommend – some call it the wisdom of crowds engine
  • How similar visitors are grouped – behavioral segmentation and integration with your explicit profile data
  • Content database – how it is organized, categorized and updated as items become available or are retired
  • Presentation model – how the recommendations are integrated into your overall website experience

This is very exciting technology that is likely to produce big results for most web sites who implement the technology but more importantly for customers in general.

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Is SaaS reaching critical mass in 2009?

I just read this blog post which starts with a very bold statement “SaaS adoption will move beyond the “Tipping Point” in 2009”.  .  Countless analysts’ reports have prophesized about the explosive growth of applications delivered under a SaaS model for some time now. The reality is that adoption of software via this on-demand model has been quite limited (outside of CRM, thanks to Salesforce.com).

Sometimes it seems like the IT industry is looking for the next big acronym that will revolutionize the way we look at technology. In reality, customers and IT departments are much more cautious than what most vendors and analysts would like them to.

While not exactly the same, there are very few differences between SaaS and the ASP model that was the vogue in the late 90’s. Where is the money? The Forrester slide in the aforementioned blog shows 24% of companies are “interested in SaaS’.  There is a difference between being “interested” and signing a check.

First, I think it is important to understand SaaS is a delivery model that can be broken down into multiple components: hosted offering (off premise), monthly billing based on use, small or non-existent upfront cost and quick deployment. This in contrast with the “traditional” software deployment licensed as a perpetual license, deployed on-premise by the IT department and variable deployment times.

Most SaaS offerings are available to purchase online via a credit card with self provisioning. To enable these self-provisioning and instant-on capabilities, SaaS offerings are usually templetized with limited options. Integration with other systems is not as flexible as with a traditional on-premise solution. I say mostly because there is a wide range of vendors with different models. To support many customers from each server, SaaS vendors usually require multi-tenancy.

In my humble opinion, the SaaS model is not nearly as important as the evolution in the market towards managed services. What is the difference? Managed services are also hosted off-premise by a vendor that also provides software deployment, management and maintenance.  In other words, a managed services vendor takes the pain from IT hosting and managing a discrete piece of infrastructure. If you look at Salesforce.com in terms of implementation costs and resources it probably looks more like a managed service than a true SaaS model.

Let’s look at email as an ideal candidate to move off on-premise IT. Most It departments see e-mail as a business critical service from It but also as a solution that is pretty standard in terms of the ability for It to add value.  Microsoft Exchange Server has a very large and growing market share (70-80%) and is used everywhere from small companies (licensed as part of Microsoft Small Business Server for organizations with 5 users or more) to the largest enterprises.

There are two markets for off-premise Exchange services: Hosted Exchange (SaaS) and Managed Exchange.

Given the advantages of hosted Exchange in terms of cost, availability and security most in the industry (myself included) expected droves of small and medium businesses to go to Hosted Exchange. Microsoft had hundreds of Hosted Exchange partners – from companies like 4smartphone.net  to USA.Net to Microsoft’s own Exchange Online offer. Yet, despite effort from Microsoft and all these partners, adoption had been very limited.

Managed Exchange is a different story. Vendors like HP, EDS and AT&T hosts millions of email inboxes for the world’s largest companies but not in a SaaS model. They manage their Exchange servers on their behalf, with a team of certified Microsoft Exchange IT experts in a datacenter. There is no multi-tenancy, each customer is likely to have a cluster of dedicated Exchange servers. There is no online self-procurement: these are multi-million services deals done in person.

What is my point? Analyzing this data, one can come to a couple conclusions:

  • The SaaS model is especially attractive for the SMB space.
  • Yet it has failed to gain the traction that the industry expected .
  • There are very few success stories outside of CRM. I can’t think of many successful and profitable SaaS vendors. Omniture, Salesforce.com, who else? Wordpress?
  • The SaaS model still has many challenges ahead:
  • The Managed Services model, on the other hand, is very successful and gaining momentum.
  • Many large IT organizations are offloading core low-value IT services like email to managed services vendors.
  • In other words, while SaaS is not being adopted as fast as everyone though, Managed Services have reached critical mass and are already a significant business.

 

Mid 2015 Update

Today I found this old post. How much changes in six years. My first thought was that maybe I should delete the post. Then I thought I should just add this comment to acknowledge my prediction was wrong. SaaS has hit a tipping point and is the future of software – for the most part.

Then I saw the date and read the post and realized maybe I was not so wrong, that many of the challenges have been solved in the past 6 years. The SaaS model itself has matured, and in some cases a hybrid between SaaS and managed services has emerged as the winning combination. The signs that SaaS had hit a tipping point were clear as early as 2010. At the end of that year I joined a SaaS company. But I have to recognize back in 2009 I was wrong in being so skeptical of the speed at which SaaS would mature. Which is OK I guess, ad my track record with predictions has been pretty good so far.

 

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Enterprise 2.0 – Boosting employee productivity with social media

Enterprise 2.0 is one of those buzzwords that is looking for a definition. In my mind, it refers to the application of Web 2.0 ideas, processes and technologies to inside the company – to the intranet and the extranet.

I am presenting on June 10th for the Technology Executives Club on this topic. These are my slides for the webcast.