Archive for March, 2011

News Analysis: Salesforce.com Acquires Radian6 For $316M

Published on March 30, 2011 by R "Ray" Wang


Salesforce.com Bets Big On Social Media Monitoring And Socialytics

Salesforce’s definitive agreement to acquire Radian6 continues the consolidation of 100′s of social software vendors in the marketplace.  Radian6, a social media monitoring and customer engagement platform, provides tools for companies seeking to harness the power of social media and related social networks.  Most customers utilize Radian6 for brand management and monitoring, sales and lead generation, Social CRM (SCRM), customer service, competitive intelligence, trend analysis, and crisis management.

The company’s focus on the enterprise has paid off with over half of the Fortune 100 deploying Radian6′s products and 1700 customers worldwide.  Marquis customers include AAA, Dell, GE, Kodak, Molson Coors, Pepsico, and UPS.  The deal represents a $256M cash and $50M stock offer.  The following is a first take analysis of how Salesforce.com envisions applying the assets of Radian6 for its customers to:

  • Bring social analytics or socialytics to the Salesforce.com offerings. Sales and Service Cloud will gain new capabilities in social media monitoring and engagement.  Today’s companies seek the tools to bring social customer strategies with existing CRM processes and organizational structures. A social media monitoring and engagement platform provides a critical tool for success in Social CRM (SCRM).

    Point of View (POV):     While this acquisition does not solve the lack of a good analytics platform in Salesforce.com today, a Radian6 acquisition delivers social analytics or socialytics capabilities for Salesforce.com. customers.  Social media monitoring delivered by Radian6 provides the first step in the journey to engaging customers in social channels.  Advanced users often find they need to couple a sentiment analysis tool such as Clarabridge, Lymbix, SPSS, or Textlytics to improve accuracy. 

    Because Salesforce.com customers have proven to be more cutting edge in adopting disruptive technologies, natural synergies will emerge among these CRM pioneers.  Whether Salesforce.com can build an SCRM solution in parallel remains the bigger question.

  • Apply learnings to the Force.com platform. Salesforce.com hopes its developers will build new products using the Radian6 platform.  The intent is to add social elements into future products.

    POV:     Force.com currently lacks the social graph required to build social software.  Learnings from Radian6 should help the Force.com team identify the key additions to the platform required to enable social software development.  Developers can expect these offerings to take at least 9 to 12 months to be incorporated into the platform.  More middleware components will be required in the long run.
  • Build a bridge from Chatter to public social networks. Chatter today remains within the closed walls of the enterprise.Salesforce.com sees opportunities to apply Radian6′s engagement platform to expand the capabilities of Chatter.  Expansion into public social networks opens new insights into the enterprise.

    POV:     Users seek feeds from Facebook, Twitter, YouTube, LinkedIn, and other social media.  Radian6′s engagement platform can quickly be applied to expand Chatter.  The integration will remove a key deficiency with Chatter, an inward only focus.  However, Salesforce.com will have to ensure that the offering meets enterprise class standards and addresses the challenge of information overload in activity streams.

The Bottom Line: Salesforce.com Going After The Five Pillars Of Consumer Technologies For
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Monday’s Musings: Putting An End To The Conflict Of Interest Among Some Sourcing Advisors

Published on March 28, 2011 by R "Ray" Wang

Many Services Firms Seek Unfair Advantages With Market Makers

Service providers continue to battle it out in the über competitive market for large annual multi-million dollar contracts.  Market makers who serve as sourcing advisors, (i.e. management consultants, analysts, or vendor specialists) often influence the outcome of large sourcing contracts and system integration projects.  Consequently, more and more service providers seek to influence sourcing advisors.

Now let’s be honest, influence through consulting engagements around positioning, competitive intelligence, and go-to-market strategy is nothing new.  Most firms make it transparent to the buyer who they work with.  However, in the past few months, we’ve uncovered several new techniques that cross the line on both objectivity and transparency.  These approaches include both formal and informal contractual guarantees across three major areas:

  • Number of blog posts or written research about a vendor. Sourcing advisors commit to writing certain amounts of research in exchange for a contract with the service provider.  In some cases, the research may require editorial approval by the service provider.
  • Number of invitations to bidders conferences. Sourcing advisors commit to inviting the contracted service provider to a short listed group of candidates.  Some contracts even include a tiered scale for greater payouts based on the number of invitations to deals.
  • Kick backs and referral fees for closed business. Sourcing advisors collect a financial reward for recommending a buyer to a service provider.  Fees work similar to referral models with alliance partners.

The Bottom Line:  Ask These Five Questions Before You Engage With Your Sourcing Advisor

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News Analysis: Infor Extends $1.84B Unsolicited Offer For Lawson

Published on March 14, 2011 by R "Ray" Wang

Unsolicited Offer Marks Chuck Phillips’ First Acquisition Attempt At Infor

On March 11th, St.Paul, MN, based Lawson announced that Infor and Golden Gate Capital made a $1.84B unsolicited offer.   This comes after the March 8th news that Lawson retained Barclays Bank to evaluate options.  An acquisition by Infor (the 3rd largest ERP vendor) and Lawson (the 6th largest ERP vendor) could result in:

  • New revenue streams for Infor. As with Lawson, Infor’s revenue mix heavily relies on maintenance revenue.  Despite high estimated retention rates in the 95% range, its estimated that Infor has not successfully grown new license revenue at a rate and pace to keep up with retention losses.  Infor must find new revenue sources to grow and cover its debt obligations while preparing for an anticipated IPO.

    Point of View (POV):     Lawson’s S3 offerings in human capital management (HCM) software, public sector, and healthcare provide the drivers for growth.  Infor’s lack of a full HCM suite provides many opportunities for a cross-sell Lawson HCM and build on Infor’s Workbrain customer base.  Infor’s Hansen public sector offering will deliver good cross-sell opportunities with Lawson’s Public Sector HCM and Financials offering.  Healthcare will deliver overall incremental revenue growth.
  • Long term economies of scale for Lawson customers. Lawson earned $736.4M in revenues in 2010.  Lawson’s acquisition of Intentia in 2006 was long and hard but provided a global presence and some economies of scale, especially in R&D.  Lawson gained better user experience and a more complete offering through the M3 products.  In general, the acquisition placed Lawson into the Top 10 of ERP vendors by revenue and was seen as successful.  However, cross-sell opportunities did not materialize as intended in the North American market for M3 and for EMEA in S3.  On the positive side, Lawson’s new distribution product resulted in big deals in a very under served market and created growth synergies between S3 and M3.

    (POV):     From a size and scale perspective Infor will provide significant scale for Lawson customers.  As with the Intentia acquisition, scale could come from the R&D side of the house and of course back office efficiencies.   Given the need to support a large maintenance revenue base, customers can expect continued investment in service, support, sales, and product.  No acquiring vendor would be foolish enough to kill these areas.  Both Infor and Lawson have made steps to adopt Microsoft .NET platforms and coordinated efforts in R&D should provide the necessary scale to advance the technology across the product lines.

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Press Release: Customer Experience Expert And Veteran CIO, Jim Huser Joins Constellation Research, Inc.

Published on March 8, 2011 by R "Ray" Wang

Pacific Palisades, CA – March 8, 2011
12:25 PM (GMT -8:00) Pacific Standard Time

Constellation Research Inc, an emerging and disruptive technologies research and advisory firm, announces the addition of Jim Huser as a VP & Principal Analyst in the research team.   Jim will focus on building the customer experience research agenda and driving membership among executive management clients.



Huser is the founder of CE2, a consulting and technology firm focused exclusively on Customer Experience innovation – from thought leadership and strategy to implementation. Jim is an acknowledged leader in Customer Experience innovation, and has participated as a presenter and panelist at Customer Experience conferences and events.

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Monday’s Musings: The Race For Enterprise Class Consumer Tech

Published on March 7, 2011 by R "Ray" Wang

Start Ups Chase Enterprise Dollars As Freemium Model Plays Out

I’ve been spending time with emerging technology start ups over the past 3 months.  The good news – innovation in the valley is alive and well.  Most of these ventures start with solving a consumer problem and hope for massive viral success in the freemium model.  The bad news – the VC’s hope for quick turnarounds that result in exit strategies to the deep pockets of Google, FaceBook, Microsoft, and Zynga.  The sad truth -  you and i know most will never make it.  When that realization hits, the VC’s hurry and move to the obvious next step – find an enterprise angle.

Consumer Tech Must Meet Five Elements To Earn Enterprise Class Status

To make it in the enterprise requires a mindset change.  Business models focus on well… making money!  We’ve spent much time coaching clients on how to move from freemium to premium.  We also have to explain how an enterprise customer (i.e. CIO, CMO, Line of Business exec) may make a decision.   Inevitably, our buy-side clients will ask, “Is this solution fit for the enterprise?”  In a post from October about how consumer tech trends will enter the enterprise, we discussed the 5S’ of for enterprise class software:

  1. Safe. Organizations expect these solutions to not only integrate with ease but also, not harm existing systems or jeopardize how users perform daily work and operations.
  2. Secure. More than just role based security mechanisms, these solutions should pass encryption requirements, prevent data intrusion, and protect key intellectual property assets.
  3. Scalable. Solutions should work in a wide range of environments, meet wide ranges of usage demands, and perform well across the globe.  Users should be able to grow demand and scale down as well as up.  Scaling up should lead to a lower cost per unit.
  4. Sustainable. Consumer technologies must meet requirements for flexibility and adaptability over longer periods of time (e.g. 7 to 10 years).  Training programs, knowledge transfer mechanisms, and support communities should be readily accessible.
  5. Simple. Software vendors should employ design thinking to build solutions based on how people want to use mobile, social, analytics, video, and cloud in an enterprise context. Enterprise software should deliver in an easy to roll out and use manner.

There are probably more criteria to add here and I encourage you to add your thoughts to the 5S of enterprise class. Kudos to Christian Pantel for his addition of the 5th S – Simple!

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Product Review: Inside SAP’s Line-of-Business OnDemand Strategy

Published on March 3, 2011 by R "Ray" Wang

SAP’s Sales OnDemand Strategy Reveals A Longer Term Product And Cloud Strategy

In an exclusive briefing on February 24th with SAP’s Executive Vice President of Line Of Business Applications, John Wookey, he provided fresh insight into the new product design and Cloud philosophy at SAP.  This pre-CeBit announcement coincided with the SAP Analyst Day in Boston.  A few take-aways from the briefing reveal:

  • An investment in design thinking behind future Line-of-Business products. With consumer technologies entering the enterprise at a blistering pace, it’s become obvious that today’s enterprise apps only support a small percentage of the work people must accomplish on a daily basis.  SAP’s Line Of Business apps team starts with a design thinking approach.  The initial objectives leverage SAP’s rich history of process excellence, focus on people empowerment, and align with business objectives to achieve a clear purpose.etc.

    Point of View (POV):     The software industry has taken note in how Design Schools around the world solve problems in user experience and adoption.  SAP’s design thinking process reflects the classical 7 phases of define, research, ideation, prototype, objectives, implement, and learn.  Pairing a design thinking approach and agile development methodologies has led to an understanding of what tasks people need to get done and how to quickly create iterations.   The result – more intuitive user experiences and new product releases every 6 months.  More time is spent on upfront design not engineering.  If successful, Co-CEO Jim Hagemann Snabe will have shown how his focus on agile will pay off across the development organizations.

  • Solutions such as Sales On Demand (Sales OD) that empower people to be effective. From the beginning, the product begins with collaboration through the use of activity streams (i.e. Facebook, Twitter like user experience).  Team collaboration is enhanced with access to key content, analytics, and even competitor information (see Figure 1).  Design points focus on delivering the right content, to the right people, at the right time, on the right form factor.  Analytics provide self-service reports (see Figure 2).  Sales effectiveness concepts build around the 4Cs (i.e. the right context, right contacts, right content, and the right contract).

    POV:     Sales Force Automation (SFA) solutions in the past failed to address the needs of the Sales Professional and the customer.  As with most customer relationship management solutions, they covered the “M” in CRM and ignored the customer (C) and the relationship (R). SAP’s Sales On Demand product is different as it addresses the key issues in helping sales professional receive relevant information and collaborate with their networks in an intuitive manner.  Users will be surprised that this is an SAP application. Despite only delivering 20% of the full SAP CRM suite Sales application capability, the 20% provided delivers 80% of the key capabilities to support sales person effectiveness.

Figure 1.  Activity Streams (Feeds) Deliver A Intuitive And Collaborative User Experience

(Source: SAP)

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Research Summary: Best Practices – The Case For Two-Tier ERP

Published on March 1, 2011 by R "Ray" Wang

Forward And Commentary

Legacy optimization remains a key component for funding future innovation.  Two-tier ERP emerges as one strategy to optimize existing systems while adding innovation.  The report capitalizes on the recent Software Insider survey of 235 companies looking at future strategies.

A. Introduction

Organizations continue to face an onslaught of business requirements that their existing ERP systems can no longer address.  Stuck in the past century, these ERP systems are expensive to run, difficult to upgrade, and impossible to modify for today’s fast changing requirements.  Two-tier ERP has emerged as a strategy to enable legacy optimization while reinvigorating the organization’s existing ERP systems.

B. Research Findings

Two-tier ERP refers to a business and technology strategy that enables organizations to keep existing ERP systems at the corporate level while empowering divisions or business units to innovate with a second ERP system.  Consequently, two-tier ERP deployments continue to gain favor.  Why? Organizations must optimize legacy systems while delivering on business value.  In fact, in a recent Constellation Research survey, 48% of respondents indicated that they are considering at two-tier ERP strategy (see Figure 1).  These results reflect a 27-point increase from 2009.

Figure 1.  Two-Tier ERP Growing In Popularity As A Key Strategy

While today’s two-tier strategies mostly involve on-premises solutions, cloud based solutions will gain favor over the next 18 to 24 months because of their rapid deployment capabilities, constant innovation qualities, and subscription pricing.  Organizations challenged by diverse lines of business, multiple localization requirements, or needs to phase in legacy system modernization will find a two-tier ERP strategy one that can reduce costs and provide better business value than a one-size-fits-all solution.  Whether SaaS, on-premises, or hybrid, a two-tier ERP strategy will reduce costs, meet new business requirements, and provide better business value. More…

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