I’ve just finished up several months of research digging into the best practices of how leading organizations aspire to implement outside-in, customer-focused, cross-functional processes that transform the organization and set it on the path toward continuous improvement. I found that these companies are moving from isolated business process management (BPM) and/or front-office customer relationship management (CRM) projects toward broader transformation initiatives across the organization. At the core of this trend is a desire by these organizations, especially in services industries, to domesticate their “untamed” or “invisible” processes that touch customers.
My report on the best practices for process-centric CRM will be published soon. A key finding is the growing convergence of data-centric CRM, BPM, and dynamic case management (DCM) solutions. The right mix of these solutions, of course, depends on the use cases you are designing for. For example:
Ultimately, customers don't judge you based on how well you gather business requirements, choose development technologies, manage projects, or march through the development process — they judge you based on how they feel before, during, and after they use your software. This is the digital experience. If you get the customer experience wrong, then nothing else matters. And expectation inflation is sky-high thanks to the Apple-led smartphone revolution. To succeed in the new age of digital experience, application development professionals must collaborate with their business partners and customers to create experiences that customers love. You need a new approach represented by these five axioms:
Software is not code; it creates experience.
Development teams are not coders; they are experience creators.
Technical talent is table stakes; great developers must be design and domain experts.
Process is bankrupt without design; you get what you design, so you had better get the design right.
Software is a creative endeavor, not an industrial process like building automobiles. Structure your methodology to empower your creative talent.
Based on the very high interest in this blog and its cloud predictions we are planning to host a Forrester Teleconference entiteled "2012 — The Year The Cloud Matures: A Deeper Dive Into 10 Cloud Predictions For The Upcoming Year" on February 28th, 1-2pm EST/6-7pm UK time, where we will highlight and go through the 10 below predictions one by one. For more details and registration please follow the link to the: teleconference web page.
1. Multicloud becomes the norm
As companies quickly adopt a variety of cloud resources, they’ll increasingly have to address working with several different cloud solutions, often from different providers. By the end of 2012, cloud customers will already be using more than 10 different cloud apps on average. Cloud orchestration will become a big topic and an opportunity for service providers.
2. The Wild West of cloud procurement is over
While 2011 still witnessed different stakeholders within a company brokering (sometimes unsanctioned by IT) a lot of cloud deals, most companies will have established their formal cloud strategy by the end 2012, including the business models between IT and lines of business for their own, private cloud resources.
Do you ever wonder which IT investments really drive competitiveness or comparative advantage for your firm and which are there simply to support mundane processes that are identical to those of all your competitors? Do you ever wonder if it might make sense to standardize on "best practices" for non-differentiating processes and supporting application implementation?
Received wisdom is that accounting processes are not differentiating and so it makes the most sense to support them with packaged apps or maybe with software-as-a-service solutions. Larger firms often implement shared services for financial management across all their business units or even outsource altogether apparently dull processes such as invoice settlement or collections.
But does that really stand up to scrutiny?
One retailer, with which Forrester worked, confessed to having 17 definitions of margin depending on which types of supplier rebates and volume discounts were included. We asked how they calculate markdown and they grinned.
The more I thought about it, the more this fact disturbed me. In some types of specialty retail, inspired opportunity buying is the key to competing with the bulk buying muscle and supply chain scale economies of global discount retail chains.
Many retailers import merchandise and have to calculate "landed cost" based on customs and freight invoices that arrive long after the goods in question have been sold. What price weighted average actual cost accounting, or margin calculation, in such a scenario?
Where is the scope for creative dealmaking in standardized accounting applications that deliver lowest common denominator functionality across verticals as diverse as local government, with its focus on fund or commitment accounting, engineer to order manufacturing with a focus on multi-period project costs and retail with a focus on margin measurement and management?
Back in August of this year, Marc Andreessen published an essay in the WSJ highlighting his thoughts on why software's eating the world. I encourage you to read it. It highlights something we firmly believe. We’ve entered the age of software, and you’re at its center. With December upon us and many of you engaged in finalizing 2012 plans and reviewing your 3 - 5 year strategies, I encourage you to look beyond tech developments like cloud, big data, and the App Internet. Focus instead on what you need to deliver good software, and keep three things I'd gladly tell you and your CIO top of mind.
Software IS your business. This age isn't just about Borders and Amazon, game developers, or online service delivery capabilities. No, look at how software's increasingly a part of everyday life. What about your TV, your car? Heck, my wife's new ovens have software embedded in the digital display that takes all the guesswork out of baking! Whatever business you're in, be it financial services, public sector, consumer products, insurance, healthcare, energy, or logistics, you name it, you can no longer simply look at software or application development as a support function. Software IS your business.
Some Reflections On The Deal For Competitors, Partners, and Customers
On December 3, SAP announced the acquisition of SuccessFactors, a leading vendor for human capital management (HCM) cloud solutions. SAP will pay $3.5 billion (a 52% premium over the Dec 2 closing price) out of its full battle chest and take a $1 billion loan. SuccessFactors brings about 1,500 employees, more than 3,500 customers, and about 15 million users to the table. In 2010, the company reported revenues of $206 million and a net loss of $12.5 million. A price of $3.5 billion is certainly a big premium, but the acquisition catapults SAP into the ranks of leading software-as-a-service (SaaS) solution providers — a business that will grow from $21.3 billion in 2011 to $78.4 billion by 2015 (for more information, check out our report “Sizing The Cloud”). The deal will certainly help SAP to achieve its 2015 target of $20 billion revenue and 1 billion users as it mainly targets the 500,000 employees that SAP’s already existing customers have. The deal is expected to close in Q1 next year. However, because most of the stocks are widely spread, stakeholders might hold back for now, waiting for possible counter bids from competition.
We live in a world of increasing complexity: an increasing number of communication channels, an explosion of social data, the intertwining of sales, marketing, and customer service activities, and a growing amount of information and data that customer service agents need to answer customer questions. These issues complicate the challenge of being able to provide customers the service that is in line with their expectations — service that keeps customers loyal to your brand yet that can be delivered at a cost that makes sense for your business.
Being able to deliver the right customer service involves:
SAP is a paying a substantial premium to acquire SuccessFactors, a leading SaaS performance and talent management vendor. The press release of December 3, 2011 states that the deal price of $40 per share is a 52% premium over the Dec. 2 closing stock price. Even more startling is that SuccessFactors has a revenue run rate of roughly $300 to $330 million for 2011, and the acquisition price of $3.4 billion is more than 10 times revenue! Why then did SAP make this move?
SAP’s cloud strategy has been struggling with time-to-market issues, and its core on-premises HR management software has been at a competitive disadvantage with best-of-breed solutions in areas such as employee performance, succession planning, and learning management. By acquiring SuccessFactors, SAP puts itself into a much stronger competitive position in human resources applications and reaffirms its commitment to software-as-a-service as a key business model.
In my recent research for a soon-to-be-published Forrester Wave™ on human resource management systems (HRMS), I noted that SAP has more than 13,000 customers using its HCM suite. Yet the adoption of SAP’s learning and talent management products is much less (a few thousand, perhaps), which is noted in my colleague Claire Schooley’s “The Forrester Wave™: Talent Management, Q2 2011.” The talent management Forrester Wave also clearly shows that SAP’s embedded talent management offerings lag well behind the best-of-breed specialists in learning and performance management. The bottom line here is that SAP HCM customers predominantly run best-of-breed talent management solutions alongside their SAP core HRMS (i.e., the transactional employee system of record).
Your customers are using social media in their private lives. Facebook has more than 800 million users that collectively spend more than 3 billion hours a year on the site. Twitter, YouTube, and LinkedIn have large numbers of followers as well. What are you doing to engage your customers in the medium where they are spending their time?
You can’t add social technologies in a silo; they have to be intergrated into your customer service ecosystem so that they extend and add value to your current operations. Here are six ways to add social technologies for customer service in the right way:
Start by listening to customer conversations. These conversations can surface general issues with products, services, and company processes. Make sure you create workflows to route surfaced issues to the correct organization so they can be worked on.
Flag and address social inquiries. Understand the general sentiments expressed in these conversations, but also identify specific customer inquiries and route them to the right agent pool for resolution. Tie feedback to customer records so that agents are aware of customer sentiments so that they can personalize future interactions.