Focusing on the ROI 2.0 Part 3.

by Gil Yehuda on August 25, 2009

in Enterprise 2.0

In this part 3 I’ll share some thoughts related to the first two blog posts of this series. I’ll preface that there’s a lot to say but this is only a blog post. So if you want to talk about this some more, drop me a note and let’s set up some time and talk.

The evidence that I gather so far points to Social CRM being in a very favorable growth position. I look at a couple of indicators to get a sense of the overall health of a market place. These include customer growth and diversity, vendor success, as well as intermediaries and ecosystem player activity. I also look at the ease of adoption for the products – measured by a couple of factors too. These include who is involved in the product purchase, degree of integration within enterprise applications, cost/value, what it offsets, and other such factors.

Social CRM vendors are developing valuable software that customers are able to understand, implement, and find useful. This, along with positive indicators above bodes well for the Social CRM market. But what can E2.0 learn from SCRM successes?

One of the obvious things is that Social CRM has a design surface upon which to hang functionality. The Social CRM vendors I mentioned in the previous post are not inventing new CRM systems. They offer plug-ins that works with Salesforce.com, SugarCRM, Oracle CRM, maybe a few others too. You don’t have to build a new CRM in order to add social features to it. Customer-facing Workers (CfW) already use a CRM system.  Adding “social” to an existing system is much less disruptive than adding a new system.

Contrast E2.0 vendors — whereas Information Workers (IW) use Outlook as their primary workplace tool, most E2.0 vendors don’t build Outlook plug-ins. Sure you can create Outlook plug-ins, just like you can create Siebel plug-ins; its doable but painful.  Some E2.0 vendors support integration (at various levels) with SharePoint – another common place to for information workers to “do work”.  But SharePoint is not to IW like CRM is to CfW.  At least not with most of the SharePoint implementations I’ve seen.   Moreover, some E2.0 vendors are out to unseat SharePoint. I understand the sentiment, but it does add a barrier to the pitch, especially if the client uses SharePoint for other business needs.

So given the lack of an effective design surface upon which to add functionality – most E2.0 vendors provide a new place for information workers to do their work.  And many say that E2.0 success implies the significant reduction of email.  Sounds OK on paper — but it’s much harder to implement a new place to do work (the E2.0 platform), especially if the old place to do work (Outlook) is not going to go away so soon.  What results is E2.0 vendors coming in with great solutions, but IT buyer see “yet another system to manage” that usually does not displace another.  So if they had 30 products to juggle and manage, now they have 31.  Uggh.  That makes the pitch harder.

Another difference between the SCRM vendors I mentioned in the previous post is that they generally bring information from outside the corporation.  E2.0 tools generally seek to collect information from inside the corporation.  It is simply easier to ramp up and get activity on a system when you get existing information from the outside than to get people to create information.  And if any of these tools are deployed as a SaaS solution, it’s easier to get approval to have SCRM data in the cloud than to put company IP outside the firewall.

Another obvious difference is the ease of which the SCRM ROI story works.  You can easily measure if there is a return on investment — and research suggests that if you are the right kind of customer, you’ll find the ROI to be very high. Contrast to E2.0 — where the story is harder to articulate.  I’m not saying there is no ROI model (I have collected 7 models).  I’m asserting that SCRM vendors have a much easier time demonstrating it.

So E2.0 vendors face at least three challenges that SCRM vendors don’t.  Those E2.0 vendors that leverage existing IT infrastructure (e.g. tools like NewsgatorTelligentTomoye and others that add functionality to SharePoint) have a certain advantage when selling to IT shops.  Those that don’t take internal information and put it outside the firewall have some advantages too.  And those that can articulate a crisp ROI story that is relevant to their prospective customer — bless you for that, ‘cuz it makes a difference.

A final thought: in my first post in this series (and in the first post on this blog) I described my understanding of “Enterprise 2.0″. I say that the term describes a new kind of workplace that leverages tools and behaviors inspired by the Social Internet (Web 2.0). If you start playing definition games you can ask things like “Is SCRM = E2.0?” or “Is SCRM part of E2.0?” – maybe this is a 16th fight?

Technology and cultural behaviors change people and organizations. The Internet has brought people and workplaces together. The Social Internet (Web 2.0) has amplified this effect. When I started in the working world, things were much different than they are now. Major technologies and technology events caused changes in organizational behavior (e.g. think of the Morris Internet worm, IE viruses, Linux, XML, the Webcam). Enterprise 2.0 describes a change to the Enterprise. But what is that change? Most E2.0 folks focus on the leveraging of social behaviors and collaboration tools to create content, new organizations that leverage weak ties, and change the nature of workplace boundaries. Social CRM does all those things — but in a very different manner. I see SCRM and E2.0 as very different in method and message.

But they are very related too. Both leverage the same tools and behaviors. Both attempt to improve companies by adding value inspired by the Social Internet. And both will run into each other in an implementation at a customer site. So I suggest that E2.0 vendors and SCRM vendors get to know each other a bit. There are leverage opportunities for both of you. You are selling to the same customers, after all.

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