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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Next big thing for SMBs: Need for Enterprise Performance Management

CRM has become a core application for businesses and we have already seen that Sales Force Automation and Marketing Automation functions have been quickly incorporated along with Business Intelligence.  All of these can use the same or linked tables to provide a 360 degree view of the sales and marketing process. However, today, we have finally come to a place where it should be easy enough for SMBs to plan and execute business strategy using a structured performance management system, like the Balanced Scorecard. Key Performance Indicators (KPIs) should be a standard part of the application architecture as should a meta-directory of KPIs that all applications can access.  To measure the effectiveness of Sales, Marketing, Operations, and industry-specific activities, each area should have standard metrics and access to benchmark data that lets the SMB know how they are doing compared to peers, but rather than only using historical data it should be based on forward-looking objectives (leading indicators) that are tied directly or indirectly to activities designed to ultimately improve financial results. SMBs are seriously interested in measuring elusive objectives like Return on Marketing Investment, Optimal Pricing, Cost of Acquisition, Lifetime Customer Value. They want integrated applications that can not only measure these objectives but also be able to optimize effectively.  This is what we call the Enterprise Performance Management (EPM).

For EPM applications to be really effective, they should be able to collect data from all applications and break into several areas; for people, productivity should be monitored through activity and results (as it already is in the new generation of SaaS applications), and effectiveness of software and equipment should be measured through algorithms that follow click paths, analyze application usage, optimize the process flow and usability of the systems. In some cases, like network optimization, filtering potential employees and ecommerce, systems should optimize themselves and human intervention should only be required when something is way outside the parameters defined by the administrator – who may increasingly be the LOB management.

With the EPM (Enterprise Performance Management) system SMBs will have a new attitude and culture that values and uses data visualization as the quickest way to gauge overall performance and specific areas of interest at a glance.

Most SMBs that have used CRM and ERP systems within the past few years are familiar with the dashboards that are available with many of these applications, either embedded or purchased separately. We believe that Dashboards will continue to evolve and be dynamic in several ways; the way they use data from subsystems like ecommerce and other real time feed sources, the way users can personalize the layout of their dashboards. Similarly, within the EPM, the actual KPIs should be dynamic and have the ability to build KPIs “on-the-fly” by calculating variables on the screen and saving the result in a meta-repository for all to use. It will have to become the norm.

While several SaaS vendors allow this kind of metric building and start the user at a dashboard, we have yet to see anything targeted to the mid-market or SMBs that connects the performance across front office, production, fulfillment and customer service. NetSuite does it to some extent almost out of the box. The market has to catch up. While this level of functionality is an excellent target, small businesses can probably get by with a good understanding of leads, opportunities, customers, invoicing, billing and customer service (or the appropriate subset) by integrating together several applications from different IT vendors. But the need for EPM is genuine and the industry has to quickly design solutions to empower SMBs with enterprise-level EPM technology at an affordable price.

 

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Oracle takes the plunge with Eloqua – Techaisle Take

We have covered Marketing Automation as a major topic, especially through the Techaisle SMB Marketing Automation Study conducted in US, UK, Germany and several blog posts, commenting on the rapid growth and consolidation in the market. In one fell swoop Oracle is now addressing a US$3.5 billion opportunity in the US by 2015 and US$6.0 billion opportunity globally.

Oracle’s announcement that it would acquire Eloqua for $871M, a leading Marketing Automation vendor, seems a little odd at first, mainly because majority of Eloqua’s customers are said to be using Salesforce.com as their CRM platform, and because Oracle competes with Siebel-on-Demand and recently released its’ own Fusion CRM product.

In the typical Oracle fashion of acquiring existing market leaders, i.e. Siebel Systems, PeopleSoft and JDE, Oracle snatched up another jewel for the Ellison crown, apparently valuing B2B and Enterprise-level functionality over SMB and Social Media Marketing automation that have been the focus of arch-rival Salesforce.com. It also sends a message to Redmond, whose recent acquisition of MarketingPilot seems to offer a substantial list of features and functions, but does not carry the weight of Eloqua’s brand. In the short term, it kind of looks like a mixed bag; the repercussions of the purchase seem to revolve along these areas:

SMB Customers:

1)     Oracle says they will continue to support third party applications, but they have a huge vested interest in on-premise CRM in Siebel and other solutions that will compete for resources,

2)     Enterprise customers who still have a staff to manage applications may be open to another level of integration with a combined Fusion/Eloqua/Siebel offer, but for those SMBs already on SFDC, it is very unlikely that there would be a compelling reason to move from SaaS to an on-premise model; getting away from capital purchases, IT headcount, maintenance fees and software upgrades was the main reason for going with Salesforce.com from the beginning. Same for those who are already managing their marketing campaigns and customer communication programs using Eloqua; it is hard to take that away without some revenue risk and employee dissatisfaction.

3)      In a recent Techaisle survey, 77% of SMBs interviewed stated they were looking for vendors to reduce complexity. The type and level of integration of Eloqua into the larger Siebel suite will either make things more or less complicated depending on the approach taken by product managers to create a seamless experience.

Competitors:

4)     Oracle denies access to Eloqua’s technology to Salesforce.com, which would have been a very good fit both in terms of customer acquisition/migration and start up culture. This may well be the most important (short-term) advantage gained by Oracle. This moves Marketo, SliverPop and others up the ladder as the large independents in the space, with Hubspot and Marketo obvious next-in-line M&A targets, in a market that has seen scores of start-ups, mergers and acquisitions over the past few years.

5)     Despite a 30% premium paid by Oracle for Eloqua ($23/share over the market $17), there is already a class action suit alleging that the board should have shopped a buyer more aggressively, suggesting a $27 price as more reasonable. No comment.

6)     Over the longer term the implications are larger in a market that is moving fast, which will be influenced increasingly by Big Data, Automation and Optimization -  Enterprise capabilities to compete with the big players like IBM,  Salesforce.com and  SAP, who will be bringing competition and automation to a new level in the next few years. A recent Wikibon Post is a good example of how hardware and software are evolving to meet these emerging real time challenges. The post describes how fast the bar is rising in optimization in general and online advertising in particular:

“Many commercial Web publishers make space available on their Web pages for banner and display advertisements. Typically, when a user opens such a Web page, the browser reaches out to an online ad exchange network and requests an ad unit to serve to that user. The ad exchange broadcasts this information, often enriched with behavior data specific to the user in question, to multiple advertisers. Each advertiser compares the information against its internal ad inventory and existing ad campaigns to determine what that ad impression is "worth" to them. It then decides whether to place a bid and at what amount. Bids are returned to the ad exchange, which determines who the highest bidder is and delivers the winning advertisement.”
- Wikibon


Online Advertising Forecast, Kleiner PerkinsAll without noticeable lag to the user. These are the kind of industrial strength capabilities that are on the way as the market compounds at almost 130%, dominated by Mobile spending as devices grow by the hundreds of millions, as shown in this Kleiner-Perkins forecast.

Who’s Next?

So in our opinion this is a significant acquisition for Oracle, mainly because Eloqua has a strong base of satisfied users and a strong brand, and strong technology that can be applied to Oracle’s stack in the long run. The $871M price tag was not enough to prevent a lawsuit for some shareholders, but represents a sizable investment for Oracle as they strive to define the ultimate Customer-Centric, Multi-Channel Relationship Management platform in their race against the large horizontal vendors in the space (IBM, SAP, SAS, Google, Teradata).  To this end Oracle has acquired eight companies in the last two years (ATG, FatWire. Endeca, RightNow, Inquira, Vitrue, Collective Intellect, and finally with this announcement, Eloqua). The scope of what used to be called the “360ᴼ customer perspective” has evolved to include pre-sales, sales, post-sales, customer service and lifetime customer value application components, with a relentless push to automate and integrate each piece of the puzzle.

In the wake of this acquisition, an obvious question is who's next? As mentioned earlier, Marketo is an obvious choice, as are Silverpop Hubspot, Responsys, and others.  Will SFDC respond in kind or continue to focus on the lower end of the market and Social Media acquisitions? Regardless, we think 2013 will continue to see a rich market for Marketing Automation M&A activity, following two years that have seen scores of transactions in the space.

 

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Pick of the Week: Dell’s SMB Integrated Cloud Front Office

Solution for End-to-End Lead-to-Cash Workflow

As part of our Pick of the Week series, we requested an online demonstration of what sounded to be too easy, and were privy to a demo of Dell’s DCBA (Dell Cloud Business Applications) to see the lead to cash process from building customer awareness to sales contract. We were impressed at how far the industry, and Dell, has come in the last few years at solving the practical challenges around marketing and sales integration. Dell is providing enterprise-level CRM capabilities to SMBs that might have run into seven figures (and a year-long implementation) only 10 years ago. And going even further by tying all this front-office activity together with accounting to synchronize invoicing and billing into the process, insuring that sales staff can be paid without spending 12 hours a week updating their CRM records, and Finance does not have to chase down account managers for collections and accounts receivable updates on the 29th of every month.

Small and Mid-Market Companies Choose Online CRM as the Shortest Path to Revenue

SMB CRM Integration

The killer Enterprise Application to emerge at the end of the Client/Server era was CRM, which spawned a huge ecosystem of sales process, configuration and customization experts. The next step was online CRM solutions led by Salesforce.com, a true multi-tenant architecture and Cloud ecosystem in and of itself. The ample supply of CRM expertise, along with the market needs to generate revenue as quickly as possible resulted in a wave of online CRM start ups and then pure-play Marketing Automation vendors that were eager to plug into the accelerating number of customers opting for a services model.

 

Falling Through the Cracks

Even with the best CRM software and a lot of customization, even for those who spent the most on these systems, and especially large organizations, getting to a state of accurate and current information has always been a challenge. The perpetrators tend to be too many steps in the process, unclear roles and responsibilities, limitations in the software that force workarounds, ineffective hand-off of customer relationships, different levels of process and software maturity, and many others. Much of this was caused by contention for capital budgets, the complexity and expense of internal systems integration and never being able to get ahead of the technology curve, resulting in a large percentage of CRM implementations failing outright. Properly selected and integrated Cloud-based Applications like this one from Dell have already gone a long way to eliminate many of these challenges by offering a shared customer database approach from the very beginning.

Dell SMB Lead to Cash Application

 

Following the image above, it is quickly apparent that the demand and supply cycles are covered by this approach: Lead to Opportunity, to Proposal, to Customer Support, which is good for the customer. The internal operational cycle is also enabled from Marketing to Sales to Invoicing and Billing, to Customer Service, which makes life a lot easier for everyone involved.

Dell End to End SMB SalesThe demonstration was recorded and we have included relevant excerpts that follow the process. Dell offers Pardot, a leading Marketing Automation Solution for marketing which connects automatically to Salesforce.com by synchronizing User-IDs from each component, in less than a minute. Sales Funnel, Alerts, Dashboard, Forecast are coordinated out-of-the-box, and rules are customizable between the applications.

Next comes Conga, which merges customer information, selected products and services, proposal template and cover letter into a print-ready quotation that shares all data with the appropriate customer and pipeline records.

EchoSign, an e-Signature solution from Adobe follows, allowing the customer to authorize the order securely and purchase immediately, which is always a good thing in Sales.

The next part of the solution solves the ever-present issue of ensuring the Sales and Accounting Systems contain and report the same information. This is accomplished using the process integration presented below:

 



Dell SMB Lead to Cash Process Automation 1 from Techaisle on Vimeo.

 

As shown in the image, the same information that is incrementally collected throughout the marketing and sales process is used to auto-populate the agreement, invoice and collections data within the accounting package, for our demo, this was done using QuickBooks Online, one of several pre-configured packaged integrations that do not require manual intervention except for company-specific policies and table structures.

Again, seeing it is more impressive than reading about it:



Dell SMB Lead to Cash Process Automation 2 from Techaisle on Vimeo.

What was the name of your company again?

The benefits of sharing information between Marketing, Sales and Accounting are equally or more important with Customer Service, which is the lifeblood of all companies’ online reputation these days. Taking the data one step further into customer service affords the advantage of having the full customer history at your fingertips while fielding support calls – which provides a higher level of satisfaction and smarter service capabilities.

 



Dell SMB Lead to Cash Process Automation 3 from Techaisle on Vimeo.

 

Why this is Important

This is important because it goes back to some basic principles that improve information system management, including:

Move Data, don’t type it more than once. Whether using drop downs to input categories and exact descriptions or whole sections of records or groups of records, moving data will result in fewer errors than typing it into the system. In addition to the accuracy this offers, it eliminates a lot of the drudgery associated with maintaining CRM systems and allows sales people to get back to selling.

Build Information Incrementally. Capturing the same data repeatedly will annoy customers and staff, records should be built up over time and sections of data moved to populate application modules as they are brought online. Dell’s solution does this through progressive web forms for customer records and by sharing data between marketing, sales, accounting and customer service.

Centralize Data. Trying to manage multiple customer databases is confusing, inefficient and causes a lot of frustration. Accuracy, Consistency, Reliability and Timeless are hallmarks of data quality and all suffer from running disparate databases of the same information. While data tends to take on a life of its’ own with volume and increased usage, starting with a design that shares information between systems will eliminate problems down the line and can actually give Small and Mid-Market businessesan advantage over Enterprise customers who have been wrestling with huge CRM database and internal IT for the past 15 years.     

Keep it Simple, Get Going Fast. In a recent survey 77% of SMB complained that even there has been a lot of progress in the past few years, complexity managing IT has grown faster than the problems it is designed to eliminate. SMBs want to spend money on revenue generating activities and reducing costs, which means focus on the core business, not hiring people to manage IT adoption that cannot stay engaged full time on building the business. We were surprised at how easily this whole integrated solution came online, easy enough for a power user to manage and available to use in a matter of days, quicker for those who are familiar with CRM systems.  The Dell solution comes with fixed fee, fixed scope implementation services for all of the applications they sell, making it easy for SMBs to get going quickly with a single vendor for support.

The Bottom Line

Dell’s DCBA solution was announced last September and has come a long way since introduction. In this example the demo provisioned a new account without need for any coding; userIDs tied Sales and Marketing together.  Customers signed the necessary paperwork and and Invoicing data was moved automatically once the new account was opened in QuickBooks. For small and medium sized organizations, finding ways to make best use of their IT investments-- to streamline their sales processes, as in this example here, can be the path to increased sales and help them realize greater business success, and is certainly much easier and cost effective than it used to be.

 

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SMB Marketing Automation User Snapshot

Current penetration of Marketing Automation in the Mid-Market is higher than Small Business across the board and determines overall ranking within SMB segments. The “Currently Use” below represents either standalone applications or functions that have been enabled within Marketing Automation Suites. Our research shows that the number of applications, or enabled functions, has steadily increased from 2 in 2010, to 5 in 2011 and survey results suggest that will move to between 7 and 8 as an overall average for SMBs across all size segments. Once a quick win is apparent there is a lot of enthusiasm to move forward with new efforts.

SMB Marketing Automation Current Usage SnapshotWe have also uncovered some interesting trends that will be the subject of upcoming posts and our SMB Marketing Automation report and Updates. These trends include a fairly consistent relationship between the adoption of applications, an order of operations if you will, between several categories of cloud based services and applications; once SMBs are unfettered from the linear HW, SW, NW, Integration cycle, they are able to adopt technologies in a much more strategic way. For example, adopters of SaaS CRM start immediately investigating Business Intelligence options as soon as they are up-and-running with their CRM Dashboards and Reporting – this previously unavailable functionality spurs investment in an effort to get more visibility into other parts of the business. Also, opportunity in Integration Services abounds as SMBs commit to Cloud-based architecture.

Current Use Key Points:


Only Email Marketing, Segmentation and De-Duping are more widely used by Small Businesses in the Survey, Mid-Market companies are far more likely to use the rest of the features.

For those who use Marketing Automation, Email Marketing, Campaign Management, Message Personalization, SEO and CRM Integration are the most adopted Marketing Automation Functions – driven largely by more aggressive usage within mid-market companies.

While the market is maturing and relatively new, basic requirements like the Top 10 listed above are laying the foundation for all SMBs, but soon after there is a divergence as requirements of small businesses, typically building out their block-and-tackle marketing productivity by enabling individuals, evolve into a need to build effective teams by tightening up process and collaborative capabilities in Mid-Market companies.

Needs Evolve with Size of Company and Level of Maturity


SMB Marketing Automation Needs by SizeWhile Web-based Lead Capture and Campaign ROI Reporting were common objectives between the Small Businesses and Mid-Market Firms, other in the Top Five were different; SBs looking for more Web-based functionality like Social Media Monitoring, SEO and Analytics Dashboard, while the MBs were looking for more data-oriented functionality such as De-duping, Segmentation and Lead Scoring.

Level of integration value added opportunity for these scenarios is also different, and obviously grows as companies look to improve collaboration.

 

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