Pretzel Logic – Enterprise 2.0

Earlier this week, a post by Thomas Vanderwal on Microsoft SharePoint 2007 caught fire on Twitter and a few blogs. What started as a spirited discussion on whether Sharepoint is a respectable Enterprise 2.0 offering or not, quickly turned into a debate on Enterprise 2.0 definitions. Mike Gotta masterfully jumped in front of  the parade and steered it hard right, questioning whether Enterprise 2.0 is even a category or a rather, a philosophy around the use of social computing within existing business processes. With due respect to Forrester, I’m convinced it’s the latter.

In preparation for a meeting with an old client next week about social computing and the opportunities it presents for lead generation and sales operations, this discussion could not have been more timely for me. Here’s how I see it:

These are social computing concepts. Not Enterprise 2.0.

Enterprise 2.0 is a state that Enterprises achieve by employing an appropriate set of social computing concepts.

The promise of transforming to a next generation enterprise (2.0) involves enhancing or even ripping apart traditional processes by leveraging social concepts, to accelerate performance. Organizations do that by starting simple and applying social computing concepts carefully on a process by process basis. As basic as this message is, it’s clear that it bears repeating given the lengths Mike had to go to, to make his point.

To me, the unsung heroes of Enterprise 2.0 are the vertical offerings providers that eat/drink/sleep solutions to specific business problems, everyday. These solution providers get plenty of coverage but surprisingly, almost zero credit for the role they play in transforming their customers into Enterprise 2.0 structures. This is hardly exhaustive but here are some examples:

Lead Management: InsideView helps sales reps qualify and accelerate the sales cycle by folding in relevant structured social data from LinkedIn and Facebook, based on leads in Salesforce. The service helps you call the right lead at the right time and accelerate the sales cycle. That’s it.

Viral Marketing: Appirio’s referral management solution helps you find leads by connecting campaigns entered in Salesforce to connections on your organizations Facebook fan pages and with employees friends and contacts. Appirio brings more qualified leads using Facebook user profile data to campaigns.

Product Development: UserVoice, and Salesforce Ideas remove risk from product development processes and drive innovation by enabling you to ‘crowd source’ features and product designs before you spend gazillions designing and developing solutions.  One objective – innovate via social leverage.

Customer Service: GetSatisfaction improves the quality of customer service and cuts costs by letting users help each other.

Brand Management: Radian6 and Visible Technologies keep brand marketers informed about market sentiment regarding their products and organization.

I could go on and on.

It would be unfair to imply that so called Enterprise 2.0 vendors are doing nothing in this area.  For instance, Telligent, Jive Software, Lithum and others have customer facing offerings designed to help enterprises generate brand awareness, engage with prospects and customers and surface important analytical data. Newsgator offers social widgets help distribute and monetize content for media companies.

Does that mean horizontal platform solutions, especially those that are behind the firewall are a lost cause? Absolutely not. There’s ‘massive’ opportunity for these solutions to rally around specific business processes and design versions of their products to accelerate and transform specific internal tasks. There’s billions locked up in Supply Chain, Product Development, Retail/POS etc., that represent a mammoth opportunity for social computing technologies. Emulating the portal business of the 90s and sticking to a horizontal solution would be tragic, in my opnion.

The truth is that IBM, Oracle, SAP, et al dominate systems that enable business activity. That said, in my opinion, social computing concepts represent the first opportunity in two decades to successfully move the nucleus of business process management from structured, data centric ERP systems, over to people centric platforms that break silos and artificial firewalls in the enterprise. That entails strategically unleashing social computing on each of these processes and owning the environment where significant improvements in business performance are realized.

I’ve seen lots of commentary lately from smart folks that I respect about how social software can help organizations, accompanied with varying approaches to ROI justification.  Typical stated benefits include the following:

• Time savings or improved productivity
• Increased connectivity amongst employees and customers
• Improved transparency and reduced reliance on Email
• A clearer understanding and leverage of the social graph
• Other such soft ROI metrics

The good news is the executives that I speak with have heard the E2.0 message loud and clear. The bad news is that many are at a loss when it comes to extrapolating these into solutions that their business units are desperately seeking.

Let’s pick on my favorite: “Time Savings”. The standard justification here is:

Here’s how any smart buyer would respond: “Saving me 4.6 hours of productivity per employee per week means each employee gets to duck out of the office at noon on a Friday. Where’s the tangible benefit? Unless you show me how this leads to needing less unit resources per task and therefore a reduced headcount, I’m not going to see any real savings.” Sorry, that’s a harsh example in these economic times, but you get the point.

Take “increased connectivity” or a better understanding of the social graph of prospects or customers. So what? Unless you illustrate how the increased understanding of the social graph was put through the metrics blender to generate qualified leads based on say, “purchase intent and the ability to spend $X”, that’s just good raw material towards a ROI analysis; Not ROI.

The problem with any of these ROI examples above is that none of them are really what a smart buyer can justify to a senior executive as “return”. What’s worse, software was sold a decade ago in this fashion and the scars from unattained real dollar productivity savings from CRM, Portal and KM implementations are still very visible in the enterprise. To me, all of these ROI examples listed above are extremely important means to an end but not the end itself. We need to show how these drive revenue or save real costs and you’re going to see IT managers demand it more often than not.

Where it really hits home is when you look at the impact of this on the Enterprise 2.0 sales rep that’s out there, hustling. Putting the onus on the customer to figure out credible ROI makes the sale much much harder. You risk stretching out the sales cycle with the addition of more decision makers brought in to help justify value, or unfortunately in a few cases, to ensure adequate CYA on the buyers end.

On to a solution….

Enterprise social software needs to be sold based on one simple end goal: How the income statement will look like before and after the investment.

You might say “Well, that’s hard to do across scores of departments or business units in the typical Fortune 100 customer organization when you’re selling horizontally.” or “We sell collaboration software and the numbers vary significantly by functional group” Here’s one approach:

Don’t rely only on how you can save an average of X dollars across the enterprise. That number is almost certainly going to do grave injustice to illustrating the potential value of your product. Instead, model just 2 representative use cases at narrow functional levels even if your trying to sell an enterprise-wide deployment. Pick one that’s the most stellar and for balance, one that’s closer to the average. Saying for instance “on 5 occasions, our software enabled a sales rep to find a subject matter expert/a white paper/an up sell opportunity, resulting in total sales of $20 million” is much more tangible for an IT director to take to her CFO. Even if the opportunity is a company wide deployment, those signing the checks get a much better view into best and average case outcomes. And it gives your internal champion oodles of confidence and credibility as he socializes these benefits up and down the food chain.

Two things that struck me recently that support this line of thinking:

Last week at the Sales 2.0 conference, it first struck me as odd that Email productivity vendor Xobni was exhibiting. Xobni is a horizontal solution that can work for any employee or individual, regardless of role. I’m guessing here but I bet you Xobni sees a huge opportunity to help Sales folks find LinkedIn and Facebook connections to leads generated by CRM systems that show up in their Inbox. Using that single use case, Xobni stands a much better chance of getting the CFOs attention. Going in with a generic company wide ’show up and throw up’ value proposition would make for a much more scattered ROI business case, relatively speaking.

Second, noted ZDnet blogger and eternal pragmatist, Dennis Howlett says:

In my argument, breakthrough ROI comes from seeing these technology through the lens of collaboration, which in turn implies process and context. I am mindful that huge amounts of value continue to be locked up in supply chains. AMR quoted a number of $3 trillion in 2005. Has that materially changed? Simply being able to communicate across supply chains in a meaningful manner could do wonders to lubricate those rusty wheels.

The money phrase for me is “…seeing these technology through the lens of collaboration, which in turn implies process and context.” When you can articulate how participatory media supports a specific context (Sales, Pre-Sales Engineering, Supply Chain insight, etc.), you have a much better shot at illustrating and delivering hard savings or increased revenue potential.

Striving for a business case that can affect line items on the income statement is undoubtedly a tall order for Enterprise 2.0 marketeers. But if you aim for the sky, you’ll hit the mountain top.

As Enterprise 2.0 vendors and customers, what other credible justification methodologies are you seeing or employing?

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I’m looking forward to attending the Sales 2.0 conference in San Francisco at the Intercontinental Hotel on March 4th and 5th.

Ironically, my last post was on the topic of opportunities and pitfalls of Enterprise 2.0 in the context of Sales. Given my work with Sales and Marketing organizations, I’m very familiar with the litmus test these buyers use (or should use) when selecting social software. I’m hoping that over the next few days, we’ll learn how well some of the solution providers have taken into account what makes a sales rep tick. Looking at the list of presenters and sponsors, I’m fully expecting to see some really useful innovation. If you’re attending, come say hi. Or register here.

Agenda topics include:

• How to Accelerate Sales in a 2.0 World
• Sales Lead Management 2.0
• Customer Engagement Strategies
• Analytics and Compensation Management
• Accelerating Productivity – New Sales 2.0 Tools
• The Foundation of a Sales 2.0 Business

Speakers include a list of whose who in the Sales community including Anneke Seley, author of Sales2.0,  Tom Barrieau from IDC, Jeremy Cooper from Salesforce.com, Scott Santucci and Brett Wallace from Forrester. I have to admit though, I’m as excited in the “LobbyCon” part of the event. Trying to understand how Sales and Marketing solution providers such as InsideView, LucidEra, Marketo and others are going to reinvent/improve the business of selling should be very interesting.

I’ll be there as part of the blogger/media folks and the plan is to soak it all in and write up a few posts at the end. I also plan on tweeting the event (@sameerpatel). The hashtag on Twitter is # sales20 for those of you that want to follow along.