Pretzel Logic – Enterprise 2.0

Marc Benioff unveiled what he described as Salesforces’ “biggest breakthrough” – an enterprise social networking platform dubbed Chatter.

Here’s a video interview, courtesy of Dennis Howlett, that provides insight into the drivers, challenges and opportunities for moving to more open constructs in the workplace, as Salesforce sees it:

VentureBeat has a straightforward run down of the proposed feature list. Some other good commentary as well:

Jeremiah Owyang chimes in with what, I sense, is on the minds of many right now:

Trying to grapple with understanding Salesforce’s Chatter, is it something *new* or just a *me too*? #DF09

I’ve seen all of these Chatter features (at least in parts) from Jive, Telligent, Lithium(client), Socialtext(client), Yammer, #DF09

Dennis Howlett’s skeptical:

Salesforce.com may well be the poster child for hip and cool apps that bring the consumer experience to the enterprise but it will likely find CXO’s baulk at the idea of Chatter as a useful addition to their Salesforce.com environment. Only time will tell whether Salesforce.com marketers have judged this correctly.

And Michael Krigsman concludes:

Regardless of where Salesforce decides to take Chatter, the announcement demonstrates that social computing space is reaching a tipping point, which I think is great.

I’m baffled by the name of this service but on the whole, my sense is that this is a huge development for the enterprise software business, as well as a definitive stamp of validation for Enterprise 2.0 constructs and technologies. Assuming of course that Salesforce.com gets this to market as promised.

Context Built In

Chatter is different. Its got the one thing baked in that other applications don’t – context. Built in from the ground up.

Back in February of this year, I wrote about how social computing constructs can make a difference to enterprise sales organizations. Based on our work with sales and marketing organizations at leading enterprise and voice of customer (sales reps) interviews with over 900 sales reps, I laid out a simplistic illustration of what makes a sales rep tick:

• Media watching is not a sport for sales reps. Feed them the good stuff and they’ll consume it.
• Data/Intelligence extraction over collaboration. “Give to Get” doesn’t fly with most sales reps.
• Good reps know exactly which 8.75 data types help them bust quotas. No more, no less.
• In spite of the above, don’t expect them to dig for it. They’d rather use the time to cold call a lead.
• Sales reps often ignore a lot of what marketing might offer or recommend.
• They don’t personalize portals & intranets.
• They rather search than browse; they want answers, not search results. (ok, who doesn’t!)
• CRM apps often morph into reporting mechanisms that sales reps are mandated to use.
• Pre-sales engineers (in the case of High Tech) often do most of labor intensive tasks in the sales cycle (assembling proposal components, finding SMEs and references, etc).

Super impose these characteristics on the features presented in the Chatter demo and I say we have a solid start. Chatter’s got context and intent built in for the sales organization given its close out of the box linkages to Salesforce.com’s flagship CRM application. Next, the activity stream/ feed metaphor was made for the sales rep: Why? Given how they prefer to work, it 1) enables them to pluck important nuggets out of the stream that support the sales process and 2) lets the best minds wrap around a task at hand (RFP, prospect inquiry, customer support issue and the like). It won’t all just happen out of the box but the application has the potential to make it a hell of a lot easier.

Process + Social

Last week I wrote a post called “Why Process Barfs on Social”. My central point was that unless we see a social + process in context, Enterprise 2.0 won’t realize its full potential. Whilst tools certainly won’t provide the solution alone, Chatter has the capability of being the first integrated showcase where social concepts are unleashed to enrichen discrete processes (in this case, closing and keeping customers) towards established performance goals.

There’s no question that some of the most important data that sales reps need reside outside of the confines of traditional CEM and sales applications. They sit in home grown contract registries, support agreement databases, 3rd part news and social media platforms, ERP systems and very important – the minds of known and unknown colleagues. Chatters’ platform capabilities enable access to these data sources and people. This, along with the ability to collaborate around an object ( a lead, a competitor, a customer, a topic) brings process + social closer than ever before.

One Part Offence, Two Parts Defense

Despite the very convincing assault on Microsoft SharePoint by Marc, my sense is that this is more defense than offence on Salesforces.com’s part. Taking on the installed base of SharePoint may be a longer term goal but for now SalesForce needs to make its existing applications useful to sales reps and move away from being a glorified reporting application for operational bean counters or (as Scott Schnaars suggests), a contact management system. Not to mention the rising interest in so-called “social CRM” services. Chatter gives reps a reason to stay within Salesforce.com a little while longer and amps up the sustained utility of the service.

Distribution

Whilst this is validation around the concept of social computing in the enterprise and pureplay vendors will see a rising tide effect, there’s a downside as well. Its tempting to say that pureplay vendors had these capabilities for a while and can hold their own. The reality is that feature shoot outs play but one role in enterprise purchase decision making. Salesforce brings its powerful distribution channel, out of the box process integration, and a now social marketplace in AppExchange – together providing a very compelling reason for enterprises to consider this as a company-wide social networking platform.

Customer Centricity

This, in my opinion, was the biggest lost opportunity in the launch of this service.

One of the reasons for Bloomberg LPs ungodly success is that every single employee’s bonus is tied to new sales and renewals. IT, Product, Marketing, Support, everyone. That means everyone prioritizes their work around revenue. That’s extremely difficult to do especially since only a chosen few at most companies have any control or even insight into the sales process. Now, with Chatter being seeded in the nucleus of managing customer relationships in the enterprise (i.e. CRM), there’s the opportunity, for the first time, to provide a universal lens into the process of courting, converting and servicing a customer. Everyone can see the sales and support process live and chime in with expertise, helping cradle the process to revenue and customer satisfaction. The big value proposition of the enterprise social web is improved customer centricity and there’s a unique opportunity for Chatter to make this a reality. I wish Salesforce had seized this opportunity to present a model that can transform how organizations and their partner ecosystems can be structured around the customer.

$50 bucks a user per month? Ouch!

Yes it’s a lot. But what strikes me as odd was that Salesforce did not offer some sort of basic/read-only access to Chatter for non Salesforce users at a given customer. What better way for others to see where their input is crucial to an ongoing project, RFP, discussion etc and make the case for purchasing that additional seat? That’s free marketing and a straight forward conversion strategy for Salesforce to move laterally, out side of sales and marketing. It’s still early so I won’t be surprised to see something similar to this.

Closing Thoughts

All up, this is excellent news for the Enterprise 2.0 space and I’m thrilled that a process facilitator such as Salesforce has dipped its toes in the social computing arena. Its about time Enterprise 2.0 grew up and started talking business. And Salesforce is one of the few companies that can lead that charge. It’s a separate post but pure plays will gain more than they will loose with increased awareness of the business association of social computing concepts. Good for the entire ecosystem.

For a detailed look at Chatter, see Marc Benioffs (very long) interview at TechCrunch’s Realtime Crunch Up Event.

I’m bullish.

Update: Great analysis on the infrastructure view point by Esteban Kolsky.

I’m at the KMWorld Conference in San Jose for a couple of hours this afternoon, sitting in on the Intranet 2.0 session with Toby Ward. Toby’s got some good pointers on the value and current state of Intranet 2.0. Many findings from his firms Intranet 2.0 research report as well.

I’ve tried to capture some of these here for your reading pleasure:

• 2.0 brings structure to informal conversations
• Nearly 70% of all internet users use social networks
• 30% of employees under the age of 25 would leave their job if the company banned tools such as Facebook
• British Telecom has 900,000+ Wiki Pages
• Reason for using Enterprise 2.0 tools: 77% for collaboration; 49% for knowledge management, only 19% for cost savings
• Satisfaction levels are low in the Exec Suite for (38% are not satisfied)
• Barriers to success: Minimal Exec Support (33%), Lack of a Business Case (30%), No IT Support (31%)
• Sabre’s Intranet Social Network is built on Ruby on Rails for less than $10k

    – 60% of questions answered within one hour of posting

    – Each question posted received an average of 9 answers

    – 65% of employees joined within the first 2 months

    – More than 90% participation rate after 1 year

    – Estimated $500K savings in year one

• Verizon using Present.ly, has activity feeds internally, alerts
• 1/3 of IT projects exceed budgets and schedules by almost 100% in SMB companies (Gartner)
• “Intranet will always be the poor cousin of external facing properties”

Toby showcased some solid intranet examples from leading organizations such as Verizon, Sabre and Coca Cola using everything from homegrown tools built on Ruby and Websphere to SharePoint. No usual suspects from the Enterprise 2.0 software category came up.

ZDNet Blogger and eternal pragmatist, Dennis Howlett is at it again. As a follow up to his original “Enterprise 2.0: What a Crock” post and an attempt by a panel at the Enterprise 2.0 conference to respond to his contention, he validates his original argument, saying:

What I find staggering is that despite the panel’s general acknowledgment that ‘it is early days’ they have no clear answers for solving the problems that Enterprise 2.0 evokes. If this is the best that industry can put forward then forget it. There are far bigger problems to solve like correctly managing the workforce in times of economic crisis, smoothing out lumpy supply chains, beating down on data center costs or just getting ERP to deliver the benefits that were intended and which have consumed billions of IT spend dollars.

Given how the discussion on Enterprise 2.0 plays out on the blogosphere as well as at conferences, you really can’t objectively argue with this statement. In fact, Ill go further: The ‘Its the early days’ argument just doesn’t stand up. No different from the plethora of consumer services that we all use (Twitter et al), first impressions are lasting impressions in the enterprise setting as well. As participants, we make up our minds very early about the usefulness of a program, technology or service. And so if intent, incentive, context and usability are not hard coded into the effort from the get go, its never going to have the required street credibility, no matter how much time and money you throw at adoption.

And if you can’t shake fact that Dennis often sports an ERP-colored lens, a fresh eye provided by Venturebeat reporter Anthony Ha also results in a similar conclusion.

The Colossal Enterprise 2.0 Short Sell

The problem is that, in the context of E2.0, there’s little discussion around performance objectives where social computing constructs and technologies can move the needle on discrete but large scale business solutions. Equally bad is that there’s little thought and discussion around the optimal solutions architecture and combination of process + social that can solve large scale problems that keeps the c-suite awake at night. Instead, the discussion is dominated by suites vs. platform debates, more technical gobbldygook (to an executive at least) about feature superiority, endless back-to-the-drawing-board definition debates, and post deployment adoption difficulties that in actuality might not have been so bad had the requisite execution planning been considered in the first place. I’m not pointing fingers, by the way. I also engage in some of these when prodded.

In actuality, Dennis’ assessment is not entirely correct. It’s just that the Enterprise 2.0 airwaves (and conferences) are subsumed by weak business benefit alignment exacerbated by tactical discussion around ‘strategy’ (NOT) that centers around suite implementation, why no one stuck around after launch, and how email sucks.  All that achieves is driving the promise of social computing constructs further and further down the food chain – to a place that few executives really care to hang out at. And the process performance practitioners and pundits have a field day with all of this.

The Beef is, In Fact, Here

My colleague Oliver Marks (who also takes on this issue) and I co-chaired the strategy and execution planning track (review by Ben Kepes | CloudAve) at the Enterprise 2.0 conference where we ran a 3 hour workshop on how to get executives to understand the business value of social computing in the context of performance goals that keep them up at night. Following that we ran sessions that addressed delivering tangible value in the context of known functions and processes in the enterprise: purpose driven collaboration, reducing customer support costs via social concepts and improving product innovation via social concepts. No tools, no features and frankly no adoption. Just performance acceleration via strategic process and performance alignment – topics that are central to the consulting work that Oliver and I are involved in and frankly those that need to dominate the discussion around Enterprise 2.0 (detailed below).

How would the skeptics respond if they heard GetSatisfaction CEO Wendy Lea explain how Nike centrally manages its offsite community discussions for a whopping $8,000/ year? Or Altimeter Group Partner, R Ray Wang’s estimate that social computing concepts, when injected into process, actually reduces costs 2 to 4 X times over those very ERP-esq call center/CRM technology driven programs that Dennis and other skeptics are all too familiar with? Contrast that with the fact that traditional CRM systems on their own are often nothing more than glorified reporting systems that sales reps are mandated to use, in exchange for their commission check. Building on Rays assertion, now, with the strategic use of social computing concepts and technologies in context, these new approaches help nip customer support problems early and at a significantly reduced cost. As important, they inject qualified leads into traditional CRM systems finally giving them a real performance acceleration purpose, beyond bean counting by a Sales Operations Manager. That’s process + social, exponentially improving performance.

Want more? Take the case of how an extremely conservative organization such as Chevron  significant improved safety risk and improved performance:

• Chevron used social computing (in this case to generate ideas) constructs and technologies to find new applications for patented processes created at one of its oil refineries. These processes, powered by ERP inventory management as well as other systems that manage chemical mixes, fume levels and repair management were limited to one process and one physical location. Idea management via social software enabled Chevron to find and select 6 out of 115 re-application candidates globally where existing patents were reused or extended as new patents, to also improve similar processes on aboard ships, offshore refineries, energy exploration efforts and other “dangerous monitoring environments”. Federated risk management programs and more patents – thanks to the power of social computing that brought the right minds together to ideate and collaborate.
• Second, reducing safety risks at residential and commercial communities that sit above oil pipelines is obviously critical to Chevron. They used social computing constructs  to get its IT department, ERP inventory management provider and GPS system vendor to generate ideas and to collaborate on a new approach to removing process breaks and paper based processes that impede timely community notification when pipelines break. Social computing was central to this effort to speed up communication to folks that lived close to pipelines and to reduce the time from problem notification to repair.

In all of these cases, data, and intelligence normally buried in closed process centric activity and systems were pushed into people centric social realms for improvement, only then to be put back into process systems in their newer highly optimized forms. If these are not clear examples of how process and so called enterprise 2.0 social concepts came to together to accelerate performance, I don’t know what is. And I’m willing to bet that if the naysayers saw more of these examples, they would pontificate based on a different set of facts.

I suspect this is what SAP EVP, Zia Yusuf might be thinking when he tweeted

@dahowlett blog and wikis will not drive value alone, I think the trick here is to connect "crowd insight" directly into specific bizprocess

…and what ex-SAPer and author of Driven to Perform, Nenshad Bardolliwala credibly elaborates on in his architectural illustration of where social computing can co-exist traditional process based activity.

Whilst we are on the subject of SAP, think those ERP laden processes are all that?  Lets see how Tony Hsieh feels about not using community constructs during, say, the order to cash (and refund) process to provide the same insane level of customer service that Zappos offers during the pre sales process. Sure, you need to have compliance and governance covered, but social constructs injected strategically drastically improves the quality of output in a world where customer centricity is inevitability becoming front and center.

But truthfully, in the defense of the Process advocates, what else can they benchmark against? Certainly not the prevalent E2.0 discourse that’s focused on unseating Knowledge Management, Email, Intranets and Portals to drive nebulous benefits such as productivity, time savings, and worse, the rudderless catch all – workplace transformation.  All in all, these older technologies and programs have shown little to no large scale performance acceleration and the C-Suite is acutely aware of that. If for nothing else, at least SAP helps to keep the SEC, Justice System, FDA and IRS off your back.

The Moment of Truth

Don’t get me wrong, there’s a lot of real work required in the area of adoption that dominates the airwaves and I don’t mean to discount these efforts of some very hard working folks. And even ERP, CRM etc have their own share of usage problems, giving birth to a sizable industry that just focuses just on ERP/CRM training to drive proper adoption. The difference is that intent and the business case for using these technologies are dead clear. Something that’s just missing in the Enterprise 2.0 discussion and stated promise.

The moment of truth is about to hit this category over the next 12 months where executives are going to ask the hard questions about the applicability of these constructs and technologies to performance acceleration and to alignment with discrete business goals. Anything but a succinct answer that involves the right balance social + process and the estimated switching cost will result in E2.0 being tragically (and wrongly) regarded as yet another example of Micky Mouse technology that belongs on a server under someone desk, if at all.

The choice is clear.

Update: More from Dennis on ZDNet commenting on this and some other very good posts on this topic.