Pretzel Logic – Social and Collaborative Business

Google Trends is one tool that I put to work fairly often in my consulting work. Last week I decided to benchmark some of the concepts we hear a lot about in the area of Enterprise 2.0 (KM, Portals, SharePoint) and others that we should be paying attention to (business activities such as Lead Generation, HR, Supply Chain Management, etc). The idea was to see how current Enterprise 2.0 search traffic and news volume fares against these concepts.

Search phrases are subject to human interpretation and Google’s magic algorithms. However, Google’s advertising business is built on the premise that search is a very good measure of current interest and intent. And I’m piggybacking on that in the analysis below.

What I found wasn’t flattering, to say the least.  Here goes:

1. The mindshare is steadily fixed on older incarnations of communication and collaborative mediums

• If KM and portals are what we, in the social computing arena, consider to be older, inefficient communication and collaboration mechanisms, well, that’s still where the attention firmly sits.

2. Enterprise 2.0 nemesis, a.k.a Microsoft SharePoint, continues to dominate mindshare

For good or bad, a good number of Enterprise 2.0 vendors are focused on obliterating SharePoint. So have they been successful in making a dent in the current mindshare commanded by SharePoint?

• Not the case. I wasn’t expecting to see E2.0 having caught up with SharePoint, but since the 2006 coining of the term by Stuart Eccles, and subsequent evangelism by then Harvard Business School Professor Andrew MacAfee, you would have expected at least the start of an upward trend.

3. Business activities have at least 5 times more mindshare when compared to Enterprise 2.0

Finally, in line with most posts on this blog, I went a step further to see how Enterprise 2.0 compares against a representative set of business activities and pain points, faced by most organizations. I wasn’t expecting a break through here to be honest, rather I wanted to see how far away the E2.0 mindshare really was relative to business activity:

• Customer Satisfaction, the closet in terms of search volume was still approximately 5 times more popular when compared to Enterprise 2.0; Business intelligence is the furthest away.

Some thoughts on why this is the case and where we need to go from here….

Enterprise 2.0 is plagued by tactical value propositions

The focus needs to move away from replacing email and document sharing to say, competing more effectively by better serving partners and customers. Or shrinking the distance between sales and prospects. Or accelerating product innovation by extending a hand to your supply chain. And on and on.

Over on the FastForward blog, Jevon MacDonald wrote a great post on understanding and defining Enterprise 2.0, IMO, correctly stating that we need to differentiate between Social Strategy and Social Software. Jevon is spot on when he says that there’s a need for a more strategic framework to institutionalize socially enabled business processes.

At a more tactical level, positioning internal Enterprise 2.0 solutions as more efficient incarnations of general purpose Intranets may not be an effective approach for internal champions to sell social software to executives. In my experience, general purpose Portals/Intranets, often E2.0 predecessors, have in fact not been that silver bullet in the enterprise that was meant to remedy information overload, fragmented data access or inefficient communication. That’s partly due to them being general in purpose and lacking in activity focus.

SharePoint is easy to sell

Setting SharePoint as a target is again merely a tactical step to transforming an organization. However since so many vendors are focused on this, it bares discussion.

Sometimes I wonder if it‘s precisely the structured process put forth by SharePoint that actually made it easy to define and sell, up the food chain. After buying into multi million dollar ERP systems that strictly enforced workflow and control, structured ERP might be the perfect trampoline to justify structured SharePoint. SharePoint becomes the process-enforced file management and document sharing system across the enterprise to compliment process centric finance, HR, inventory management and the other 20 ERP-driven business activities.

For more color on this topic, follow this great discussion thread about SharePoint / Enterprise 2.0 recently, by the likes of Mike Gotta, Michael Sampson, Todd Stephens, Oliver Marks, Dion Hinchcliffe and James Dellow.

Lack of/minimal association with pain points

As I’ve previously written, too much of the Enterprise 2.0 talk takes place in a vacuum. I wish more solutions were aimed at fixing focused inefficiencies in business activity, brought about by those very ERP systems.

We need to stop patting ourselves on the back for small isolated gains that were never intended to go big and remove the high viscosity that plagues many business processes today. I’m an advocate of starting small (depending on the circumstances) for proof of concept purposes but small absolutely should not mean insignificant. Start with a very important use case where the pain is high and the benefits can be huge (a large account, a flagship product, whatever) and then scale out. Too often, starting small is equated with starting where it doesn’t matter.

We, the bloggers…

I’m looking in the mirror as well when I rate Enterprise 2.0 marketing. I share the stage with plenty of other bloggers and consultants who diligently opine on the subject of Enterprise 2.0. Yet, there’s a clear need to provide additional torque to effectively raise awareness to the level it deserves. My personal belief is that this can be done by celebrating institutionalized success but also by setting a higher bar and calling out timid implementations that won’t really move the needle.

There’s plenty of visionary speak going on at the 100 thousand foot level. Most recently, Cisco CTO, Padmasree Warrior (on Twitter) wrote an inspiring post predicting amongst other things, that ‘Collaboration Networks’ will be to the Enterprise, what Social Networks are to consumers. Other terms such as ‘Social Business’ and ‘Social Business Software’ are often used to describe the new design of organizational behavior. These concepts are pertinent to board room and executive level introductions but very little is said about how to change the organizational DNA to make this happen. To be clear, I believe these visionary benchmarks are extremely important to ignite wholesale change and I’m even currently involved in such discussions with senior executives at very large organizations. But more guidance needs to be provided to managers who will take the necessary steps to institutionalize this change. That’s where strategic case studies will emerge to fuel the news cycle.

I’m looking forward to discussing this at the Enterprise 2.0 conference in Boston this summer and really talking execution, which is my focus. By execution I don’t mean only how to drive adoption for a wiki or employee social network. I mean how to also change organizational behavior to capitalize on an Enterprise 2.0 design which may well include wikis, micro-messaging tools, etc.

I’ve seen over and over again that smart business leaders who give you the time to discuss a bolder better strategy, will want to hear about how it can be successfully executed. So we need to be ready to address that from the get go.

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This morning Oracle announced its purchase of Sun Microsystems for $9.4 per share or $5.6 billion, net of cash and debt. The money quote by Oracle’s president, Charles Phillips:

This could lead to, in effect, shrink-wrapped suites of hardware and software for specific sectors of the economy, from retailing to banking to communications. He called this delivering “a complete industry in a box.”

The promise is that corporations will have what they’ve always said they wanted: one neck to choke.

There’s plenty of commentary supporting the pros and cons of this deal. ZDnet writer, Dana Gardner says sees a positive side to this:

Among them is the fact that IBM now — for the first time, really — has a true, full and global counter weight to its role and influence. Oracle plus Sun aligned with Hewlett-Packard (which I fully expect) meets and begins to beat IBM at all the important full-service IT games.

Dennis Howlett’s opinion with his “curmudgeon’s curmudgeon hat on” is:

“I can’t help but think this is a dark day for the enterprise computing business. Who worse to entrust your entire stack than Oracle, that voracious consolidator of application providers and now, it seems, guzzler of open source and hardware?”

You can read all about it here.

Looking at all this and its implications from an Enteprise 2.0 vector, a couple of things jump out at me.

System Integrators are doing the chicken dance right about now

The incremental revenue from selling stand alone applications now has a much higher opportunity cost for a System Integrator (SI). For pure play enterprise 2.0 vendors, this means that it just got order of magnitude harder to get an SI to pay attention to them, if they’re want to sell to large organizations.

Yes, SaaS is all the rage right now, but the holy grail of application software sales still is and will remain getting on the radar of the large pure play and integrated SIs such as Deloitte, Accenture, and HP (EDS). To successfully go from a $100 million dollar company to a $1B+ company, social computing vendors are going to need the reach that Systems Integrators provide. You might argue that SaaS (if its a SaaS offering) has a different distribution dynamic but honestly, unless it’s like Salesforce.com where thousands of individual buyers can put down a credit card and start using your product, it’s going to need an expensive sales force or the air cover that an SI partner can provide.

If Sun + Oracle signals an industry trend, it means an entirely new opportunity for SIs. The prospects of a lucrative integration and a waning outsourcing business being displaced or complimented by mammoth enterprise wide and complete stack deployment engagements is entirely too juicy. This could be signal another round of large ERP sized engagements that we haven’t seen since Y2K. Either way, it a massive enough opportunity for an SI to drive big ticket projects and they’re likely not going to want to be distracted by point solutions that require managing a new bench, have unproven lead flow, and require extensive training. Enterprise 2.0 has all of these characteristics at this time.

The fate of MySQL

The joint press release by Jonathan Schwartz and Larry Ellison made no mention of MySQL. Zero. Nada. Andrew LaVallee poses a good question on Wall Street Journal’s Digit Blog: “Wither MySQL?“. He quotes Curt Monash as saying that “Oracle could evolve MySQL in a direction that makes it sensible to put a MySQL transparency front end onto the Oracle DBMS”

As a social computing vendor using MySQL, whether appliance, SaaS or installed, a significant component of it’s architecture now faces an unknown future. In the immediate term I don’t expect much to happen. In the short to long term, social computing vendors are going to have to be ready to potentially jump off MySQL, which means more costs. Another scenario is that long term Oracle begins to charge for supported stand alone versions not tied into Oracles DB, which means the cost of business (and in turn, customer pricing) needs to go somewhere north. Of course MySQLs fate is all speculation at this point. Om Malik on GigaOm, sees this acquisition as Oracle removing Sun, its number one threat in the database business.

What I’m personally hoping for is that Oracle realizes that MySQL is a super opportunity for them to tackle the SMB and Mid Market business, leaving its flagship database for larger buyers. That would be a great outcome for the majority of Enterprise 2.0 vendors, as well as buyers.

Oracle wants to be the “Apple of the Enterprise”

TechCrunch Co-Editor, Erick Schonfeld says “Oracle wants to be the Apple of the Enterprise…” If this is true, in the large scheme of things (in other words, when compared to the overall Stack), social computing is but a small piece at this time. If 99% of a given customers solution is being powered by an Oracle Stack + say HP services, Oracle stands a much better chance at rolling in its’ own integrated social computing offerings, similar to how Microsoft distributed SharePoint along with Exchange. More importantly it buys Oracle time. If they power the entire stack at many of the large organizations, they have the luxury to see, first hand, when each customer is ready to tackle Enterprise 2.0 and strike when the iron is hot.

If this scenarios plays out, it will undoubtedly lead to some Enterprise 2.0 software acquisitions, however it adds uncertainly to second and third tier vendors that can’t get on the radar of corporate development number crunchers, at large acquirers.

At the end of the day, there will always be a market for pure play vendors that haven’t standardized on one platform or prefer best of breed software. It just got a little smaller. And if you sell to the mid market, this is less of an issue. But overall, as an enterprise social computing software vendor, integrator, or buyer, if you haven’t stopped to consider what this acquisition and it potential to kick off a market trend means for you, it’s time to huddle.

What other positive or negative impacts on the social computing landscape do you see?

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Dion Hinchcliffe kicked off this weekends’ Enterprise 2.0 meme with a well articulated post on determining ROI. The central theme of the article suggests that its challenging to identify where and when E2.0 ROI returns will be realized and why.

Dion goes on to say that IT managers are mainly taking a wait and see approach for the following reasons:

1. One is an broad wariness of a new horizontal information technology approach that purports to solve so many problems and will overlap with existing solutions….

2. A second set of issues is related to corporate culture and its fundamentally hierarchical nature, which seems anathema to the flattened, highly social nature of Web 2.0 in the enterprise.

3. Accurate predicting of the return on investment of an IT solution.

Dion’s post follows a series of somewhat realistic (or negative, depending on your view) articles that we recently saw from the likes of Susan Scrupski, Gil Yehuda and to some extent Venkat Rao. Venkat was focused on why culture doesn’t matter but if you look at his reasons (e.g. The Churn argument which states – Radical ideas “get adopted because the nay-sayers retire or die out and get replaced by others.”), it’s bordering on wrist-slitting, depressing outcomes, required to make Enterprise 2.0 a reality.

In a 2008, Gartner Research defines the Hype Cycle of Emerging Technologies as:

• Technology Trigger
• Peak of Inflated Expectations
• Trough of Disillusionment
• Slope of Enlightenment
• Plateau of Productivity

In his post labeled, “Enterprise 2.0 and the Trough of Disillusionment“, Hutch Carpenter creates a good summary post that explains that Enterprise 2.0 has graduated into the “trough of disillusionment” implying much needed hope that the “Slope of Enlightenment” will soon be upon vendors and customers alike.

I was thrilled to see Dennis Howlett chime in on this topic this morning with his post titled “Enterprise 2.0 promise is years off…if it materializes.” Some key quotes for me:

“Marketers would do far better to concentrate on a sliver of functionality that has meaning to the C-suite rather than grand statements, laced with competitive FUD.”

“The problem comes down to the individual perception of IP value and how that might be threatened”

“For instance, I’d be far happier to see cases where there is an identified pain point and then build out from there rather than dangling cascading network effects further down the line.”

The last quote above, my favorite by a mile, really got me thinking about how all this breaks out. Can we rest easy, realizing that we must feel the pain of natural transitioning through the “Trough of Disillusionment”? Will vendors and customers have the stamina to work through the cascading process in Dion’s diagram that will eventually show real return at the point of “3rd order cause and effect”.

Frankly, I’m nervous about both approaches. I don’t believe that most vendors (and the innovation they bring) will be able to withstand this long a process to show real ROI. Telling VC’s that we’re in a “Trough of Disillusionment” won’t be enough to raise the next round of funding in this or any economic climate. In turn, proponents of using social computing software on the customer side will likely get shot down, were they to present a long drawn process to showing real results.

As I’ve said and illustrated earlier, (as does Hutch in his post) focus on the business activity and the pain felt and you have a solid chance of skipping some of the steps in Dions’ diagram above. Sell horizontally (customer wide or employee wide) and you better be prepared to go through each of the 1st, 2nd and 3rd order cause and effects.

My interaction with LOB executives has consistently shown that in this economic climate, the knee jerk reaction has been to pour more money into current programs. New investments are being made for sure BUT instead of experimenting with new software or programs, more money is being thrown at current programs that have historically yielded the best return. With this reality in mind, showing a cascading return that has no definite time line, emanating from a new unproven technology investment, is going to mean certain death for many promising E2.0 initiatives.

Instead, focusing on a specific business activity. Prove results in a contained fashion and illustrate more attractive cost/return when extrapolated across the business unit. This affords the best opportunity to jump the natural evolution cycle and bypass some of the earlier nebulous effects of adoption that can’t be translated into real dollars.

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Over on the Enterprise 2.0 Blog, Venkatesh Rao of the Xerox Innovation Group makes a compelling case that “there is no such thing as culture change”. He goes on to list five ways to get out of the culture change argument, summarized below:

• Culture change naturally takes place because “nay-sayers retire or die out and get replaced by others. Resistance ceases because the resisters leave, and because the adopters are younger and are clearly producing more value using their ideas.”
• Inefficient or more difficult user experiences that make the transition from old to new more difficult.
• Careful alignment of incentives for those moving from old to new systems.
• Given that “people self-select into cultures containing people they want to be socially connected with” make HR needs to compete to hire those that are likely to fit into the culture your trying to grow into.
• Start at the periphery of inefficient processes and systems. In other words, start circling injured systems and be ready to step in when they cease to exist.

Noted consultant and ReadWriteWeb blogger, Susan Scrupski puts forth the most compelling rebuttal in the comments:

The 2.0 philosophies of openness, sharing, flattened hierarchies, emergent outcomes, transparency and unfettered collaboration are anathema to nearly 100% of the large organizations I’ve encountered in my zeal to evangelize e2.0.

Realistic roadblocks are presented by management with invested power/influence, governance (regulation) and legal concerns, and yes, the 9x factor that McAfee pointed out early on, which you’ve also alluded to. I do agree with you regarding the user experience and likelihood of adoption, however.

A command and control corporate culture that spawns fear, protectionism, and paranoia will never be a good candidate for e2.0. When we say it’s more about the people than the technology, this is what we’re referring to. The technology is liberating, but unless every vested member in the org chart is willing to be freed from industrial age convention, it’s unlikely change will come soon. These are corporate culture issues and they’re pervasive in the adoption story. I covered this in a post about a year ago on ITSinsider.

So whose wrong and whose right? Can you overcome the culture argument if you follow Venkats’ antidotes? Or is Susan pouring a solid dose of reality on what happens when the decision makers get in a room together.

They’re both right. From a macro, organization wide perspective, both buyers and sellers of the social computing promise will need to address and respond to shifts in the organization that Venkat brings up. Likewise, as Susan correctly says, fill a room with LOB executives, HR and IT and sell them on using software that makes the organization social, and you’re going to see some serious push back for all of the legitimate reasons she enlists.

The problem (and opportunity) here is the underlying premise:

Collaboration, Wikis, social networking or some other form of social computing technology is positioned as a better way to work, discover, save costs, etc. LOB Executives, HR and IT get in a room and try to ascertain the opportunity and risks of company wide adoption. They may reach different conclusions but you can pretty much guarantee that the weakest link (read: parts of the organization where culture can in fact be a serious impediment) will get extrapolated to estimate enterprise wide success or failure.

The most simple culture busting argument IMO is focusing on how social computing exponentially accelerates individual business activity. Prove that you can accelerate performance in a particular area and few decision makers are going to care if the execution involves social computing, hula hoops or whatever else.

So what’s required to tactically execute the justification of a social computing transformation and busting the dreaded culture roadblock? There’s obviously a few approaches but this one has worked for me. Heads Up: This is somewhat of a long story so please bear with me as I set the context and result.

The Backdrop – A primer on Hi Tech Partner (SI) Sales

I’ve been facilitating a strategy session with the EVP of Global Marketing of a F500 Hi-tech technology provider and his direct reports.

The organization depends heavily on the System Integrator (SI) partner ecosystem to push product. If you’re not familiar with the channel business, a good number of technology providers rely on SIs to reach their target market. It’s the SI that often gets the RFP from prospects and it’s up to them to propose the necessary strategy and technology solutions required to solve a problem. For those technology vendors that want to get their technology solutions on an SI’s proposal, the onus is on them to not only provide product details but to also provide all the supporting proof points that shows how their solution is in fact better than that of their competitors.

It’s a bit of a cynical statement but after conducting needs assessments for well over a 120 channel sales reps, partner development managers and LOB channel execs at different clients (as a precursor to design, sourcing and ‘operationalizing’ of collaborative extranets), the general consensus I’ve seen is that the vendor has to back fill strategic technology thought leadership elements of the SIs proposal. The more perceived/real commoditized nature of your offering, the higher the chances that the SI picks the provider that makes it easiest for them to improve the probability of sale. What’s more, it’s the SI who’s regularly playing golf with the CXO at the customer and formally pitching or informally educating the customer on what’s hot and what’s not in the evolving technology landscape. So as a technology provider, you better make it dead simple for the SI to have access to the latest information, proof points, reference architectures, experts and so on. Reliable and timely data and expert access is as much of a competitive advantage as is the long string of product differentiators you can cook up.

The Social Computing Context

Back to the client discussion. We investigated a seemingly crazy hypothesis that there needs to be a way for the technology vendor to provide a guarantee to SI partners that all supporting product documentation and access to known and unknown subject matter experts (SME) will be made available either in real time or one communication instance away. No hunting within stale portals, partner directories or extranets, emailing account teams, risking reliance on outdated pre sales material, or chasing the account manager for the answer to time sensitive questions. Convince the partner that if the data and resources come from this technology provider, its legit.

We agreed on primary pain points in the SI partner collaboration process, folded in anecdotal field data and got partners to chime in on an optimal collaboration model. We then came up with a blueprint of the what the new interaction model needs to look like to successfully grow their share of partner wallet.

It was about 70% into the process that we really started talking about the required mix of technologies needed, to realize such a business objective. Low and behold, the resulting recommendations for collaborative, micro-messaging and alerting architecture, candidate solutions providers and operational design centered around so called Enterprise 2.0 solutions. But no one really cared what label was slapped on to this ‘nirvana’ after-state.

By the time the words “culture”, “risk”, “feasibility” and “switching cost” came up, they were well into identifying which partners to approach for a very contained pilot. At this stage, the impediments I list above were not seen as deal breakers, rather, as obstacles that needed to be addressed. Think about it: What new program, whether timid or bold, doesn’t have obstacles? This was no different. Clearly identified participant incentives, the attractive cost structure of social software and business value, provided the necessary chutzpah to take this on.

Stowe Boyd said it well on his Open Enterprise 2009 panel at the Web 2.0 Expo. My re-tweet on Twitter here:

It’s a huge disservice to the promise of social computing when you’re advocating the software and not the benefit. The best case outcome is an average benefit emerges across the organization. The worst case is the you encounter the risk of individual department-centric apprehensions getting blown up and being presented as organizational wide toll gates.

So is culture a serious issue? Yes, it can be. In fact when you consider enterprise wide deployments, culture could be a much larger issue for E2.0 software when compared to ERP and CRM roll outs of the late 1990s. The latter was far more expensive but wasn’t dependent on the network effects that E2.0 so desperately needs to be a success. But by focusing on pointed business acceleration opportunities, culture can be turned into a hurdle that you can systematically glide over, as opposed to a brick wall that you slam into.

I’m sure enterprises, customer success teams from social software vendors and consultants are sitting on some really good experiences. If you have successfully glided past the culture discussion (or hit the proverbial brick wall), pipe in, in the comments.