Pretzel Logic – Enterprise 2.0

The innovation zealot in me felt instant disappointment today upon reading that Google Wave is no longer. The official word from Google:

The use cases we’ve seen show the power of this technology: sharing images and other media in real time; improving spell-checking by understanding not just an individual word, but also the context of each word; and enabling third-party developers to build new tools like consumer gadgets for travel, or robots to check code.

But despite these wins, and numerous loyal fans, Wave has not seen the user adoption we would have liked. We don’t plan to continue developing Wave as a standalone product, but we will maintain the site at least through the end of the year and extend the technology for use in other Google projects.

One one hand, its startling when a behemoth such as Google cannot use its deep tentacles in the developer and user community to shepherd a product to critical mass. That’s a lesson for many others that think they can win just on sheer scale and marketing wallet. It doesn’t matter if you are a Cisco or Microsoft –  today’s end user in the enterprise has more ability to vote with their clicks than they ever did.

Mike Arrington at TechCrunch suspects: “Maybe it was just ahead of its time. Or maybe there were just too many features to ever allow it to be defined properly.” That’s definitely part of it – I personally felt there was way too much happening in Wave to encourage a wholesale leap off of the email cliff.

But there’s a more important issue at play here. My sense is that the primary culprit here is lack of context.  No matter how sexy, the use case for silo’ed, dumb “un-smart” collaboration still generally goes like this:

• Think up/get notified of a process problem or event
• Remember that a bunch of tools and metaphors (email, phone, the conf room or water cooler, software) exists that can help decision facilitation and brainstorming
• Group/find the right people to collaborate
• Pick a collaboration metaphor that works for everyone
• Solve the problem
• Go back to the system of record or powers that be (a boss, a customer, a supplier etc), to deliver the outcomes.

That’s a lot of steps and frankly a lot to expect from the average business user. If you want to hear more voices on this, the comments on Lifehacker are especially enlightening. And there’s parallels to be drawn from the consumer world as well: Think about the scores of of tools and nifty web apps introduced by Robert Scoble. We rush to try them, fall in love instantly, and then proceed to forget about them, pronto. Why? Because most of them require stepping out of our daily routines or are predicated on pre built, evergreen network effects to see value.

This is a conversation I’ve had with more vendors and customers than I care to remember but its working and many of them are understanding the value of associating collaboration with performance drivers (more in a subsequent post). Organizations still need to understand how to design work processes that blend optimal process and collaboration but its a hell of a lot easier when the software choose to plays nice.

On the other hand, far too many product teams continue to pile on whiz-bang collaboration features when end users are still struggling to understand the basic applicability of these new tools to meeting their performance requirements in a better/faster/simpler way. Organizations on the other hand often have a huge gap between declaring big picture strategic collaborative intent and tool selection. It’s in that gap where the “why” and “how” gets figured out and where the magic truly happens.  Putting the onus on the user to decipher when to use enterprise 2.0 or collaboration will almost never lead to business results.

You have to give Google credit for trying and failing fast though. I had high hopes. The good news is that Google promises to inject some of Waves core technology into its other products. That hopefully will provide the necessary context that will celebrate some of the most amazing innovation that the core Wave team developed.

These are my favorite videos from SAP SAPPHIRE 2010.

Mobile: Vishal Sikka on the Sybase acquisition

You got the sense that one of the most important objectives of this Sapphire Event was to instill confidence in the market about SAPs continued prominent role in the business software. That comes, in big part, from clarity in intent. Vishal is dead clear in this video about why SAP purchased Sybase (after being prodded by Vinnie Mirchandani). My favorite, most well articulated video across the board.

Video Credit: Dennis Howlett

Collaboration in Context: SAP StreamWork and ByDesign

Whilst I wish SAP does more in terms of radically re-thinking how discrete business activity needs to be executed by balancing engagement, content access and traditional ERP processes, this application of StreamWork is an excellent start. This video provides a sneak peak into the power of blending structured and unstructured data access and collaboration to improve business outcomes.

Video Credit: SapphireNow

Experience Design: Hasso Plattner demoing SAP apps on the iPad

As I mentioned in my post, modern interfaces are finally coming to the enterprise. Some of the Enterprise 2.0 pure plays have done a great job of bringing engaging, usable interfaces to business – companies such as Socialcast and nGenera for instance. Intuit is an example of a traditional enterprise company that’s also done a brilliant job with Brainstorm, its innovation platform. In this video, Professor Hasso Plattner shows how seemingly bland (ok, who am I kidding – totally uninspiring) enterprise experiences can come alive thanks to in-memory and the iPad.

Video Credit: SapphireNow

The Outside Perspective I: (Mostly Positive)

Video of Paul Greenberg, Vinnie Mirchandani, Oliver Marks and Me. From Dennis Howletts blog post, about this video:

The magic dust Bill sprinkled must have doped Vinnie. I have never seen him write such an effusive and enthusiastic post about SAP. And we go back way longer than the number of hairs left on my head. If Paul Greenberg had been any more bubbly, you’d think he was a shill for the company. He most certainly is NOT. SAPPHIRE virgin Sameer saw lost opportunities around the collaboration space and I sense he is right in talking about SAP using collaboration as an add-on rather than appearing to think about it in terms of rethinking business processes.

Video Credit: Dennis Howlett

                                                                                                                                The Outside Perspective II: (Tough Love)

Finally, Vinnie Mirchandani and Paul Greenberg, two well respected analysts, thinkers and authors, tell it like it is.

Video Credit: Dennis Howlett

Related Posts:

• Ray Wang: Event Report: Sapphire 2010 Brings Customers Back To A Sense Of Normalcy http://ow.ly/1OUHU
• Thomas Wailgum: 5 Must-Read Blog Posts from SAP Sapphire 2010 – CIO.com http://ow.ly/1OUFE
• Michael Fauscette: SAP SapphireNow 2010 http://ow.ly/1OUKf
• Sig Rinde: SAPPHIRE Now – huge surprise, good stuff and a couple of important issues http://ow.ly/1OUGa
• Oliver Marks: SAP Gets Mojo Back: Enterprise 3.0 | ZDNet http://ow.ly/1OVe1
• Thomas Wailgum: SAP Sapphire 2010: Observations, News and Tweets – CIO.com http://ow.ly/1OUGY

I read, with great interest, an interview with Jeff Clavier of SoftTechVC in Network World. Jeff’s had notable successes in the consumer world (Mint, MyBlogLog, and Userplane). I’ve never interacted with Jeff (other than recommending a Dim Sum Restaurant on Twitter) but I’ve always had respect for him – unlike many others, he’s adequately self deprecating when it comes to his passing on an opportunity to invest in LinkedIn. : -)

On the topic of Enterprise Software, Jeff says:

Most of SoftTech’s investments have so far been in the consumer space. “Innovation is slower on the enterprise side,” Clavier claims, and “beset by security issues.” “It’s a mature market with only a few acquirers; sales are more difficult and investors have little leverage when there are so few buyers. Low cost, consumer applications that leverage the Web offer capital efficiencies not matched on the enterprise side – and they are fun to work with.”

I’ve had conversations with scores of CEOs of traditional and Enterprise 2.0 companies on this topic. I’m still sticking with my analysis of over a year ago about Commoditization that’s partly due to a lack of focus on process and context, too much reliance on nebulous measures such as productivity and little alignment with tasks at hand. That’s played out with CubeTree’s purchase for $20 million. Anemic by Enterprise standards.

But leverage is coming. I’ve been reading a galley copy of The New Polymath by Vinnie Mirchandani, due out later this summer, and its clear how enterprise application infrastructure, based on customer expectations is ripe for a re-haul. It’s not just about the cloud and its also not just about SaaS vs On Premise business apps. Simpler, better, faster-to-update ways of GTD in context, and in a way that connects people, are about to hit. And that opens up organic as well as M&A opportunities on the technology supply side.

There’s quite a few opportunities’ that are large enough to have significant impact, but I’m going to touch on a few areas I see when talking to end customers, discounted by the pace of innovation, to date.

• Decision Facilitation: Yes, in-person meetings and email are time consuming, expensive and often un productive. The answer is not to simply move those to digital interactions powered by Enterprise 2.0. That’s a first step. But that can also mean moving the same unproductive discussions to a digital platform and arguably more of them since its less time consuming. We still need to wrap a decision facilitation layer around it to drive better results. OpenAPIs, activity streams, data and document access all in context is where its at.
• Exception Handling: Somewhere between your Enterprise 2.0 platform and your structured employee, partner and supplier processes, lies a wide open gap. It’s a myth that we can get by with process laden technology since it solves 70%, 80& 90% of repeatable process tasks. The other 10%, 20%, 30% is where things can go horribly wrong and cost millions. Weaving in a social fabric to deal with those exceptions to standard process outcomes is barely tapped today.
• CRM 2.0 (or socialCRM) is DOA with Enterprise 1.0. You can have the most sophisticated customer community but remember, prospects and customers are looking to bypass marketing and talk to experts deep inside your org and partner ecosystem. You cant have a vibrant and successful community if you’re rely on a 1990s style latency riddled, portal/intranet/extranet inside the firm. Even a “facebook for the enterprise” that cant methodically wrap around real time customer interaction demands is but a first step.
• Performance: I joined a panel on SugarCRM’s SugarCon event last month with Esteban Kolsky, Jeremiah Owyang and Diogo Rebelo where we discussed who owns Social  Data in the enterprise. Traditional BI tools extract results from structured data systems. New performance applications will blend social and analytical data to improve discrete business performance outcomes  – HR and Talent, Spend Management, Communication Performance. Etc. Ultimately moving from “here’s the report” to “here’s what to do about the data”.

Each of these can spawn vastly different value propositions for end customers.

Jeff’s spot on when he talks about simple consumer constructs starting to influence how Enterprise users interact with people and data. And all of the opportunities, above, will expect this as a price of entry. The big consideration though for large mature enterprises will be to avoid siloed efforts and the need to form a central collaborative back bone that’s still flexible enough to show concrete improvement around specific business tasks (sales, marketing, innovation, etc). Last month, Oliver Marks and I  presented at Interop on Performance Acceleration via Enterprise 2.0 and this was further validated by a very mature audience of technology managers and executives.

I’m expecting to have a lot of interesting conversations on this topic over the next few weeks. Tomorrow I head to SAP SAPPHIRE, then to the International Forum on Enterprise 2.0 in Milan where I’ll be talking about 21st Century Enterprises and the Role of Social, and finally at the Enterprise 2.0 conference in Boston where were going to be focusing on business value of E2.0.

I’ll update this post after I’ve processed what I learn.

SuccessFactors, a very well known provider of business software, particularly with an HR and Workplace performance focus has acquired enterprise social business software provider, CubeTree.

The terms of the deal from the press release are as follows:

SAN MATEO, Calif. and REDWOOD CITY, Calif.  – May 3, 2010 – Today SuccessFactors, Inc. (Nasdaq: SFSF) announced a definitive agreement to acquire CubeTree, Inc. a visionary leader in the rapidly growing social business software category. SuccessFactors is acquiring the company for $20 million in SuccessFactors stock at closing plus a contingent cash payment three years from closing to bring the value of the total consideration to $50 million.  There is no contingent cash payment if the value of the stock issued exceeds $50 million at any point during the three year period and to the extent the holders have disposed or hedged their holdings.  The guarantee is considered contingent consideration and will be recorded at fair value and marked-to-market each quarter through the statement of operations.

 

Couple of thoughts:

• $50 million doesn’t seem like a whole lot when compared to your average enterprise software deal but there’s more to it. Whilst CubeTree counts SAP, Cisco, LG, and Adobe as customers, I’ve confirmed that at least 2 of these companies do not use CubeTree across all employees. So the pricing seems warranted.
• On the $50 million thing, another point to consider. Many founders/CEOs of E2.0 companies have been open about that fact that social software is not hard to build (form an IP stand point). So effectively the exit for most will end up being an execution play or a technology transfer. In that context, $50 million on the table looks pretty good.
• Based on my interaction/work with the space as a whole, HR or employee productivity focused offerings are very serious about adding social and collaborative features to process. It’s the most natural fit in the enterprise. SuccessFactors is ensuring that they have a forward looking solution. And the timing is perfect.
• Cash is king of course, but the $30 million payout may well be a good bet for the CubeTree team. And it also goes easy on SuccessFactors’ wallet. Following little or no innovation in the last decade with respect to Enterprise Software, we’re at the beginning of a new cycle of overhaul when it comes to enterprise systems of record. In some cases its due to the need for SaaS, in others, its the need for better engagement. And as we see here, you get both. The likely hood of upside for CubeTree and its investors is better now that its been for a while.
  • For that cross section of customers that use both SuccessFactors and Saleforce.com, they now have an alternative to SalesForce.com’s Chatter, should they choose to look for one. Ben Kepes covers this.
• For the Enterprise 2.0 segment, my sense is that this is actually very good news from a valuation stand point. There are a few players such as Jive Software, Socialcast and Socialtext that have been attracting somewhere between reasonably sized to very large customers for a long time. And the emerging Enterprise 2.0 services ecosystem (disclaimer: My firm is one of those) will only raise awareness for the applicability of these technologies to address business challenges. If CubeTree could secure $50 million after it’s relatively short life, the prospects look good for other prominent players in the space that have a marquee customer base and as important, highly engaged platforms.

About a year ago I sensed that standalone Enterprise 2.0 faced serious commoditization and the lack of process and context was going to be a big problem. I still consider these to be significant impediments to getting to IPO for most vendors. That said, Chatter and now CubeTree serve as excellent reference architectures for other traditional enterprise software companies to see how process injected with engagement can lead to accelerated business performance for end customers. And subsequently look to make a purchase or build their own.

Congrats to both companies.  I’ve heard nothing but good things about CubeTree when its come up in conversations and it’s great to see that they have found a good home.

On the heels of SalesForce.com’s announcement of ChatterExchange this morning, FinancialForce releases Chatterbox – a rules based overlay on Chatter that allows businesses to associate the use of collaborative constructs with discrete business activity. For those of you not familiar with Salesforce.com’s Chatter, I covered the initial release, here.

For all the benefits of Enterprise 2.0 software, the biggest stumbling block has been this lingering feeling that its a solution looking for a problem to solve. And so even if you got past the skeptic managers and secured the green light to give it a shot, come adoption time, the use case for collaborating and socializing business conversations in the open via a microblogging application in favor of email just never came naturally. And at that point starts the real scramble: backfill use cases that might appeal to certain users, conduct training programs, institute herculean behavioral change management processes and devise incentive plans to get active usage up to a respectable level.

Welcome to the Enterprise Context Web.

FinancialForce, traditionally in the business of bringing Finance and Sales together on the force.com platform has built a rules and workflow facility to incorporate those very important social and collaborative elements and data triggers that make a given business activity whole. All on top of Chatter. Here’s how the finance and accounting community can collaborate over bean counting topics, using micriblogging constructs:

• When an outstanding credit on a customer account goes over 90 days – finance and sales professionals linked to that account can be immediately alerted, then they can quickly identify the reasons for non-payment and act to try and solve the problem to help cash flow and prevent further sales to that client being held up.
• When a specific supplier has been paid or a new supplier engaged – to help procurement and marketing departments better manage their suppliers and improve relationships.
• Customer accounts that show no activity for a specified length of time – may indicate service deficiencies and help ensure customers are contacted regularly.
• New sales over a specific size or won against a key competitor – to keep management and marketing abreast of sales trends.

Where unstructured and, really, knowledge access and sharing was conducted directly in email, via Chatterbox,  now accountants and finance professionals can now tap into the larger community for expertise and critical customer knowledge to understand exceptions in a process (say, an overdue invoice from an otherwise timely customer). If Chatter is adopted as the central collaborative backbone at the organization, it can now becomes the common watercooler to show up at with specific business data and context and where collaboration happens. Far beyond the out of the box process integration with Salesforces’ CRM application.

I still don’t believe that this eradicates adoption planning and more importantly incentive structures that encourage wide scale usage, out of the box. As I discussed with the FinancialForce folks, with respect to finance and accounting professionals, making it second nature to use a microblogging format to notify people over email needs to be preceded by showing the value of ambient outcomes. Accountants by the nature of their job do in fact need to conduct a lot of business in private and so subconsciously knowing when to going private vs. open might be a bit of a struggle. Add to that, most finance and accounting folks especially at smaller companies already know the 5 people at the company that might have the best answer for what generally are very specific questions. And on the topic of receiving data alerts in the microblogging stream, well, native enterprise apps have had email alerts per se for decades. Where process knowhow and training comes is to show communities wrap around critical alerts to respond to an event, thereby enrichening the outcome. Data events bring context out of the gate and that makes adoption and showing business benefit far more straight forward.

One smart thing that FinancialForce has done is to not limit the use of Chatterbox to its core financial product. By offering Chatterbox as the rules engine for any application on the Force.com platform, it limits its reliance on the financial and accounting user and that’s a really smart move.

Microblogging and data access is not new to the Enterprise Social Web. Pure play Enterprise 2.0 providers such as Socialcast and Socialtext both offer similar features and the upcoming release of Tibbr from TIBCO boasts this as a central theme to its own microblogging offering. But it’s all about distribution. And force.com brings awareness and distribution. And the rules engine offered by Chatterbox brings needed context to enterprise 2.0 constructs that’s been missing for far too long. As my friend Megan Murray commented to me, that’s Peanut Butter and Jelly or Carrots and Peas. Finally.

Dennis Howlett, an accountant by trade originally is optimistic, saying:

One off surgical help is useful, but the larger opportunity comes in activity pattern discovery where what� Sigurd Rinde might call Barely Repeatable Processes are captured and become actionable in the context of business processes that matter. Does this excite you or is it a huge yawn? I know where I am placing my bets

Some links on Chatter Exchange here as well and Paul Greenberg puts it all in context on his Social CRM ZDNet blog

Will it make it? I think so. Is there still a need for proper strategic planning and follow through for large scale uptake? No question about it. But that’s no different from any other enterprise software category. One things for sure – having the software make it simpler to illustrate business cases out of the box makes it a hell of a lot easier to pass the initial litmus test.

Finally, social starts to embrace process.

I don’t focus on product launches or ‘breaking news’ here on Pretzel Logic. I have a full plate on the work front.

The two exceptions when I not only cover but downright celebrate product innovation are:

• If I see traditional application or enterprise 2.0/social software vendors having the chutzpah to even attempt performance acceleration via the combination of process + social. You still need a strategy and plan but it makes execution a hell of a lot easier if the software is designed to account for context. See this on Chatter, for size.
• When enterprise 2.0 products take existing business functions in the enterprise and improve insight and diagnostics for managers to improve decision making and reduce business risk. See this on new opportunities that social software bring to improve Employee Performance Management.

That said, I’m fortunate to see plenty of demos and hear how the product does in fact accelerate organizational performance and why my readers or clients should care.

I’ve only recently taken to getting briefed by vendors but I spent many years in technology sourcing starting with my days as the practice lead of west coast tech strategy consulting group at marchFIRST (USWeb/CKS) and that continues until today. And our firm(s) remained retained through system deployment so we couldn’t skip town after presenting a vendor recommendation in a pretty PowerPoint to the customer. As a result, separating wheat from chaff when a vendor is presenting is second nature to me.

After sitting through presentations and demo after demo here’s one situation that I see over and over again. To the degree that you are doing this, I hope you consider this as constructive feedback. Here goes…

Stop raving about your product in the context of it’s last incarnation.

Over exuberant product managers, often weighed down by the baggage of the last version get very excited about why this version is better. And how it does so much that the previous version did not do. And quickly proceed to declare it as ‘game changing’.

If it’s game changing, it better be game changing in the context of:

• first, performance objectives that are keeping customers in your target market up at night
• second, the competitive landscape and installed base at the customer and in that context, how compelling your offering is to successfully overcome the switching cost of moving to your application. Hard cost as well as soft costs (culture & change management)

Your last release or update is already obsolete in technology years and for the most part, its a pretty weak baseline to benchmark against. Whilst its tempting and human nature to realize “how far you’ve come”, customers don’t buy based on that. They might appreciate the progress. But its not enough to cut the check. Same goes for influencers and analysts that can spread the word for you.

What’s ironic is that good product managers in fact start with market and competitive research to build a business case. Then move on to understanding how new features and capabilities change the existing release. But when they present and showcase, they forget all that hard work done to assess the opportunity and gaps in the market. And proceed to do a feature shoot out with their previous version.

After a decade of buying big ticket software and not necessarily seeing the ROI, buyers are more sensitive to ensuring stringent vendor evaluations than ever. This is one simple but very rectifiable measure. 

As some of you heard (many thanks for the notes), I’ve joined the Defrag Conference Advisory Board.

For those of you who are not familiar with the conference, Defrag is a yearly event in Denver that’s focused on emerging tools and trends in technology and its’ impact on business.

The conference is organized by Phil Becker, Brad Feld and Eric Norlin and counts Roger Ehrenberg, Paul Kedrosky, Jerry Michalski and Chris Shipley as advisors.

Here’s how I described the conference in a recent post:

———————————————————————-

The Five Fragments That Make Up Defrag:

I’m going to spare you a diatribe on why its a great event and distill it down to five reasons, (or fragments) that make me go back and why this an awesome event for the enterprise folks out there:

• Its about debating solutions to big big business and economic value challenges that will consume us all over the next 12-24 months. That applies to the buy-side as well as the sell side.
• Its about the ramifications of eventual large scale adoption of a lot of what a serious IT executive will deem to be well, “cutesy” ideas today (e.g. Real Time Enterprise).
• A cut to the chase discussion on which consumer trends we see and use today might one day be enterprise worthy. Remember when people laughed at the concept of ‘Facebook for the Enterprise’? Yep, that probably came up at Defrag two events ago.
• Little talk-to-the-crowd panels. Everyone is deemed to be intelligent and has an equal voice. You’ll spend more time talking to the person sitting next to you than you will listening to someone on stage. Guaranteed.
• Its frightfully practical stuff. No fluff. All actionable thinking that makes you look at work differently when you leave. And makes you want to come right back the next year.

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A little about the conference in the words of Eric Norlin, the organizer:

Defrag is the first conference focused solely on the tools and technologies that are leveraging the "social" aspect of software to accelerate the "aha" moment. Defrag is not a version number. Rather it’s a gathering place for the growing community of implementers, users, builders and thinkers that are working on the next wave of software innovation.

Thanks to Eric for reaching out. Looking forward to a great event!

P.S If you’re a fan of Sons of Anarchy on FX, you’ll get what that T-Shirt is all about -)

These were the most visited posts from December 1, 2008 to December 1,2009, per Google Analytics.

I just realized that this blog is only little over a year old. Feels like I’ve been writing for much longer.

A sincere thank you for reading, commenting, referencing and re-tweeting my posts. I can’t tell you how much I appreciate it and how much I’ve learned from the debates and exchanges we’ve had here and on Twitter.

Ok, back to the topic of this post. Top posts here, as follows:

Friendfeed: Inspiration for Sales Intelligence in an Enterprise 2.0 world?

This post took the top spot. It did well on its own but some of the popularity was thanks to a link in the New York Times via ReadWriteWeb.

Summary: How to approach sales performance acceleration using Enterprise 2.0 constructs and account for interaction and data preferences of the typical sales rep.

Enterprise 2.0 Software: Commoditization before Monetization

Summary: A software market perspective on where we’ve been and where the category may end up given the entry of free and open source alternatives. This post could use an update given the entry/imminent entry of Microsoft, Salesforce, TIBCO and SAP – all of whom have chosen to build and not buy.

Why Process Barfs on Social

Summary: Taking the battle to the enemies turf. This is in response to “Enterprise 2.0: What a Crock” by Dennis Howlett, addressing what I hope is a balanced view on where process pundits are wrong about Enterprise 2.0 2.0 and the value of ERP that they closely guard. As well, it shows tangible examples of where social computing has in fact accelerated performance and suggests what we in the E2.0 community can reduce this friction between process and social. Dennis comes around with his balanced opinion as well.

Don’t Confuse Enterprise 2.0 with Social Computing Concepts

Summary: An early post – one of my last on definitions and naming – a topic that I generally stay away from. This post suggests focusing Enterprise 2.0 as a state the enterprise achieves via strategic use of social computing.

Why Unlocking ECM is critical to your Enterprise 2.0 Execution Plan

Summary: How you can leverage existing ECM/CMS investments and Social Computing to drive better outcomes for your marketing investments. Also included was a conversation with Billy Cripe, then Director of ECM at Oracle.

Happy New Year. See you on the other side. I’m pumped about 2010.

Telcos will start looking at picking up affordable SaaS Enterprise 2.0 suites. Why? As mindshare starts to get split between Email and Microblogging/Activity streams, telcos and CSPs that offer white label business email hosting for the SMB market will see these as a natural extension. In the SMB market, standalone solutions are key to allow for simple, cheap distribution directly as well as via small reseller partners that don’t want service and customization headaches. E2.0 SaaS offerings meet those criteria. In addition they offer ready plug ins into other popular SMB apps such as SalesForce for those that want integration.

That could mean a huge buyer market outside of the traditional enterprise players who seem to prefer build as opposed to buy scenarios (Salesforce Chatter, TIBCO Tibbr, SharePoint 2010, SAP Constellation, etc).

If I’m somewhat correct, expect the likes of British Telecom, Singtel and Comcast etc jump in. If I’m very right and my commoditization assessment from last year holds true, we’ll see more players such as RackSpace and XO communications start to pay attention as well.

Agree? Disagree? Fire away below. I’d love to hear other views and bets on which vendors might be juicy candidates if you agree with my swag.

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.