IDC Business Software GroupIDC's worldwide Business Software Group leads the research and consulting in software applications, software business models (Licensing, Provisioning, and Cloud Applications) and software and infrastructure channels and alliances.

Specific application coverage includes:

  • Cloud Applications, Software as a Service (SaaS) and Platform as a Service (PaaS)
  • CRM: Sales and Service, CRM: Marketing technology and Customer Experience 
  • Enterprise Applications, Digital Commerce and Asset Centric Networks
  • Social and Collaborative Technologies and Community Platforms 
  • Content and Digital Media
  • Human Capital Management
  • Mobile Enterprise Applications

The current research agenda for the group is built around the concept of business modernization and looks at how businesses can adapt and modernize to thrive in the post-industrial and post-application era. The following diagram shows the areas of focus for the group:

For more information, see the IDC website.

IDC Business Software Group
IDC's s perspective on enterprise software, and emerging software and Internet-enabled ecosystems.

 

IDC Business Software Group

Competitive Advantage: It’s Not Just About the Technology, It’s About the Frame of Reference

  • Partner: IDC Business Software Group
Mike Fauscette, Chief Research Officer, G2 Crowd
Mike Fauscette
Chief Research Officer
G2 Crowd

Creating the right environment to connect with customers, employees and partners is not just about doing the same thing we have always done. If we do more of the same thing we don’t have the right frame of reference. The Business Modernization framework is a way to look at all aspects of the business and identify what the new way to operate should be, identify the technology that can enable that, then identify the culture shifts and the change that needs to happen to enable the business to be effective in today's environment.

Transcript

Obviously this has been an interesting transition period time for businesses in general and for the past several years we have been looking at market trends that are either reacting to what businesses have been trying to do or driving some of those changes. I think we are at a nice interesting point between some of those business objectives and maybe we are going to start to see the business change accelerate so there is this fundamental shift from a model that was built on a structural hierarchical model and the internet has helped bring a lot of new opportunities. The technologies that are built on top of that have produced some pretty major pressures on business to do things differently. If you are a business today you are dealing with an increasing amount of pressure around customers who wont behave anymore, maybe they never did but now it is really obvious. Internally, employees who are increasingly more difficult to put into some sort of a box because there are a lot of expectations and a lot of things they want form the technology that aren't as traditional in a hierarchical organization. partners are struggling with their whole business model because they need to be more closely aligned to the system around the company so you are tying partners and customers together.

If you think about that as a backdrop what are the things that are really important today it is around customer experience, employee experience and around partner experience and how do you create the right environment to take advantage of the opportunity you have and at the same time defuse the pressure that you feel because things are changing. I think it is interesting and at a good time now because the pressure is to the point where companies are responding and have to respond. At the same time, it’s one of those transition periods where some companies aren't responding well, they are trying to do the same thing but faster. That’s not the right answer when it didn’t change their business. So now if we look at a business that is trying to change they realize that their sales model isn't working the that it used to be. Marketing has changed because you can still reach people that way you used to but it’s not about outbound anymore, it’s about a conversation. It’s about creating more of a dialog than blasting messages. In service, people, employees have to deal with an increasing amount of channels and information flow and issues from customers that are much more aware, they are much more educated because they have better tools to be educated.

The company is dealing with a multi-channel problem so in other words, they are having communications and interactions with customers in all the online channels as well as offline channels and there are new channels all the time, what might have been email shifted to twitter so it’s complicated. Then the customer thinks about it in that they have an interaction problem. They don’t have a multi-channel problem. If you can’t react to it in the way that they want, then what do they do. Let’s take an example, the sales problem, because the customer has more ability to research on their own they can build a trust base in their network instead of trying to going to the company for it. In a recent survey we did, it was a B2B survey, 64% of the buyers said that they had already made a decision about what they were going to purchase and from whom before they actually contacted the vendor so you are not selling in an environment anymore because you are not actually interacting with a prospect at a time when it would actually help them make a decision. You as a company are trying to increase your sales efficiency and effectiveness because you are having a harder time getting deals and the ones you do get you feel like you don’t have as much control over it. That’s absolutely true.

Traditional businesses keep trying to do the things they have been doing but they do more of them. From a salesperson

Obviously this has been an interesting transition period time for businesses in general and for the past several years we have been looking at market trends that are either reacting to what businesses have been trying to do or driving some of those changes. I think we are at a nice interesting point between some of those business objectives and maybe we are going to start to see the business change accelerate so there is this fundamental shift from a model that was built on a structural hierarchical model and the internet has helped bring a lot of new opportunities. The technologies that are built on top of that have produced some pretty major pressures on business to do things differently. If you are a business today you are dealing with an increasing amount of pressure around customers who wont behave anymore, maybe they never did but now it is really obvious. Internally, employees who are increasingly more difficult to put into some sort of a box because there are a lot of expectations and a lot of things they want form the technology that aren't as traditional in a hierarchical organization. partners are struggling with their whole business model because they need to be more closely aligned to the system around the company so you are tying partners and customers together.

If you think about that as a backdrop what are the things that are really important today it is around customer experience, employee experience and around partner experience and how do you create the right environment to take advantage of the opportunity you have and at the same time defuse the pressure that you feel because things are changing. I think it is interesting and at a good time now because the pressure is to the point where companies are responding and have to respond. At the same time, it’s one of those transition periods where some companies aren't responding well, they are trying to do the same thing but faster. That’s not the right answer when it didn’t change their business. So now if we look at a business that is trying to change they realize that their sales model isn't working the that it used to be. Marketing has changed because you can still reach people that way you used to but it’s not about outbound anymore, it’s about a conversation. It’s about creating more of a dialog than blasting messages. In service, people, employees have to deal with an increasing amount of channels and information flow and issues from customers that are much more aware, they are much more educated because they have better tools to be educated.

The company is dealing with a multi-channel problem so in other words, they are having communications and interactions with customers in all the online channels as well as offline channels and there are new channels all the time, what might have been email shifted to twitter so it’s complicated. Then the customer thinks about it in that they have an interaction problem. They don’t have a multi-channel problem. If you can’t react to it in the way that they want, then what do they do. Let’s take an example, the sales problem, because the customer has more ability to research on their own they can build a trust base in their network instead of trying to going to the company for it. In a recent survey we did, it was a B2B survey, 64% of the buyers said that they had already made a decision about what they were going to purchase and from whom before they actually contacted the vendor so you are not selling in an environment anymore because you are not actually interacting with a prospect at a time when it would actually help them make a decision. You as a company are trying to increase your sales efficiency and effectiveness because you are having a harder time getting deals and the ones you do get you feel like you don’t have as much control over it. That’s absolutely true.

Traditional businesses keep trying to do the things they have been doing but they do more of them. From a salesperson perspective you are not doing enough cold calls or you aren't doing enough prospecting or in marketing you aren't generating enough leads. that’s not really the problem. If I go to Chicago with a map of St Louis, no matter how quickly I move around or how many people I ask to show me where to go on my map, it’s just not going to work because I have the wrong reference. The sales problem is now that the prospecting has moved upstream in the process, so I now have to find a prospect that wants to interact with me or has a need that I could possibly help them with. So the Salesperson actually looks more like an educator in that role. they want to collect those opportunities and do things that would help that customer or that prospect build trust. And also help you move them along in a way that builds that trust and relationship over time so that you do actually get to a point that they would buy from you. and that is a really different thing from, I’m selling, I’m selling, I’m selling. It’s more about, I’m interacting, I’m interacting, I’m interacting and I built trust and then I get the deal. and that is hard for many companies. That is really specific but it is happening all across the other areas too. With employees, everything from, I don’t want to use the tools you are giving me anymore because I like the user interface that I get on my personal web use, social sites and media sites. Now the software you give me looks really old and outdated. It’s not interactive, it doesn’t help me, it doesn’t have intelligence built in. I have to fill out all these forms and enter a lot of manual data that I know the system could put in for me. All those things are causing a lot of pressure to change.

Some technology vendors, software particularly, are trying to move to a place where they can offer a lot of value while companies are trying to make that transition. You hear about digital transformation and that is one way to look at it. We look at it as business modernization. because really what you are trying to do, it’s not just about the technology. It’s about the culture and about the process and the way you do things and who does them and what the systems can do to help you. So that’s a little bit of a different take on it. And across that idea, the business modernization framework, you can work in those different areas to identify what the new way should be, identify the technology that can enable that, and then also identify the culture shifts and the change that needs to happen to get that to a point where it will be effective in the environment we are in today.

Culture and Innovation

  • Partner: IDC Business Software Group
Mike Fauscette, Chief Research Officer, G2 Crowd
Mike Fauscette
Chief Research Officer
G2 Crowd

Mike Fauscette talks about the relationship between a company’s culture and its ability to be innovative.

Does Innovation happen Top-Down or Bottom-Up?

  • Partner: IDC Business Software Group
Mike Fauscette, Chief Research Officer, G2 Crowd
Mike Fauscette
Chief Research Officer
G2 Crowd

Mike Fauscette says that innovation is a boat function. The impetus and executive support must come from the CEO, but ideas come from the rest of the organization.

CEO as Chief Innovation Officer

  • Partner: IDC Business Software Group
Mike Fauscette, Chief Research Officer, G2 Crowd
Mike Fauscette
Chief Research Officer
G2 Crowd

Being a CEO in the role of chief innovation officer does not guarantee your company will be innovative. Mike Fauscette points out that the ability of a company to be innovative depends on having the organization, organizational dynamics, and structures in place to support a cooperative and collaborative organization.

Why is Good Customer Service So Difficult?

  • Partner: IDC Business Software Group
Mike Fauscette, Chief Research Officer, G2 Crowd
Mike Fauscette
Chief Research Officer
G2 Crowd

IDCThank you to IDC for underwriting CXOTALK.

This could easily be a rant based on some recent customer service experiences but I'm going to avoid that and instead look at what companies are facing today in trying to meet customer expectations. I read recently that Comcast has finally appointed a VP to try and address their extremely poor customer service (I'd say customer service image, but let's be honest, it's not an image problem so much as it's an execution issue). That announcement coupled with some personal experiences with two banking institutions recently got me thinking about customer service again. 

Customer experience is an overused and over discussed topic maybe, but it is, I believe both relevant and necessary. The customer has experiences with your brand at every interaction, the question is whether the experience is positive, neutral or negative. Meeting customer expectations is hard for a lot of reasons. Just the simple concept off meeting something that changes and is highly individual is itself daunting. How do you even know what the customer expects? Well, of course there are some basic concepts that you have to meet, like if a customer calls someone needs to answer, but beyond that, what constitutes a positive experience for an individual customer and how do you figure that out? 

So that's certainly part of the problem, understanding a customer's expectations isn't always a straightforward thing. Beyond that though, I find that many businesses have some fundamental issues that make solving customer problems and issues really difficult. There are things you can do to gain insight into expectations of course, but even without those, there are some simple things that companies seem to struggle with. In fact I find that a lot of customer discontent is caused by a few mistakes.

To understand this better let's look at a couple of personal examples. The first is with a bank that I've used for many years, Union Bank. Now in general the reason I've stayed with them as long as I have is pretty simple, they understand and deliver good customer service. I mean customer service in the old fashioned "this is my personal neighborhood banker" way, even when I'm 3000 miles from the closest branch. So recently I had an issue executing a transaction remotely, mostly due to some arcane banking rules. The initial customer service experience was surprisingly unhelpful and missed my expectations completely. I was shuffled around to many people and no one wanted to own solving my issues. After wasting a half a day or so on it, I tweeted in frustration. Now this is where things changed dramatically. The response to the tweet was almost immediate and moved to another more private channel where an escalation representative with 2 important attributes took over. That person had ownership of the problem until it was resolve AND the position power to get it resolved, even though it involved being creative about how to deal with things. The net, would I recommend Union Bank (and have I), without a doubt, yes.

The 2nd issue is also with a bank. Because of the 1st issue I decided that there are some transactions that are easier to handle with a local banker in person, so I decided to open an account with another bank (not to replace my account, but to add options). I opened an account with TD Bank, I picked them reasonably randomly, mostly because my daughter has an account there and also they have very convenient locations and hours (actually insanely accommodating hours). In the 1st 30 days I had the account I needed to do an international transaction and went to do so at the local branch. The paperwork was a little annoying and I had to go back more than once to complete it, but in the end, it seemed fine. Unfortunately though, it wasn't. They held up the transaction because of intervention of another internal facing department that thought there might be some risk (a very tiny part of the funds for the transaction had been deposited within a week...hey, the account was less than 30 days old so go figure. The risk was in effect less than 1% of the total amount). Anyway, I was not notified until a day later and then by the branch, not by this internal department. There was little information available (I did not know until 2 days later even the reason for the refusal to process it). The net was that they refused to execute the transaction even though I had deposited 2 times the funds required. I tweeted my frustration and once again the response was rapid. Unfortunately though, the response was "some one would call me", but they never did (the 2nd fail in this problem, set expectations, don't execute). The short rest of the story is that I went to the bank 2 days later, withdrew the funds in a cashier's check with the intent of moving the funds to Union Bank while I was in San Francisco the following day, but before I left the bank, the bank manager stopped me. She promised that the transaction would be handled if only I'd redeposit the funds and that she would personally solve the issue. Finally someone owned the problem and got it resolved. My intention that day was to close that account, but I have not done so. You see the branch employees are the customer service team there, and they do in fact try to provide a positive experience. Unfortunately other parts of the bank aren't oriented towards solving customer issues and providing positive customer experiences. The local face of customer service is a good thing, but as to recommending the bank to others, I'm reluctant to do so.

As I look at the examples and also my discussions with technology companies, companies delivering customer service and trying to build customer experience strategies, etc., I see four issues that create roadblocks to providing "good" customer service:

  • Disconnected people / organizations: Customer service is an inherently people focused process. Our attempts to automate and use technology have had mixed results, some good (like self help forums) and some bad (like IVR systems...I suppose that's good for the company in the short term, bad for the customer and company in the mid/longer term). In the end though, often delivering customer service requires the interaction of people and to facilitate there's the need for some type of enterprise social network (ESN) that connects them. It's not a technology issue though, the real problem is organizational silos, the inability for internal organizations to work together to solve the customer issue. Part of this is directly related to a companies definition of what is customer facing too. Most companies today define customer facing as only the "front line" personnel, and don't think about the big responsibility that other departments have in delivering a good CX. That includes billing (getting the correct invoice), or shipping (shipping the correct item) and many other departments. In my bank example that included risk management and unfortunately they were absolutely not in any way involved in serving customers, but had direct impact on the CX. In their case, if they had the ability to communicate the issues, they could have facilitated a quick resolution that would have made a huge difference...unfortunately they were most likely not incented to do so (I'll talk about that in the 4th issue) nor culturally inclined to think about the relationship with the customer at all.
  • Disconnected systems: Disconnected systems create data silos. Pulling together a truly complete customer profile would provide the opportunity to deliver much better experiences. It's just not easy and when you add in the external data sources available today, like social networks and social media, that gets even more difficult. I don't have any behind the scenes information on the systems at either bank, but based on my happy result it wouldn't surprise me that one of them has a much more complete profile on me, and used that profile to guide interacting with me, not so the other. Integrated data and integrated workflow are both critical to delivering good customer service.
  • Changing Culture: In the end I suspect the biggest issue with my examples is culture. Culture is the most difficult to understand and change, but also the root of good (or bad) customer service. I mentioned Comcast earlier, they're the best example I have of a culture that is simply not oriented towards providing good (some would argue, barely adequate would even be an improvement) customer service. Clearly changing a business culture for an organization that large and with that checkered a customer service past is a massive challenge. In my banking example over the years Union Bank has proven to me through experience that they have a culture of providing great customer service. Just the fact that they have social listening in place AND an organization to handle / own service issues raised there, is a very strong indicator of the management attitude towards the customer.
  • Misaligned incentives to business objectives: This is often the real underlying problem for organizational issues, or at least reflects the real attitudes of management. You get the behavior you pay for, as the old saying goes. I suspect that this is a part of my bad experience at the 2nd bank, of course tied to the organizational and cultural issues as well. This issue is also one that we see often when working with companies on ESN adoption, and in general is often the issue for getting employees to collaborate more effectively.

Delivering good customer service and the overall customer experience is a complicated issue for most companies. There are technologies and processes that can help work through many of the problems, particularly around communication and around data driven customer service, but still, the most difficult issues require strong executive leadership and a coordinated program to change. 

This originally appeared on the Michael Fauscette blog

Facebook at Work...what does it really mean

  • Partner: IDC Business Software Group
Vanessa Thompson, Research Director, IDC
Vanessa Thompson
Research Director, Enterprise Social Networks and Collaborative Technologies
IDC

IDCThank you to IDC for underwriting CXOTALK.

The basic building blocks of social business, content, and community are still creating opportunity for change and disruption. However, the market for collaboration and social technologies has changed dramatically over the past 18 months. The confluence of personal productivity and increasingly agile business models is also shifting the way we think about work, the way we do work, and the people that do that work. Users are quickly becoming more comfortable with transitioning their personal productivity behavior into the work environment, particularly in how they interact with business applications. Social medial platforms like Facebook have been strong contributors to this behavioral change.

The announcement of Facebook at Work this week has ignited discussion around the ongoing value of dedicated corporate-sponsored enterprise networks (ESNs). The Facebook at Work solution is in private pilot with a small number of enterprise companies. Facebook will look to target global companies with over 100 employees. The information sharing model is such that the company news feed will only be accessible by users in that company on that instance. A company will 'own' all of the information in the newsfeed including content and other objects that get posted to the newsfeed similar to personal Facebook with the difference being that individual users are able to grant Facebook permission to use their information across Facebook platforms.

Facebook at Work is entering an established market that has now settled into a spectrum of use that span across internal communications, integrating the enterprise social network into mission critical business workflow and connecting customers partners and suppliers on the edge of the business. Facebook for Work doesn't link to users' personal Facebook accounts or the company's external brand presence on Facebook. This holds some challenges when transitioning into focus on the enterprise from the consumer model. Enterprise-grade security as well as robust administration controls, audit capability and tenancy options are just a few of the capabilities that need to be factored in.

According to the 2014 IDC Social Business Survey, the deployment of corporate-sponsored enterprise social networks is up to 85%, but within that number, 30% of organizations are looking for alternatives. The majority of ESN deployments are point solutions that add value to an individual or siloed activity, like sales automation or customer support, instead of creating a holistic end-to-end social network among employees, customers, partners, or suppliers. The power of ESNs is the ability to connect an organization's stakeholders across departments and functions for improved communication and collaboration. While there are many established players in the ESN market, Jive, Microsoft Yammer, Salesforce Chatter, IBM Connections, Tibco tibbr & SAP among others, those solutions have struggled due to a number of factors including lack of adoption, no executive sponsorship or, primarily, not having the ESN linked to any other business processes. Facebook has the advantage of connecting stakeholders across departments via its colossal user base (over 1 billion) but the complication is that the Facebook for Work solution doesn't allow personal Facebook accounts to link to Facebook at Work instances. Facebook will need to allow users to transition between accounts easily while offering adequate comfort to IT around security controls. Dropbox went through a very similar transition when initially positioning Dropbox for business and it will need to be solved quickly to avoid solution abandonment.

Connecting users inside the business is in contrast to solutions that enable conversations with customers, employees, partners and suppliers on the edge of the business through online communities. While many ESN's are adding external community capabilities, Salesforce Communities and tibbr Engage, in the majority of cases these communities are not connected to internal ESN instances. Companies are looking to simplify web properties but also enable a customer to have a seamless and ubiquitous experience across every community it is exposed to from that company or brand. IDC's 2014 Social Business Survey supports this notion, with "connecting with customers" as the top business priority organizations are targeting. This is also cognizant of the shift we have seen take place in the market from a more passive responsive type behavior to a more proactive and conversational engagement with customers, partners and suppliers.

With more and more customers and partners wanting to target a consolidated and consistent brand experience, the importance of connecting not only people and their profile behavior but data and information all together in a single pane of glass may help fine-tune how organizations are able to target all future potential customer interactions. Facebook are at the coalface of this shift with their focus on brand Pages but with Facebook at Work the company will need to quickly become relevant either to existing business processes or as an enterprise grade conduit to online communities. If the conduit route is the route Facebook choose to take, they will have other community solutions biting at their heels, like Lithium who acquired Klout last year to add context to communities.

IDC's research finds that organizations will not integrate disparate ESNs or connect online communities in the short term as other areas of business investment will take priority. Facebook will need to quickly decide what camp they belong to an start working toward options for customers. Organizations should consider the following when looking at investment in ESN or online community solutions:

  • Integrating social networks is complex and complicated from a technical integration perspective as well as a change management perspective. The skills gap that exists in connecting content, data, and a disparate network of users will create an ongoing challenge for social software integration projects in the foreseeable future. A number of specialized consulting partners like Social Edge and 7Summits are addressing some of this but skilled resources are scarce and in high demand but are essential to execute successful integration projects. This talent gap may be felt more in some industries, such as government, education, and utilities.
  • To expand the value of individual ESNs, organizations will look to connect the applications and workflow that are disconnected today. To connect expert networks of employees, customers' partners, and suppliers, organizations need to integrate social software assets with mission critical business applications to the broader business network to deliver additional value. SAP Jam and Oracle Social Networks are good examples of this today as they are both deeply embedded in business processes and customers of those process can easily expand the ESN to incorporate additional users.
  • Connecting networks of interactions is not possible or even required in every instance, so connections should be made where there is an explicit business need. Initially, it makes sense to target the customer service and support function because customer service requires quick insight into a customer's behavior and there are direct business metrics between the interactions of customers and how they are being served. As the business value of integration is proven, additional business functions will be connected.
This originally appeared on IDC Social Business

The Disconnect Between Customer and Employee Experience: IDC EXPERIENCES Survey 2015

  • Partner: IDC Business Software Group
Vanessa Thompson, Research Director, IDC
Vanessa Thompson
Research Director, Enterprise Social Networks and Collaborative Technologies
IDC

IDCThank you to IDC for underwriting CXOTALK.

The pressure to deliver differentiation as a means of competitive advantage is a critical driver for the changing nature of experiences across customers, partners, and suppliers. The IDC EXPERIENCES Survey 2015 highlights the notion of "experience" and how initiatives are maturing and coming together around five core components: customer experience, workforce, commerce, business networks, and innovation (products and services). The ability to link those experience components together in order to deliver a holistic view of digital and social transformation is at the epicenter of the differentiation. The survey shows that providing a consistent experience across multiple engagement channels is a key focus for companies as well as the means to ensuring that employees, business partners, and suppliers have a unified view of interactions.

With many organizations characterized as a post-industrial enterprise, business modernization can provide a stronger way to discuss the ensuing transformation. Technology is at the core of the linkages that need to be made, but it is far from simply implementing some new software/hardware, automating processes, and learning a new workflow. The changes that need to take place to deliver this differentiation are much more fundamental and alter the way work gets done, the type of work that is done, and ultimately way people interact.  

Some key insights from the IDC 2015 EXPERIENCES Survey include: 

  • Customer experience has been the most visible and important "experience" initiative to date. According to the survey, 81% of respondents use customer satisfaction surveys to measure the customer experience with their company. Yet many organizations are wrestling with the interactions they deliver versus the technology that has been put in place to "manage" these interactions. And when it comes to employees, 69.4% of companies do not measure their experiences at all. These "experiences" can incorporate prescribed business processes, corporate strategy, business impacts, and perceived challenges. 
  • Online communities are considered an important interaction channel across all experience types. The community, or peer-to-peer support community as it is commonly called, provides an alternate support channel that is self-serve and leverages interaction across the customer base. There are businesses that have the need for multiple communities that reach different constituent types, customer, employee, partner, and supplier. These types of businesses include companies that have multiple brands or different business models that reach both business to business (B2B) and business to consumer (B2C). 
  • Training and hiring are critical to delivering excellent experiences across customer, employee, partner, and supplier. However, it is a continuous challenge for many organizations. As the nature of work changes and business processes become more ad hoc, training employees to manage exceptions, while at the same time delivering seamless interactions across multiple engagement channels, will become increasingly complex but essential. 
  • The future of business is connected, and the way we work, collaborate, and simply connect with our customers, employees, partners, and suppliers is rapidly changing. A core component of this is the combination of a new set of connected users who have an increasing requirement to access information for decision making and the ubiquity of cloud-based applications to connect to these increasingly disparate information sources. Beyond this is the ability to link customer and partner experience, workforce, commerce, and innovation together in order to deliver a holistic view of the opportunities afforded through business modernization. 

Software providers can no longer be prescriptive about how users will interact, transact and get their work done. More and more employees, customers, partners and suppliers are becoming empowered to use applications and systems beyond the ways they were initially prescribed. This means that those individuals will have more control over how they interact to deliver a business outcome or output. This is a fundamental shift in the way we have previously thought about delivering systems that connect people to people to information. In a successful shopping experience, a store doesn't instruct you how to interact with it, it finds you where you want to transact, whether that be online, on a mobile device, or in a store, and makes the transaction happen there. Similarly, organizations need to start meeting users where they want to work, interact, and transact. In addition:

  • The business network is forming a new framework for productivity and value creation across a broad set of business functions. Customer communities and their effect on customer experience is one part of this. Organizations are wanting to drive more awareness of their brand as well as have an ongoing conversation with customers. This ongoing conversation is particularly suited to online communities where brands can quickly build a trust relationship with customers, employees, partners, and suppliers. Beyond this, there is an opportunity for online communities to become marketplaces of their own where partners and suppliers are able to start transacting in the community to help solve other customer or partner questions. Other successful communities engage in gamification to incentivize user participation. 
  • In connected commerce experiences, leveraging the Internet and new connected technologies like mobile, cloud, and the Internet of Things is offering networks that can increase business performance and reduce costs while creating competitive advantage. In particular, marketplaces create a high-performance platform for suppliers and procurement professionals to build collaborative relationships and execute in more efficient and effective ways. 
  • Gaining a better understanding of the workforce from recruit to retire means understanding not only the outcomes and outputs but the skills and dynamics of employees. As employees get asked to do more in their daily work, roles may be shifting slightly to encompass an expanded set of outcomes and outputs. In addition, processes that are shared with other users in the same or different business functions are often not accounted for as part of an individual's KPIs. More fundamentally though, the way a user may now need to execute tasks as part of existing roles has become much more ad hoc in nature. Understanding how users are interacting on a task level can add insight into how an organization may be able to operate and incentivize users in the future. 
  • To meet the changing needs of customers, partners, and suppliers, organizations need to become more agile. This does not isolate the conversation to an IT department using agile development methodologies rather than the traditional waterfall methods — this is a key component, but it is not the whole picture. Organizations are realizing that as all business constituents become more empowered, they are forcing those organizations to transact with them wherever they are — in-store, online, mobile, and social.  

Additional detail can be found in the IDC study, The Opportunities and Challenges of Delivering Superior Experiences: IDC's EXPERIENCES Survey (IDC #256564). A total of 799 senior executive-level decision makers in the United States were polled on their current and future technology, business plans, and perceptions related to the experiences being delivered to customers, employees, partners, and suppliers.

This originally appeared on IDC Social Business

Software License Optimization an Important Strategic Initiative

  • Partner: IDC Business Software Group
Amy Konary, Research Vice President, IDC
Amy Konary
Research Vice President, Software Licensing
IDC

IDCThank you to IDC for underwriting CXOTALK.

Managing the software licensing landscape within most companies is a complex task, which is made more complicated by the sheer number of contracts to be managed (hundreds, if not thousands) as well as the different types of licenses that must be administered. Industry trends such as virtualization, cloud, and increased flexibility in software licensing have added to this challenge, ensuring that the complexities associated with understanding and managing software assets will continue to increase.

Most IT buyers are aware of the tangible impacts of these complexities. At best, hours are wasted and thousands of dollars are spent manually counting licenses. At worst, millions of dollars are spent rectifying compliance issues. However, organizations should not only be focused on audit risk, but they also need to take steps to spend software license dollars more. This is the crux of software license optimization (SLO).

  • IDC believes that software license complexity will indirectly cost organizations an average of 25% of their software license budgets in 2015. Software license optimization can help identify and eliminate the inefficiencies that can lead to overspending.
  • Software vendors are increasing the number and scope of their software license audit activities. IDC recommends that customers deploy software license optimization in order to self-audit in advance of an audit, and help to identify and fix the underlying issues that can cause non-compliance.
  • IT buyers should understand the audit key triggers and be especially vigilant with license management when any of the following apply: virtualization/cloud initiatives, mergers and acquisitions (M&A) activity, and cloud migration.

According to a recent IDC study on Software License Optimization maturity, IDC believes that most organizations are at the early stages of implementing and successfully carrying out software license optimization initiatives. At the same time, IDC expects that it will become increasingly harder for organizations to achieve software license optimization unless time and resources are permanently dedicated to this effort.

IDC offers the following guidance to those organizations looking to jumpstart or improve their organizations' software license optimization initiatives:

  • In the next 6 months: Identify key individuals that are responsible for software license optimization. This should include at least one dedicated person that can manage software licenses in general and for up to five companies that you spend $1 million on software or more. For every five additional companies that you spend $1 million on, you should have an additional dedicated head count. Understand the key audit triggers, and be especially vigilant with any of the following: virtualization/cloud initiatives and merger and acquisition activity. Identify technologies that can track license entitlements and true software usage. Take steps to self-audit in advance of an audit. Do a proactive review on every vendor that your organization spends $1 million or more on. For some of the big companies, like Microsoft and Oracle, you should review twice a year. The rest can be reviewed once a year.
  • In the next 6-18 months: Build a repository of common licensing terms and conditions and outline accepted practices. Consolidate license agreements and obtain accurate inventory. Institute process changes that complement technology investments. Establish internal controls, including repercussions for people that deploy software that they haven't paid for. Answer the following questions for the top 20% of your software assets (by spend amount): Do we need this product? Does it fit within our strategic road map? Are we paying for the correct quantity? When is the last time we called support? Do we need support/maintenance? Retain it, change it, or cancel it. If you have to react to a situation, you've lost money and capabilities.
  • In the next 18-36 months: Drive toward a full life-cycle process with supporting automation. Focus on the areas of the highest spend and value. For each of these applications, use technology and process to instrument and identify how the application is actually being used, create business rules based on usage, and provide recommendations on how to increase adoption and reduce spend. Obtain granular information on software usage to compare with capabilities to optimize spend, and change the nature of the enterprise-vendor relationship. Optimizing license spend is not always synonymous with "cut spending." A better description is "buy what you need and use what you have."

In the future, organizations will be managing a hybrid scenario, including a mix of on-premise, cloud, and embedded software; perpetual and subscription licensing; and fixed and variable costs. They will also be facing a complex combination of many more applications and devices to manage; decentralized application purchasing and the proliferation of application access.

In addition to bringing new possibilities for what applications can do and for whom, new software business models will generate opportunities, and challenges, for software customers. There is the opportunity to spend software budget more efficiently and in such a way that allows operational expenses to replace capital investment. At the same time, there is the opportunity to push IT spending to the line of business for certain business process workloads.

Things like variable-use software licensing or licensing that accounts for the scale-up/scale-down nature of virtual environments are complex. Software vendors will try to mask this complexity by layering on technologies for metering and billing. However, for reduced complexity with increased flexibility to be a reality, customers will play an important role as well. They must take matters into their own hands, using the information generated through software license optimization strategies to determine the best way to buy and manage their software. In an environment where customers have had so little information in the past, the power of information on software usage can be impactful.

This originally appeared on IT Governance and Executive Strategies

Only You Can Change Your Software Pricing Experience

  • Partner: IDC Business Software Group
Amy Konary, Research Vice President, IDC
Amy Konary
Research Vice President, Software Licensing
IDC

IDCThank you to IDC for underwriting CXOTALK.

In IDC's 2015 CXIT Survey, 809 respondents were asked to rate the major tasks, reasons, or interactions through which customers engage with vendors. The number one interaction, higher than support questions, contact center, or even sales-- is pricing. In the software industry, pricing is equal parts science and art, and software customers play an essential role in shaping their own experiences.

The typical software customer experience begins with a license negotiation that is about as fun as buying a used car. At least in the case of the car, the consumer has information that they can use to figure out if they are getting a good deal. Very few enterprise software providers that publish a price list, and customers end up believing that they pay what they can negotiate.  Once the software is implemented, the customer must manage the software licenses and stay in compliance with the agreement.  The average customer will have hundreds, if not thousands, of software contracts to manage. The terms are almost always different and complex to understand.

This analyst is often asked to assess which software producers offer customers a good software pricing experience, and which ones do not.  It isn't as simple as putting companies in a “good” or “bad” column. Companies with a large and broad software portfolio can be more challenging to buy from simply because they have a lot of products to offer, many with licensing terms that differ due to merger/acquisitions, market conditions, and unique requirements across a vast set of functionality. In addition, some companies offer more flexibility in how they price for customers, such as metrics that measure value for a specific user role, or a user in a vertical industry. Some software producers create license types at the request of their customers. While this kind of flexibility is almost always in response to customer needs, it leads to complexity that negatively impacts customer satisfaction. From here, the road back to simplicity can be a long one.  

Software audits are also a part of the customer's software licensing experience. While software providers believe that education is the best way to help customers navigate complexity and manage their software licenses effectively, the reality is that audits can and do happen. All of the largest software companies have the contractual ability to audit, most do, and the number of companies outside of the top 10 that regularly audit is increasing.

In almost every case where an audit is initiated, compliance issues are found. Software vendors will not disrupt a client's business unless they are fairly certain that there is a problem, and therefore they look for red flags. These include merger and acquisition activity, contract expiration dates, virtualization initiatives, and other major impending events. Dynamic environments — such as those where servers are frequently reimaged — can often be host to compliance issues.

Another factor that vendors consider is the degree to which there are controls in place to prevent unauthorized use. Many ISVs do not want to "lock down" their products because they don't want to inconvenience or send the wrong message to their honest customers. ISVs may then focus their audits on products that have very little license enforcement (other than contractual restrictions) where it is easier for customers to run into compliance issues.

Software negotiations and license audits are a part of the enterprise software landscape. While these events may never be delightful for customers and software producers alike, there is much that can be done to make the software pricing experience a more favorable one.  Software customers play a role in shaping their own experiences, and will need to make compromises in order for these to improve. For example, they should resist the urge to ask for special terms in every negotiation. In many cases where customers find software pricing too complex, the very terms that confound them were created for them in response to a request for custom flexibility.

In order for things to improve for customers, software producers need to make some changes. These changes won't happen unless customers push their vendors to change processes, roles, and even company cultures in order to provide a better pricing experience. This is a list of a few  of the many ways that customers should encourage software producers to improve.

  • Transparency.  The first step in the pricing journey should not be "contact a sales rep".  Every software producer should have a publicly available pricing page.  We all know that these deals are complicated and often involve custom elements. What is the harm in giving customers a starting point to help anchor their expectations?
  • Community. Customers should be encouraged to share their experiences with one another, whether at physical events or online forum. The software pricing experience should not be a taboo subject (this would be revolutionary… customers are usually contractually required not to discuss purchase information).
  • License Management. The more flexible the software licensing arrangement, the more challenging that manual management will be and the more likely that compliance situations will occur. IDC has published a maturity model to provide guidance on the processes and technology that should be applied to the management of software licenses.
  • Audits. Most of the largest software producers initiate audits, and the majority have an associated annual revenue target. Software producers say that they would like to reduce the number of audits that they do and focus instead on empowering customers, but until the target goes away it is easy to come to the conclusion that software vendors have little incentive to fix complexity. Compliance groups within software producers should be measured based on their ability to fix the problems that lead to compliance situations, not awarded when those situations result in revenue.
  • Governance.  Software producers are always reviewing the relevance and effectiveness of their pricing strategies.  In order to discourage sales or product management from making changes that create complexity but provide little benefit to the customer base, there should be governance, rules and policies around what can be added to the price list and how. For example, in order for an item to exist as a standalone item on the price list, it should meet certain revenue criteria.
  • Internal communication. Software sales reps hear a lot from customers on their pricing experiences, but this feedback doesn't always lead to change. For example, SaaS companies are moving customers to terms that require annual contracts be paid 100% up front. This is being baked into sales rep's comp plans. Some customers don't mind this, but for many, such as franchises or small businesses, this can be a major hardship. Annual billing up front has become a major contributor to negative customer experiences in a purchase process that is otherwise generally OK.  Sales reps should know this, but sales management and corporate does not seem to realize how big an issue this can be. There should be internal mechanisms to manage customer experiences in the same way that these are managed in other parts of the organization, such as customer support.
  • “Customer success” needs to include pricing. Many software providers have customer success initiatives. These initiatives need to focus on the entire ecosystem of customer touch points and include the pricing experience.  Customer experience and success should be every employee’s job. For example, at Citrix every employee rates themselves in terms of how they improved the customer experience as part of their annual assessment.

These are just a few of the many ways that software producers could work to improve their customer's overall experiences by starting with pricing. The good news is that software producers are aware of the issues, and are working to fix them. However, the challenges are pervasive, and changes will be observed over the course of months or even years-- not overnight.

This originally appeared on IDC Governance and Executive Strategies

Social Business and Digital Strategy

  • Partner: IDC Business Software Group
Mike Fauscette, Chief Research Officer, G2 Crowd
Mike Fauscette
Chief Research Officer
G2 Crowd

IDCThank you to IDC for underwriting CXOTALK.

Social business, collaboration, community and content, is there real business value tucked away in those words? Digital transformation, digital strategy and digital disruption, are businesses really feeling the pressure to do somethings differently and by changing can they be more competitive, grow faster and be more successful? What's different today that would help businesses unlock a transformation that many have struggled with for one or even two decades? 

I started researching themes around the social web, the shifts in customer and employee behavior and other related digital disruptions caused by the Internet almost eight years ago. I started using the term social business to represent these forces of change and over time have shifted and expanded the definition quite a bit. Like any good bit of tech research it needs to evolve over time. The basic building blocks of social business, content and community, are still creating opportunity for change and disruption but the picture of how and in what business areas are much clearer today. The other thing that is clear, although certainly a point of contention for many, is the business value of these new solutions and the general shift to digital. Nothing happens in a vacuum though, and the other tech disruptors, mobile, cloud, data, Internet of Things are intertwined with social to create many of these disruptions. With that in mind we are moving to a new framework for the social research, that, for the my group anyway, has 5 components:

1. Social Business for transforming customer experience

  • Community
  • Social marketing 
  • Collaboration
  • Social listening / social media monitoring and response (SMM/R)
  • Social sales enablement and intelligence

2. Social Business for transforming commerce

  • Marketplace and supplier networks
  • Social media monitoring and reponse
  • Business Networks

3. Social Business for transforming the workforce

  • Enterprise Social Networks (ESN)
  • Social learning
  • Social recruiting
  • Performance and talent management
  • Other collaboration

4. Social Business for transforming innovation (products and services)

  • Innovation management
  • Community
  • ESN

5. Social Business for transforming partner relationships

  • Business networks
  • Community
  • SMM/R
  • Collaboration / ESN

There's a 6th component, workplace transformation, but that's outside my enterprise software focus, so I'll leave that for others to work on. You can see that these social technologies and concepts are embedding themselves across the business and are an important part of the overall digital transformation that is gaining momentum in many businesses. I'll drill into each of these components more in future posts.

This originally appeared on the Michael Fauscette blog