More and more, I’m hearing the tempo increase around the conversation of democratizing services like cable TV and mobile phones. It’s also referred to as unbundling, so that we’re (theoretically) only paying for what we want. Some industries are using this as a pricing strategy (e.g. Airlines) but I’m basically using it from the pay for what you want viewpoint. For instance, I typically watch about 3 channels on television, my wife watches three different channels and our son has a few kid networks he likes to watch (otherwise it’s YouTube). So why are we paying for 1000 channels we don’t watch?
The reality is that we are supporting the preferences of other customers to some extent, and perhaps subsidizing corporate interests to a larger extent. It doesn’t sound very customer-centric but the reality is that traditional media and telecommunications business models simply won’t work in conjunction with the evolving preferences customers increasingly demand. The question is whether disruption can work in the consumer’s favor given the heavy regulatory involvement in these industries. We don’t really have that problem in the CRM world; but the vendors do have inertia and marketers do have to deal with channels conveniently provided to them. Change simply looks expensive to them; but is it more expensive than not changing?
I’ve written about unbundling CRM a number of times: A Long Tail Look at CRM as a Platform, Re-inventing CRM for the Customer-Centric Organization, The Widgetization of CRM, and To Integrate Systems or Bridge Systems…That is the Question. My feeling is that as the components of CRM become commoditized; they will surely become utilities at some point. When that happens, we will likely see new services built on top of them that were only accessible through high paid consulting engagements in the past. We’re already hearing this from the likes of McKinsey & Co. The jobs we are trying to get done today are the same jobs we will be getting done in the future; only the future holds new and better ways to get jobs done. Some of those jobs are being ignored by most businesses today because they are simply too expensive to pursue.
Gone will be the days of the monolith CRM application. We’ve already seen the decline of these clunky on premise systems. Many careers were made implementing and supporting these systems both internally and externally. Other careers were invested in building add-ons and extending these functionally specific applications to integrate them more tightly with a particular business. We were so busy laying out large amounts of cash up front, paying annual maintenance and support, and paying for developers experienced with proprietary technology that we almost didn’t notice the emerging cloud and its subscription services.
It’s hard to miss now, because the cloud vendors have essentially given us the monolith again. No more large up front investments and no internal infrastructure (to speak of) required; but there are still bucks to be made by internal talent and external contractors to extend these solutions to meet the needs of the business. Add-ons are also widely available, but they don’t seem drive outcomes any more effectively than the add-ons of the past. One size does not fit all.
However, while I tend to poke fun at the lack of innovation in the CRM space, and that includes the freshly minted apps that do this or do that, it does open the door to some interesting possibilities. As it becomes easier for us to subscribe to an app for a few bucks a month (or free if you are a user of Google apps), this unbundling also creates large gaps, or opportunities; depending how you look at it.
Clint Oram (co-founder of SugarCRM) recently wrote a guest post for Paul Greenberg that talked about the lack of true penetration in the CRM market. The emergence of a platform that allows developers to quickly and cheaply solve problems and deliver them on demand has opened the door for more people to consume CRM-related services; even if we’re just talking about Contact Management. The big old vendors are not positioned well to take advantage of this emerging threat.
But that still leaves us with a big problem; tying it all together from end-to-end in our businesses. In the past I have talked about the disruption of management consulting as it becomes easier to deploy and integrate cloud-based systems. One of the concepts that has emerged in conjunction with the cloud (albeit with slower adoption) is composite applications. Platforms providing the kind of technology to build these will help business more cost-effectively do things that have been difficult to do in the past:
- Help people get things done in a context that makes sense to the business, not to a software vendor
- Leverage legacy technology (e.g. ERP and CRM systems) to build modern interfaces that use existing data and business rules without having to move data from system to system and keep it in sync.
- Visualize end-to-end business processes incorporating all resources; not just technology
- Build interfaces within the visual process itself, so the IT and business resources can work together with complete transparency on the same platform
- Incorporate real time measurement and metrics into processes so they can be assessed, and improved over time without the need for expensive consulting engagements.
Consultants, don’t be alarmed, there is plenty of opportunity to provide services as this technology grows, but the focus will be on bringing these capabilities to the middle markets and below; where there is far more opportunity. And there is one last feature this model has that current vendors simply can’t survive on; the model is priced on usage – per unit, per use.
If you don’t use it, you don’t pay for it. But, since we all want to be successful, those that build a competitive capability here will pay more, and the consultants who introduce this capability will share in those successes. Outcome-based pricing will focus these vendors on building and evolving a platform that enables consultants and designers, and it will focus consultants and designers on solving real problems and not pet projects. It’s simple; if they solve real problems they will make more money and they will only make more money if their customers make more money. Everyone wins or no one wins.
The reality is that many companies have made large investments and they feel trapped; even in subscription models. Over time, however, they will be able to switch when it makes sense without disrupting their business; but only if they begin to solve problems across applications. It’s nearly impossible to design end-to-end solutions within a functional tool so we dangerously and expensively move data across many function applications. This requires tight integration, which is often invisible and forgotten until something breaks.
We need to solve problems that extend across a company as it manages experiences throughout the life of its customers. While it’s convenient for vendors to build functional tools, they really don’t reflect the nature of a business no matter how many times you repeat Customer Relationship Management. I recommend keeping your eye on platforms that build contextual end-to-end solutions and leverage both the old legacy applications and the growing number of unbundled, a la carte apps in the cloud. It’s time for companies to pay for what they need, and only pay for it when they need to use it; just like electricity.
We have quite a way to go, but expect the pace of change in this area to accelerate. It always does.
This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.
