Like On-Demand, the Social Web May Have Unintended Consequences for Businesses


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Unintended consequences can be both good and bad. At their best, they are the serendipitous things that once in a while make a CEO look like a genius. At their worst, they can go by other names, like blow-back.

Not long ago we decided to take a look at unintended consequences in the on-demand space, and we researched and wrote a report. It was a different kind of report because we surveyed only CEOs and other senior people in companies that produced on-demand solutions. To make things interesting, we decided on the unintended consequences theme and filtered out all references to return on investment. Effectively, we were saying: “ROI is table stakes these days; what else do you have?”

You might recall that nearly 10 years ago, on-demand was sold primarily for its rapid and relatively secure ROI. That was a time when companies of all sizes and stripes were trying to recover from the double hangover of ERP and CRM implementations. The ERP was for Y2K considerations, and CRM was just “next.”

When on-demand vendors decided to compete on ROI, they hit a nerve.

At any rate, the stories were legion of companies buying expensive software and hardware and then spending two or three times the software cost on implementation, integration and the like. Worse, still, was the fact that too many deployments ran over budget and over time. When on-demand vendors decided to compete on ROI, they hit a nerve and they knew they had something.

However, so many people tried the same formula that it quickly lost its appeal. Today the loudest voices in on-demand are still shouting about ROI, but fewer people are listening.

When we went back to look, it was very easy to see that on-demand solutions had delivered on ROI as advertised, and there was a good deal more. Believe it or not, one of the most interesting unintended consequences was the power of simply being online because it changed not only computing but also the way people worked and interacted. We found that a whole class of applications came into being because of on-demand. Now, understand that we’re not talking about applications that simply behave the same, whether they run on-demand or on-premise. Those applications use the Internet simply as a delivery mechanism, and we refer to them as being web-friendly.

Leveraging the web

The new class of applications I am referring to are called “web-necessary” because they leverage the Internet as part of the solution. In fact, these applications would be much less effective if they lived behind a firewall instead of in the cloud. Some examples include BlueRoads for PRM, Communispace for communities of interest, Centive for incentive compensation management and Kadient for content management and sales knowledge.

When Centive and Kadient turned their legacy applications into on-demand applications, things really opened up for them. Suddenly, the applications were more available—and valuable to—the primary user, the salesperson. Centive is right in the middle of a hot market: incentive compensation management and sales performance management (SPM). Centive has repositioned itself from a tool that helped calculate commissions to one that helps salespeople and their managers identify and go after the most profitable deals. As a result, salespeople can use Centive’s Compel to quickly calculate up-to-the-moment commissions and work through what-if scenarios. Now the company is branching into territory planning and transitioning from a point solution.

Kadient did something similar. The company’s inciteKnowledge product enables companies to provide the knowledge, messages and strategies to have better communications with customers and close more deals. Kadient’s customers can work anywhere and deliver very specific information to customers in “customer time,” rather than vendor time.

Today social applications are forming the basis of what is variously being called Web 2.0 or CRM 2.0. The “social” theme is being manifested in a variety of statistics that reveal what customers think about products, services and issues that are important in a small part of the vendor-customer universe. It all makes me want to ask what some possible unintended consequences might be. Given the power of the unintended consequence, we might benefit from trying to at least make some guesstimates.

My bet is that social computing will provide us with an avalanche of new data from customers that must be analyzed, and that’s where I think we can look for unintended consequences. It will be important as we collect this data to keep in mind that, as important as it potentially is, in most cases, it does not represent a controlled or scientific survey of the market place. At best, it represents the reactions to a few available choices and not the result of a direct question posed to get a thoughtful response.

The unintended consequence, therefore, could be that we take the new information we collect too seriously and that we fail to perform analysis and challenge the results. If that happens, look for companies running off in strange directions chasing what amounts to unicorns. The odds are that some companies will fall into this self-baited trap, just as there are still companies touting their ROI long after that train has left the station. The wise companies (and their CEOs) will find ways to leverage the data and still use their native skepticism to continuously ask, “What else is there?” They will be the market leaders.

Denis Pombriant
Beagle Research Group, LLC
Denis Pombriant is a well-known thought leader in CRM and the founder and managing principal of the Beagle Research Group, LLC, a CRM market research firm and consultancy.


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