How CRM changed cloud and cloud changed CRM
By Ian Moyse
Eurocloud UK Board Member & Cloud Industry Forum Governance Board Member
CRM (Customer Relationship Management) is one of the forerunners of cloud technologies and remains one of the great success stories in the space and itself has been dramatically changed as it has moved from an on network led market, to the verge of being dominated by cloud offerings.
Cloud is a heavily hyped term in both the IT and business sector and has come to cover a wide range of options as vendors have jumped on the bandwagon, many cloud-washing their old solutions to be able to use this hip new term (for example many have simply put a web front end admin console or added web update portals to be able to claim they are ‘cloud’).
‘True’ cloud solutions outweigh these pretenders and are truly changing the way IT is digested and moving us from an IT domicile to a business led agenda. Traditionally for example, customer and contact management solutions were on network products from legacy vendors and remained a limited market of DOS and early Windows based solutions such as ACT, Goldmine, Maximiser, Superoffice and the like. They provided the ability to share information usually limited to organisation, people, activities and notes and act as a company shared database of clients and prospects.
Then along came Siebel (founded in 1993) delivering a wider functional experience and richer customer information and really termed the market CRM. By the late 1990’s Siebel had become the dominant player, with a peak market share in 2002 of 45%. In 1999 Salesforce was founded with a Software as a Service only offering (and remains so today) that rapidly started to disrupt the status quo of vendors aforementioned and has grown to now be one of the top 10 sized IT vendors worldwide, proof positive that SaaS CRM is both a lucrative space and one customers are flocking to.
Alongside Salesforce a wide range of other Cloud CRM providers have sprung up to disrupt, replace and become heavy competitors to the legacy providers. Cloud enables these vendors to develop quicker (3-4 release updates a year compared to a typical 1 every 2-3 years with a software vendor), reach further and wider (cloud vendors can attain worldwide profile & customers quickly and affordably in comparison to the costly and slow model to launch in the old software product model) and be more agile in function and flexibility (cloud models need far less testing, support the required browsers and mobile support and your away, compared to a product based system having to work on a wide range of Operating systems and version and worry about software incompatibilities, network and hardware issues and a testing regime that can simply never cope with the wide variety of customer on network device environments.)
Cloud enables CRM vendors (and others) to innovate and compete on a global market, it empowers a vendor such as Workbooks to deliver a rich, intuitive web based system that can compete fairly with vendors such as Salesforce, something previously difficult to do in a product world. Cloud customers relay less and less on brand equity to make a decision and increasingly have more choice available to them. For example a USA business can find a UK cloud provider and turn on the service, and use and be supported equally well from the other side of the world.
SaaS (Software as a Service) CRM now contributes 50% of all new sales and is expected to reach 70% market penetration within a few years and cloud CRM providers lead the way in winning awards (Workbooks won CRM of the Year in 2014 and 2013 with most of the finalists being cloud only vendors) and market CRM reports such as G2 Crowd showing the leading players all being cloud based CRM offerings.
On Network CRM providers still have customers, but in the majority are fighting to retain their share, they are not experiencing the growth and certainly not at the pace that cloud CRM vendors are delivering. Microsoft is the exception of this, having to have an on network option alongside its cloud CRM whilst it transitions its own business market approach from being an on network vendor to a cloud focused vendor (having realised the market shift a few years back when Microsoft moved 95%+ of all its development quickly to focus on its cloud offerings). Once the shift is complete and the market accepts Microsoft fully as a cloud 1st vendor, when will the step come where Microsoft joins the throws vendors offering cloud CRM as their only form factor option for their own advantage?
Cloud CRM was there right at the start, displacing existing approaches and disrupting the status quo of approaching business application deployment methods and it has proven consistently that this is increasingly the customers preferred approach. Cloud solutions are now designed work well over slower links and transient connections, making even remote customers who would have previously found their bandwidth limiting, viable users of the SaaS based CRM options available. Increasingly also we have seem customers having higher connection speeds and demanding more mobile access from any device, anywhere at any time (mostly from user demand and not led from the business itself) all needs well suited to a cloud based CRM solution. Legacy solutions still survive, but the emphasis is on survive whilst cloud CRM is termed as thriving.
We are now at the tipping point where cloud is an everyday term (whilst many still do not understand it or its nuances, seeing it only as the internet, few have not heard of it or seen the branded marketing its featured in) and accelerate adoption has started. Cloud is extremely disruptive (nothing new to those who are familiar with Clayon Christensen’s theory of disruptive innovation) and those ignoring it in vendor land and supply channels do so at their peril.
Many still dismiss cloud, demanding on network only, not for a logical reason, but normally on an emotive basis, believing the internet insecure therefore cloud will be! This approach is not new and has affected the adoption of ‘new things’ across industries. Take the motor car. When first introduced it was deemed the ‘devil’s work’, with a man carrying a red flag having to walk down the street in front of each car and people were recorded as believing that ‘if you went in a car and it travelled at over 20 miles an hour it would rip the skin from the human face’. Now we smirk at such things, but at the time that was a very real belief and emotion towards replacing a horse and cart with a car. We are experiencing similar with the cloud
Ignoring cloud and the new form factor underpinning can be a dangerous tactic, enabling you to miss out on competitive advantage, flexibility, cost savings, functional benefit and greater resilience. Many examples already exist of major brand name leaders not recognising the change being driven by cloud in general and the rapid effect user acceptance can have on changing the historical norm. Take for example Blockbuster video – once a world leading brand, now gone, devastated by the likes of Netflix and Lovefilm (Amazon) who changed the delivery method for consumers renting a movie from ‘on network’ take a video tape home, to click and stream your choice, faster, quicker and cheaper. The brand equity Blockbuster had was not enough to overcome a new cloud based option that customers chose to choose! Not because of ‘cloud’ or because of disliking Blockbuster, simply because someone made it better and delivered something the customer preferred. The same happened with Kodak as photography rapidly went digital and online with cloud based uploads and sharing replaced the old form. The music industry with Itunes vs bricks and Mortar music stores is going through the same transition as are other markets. So to undertake a belief that cloud will not affect IT delivery and to not truly consider it fairly in any business application or IT project is a naive approach that may leave you and your business out in the cold. Cloud is not a be all and end all, it is not right for every customer in every situation, (the same as a horse and cart still has its place in certain situations – right tool right job), but it will be advantageous in the highest majority of situations.
The technology sectors ability to change has accelerated. Moore’s Law back in 1965 predicted silicon power would double every two years. But what its creator, Gordon E. Moore, couldn’t have predicted was the dramatic economies of scale the cloud would eventually bring to all of our lives. For one, it’s helped lead to a drop in price for essentials like computing power and storage by making them more accessible. But also, it’s enabled conveniences no one ever would have imagined four or so decades ago The Cloud has not only driven down costs, but it’s helped increased our satisfaction with and expectations of our Internet experience. It’s enabled mobility and delivered immense computing power to anyone, anywhere at any time. Perhaps an update to Moore’s Law will be formed to hypothesize that the number of applications running the in the cloud will double every two years; based on today’s adoption and consumption rates, however, it’s also possible we could see it being represented as the computing power available to an individual consumer (via the cloud) doubling every 2 months.