Sanjeev Aggarwal's Blog

December 16, 2013

SMB Group Top 10 SMB Technology Trends For 2014!

Here are SMB Group’s Top 10 SMB Technology Trends for 2014! A more detailed description of each follows below.

  1. Progressive SMBs Use Technology as a Game Changer
  2. Cloud Adoption Accelerates, But SMBs Steer Clear of Dark Clouds
  3. Mobile Management Becomes a Priority as SMB Mobile App Use Soars
  4. Social Media Marketing Stalls as SMBs Re-focus Marketing Practices
  5. SMBs View Payment Systems in a New Light
  6. SMBs Prepare for the Insight Economy
  7. SMBs Integrate to Gain Higher Solution Value
  8. The Affordable Care Act Puts Workforce Management in the SMB Spotlight
  9. It’s Easy for SMBs to Go Green and Save Green
  10. Make Way for an SMB Influencer Shake-Up

2014 Top 10 SMB Technology Trends in Detail

  1. Progressive SMBs Use Technology as a Game Changer. Technology continues to fuel changes in what, where, and how SMB (small and medium businesses, with 1 to 999 employees) work gets done. Back in 2011, SMB Group identified the “Progressive” SMB segment. Progressive SMBs invest more in technology-based solutions, view technology as a business enabler, and are much more likely to expect revenue growth than other SMBs. This gap continues to widen as we enter 2014, and is further fueled by generational shifts–including the rise of millennials in the workforce and older exiles from the corporate world. Progressive SMBs are blending technology and business savvy to reshape business models, carve out new market niches and invent entirely new businesses. Their adoption of cloud, mobile, social and analytics will soar as they strive for both growth and agility. They will also increasingly turn to technology-fueled services—from Elance and oDesk for staffing, to shared office space and IT infrastructure services—in pursuit of these goals. As they forge ahead, they will not only continue to outpace peers, but reshape what it means to be an SMB.
  2. Cloud Adoption Accelerates, But SMBs Steer Clear of Dark Clouds. SMBs have bought into the cloud promise: a faster, easier, cheaper and less risky route to get the IT solutions they need to create and run their businesses. SMB Group research shows SMB use of cloud business and infrastructure applications poised to grow to from 33% to 44% over the coming year. However, some cloud vendors—threatened by Wall Street and high churn rates—have backtracked on their original faster, easier, cheaper cloud pledge. They have replaced monthly subscription pricing with annual contracts, tacked on added fees for all but the most basic support, and created pricing models that are almost as confusing as those of the traditional software behemoths they once berated. As SMBs push further into the cloud, they will favor vendors that stay true to the original cloud promise, and steer clear of dark clouds.
  3. Mobile Management Becomes a Priority as SMB Mobile App Use Soars. SMBs have been adopting mobile solutions at a fast and furious pace. SMB Group research indicates 67% of SMBs now view mobile solutions and services as “critical” to their businesses. 83% have already deployed mobile apps to help improve employee productivity; 55% are using mobile apps for specific business functions, such as CRM or order entry. 49% of SMBs are building mobile-friendly websites, and/or deploying mobile apps to engage and transact with customers. However, mobile management has failed to keep pace with this explosion, and with SMBs’ increasing business reliance on mobile solutions. Concerns about security, manageability, provisioning and cost will make mobile management a top priority for more SMBs. They will be looking for easy-to-deploy, cost-effective mobile device and application management platforms and solutions to reduce management headaches and get more value from their mobile investments.
  4. Social Media Marketing Stalls as SMBs Re-focus Marketing Practices.  Many SMBs now “get” that they need a social media presence. SMB Group research reveals that more than half of small businesses and more than two-thirds of medium businesses use social media for marketing purposes. Some have invested tremendous amounts of energy to create content to feed the voracious social media beast. But the ever-increasing pressure to create fresh content, keep up with changes in users’ social network preferences, and uncertainty about the return on social investments is taking its toll. In 2014, SMBs will focus more on what networks and content really click for their target audiences, and put more time into figuring out how to convert social connections into customers. Some will integrate social more tightly with sales, marketing and content management applications, and use analytics to develop more actionable social metrics. Marketing innovators will explore new opportunities, such as online mobile advertising powered by geolocation. Others will redirect some of their efforts back to marketing basics–including surveys, competitive analysis, email marketing and attending more conferences and events. 
  5. SMBs View Payment Systems in a New Light. SMB Group research shows that although checks and credit cards are still the top forms of payment SMBs accept, there’s no question that new payment methods are growing in use and importance. 27% of small businesses and 43% of medium businesses already equip employees with mobile payment processing solutions, and about one-quarter of SMBs intend to add this capability over the coming year. Meanwhile, mobile wallets and gift cards, PayPal and even Dwolla—a payment network that allows any business or person to send, request and accept money for very low fees—will continue to provide additional payment options for consumers. More SMBs will recognize that having the capability to accept and process a broader range of payment methods can help them attract more customers, gain new business, and even enter new markets. SMBs will also seek ways to cut time and errors out of payment processing with payment solutions that integrate with accounting and ERP, such as those offered by Intuit and Sage. 
  6. SMBs Prepare for the Insight Economy.  It’s been hard for many SMBs to relate to the “big data” story that most vendors have been pitching. SMB Group research reveals that only about 18% of small, and about 57% of medium businesses utilize business intelligence and analytics solutions. However, SMBs understand the value of getting the information they need, when they need it—especially as they try to compete with new, nimble born-on-the-Web startups that view data as the new business capital. In 2014, SMB-focused vendors will retool the big data story for the little guy, focusing less on zettabytes, speeds and feeds, and more on how their solutions enable and empower better insights and decision-making. Business solutions vendors will embed better and more accessible analytics and reporting tools within their solutions. Cloud-based, visualization and scenario-driven business intelligence and analytics solutions will also help SMBs take a more data-driven approach to running their businesses. 
  7. SMBs Integrate to Gain Higher Solution Value. While the cloud has made it easy for businesses to add a lot of new applications, integration has often been an afterthought. As a result, many SMBs are struggling to make sense of disconnected information silos, and IT is under pressure to integrate cloud-to-on-premises solutions, as well as cloud-to-cloud solutions. In 2013, integration moved up from the #4 to the #1 technology challenge for medium businesses. In 2014, we expect that integration will be a higher priority even among small businesses. After all, it doesn’t take too many disconnected applications to feel the pain of productivity drains, errors, and a lack of solid data to support decision-making. Fortunately, technology vendors of all stripes are emphasizing the importance of a unified, reliable data store as the foundation for solid analytics and reporting. Business solution vendors are increasingly offering SMBs pre-integrated suites, opening up their application programming interfaces (APIs), and creating marketplaces to make it easy to find integrated partner apps. This makes it easier for SMBs to start small, with just one or two applications, and then snap in added functionality as needed. Finally, vendors that specialize in integration solutions, such as Informatica, Scribe and Dell Boomi (just to name a few), are making their solutions more accessible to SMBs. Integration still isn’t sexy, but the improved productivity, time savings, error reduction and decision-making benefits that it enables are. 
  8. The Affordable Care Act Puts Workforce Management in the SMB Spotlight. Revenue growth, attracting new customers and increasing profitability are perennial goals for SMBs.  To help achieve these goals, they have been steadily moving ahead to automate and integrate sales, marketing and other customer-facing solutions. Although improving employee productivity has also been a top goal, SMB adoption of automated, integrated workforce management solutions has lagged behind other areas. Many SMBs continue to limp along with a patchwork of disconnected solutions and manual tracking to manage components such as time and attendance, payroll, scheduling, HR and benefits.  But with the Affordable Care Act set to take effect on January 1, 2015 for organizations with more than 50 full-time equivalent (FTE) employees, that situation is about to change. Worried about uncertainty, costs and regulatory risks, SMBs will look for better solutions to calculate employee eligibility and benefits, and to develop proactive strategies to manage ACA compliance and costs. This will drive a significant uptick of interest in, and adoption of automated, integrated workforce management solutions. 
  9. It’s Easy for SMBs to Go Green and Save Green. The push for greener IT solutions isn’t new, but in 2014, we’re moving into a perfect green storm. Due to a rash of hurricanes, tornadoes and extreme weather, the sustainability of Mother Earth is taking center stage. According to a recent Harris Poll, over 74% of American adults believe in the global warming theory, and over 73% of U.S. citizens approve of the Kyoto agreement requiring countries to limit carbon monoxide and greenhouse gas emissions. IT vendors are prepared to capitalize on this opportunity with new, energy saving products. From Dell’s Dell PowerEdge VRTX applications and storage server, which runs on standard 100V-240V AC power and doesn’t require any specialized cooling, to IBM’s patent for a “green” button that helps cloud providers “greenify” their businesses and lets customers choose whether or not to tap clean energy to run offsite servers, it’s easier than ever for SMBs to be green and save green. 
  10. Make Way for an SMB Influencer Shake-Up. SMB Group research shows that in-house IT still plays a key role in all phases of the technology solution decision-making process. But now, enabled by the cloud and the swipe of a credit card, business decision-makers are much more involved: in small businesses, 69% of owners/presidents help evaluate potential solutions, and 81% help make the final decision. In medium businesses, departmental and line-of-business executives are the most likely personnel to identify the need for new solutions. This is changing the influencer landscape. Business decision-makers aren’t as likely to turn to traditional technology guidance sources as IT decision-makers. And many of us—especially millennials—are growing skeptical of traditional media sources that increasingly push paid “native content” in the guise of news. So who will the new influencers be? Accountants and other professional advisors (for line-of-business or industry) that the SMBs have an established relationship with will become more powerful influencers. Digital word-of-mouth, references, trade associations and non-technical groups and organizations will play an increasingly important role in shaping technology purchase decisions among both business and IT professionals. Finally, technology vendors that provide unbiased education—and can clearly demonstrate how business benefits from their solutions—will have a decided advantage over those that don’t.

About SMB GROUP

SMB Group focuses exclusively on researching and analyzing the highly fragmented “SMB market”—which is comprised of many smaller, more discrete markets. Within the SMB market, SMB Group areas of focus include: Emerging Technologies, Cloud Computing, Managed Services, Business and Marketing Applications, Collaboration and Social Media Solutions, IT Infrastructure Management and Services and Green IT.

November 27, 2012

Report Card: 2012 Top 10 SMB Technology Market Predictions

–by Laurie McCabe and Sanjeev Aggarwal, SMB Group

Before developing our 2013 predictions, we wanted to assess how we did on our 2012 Top 10 SMB Technology Predictions. Here’s our take–please let us know what grades you would have given us!

And stay tuned for our Top 10 SMB Technology Predictions for 2013, which we will post in a couple of weeks!

Note: On this grading scale, 5 means that we came closest to hitting the mark, and 1 means we missed it entirely.

Prediction Score

Comments

  1. Economic Anxiety Lowers SMB Revenue Expectations and Tightens Tech Wallets
4 Year-over-year data from our annual SMB Routes to Market Studies
indicated that more small and medium businesses (SMBs)* were forecasting flat or decreased IT spending heading into 2012 compared to 2011. Given SMB budget constraints and the plethora of solutions aimed at SMBs, vendors had to work harder to convince budget-constrained SMBs that their solutions would really help address top SMB business challenges to attract new customers, grow revenues and maintain profitability. More SMBs turned to lower-risk, pay-as-you-go cloud options, and several vendors (IBM, Dell and HP, to name a few) introduced new and/or enhanced financing options to help SMBs overcome financial hurdles.
  1. The SMB Progressive Class Gains Ground
5 We identified a distinct category of SMBs that we termed “Progressive SMBs,” who see technology as integral to achieving business goals and to gaining a competitive edge. Progressive SMBs invest more and purchase more sophisticated solutions than their counterparts. Trending analysis from our 2011 to 2012 Routes to Market Studies show that the percentage of SMBs in the Progressive category is growing. Furthermore, Progressive SMBs continue to gain ground over SMBs that skimp on technology in terms of expected business performance.
  1. The SMB Social Media Divide Grows
5 SMB adoption of social media did indeed jump, from 44% to 53% among small businesses (and from 52% to 63% among medium businesses from 2011 to 2012, based on trending analysis in our SMB Social Business Studies. The divide between social media haves and have-nots is also growing: our research reveals that 65% of SMBs that use social business tools anticipate revenue gains, while only 17% of “non-social” SMBs expect revenues to increase.
  1. Cloud Becomes the New Normal
4 SMBs haven’t swapped out all of their on-premises solutions in favor of the cloud–but the puck is clearly moving to the cloud in all application areas. The evolution is continuing at a steady pace, as evidenced by trending analysis in our annual SMB Routes to Market Studies. In some areas, cloud is poised to overtake on-premises solutions. For instance, over 30% of SMBs that purchased or upgraded collaboration, marketing automation, BI and data backup in the past 24 months chose cloud, and over 40% of SMBs planning to purchase solutions in those areas in the next month plan cloud deployments.
  1. Mobile Application Use Extends Beyond Email to Business Applications
5 SMBs significantly ramped up mobile business application use and plans in 2012, as evidenced by trending analysis from our annual SMB Mobile Solutions Studies. More SMBs are providing mobile business apps to employees in categories ranging from CRM to time management to expense reporting. In addition, adoption of external-facing (for customers, partners and suppliers) mobile apps and websites also rose considerably. For instance, SMB use of a mobile-friendly website is up 10% among small businesses and 23% among medium businesses.
  1. Increased SMB Business Intelligence (BI) and Analytics Investments Are Sparked by the Social-Mobile-Cloud Triumvirate
3 The avalanche of data generated by cloud, social and mobile has certainly created the need for better analytics. However, year-over year trending data from our SMB Routes to Market Studies reveals a mixed bag in terms of adoption. Use of BI solutions among medium businesses spiked 24% in the past year, but adoption rose just 2% among small businesses. While vendors appear to be doing a good job of developing and marketing BI solutions tailored to the needs of medium businesses, they have not yet figured out the right formula for smaller ones.
  1. Managed Services Meet Mobile
5 We forecast that the explosion of mobile devices and apps, “bring your own device” (BYOD) phenomenon and the increasing concerns about security would spark increased demand for and more solutions to manage mobile on the back-end. Our annual SMB Mobile Solutions Studies show that SMB adoption of mobile management services—from simple device management to comprehensive mobile management platforms—has accelerated rapidly. For instance, 16% of SMBs have already deployed an outsourced mobile management platform, and 30% plan to do so within a year.
  1. The Accidental Entrepreneur Spikes Demand for No-Employee Small Business Solutions
5 Small businesses without a payroll make up more than 70% of America’s 27 million companies. We hypothesized that the 2008 recession and subsequent layoffs generated a new and often “accidental” breed of entrepreneurs that would spike demand for—and growth of—applications targeted to meet the needs of these businesses. And they have. New and improved cloud-based and mobile apps from traditional small business powerhouses (Sage, Intuit, Microsoft, Google, etc.), SOHO pioneers (Freshbooks, Nimble, Dropbox, Zoho, etc.), and freelance talent sourcing solutions from companies such as Elance and oDesk are making it easier than ever for SOHOs to get their work done.
  1. Increased Adoption of Collaboration and Communication Services in Integrated Suites
4 Trending from our Routes to Market Study Medium businesses shows that overall, use and plans to deploy collaboration solutions is up year-over-year. Low-cost, low-risk, cloud-based collaboration and communications services have made it easier for SMBs to use integrated collaboration tools, while eliminating the inconvenience of using multiple sign-ons and interfaces.
The fact that vendors are integrating more into their offerings—such as Google integrating Google+ hangouts, IBM SmartCloud Engage adding social communities and Citrix adding video capabilities to GoToMeeting—doesn’t hurt either.
  1. The IT Channel Continues to Shape-Shift.
5 Cloud, social and mobile trends continue to reshape how channel partners must deliver value across the board. SMBs are increasingly choosing to purchase directly from software and cloud vendors in most areas. And Managed Service Providers (MSPs) have gained ground as a purchase channel over VARs in several solution areas, including security, BI and collaboration. The need for more specialized business and/or technology expertise has also made some types of channel players more relevant in each specific solution category than others.

*In SMB Group Syndicated Survey studies, we define small businesses as those with 1-99 employees, and medium businesses as having 100-999 employees.

For more information on our most recent SMB Mobile, Social Business and Routes to Market Studies, please visit our website, www.smb-gr.com, or contact Sanjeev Aggarwal, Sanjeev.aggarwal@smb-gr.com, 508-410-3562.


October 31, 2012

SAP TechEd 2012: Implications for SMEs and the Partner Ecosystem

Filed under: Blogs - Sanjeev Aggarwal, Cloud Computing, ISV, Mobility, SaaS, Sanjeev Aggarwal Blog, SAP — Tags: , , , , — sanjeevaggarwal @ 12:10 pm

Sanjeev Aggarwal, Partner, SMB Group

During the week of October 15, I attended SAP TechEd 2012 in Las Vegas, along with about 6,500 SAP technology specialists and partners, and a small group of influencers. Although SAP is more widely renowned for its success in the large enterprise market, the small and medium enterprise or SME market (which SMB Group labels the small and medium business or SMB market) is a core part of SAP’s installed base and essential to SAP’s growth strategy. Roughly 80% of SAP’s more than 128,000 current customers are SMEs with less than 1,000 employees. In addition, SAP has more than 12,000 partners worldwide who provide SAP solutions and services to SME customers.

During this year’s TechEd, SAP discussed three areas that underscore SAP’s commitment to the SME market and its fundamental belief that strong growth opportunities lie ahead in this segment.

Taking HANA to the Cloud and to SMEs

  • HANA Cloud was by far the lead theme overall at 2012 TechEd. As Bill McDermott, co-CEO remarked, “HANA lies at the heart of the intellectual renewal going on at SAP.” HANA began life as an in-memory analytics engine, and quickly evolved into a database. Now, as SAP announced at the event, SAP is building the HANA Cloud as a next-generation platform for developers.

    SAP HANA AppServices and SAP HANA DatabaseServices are services that allow developers to create next-generation applications using native SAP HANA, Java and other rapid-development services. The good news is that SAP will now offer for free, developer licenses for SAP NetWeaver Cloud to get more support from the developer community. These shared services will build on SAP’s cloud platform vision by providing building blocks for portals, integration, mobile, analytics, collaboration and commercial services required to expedite building and life-cycle management of applications.

    SAP HANA One, a deployment of SAP HANA on the Amazon Web Services Cloud. HANA One currently supports a relatively small 64GB HANA instance on Amazon’s AWS cloud for $0.99 per hour. This will make it faster and easier and cheaper for developers to build affordable, HANA-enabled apps for SMEs.Although HANA Cloud is still a work in progress, HANA Cloud services and SAP HANA One are first steps to SAP realizing the HANA Cloud development platform vision. Significant work is required to move this from a development/testing proof-of-concept to a production platform where commercial applications can be deployed. SAP needs to develop a strategy to help developers move rapidly to commercial deployment and promotion, as Salesforce.com has done successfully with its Force.com platform and ecosystem.

  • SAP also announced that SAP Business One, version for SAP HANA, has been in limited release mode as of September 18, 2012, with general availability slated for some time next year.

    SAP Business One is SAP’s flagship ERP solution for SMEs with fewer than 100 employees. This HANA-powered version uses the HANA database and allows both the transactional (ERP) and analytical application to be run on the same server, and promises significant performance advantages. Running both ERP transactions and analytics on a single platform speeds access to information for analytics, reporting and search, without slowing down transactional processing.

    While not every SME will need to turbo-charge these functions, some SMEs are challenged with exponential data growth, and managing and extracting the insights they need from it. For instance in the health care industry, companies can integrate patient transactions with insurance company patient utilization records and hospital electronic medical records, to providing a complete real-time view to better manage patient care and costs. By crunching through more data more quickly, these businesses can more readily gain the insights they need to succeed in an increasingly complex and competitive world.
    Meanwhile, SMEs that don’t require the increased speed and power and analytics capabilities that HANA supplies can continue to buy SAP Business One based on Microsoft SQL database, which SAP offers as both an on-premises and cloud based solution.

Enabling Mobility for SMEs

With the acquisition of Sybase and Syclo (which SAP acquired in April’12), SAP is moving to help SMEs develop a mobile application and mobile management strategies. Sybase’s robust, market-proven Sybase Unwired Platform, is now augmented by the Syclo mobile application development platform to enable partners to rapidly develop, configure and deploy mobile apps for SME customers. SAP partners can also help SMEs to add mobile capabilities to their existing business applications, and/or help them develop custom mobile applications to address business requirements. SMB Group research studies indicate that many SMEs are planning to deploy internal mobile solutions in areas such as field service and CRM. In addition, they are planning to provide external mobile apps in areas such as payments, marketing and appointment and reservation scheduling to boost customer engagement and create new revenue opportunities.

Empowering the SME Partner Ecosystem

The partner ecosystem heavily influences SMEs’ business solution purchase decisions. Many of the partners I spoke with at the event provide consulting, implementation services and development for SAP’s SME-focused applications, including Business One, Business by Design, Business All-in-One, Business Objects Edge. Now SAP is helping these partners build skills in HANA and mobility to support new SME requirements.

Partners will play a vital role in helping SMEs customize application, analytics and reporting on the HANA platform or help startups develop new next generation application on SAP HANA Cloud. Likewise, on the mobility front, partners are essential to help SMEs develop a comprehensive mobility strategy that includes mobile access to business application and address the mobile management issues–including devices, access, security and mobile applications –in a unified way.

SAP is sparking renewed interest from and incremental opportunities for the SAP partner ecosystem. HANA Cloud, SAP Business One with analytics powered by HANA, and new mobility solutions will help SAP attract new partners and grow its partner ecosystem. Meanwhile, SAP’s laser focus on the mobility front will help it forge new partnerships with mobile solution developers that want to capitalize on the opportunity to provide mobile solutions via SAP’s Sybase Afaria platform. SAP is also opening up the SAP PartnerEdge program to help attract these new partners with educational tools, resources and training–as well as credentials to validate and certify partner skills for mobility and HANA.

In addition, the current SAP Mentors and partners that I met at TechEd were excited about the new opportunities that this will open up for them. For existing SAP partners, SAP’s new HANA and mobile solutions provides a pathway to incremental opportunities in their existing account, and an entrée to develop business in new ones.

Perspective

SAP is betting that these new technologies and solutions will give it an edge in the SME market. But for many SMEs, this is uncharted territory. SAP will need to make a hefty investment—particularly around HANA—to build awareness and understanding of the value that it brings to the table. Likewise, it must build on TechEd to ensure that it rolls out a steady, effective training program to help partners position, design, build, implement and support SAP solutions in these areas.

That said, as discussed in The Progressive SMB: Customer Stories are Worth 1,000 Analyst Words, SMB Group research indicates a distinct and growing segment of SMEs that we call “Progressive SMBs.” Despite economic uncertainties, Progressive SMBs plan to increase IT investments. They see IT as a tool for business transformation, and a way to create market advantage and level the playing field against bigger companies. Furthermore, Progressive SMBs have higher revenues expectations than their peers.

For instance, 50% of the small and 73% of the medium Progressive businesses (who are increasing technology spending) anticipate revenue gains in 2012, compared to just 15% of the small and 8% of medium businesses that plan to decrease IT spending.

The opportunity for SAP lies in growing the Progressive SME segment. After all, its unlikely that SME technology stragglers are going to become SAP customers. To accomplish this, SAP will need to make a significant investment outside of its installed base (as well as within) to educate SMEs about the increasingly dire consequences that technology laggards are likely to face, and the tremendous upside that they can gain by using IT solutions more strategically. Then, SAP must clearly connect the dots to demonstrate how SMEs can apply its new solutions to leapfrog competitors and grow their businesses.

If SAP can alert and educate a broader SME audience, then it can not only help narrow this gap, but also increase the market opportunity for its new solutions.

September 5, 2012

Pathways to a Successful Mobile Business Strategy

Filed under: Uncategorized — sanjeevaggarwal @ 12:24 am

The phenomenal rise of mobile applications development and adoption creates both new opportunities and challenges for businesses. Is your business ready to reap the benefits of mobile solutions, or are you in danger of falling behind? Now, more than ever, SMEs need to develop a mobile business strategy to determine why to mobilize,  who to mobilize, what apps to use, and how to deploy and manage mobile solutions.

The SMB Group recently conducted extensive research to understand the who, what, where and why of how  SMEs are using mobile solutions in their businesses. This infographic distills some of the key findings from this research, and will help you to:

  •  Benchmark how your company stacks up compared to your business peers in the mobility space.
  • Gain perspective on both the benefits and challenges that medium businesses face when implementing mobile solutions—both for internal employees, and for external users such as customers, partners and suppliers.
  • Provide you with a starting point and lay out the steps you’ll need to take to maximize the value your business gets from mobile solutions.

Want to learn more? Click on the “View Infographic” button to view the path to mobile success.

August 6, 2012

Today’s SMB Social Media Market Creates Opportunities for Tomorrow

SMB businesses are increasing their adoption of social media solutions year over year–rising from 44% to 53% in small business (1-99 employees) and 52% to 63% in medium business (100-999 employees). But what business functions are SMBs using social media for, and what social media tools are they using in different areas?

Just released results from the SMB Group’s 2012 Small and Medium Social Business Study paints a comprehensive picture of the functions that SMBs are using and planning to use social media for in their businesses. The study, which is the second annual survey we’ve completed on this topic, queried 665 U.S. executives in detail on this topic. As we look at trends from 2011 to 2012, we see several data points that reveal interesting opportunities for vendors to better serve this market.

Data Highlights

We found that similarly to our 2011 study results, SMBs in 2012 are adopting social media mainly to help them achieve their sales and marketing goals. Only a small percentage are using social media for non-sales and marketing functions, such as human resources, customer service and product development. However, use of social media in several of these areas is rising. For instance, social media use is up year-over-year:

  • From 47.5% in 2011 to 60% in 2012 for “Generate more web site traffic”
  • From 45% in 2011 to 59% in 2012 for “Connect with people who aren’t customers”
  • From 45% in 2011 to 47.5% in 2012 for “Service/support and customer retention”
  • From 23.5% in 2011 to 28% in 2012 for “Input for product development”

SMBs are using different social media tools for particular types of business functions, as indicated in the heat map below (Figure 1), which shows which social media tools SMBs are using to accomplish different business functions. For instance, LinkedIn is a the most widely used social media tool for  “new employee recruitment” while “geo location tools” are least used in this areas. Note that the tools above the blue line on the heat map are most frequently used for each business function, while the tools below the blue line show only marginal use. LinkedIn forums, Facebook, YouTube and Blogs are most frequently used social media tools to accomplish various business functions.

Source: 2012 Small and Medium Social Business Study, SMB Group

LinkedIn has been breaking out of the employee recruitment mold as SMBs extend its use into different areas. Although everyone knows about Facebook (and may have used Facebook for personal collaboration) and some small and medium size businesses have created a business page, many are still challenged by how to utilize Facebook’s potential to increase awareness of company brand, increase leads/traffic of website and drive revenues higher–and are testing out other social media tools.

As shown in Figure 2, although Facebook continues to remain ahead of the pack, adoption is tapering off. Meanwhile, other tools, including Twitter, YouTube, company blogs and Pinterest, have seen the strongest growth over the past year.

Figure 2: Social Media Tool adoption timeline
Q. How long have you been using social media for these functions?

Source: 2012 Small and Medium Social Business Study, SMB Group

To a large extent, SMBs are still experimenting to see how social media can help them, and which tools are best suited to helping them accomplish different business goals. Relative newcomers–such as Pinterest–can have a big effect in a short time if they hit the mark for specific business needs.

Because its relatively easy and low cost to test out different tools, SMBs will remain loyal only as long as they believe that they are getting beneficial business results. Since only 7% of small and 17% of medium businesses currently measure return-on-investment from social media, this is still a decision made by and large on anecdotal evidence and gut instinct.

This means that social media vendors must not only provide tools, but also training, services and metrics to help SMBs maximize and measure the value the get from these tools. For instance, a vendor could provide tools to help SMBs perform A/B testing–similar to what’s available for landing pages today– to hone their social media efforts.

As the market matures, pressure will also increase for SMBs to more accurately measure the results they’re getting across social media platforms. They will need better, easier to use analytics than are available today–ala Google Analytics for social. Vendors that provide these next-generation social media analytics solutions can capitalize on a big and growing market opportunity to bring today’s fuzzy picture into sharper focus. In addition, if they can harness these metrics across a broad base, they have the potential to build some very interesting data aggregation services akin to Nielson ratings for television and radio.

The bottom line is that there is still a lot of play in the nascent social media market–and unbounded opportunities for vendor innovation.

June 10, 2012

NetSuite SuiteCommerce: Transforming Commerce Solutions and User Experience

 Last week I had the opportunity to attend NetSuite

SuiteWorld 2102 in San Francisco. One of the most notable announcements was the launch of NetSuite’s new SuiteCommerce Commerce-as-a-Service (CaaS) platform for B2B and B2C businesses.

The SuiteCommerce offering is designed for e-tailers, retailers and other companies that sell online and provides these businesses with multi-channel platform which is integrated with NetSuite’s core ERP system. This gives companies a unified front-end to manage their various digital sites and brick-and-mortar stores, connected to their ERP to provide a single system of record for history of customers across channels. According to NetSuite, SuiteCommerce will help businesses to:

  • More easily customize web page content and integrate information into back-end financial systems
  • Tailor eCommerce solutions to the requirements of mobile, machine-to-machine (M2M) and social networking platforms
  • Enhanced social networking solutions through integrations that augment the platform with social functionality such as social ratings, reviews, personalized product recommendations and conversations

NetSuite will offer two SuiteCommerce options:

  • The Mid-market version targets businesses with smaller product catalog of products and services. The Mid-market suite starts at $1,999 per month and is available now.
  • The Enterprise version is aimed at larger companies and is designed to handle a more extensive product catalog of products and services. The Enterprise version at $3,999 per month and will be available in August 2012.

The vendor also announced a roster of SuiteCommerce partners, including Square, Stripe, Acquia, Bazaarvoice, MyBuys, Velaro and Shotfarm that have developed apps that integrate with the platform. In addition, it announced partnerships with the creative agencies that can help companies design their sites to optimize SuiteCommerce capabilities. These partners, agencies and VARs can extend the SuiteCommerce platform using NetSuite’s SuiteCloud development platforms and SuiteApps.

Perspective

The timing of this announcement couldn’t be better.

Technology trends are converging to create a perfect storm in the world of commerce—one that empowers customers and raises the bar for companies to meet new, more demanding customer expectations. Social media empowers customers with information from friends and other unfiltered sources. Mobile devices are
facilitating this trend, making it possible to research and shop for products and services anytime and anywhere. Cloud computing and ecommerce are blurring the boundaries between brick-and-mortar and online commerce stores, creating an imperative for merchants to provide consistency and visibility across channels.

This has created an environment where customers expect more from businesses throughout the commerce cycle. They want anywhere, anytime, any-device access to multiple sources for information gathering, product and service evaluation, selection, purchasing and customer service. As a result, merchants need to anticipate what the customer wants, automate and personalize customer interactions, and enable the customer to do business where, when and how he or she wants.

NetSuite’s introduction of SuiteCommerce is designed to help businesses meet these elevated customer expectations. NetSuite has had an integrated eCommerce offering for years, an almost 2,800 of its customers run their web sites and storefronts on NetSuite. However, SuiteCommerce is intended to go beyond the commerce experience to integrate social, mobile and other customer touch points.

As NetSuite’s CEO Zach Nelson noted in his remarks at the event, “Over the past decade, NetSuite has transformed how our customers operate their businesses internally. Over the next decade, NetSuite will transform how businesses operate with other businesses and with their customers through NetSuite Commerce as a Service.”

In addition, SuiteCommerce strengthens NetSuite’s “one system of record” integrated suite story, which is a good one in the mid-market. SMB Group’s research finds that “integrating different applications” is a significant challenge (Figure 1).

Figure 1: Top Technology Challenges in Medium Businesses


Source: SMB Group 2011 SMB Routes to Market Study

The SuiteCommerce offering also aligns with the direction NetSuite announced at last year’s SuiteWorld event, when it unveiled plans to move up from its SMB lineage (that harkens back to its NetLedger days) to pursue the upper end of midsize business, a two-tier strategy in the large enterprise space, and select industry markets.

SMBs increasingly see that customer-facing mobile applications can help them grow revenue, attract and retain customers, and keep up with the competition. SMBs are using both mobile-friendly web sites and mobile apps to offer functionality to foster this interaction, as shown on Figure 2. Regardless of whether SMBs are employing a mobile-friendly web site, mobile apps, or both, what are the top capabilities that they are providing to external audiences? And what do they plan to add in the next 12 months?

Figure 2 Business Functions Available/Planned Via a Mobile-Friendly Web Site/Mobile App.


Source: SMB Group,
2012 Small and Medium Mobile Business Solutions Study

Mid-market businesses are increasingly enabling mobile apps to access line-of-business functions to conduct business with customers, prospects, partners and suppliers. Mobile support in SuiteCommerce will enable significant new revenue opportunities for NetSuite SuiteCommerce VARs and service providers.

Quick Take

The large number of customers and partners in attendance at SuiteWorld 2012 seemed excited about SuiteCommerce and NetSuite’s direction to help transform from the core internally-focused business application into an integrated, commerce-aware business platform. I talked to several NetSuite VARs at the event, most of them were very excited about the comprehensive easy-to-use solution multi-channel commerce solution.

NetSuite’s ability to get both developer and creative partners for the SuiteCommerce launch bodes well, as these are the applications and services that will bridge the last mile for many customers.

SuiteCommerce currently offers good mobile capabilities to mid-market businesses. However, SMBs increasingly see that customer-facing mobile applications can help them grow revenue, attract and retain customers, and keep up with the competition. NetSuite should look at developing some core mobile apps that integrate with SuiteSommerce, these apps can me customized by the VARs and offered to mid-market business providing significant competitive advantage to the SuiteCommerce platform.

There has been a significant rise in demand for social networking capabilities in mid-market businesses. On the social side NetSuite has already enabled the platform for social networking. Several of the social solutions partners help complete the solution to provide a comprehensive social solution.

One question that remains unanswered, however (although asked by analyst Brian Sommer and explored in NetSuite SuiteWorld Part 1: The Big Points | ZDNet), is how NetSuite will help companies crunch through, manage and make sense the massive amounts of new, external and transactional data that they will be bringing in. While big data, HANA, Hadoop and in memory databases are still fuzzy concepts for many, major players (IBM, Oracle, SAP, etc.) will get better at articulating what it means–and their solutions. And as NetSuite turns further upmarket, the pressure will build for it to have a solid and well-crafted big data strategy.

April 2, 2012

IBM Smarter Commerce for Midsize Businesses – Future Trends

—by Laurie McCabe, SMB Group, in partnership with Brent Leary, CRM Essentials  

To help companies understand IBM’s Smarter Commerce initiative, the SMB Group and CRM Essentials are working on a series of posts discussing how technology is empowering today’s customer, and why companies have to change their approach in order to build strong relationships with them. This is the final post in the series.

Empowered customers are reshaping business today. They want a consistent experience between all channels.

They compare notes and instantly share. And they can champion a brand or sully a reputation with the click of a mouse. In response to these trends, IBM Smarter Commerce helps companies manage and adapt their commerce processes, putting the customer at the center of their operations.

For this post, we had the opportunity to talk to Alisa Maclin, Vice President, IBM Smarter Commerce Marketing. We asked her about IBM’s views on some of the more nascent trends in this area that may not yet be on the radar for most midsize businesses–but have the potential to create significant shifts in how companies conduct commerce.

Q. While it may have been difficult to predict how radically social media or the rise of smartphones and tablets would affect commerce a few years ago, what are some of the technology trends likely to have a dramatic impact on commerce in the next 5 years or so?

A: We believe that the speed of technological innovation and consumer adoption will continue to accelerate for the next five years and beyond. This acceleration is driving entirely new business models that are changing the landscape between buyers and sellers. The traditional models of B2B and B2C will need to leverage technology to continue to improve efficiencies, while adapting to new models such as Social and Facebook Commerce. The empowered and connected consumer is driving the “consumerization” of business and the empowered citizen is increasingly digitally engaged and networked. For small and medium sized businesses, the opportunity to embrace technology and the connected consumer is now.

Q: Is there a difference in what B2B and B2C businesses need to think about and do?

A: Yes and no, the lines separating B2B and B2C models are blurring. The empowered consumer looks for the same benefits of mobile and social technologies whether they are at work or at home or on the go. The result is a connected ‘consumer’ that has access to information looking to engage in new ways and do business both locally and globally to meet their needs.

B2B companies need to optimize their digital operations and transform how products and services are created, marketed, sold, delivered and serviced. For example, the influence of ‘self service’ is universal in both B2C and B2B, with 56% of customers demanding increased self service when they do business with a company, according to Forrester Research in 2011. And, B2C companies need to really look at mobile and social as a ‘must have’ to compete and win their customers and keep them coming back.

Q: In addition to the impact of emerging technology, what other trends–economic, social, regulatory, etc.– do you see happening in the future that will impact how companies buy, market, sell and service?

A: Economic realities affect how companies operate, especially across the value chain. As the number of supply chain partners increases, the need for accurate, time-sensitive information becomes more acute. Many companies will turn to business intelligence and analytics on key control point indicators, such as orders versus forecasts and inventory in transit versus in stock, to move from “sense-and-respond” to “predict-and-act” organizations.

From a regulatory perspective, product lifecycle traceability in consumer products and other industries is a growing requirement. As product lifecycle traceability in many industries is becoming a major concern, the use of smart devices is likely to become more prevalent for tagging products wherever they are, as well as the containers and modes that are transporting them.

Q: How do you envision these changes affecting midsize businesses? What should they do to prepare and take advantage of them?

A: These changes will impact businesses of all sizes. No business is immune, and those that think they are will find themselves at a disadvantage. Midsize businesses can start to put the customer – the empowered customer – at the center of their commerce processes by taking these steps toward Smarter Commerce:

  • Listen to their clients to better understand and anticipate customer behavior and turn insight into action.
  • Adapt their sourcing of goods and services with a focus on customer demand, and orchestrate seamlessly among their trading partners and suppliers to serve that demand.
  • Personalize marketing and selling to your customers as much as possible and keep them coming back for more.
  • Evaluate service processes and learn from customers’ behavior to predict and take action.

Q. Do you think Smarter Commerce provides midsize companies a way to level the playing field–by helping them to establish a “virtual presence” in other countries without the physical infrastructure or physical presence?

A: Yes, in a flat world and global access at our fingertips – companies of any size can compete to win. But, just putting a virtual presence out there will not be enough. The key is customer satisfaction, which is tied directly to profitability. Data shows that for every customer who complains of poor service a company loses 10. And, it costs 6 to 7 times more to gain a new customer than to keep an existing one.

The way to stand out will be to incorporate customer-centricity into all your commerce processes. This is not a new concept… but in today’s marketplace it is the difference between thriving and going out of business.

Q: What are some of the things IBM is doing to help midsize companies stay ahead of the curve?

A: You’ll find that much of what we’re doing with our Smarter Commerce initiative is designed to help companies of all sizes to address these market changes. It focuses on three areas organizations need to address – customer insight, strategy and engagement. Companies need deep insight into customer behavior and needs – and the ability to anticipate and predict behavior to take immediate action. This insight, in turn, should drive the development and refinement of their customer value strategy – how to enhance, extend – and redefine value as viewed by the customer – and, the key here, is to do it profitably. And, finally, using that strategy to build customer engagement.

IBM works closely with its Business Partner network to drive this kind of change in the midmarket. For example, working with IBM Business Partner ExactTarget, Skymall was able to deliver more targeted e-mails using analytics-driven behavioral insights. This resulted in recapturing 3-5% of potentially lost revenue from abandoned carts, and helped Skymall to grow email-generated sales by 34%. Another example is RiverPoint, a systems integration consulting firm and IBM Business Partner. They helped The Society of Critical Care run more effective marketing campaigns. Combining IBM’s enterprise marketing management (EMM) software platform with RiverPoint’s best practices EMM consulting has enabled the client to experience a 2.4% positive change in membership attrition in the first year.

This is the final post in a series examining the evolution of the smarter customer and smarter commerce, and IBM’s Smarter Commerce solutions. For more information about how IBM Smarter Commerce is transforming midsize companies’ approach to commerce, visit http://www-01.ibm.com/finder/businesscenter/us/en/its_commerce_topic.wss%5D

March 19, 2012

Dell Extends its End-to-End Storage Story for SMBs

Filed under: Blogs - Sanjeev Aggarwal, ISV, Small Business, SMB, Storage — Tags: , , , — sanjeevaggarwal @ 11:35 am

Storage is a key requirement for today’s small-to-medium business (SMB) and mid-market enterprises. As the amount of data multiplies, and the need to protect critical data grows, SMBs now require many of the same data storage capabilities as larger enterprises.

With these requirements in mind, Dell recently announced the acquisition of AppAssure–the company’s first acquisition since launching its new Software Group. AppAssure will be part of Dell’s enterprise storage and software line-up, and underscores Dell intent to extend its footprint in the storage solutions market. The acquisition helps Dell take another big step in its enterprise solutions strategy and deliver a Fluid Data architecture that automatically and intelligently optimizes and protects data everywhere.

AppAssure’s software solution, billed as next generation data protection, provides continuous backup protection across physical, virtual, and cloud-based storage environments and includes the following capabilities:

  • Snapshot and replication
  • Data de-duplication and compression
  • Backup and restore
  • Archiving

Market demand for this type of solution is reflected in AppAssure’s success to date. Since its launch in 2006, AppAssure has expanded to 230 employees and more than 6,000 customers worldwide, with 194% revenue growth year-over-year for 2011.

PERSPECTIVE

The top four technology challenges for the SMB and mid-market companies are (Figure 1):

  • Containing technology related costs
  • Implementing new solutions and upgrades
  • Keeping my systems up and running
  • Integrating different applications

Figure 1 SMB and Mid-market Top Technology Challenges


Source: SMB Group 2011 Small and Medium Business Routes to Market Study, November 2011

As the complexity of storage requirements rises, these challenges have become more pronounced in the storage space as SMBs have tried to piece together disparate solutions from multiple vendors to ensure data protection and business continuity/disaster recovery.

With AppAssure, Dell can provide SMBs with storage capabilities not only for their physical servers but across to virtual and cloud computing environments–which are increasingly the environment of choice for SMBs. Regardless of the data environment, AppAssure Backup and Replication provides backup/restore, archiving, and disaster recovery, simplifying administration with near instant, reliable data recovery. AppAssure also protects application software in both virtual and physical environments.

AppAssure is part of Dell’s broader “fluid data” architecture (Figure 2), which is designed to put the right data in the right place at the right time, at the right cost. It provides a unified storage architecture to manage data more cost-effectively and efficiently–thereby addressing the key technology challenges that SMBs face. At a high level, the Dell Fluid Data architecture can help SMBs manage the growing data avalanche in a more intelligent and streamlined way. In addition to the capabilities enabled by AppAssure, Dell’s storage architecture and solutions (Figure 2) address a broad range of storage management needs including:

  • Ability of handle file, block and object-level data to support a variety of applications, from Microsoft Exchange to virtualization solutions to databases to social media applications.
  • Automated support for multi-tier storage (primary, backup and archive data) to control rapidly escalating storage costs and compliance requirements.
  • Automated data protection and replication, eliminating the need for daily manual intervention.
  • Support for business continuity and disaster recovery.

Figure 2 Dell Unifying Storage Architecture


Source: Dell


Rapid data growth driven by new applications such as rich-media, social media, 64-bit architectures and compliance solutions requiring availability of data for very long time-periods is causing increases in storage system costs, storage infrastructure complexity, and power and cooling costs. Dell’s end-to-end storage management solutions help SMBs get some of these storage costs under control, for instance:

  • Data reduction technologies such as data de-duplication and compression allow SMBs to control data growth rates by eliminating redundant data. This enables more efficient use of existing storage assets and helps users defer capital expenditures for new storage systems as they reduce disk capacity requirements. They also help decrease bandwidth requirements for data transfer.
  • Tiered storage architectures allow users to control storage hardware costs based on business value and frequency of access. Higher performance, higher cost storage resources can be dedicated to mission critical initiatives, and lower performance and cost solutions can be allocated for back up and archiving.
  • Storage virtualization helps address storage costs by improving resource utilization, data mobility, information availability and related IT resources required to manage storage environments.
  • Business continuity and disaster recovery solutions reduce the impact of unexpected outages. By helping to keep the business up and running, they protect against potential revenue loss and brand damage due to outages.

QUICK TAKE

Dell’s acquisition of AppAssure and its continued focus on end-to-end storage management solutions provides several benefits to SMBs in addition to cost savings:

  • Ability to manage a mixed environment of physical, virtual, and cloud-based storage in a unified storage management solution.
  • Reduced IT resources needed for data storage management.
  • Ease of doing business with a single vendor for an integrated storage management solution.
  • Significant storage capacity savings afforded by storage consolidations and sophisticated deduplication/compression technologies.
  • Support for the most widely adopted virtual solutions – Microsoft Hyper-V, VMware, vSphere and Citrix XenServer.

And, with SMB market adoption of virtualization and cloud solutions rising, Dell’s timing couldn’t be better. The interest among SMBs to acquire/upgrade IT infrastructure management and virtualization solutions is very high (Figure 3), driven by the need to address IT environment complexity and increasing costs.

Figure 3 Solutions Purchased/Upgraded and Future Plans


Source: SMB Group 2011 Small and Medium Business Routes to Market Study, November 2011

That said, SMBs need better guidance in this area. Dell can significantly strengthen its story–and sales–by making it easier for the SMBs to easily understand the scope of it storage systems and end-to-end storage management offerings and pinpoint the “best-fit” solution(s) for their needs through the following:

  • Compararative information and visuals on Dell’s web site-replacing pages of detailed information and specs that illustrate Dell solutions and provide guidance on when and why different systems are relevant
  • Web-based tools for needs assesssment and recommendations.
  • Proof points in the form of customer references, return-on-investement and total-cost-of-ownership calculations that illustrate the financial and efficiency benefits of Dell’s integrated approach.

By providing education to SMBs and clarifying its storage story, Dell can make the most out of its push to extend beyond the hardware business to provide business computing solutions that are innovative, yet practical–and geared to both SMBs as well as large enterprises.

February 27, 2012

Is Your Midsize Business Ready to Change Before You Have To? Gearing Up for the New Marketing

Filed under: Uncategorized — sanjeevaggarwal @ 12:36 am

In conjunction with IBM’s Smarter Commerce initiative, the SMB Group and CRM Essentials are working on a series of posts discussing how technology is empowering today’s customer, and why companies have to change their approach in order to build strong relationships with them. This is the sixth post in the series.

Very few marketers would deny that marketing is in the midst of a sea change. As we’ve been discussing throughout this series, many businesses are struggling to keep up in our increasingly connected world. This rise of social media, a growing avalanche of data, and 24/7 access to new channels and devices that customers can use to learn about, shop for and buy goods and services is radically and irreversibly changing the world of marketing and commerce.

Given this reality, the central question is whether your business is preparing to ride the new wave–or is in danger of getting caught up in the turbulent undertow? In other words, to quote former GE CEO Jack Welch, are you ready to “change before you have to”? And, just how feasible is it for a small or midsize business to get ahead of the curve?

IBM’s 2011 IBM CMO study, From Stretched to Strengthened, took an in-depth look at how 1,734 Chief Marketing Officers (CMOs) (including a sample of midsize companies) are thinking about and dealing with these mega-changes. It’s interesting to look at these results, and how one of the midsize companies that we spoke with recently is navigating through this transformation.

Top Market Forces and CMO Concerns and Readiness to Address Them

CMO study respondents of midsize companies are struggling with four major market forces: decreasing brand loyalty, the explosion of data, proliferation of channels and devices, and social media.

Unfortunately, change is difficult–and most CMOs feel ill-equipped to address these new requirements, as shown in Figure 1.

Figure 1: Percent of CMOs Reporting Underpreparedness

To me, this level of concern isn’t surprising. Social and technology changes are escalating at a breakneck pace, in an increasingly volatile world. Wrapping your head–let alone a marketing organization–around these rapid, often unpredictable changes isn’t for the faint of heart.

Charting a Course for Change

The good news is that the vast majority of CMOs see three key areas that they need to take action in to address theses challenges by:

  • Delivering value to empowered customers
  • Fostering lasting connections
  • Capturing value and measuring results

What does this really mean? Customers have always wanted companies to listen to them and to act on the input they provide. They’ve always wanted companies to value their time and their recommendations as well as their money. But today, technology gives customers better, faster access to information, people, products and services–giving them more control over the commerce process and enabling them to wield more influence with other buyers.

Customers increasingly expect anywhere, anytime, any-device access to information throughout the commerce cycle–from information gathering, evaluation and selection, to purchase and service. They expect vendors to do a better job of meeting–or even of anticipating–their needs. This means that vendors need to understand not only “the market” but individual customer requirements and preferences, and deliver solutions to attract, interact with, acquire and retain customers on a much more personal level.

In the digital age, this means that CMOs must develop automated processes to tap into multiple channels and customer touch points. And they need new analytics capabilities to gauge and tune marketing and commerce initiatives in an actionable way at a one-on-one level.

In a nutshell, CMOs and marketing organizations need to radically reinvent marketing with automated digital and analytical processes that help them to deliver more value to customers.

Taking a Proactive Approach

IBM’s study also revealed that CMOs in outperforming companies are more proactive than their peers in tackling these issues. These CMOs are investing now to better understand individual customers as well as markets, and using analytics to help them do a better job of zero in on customers’ needs to deliver a better experience and build customer loyalty.

For instance, CustomInk, a 300-employee custom t-shirt company, uses IBM Software for Enterprise Marketing Management, specifically IBM Coremetrics, to improve the customer experience and grow the business. CustomInk relies on a Coremetrics dashboard to monitor daily key performance indicators (KPIs), such as: What percentage of site visitors go to its Design Lab? How likely is a visitor to save a design? How do aesthetic changes improve conversion rates? CustomInk uses these metrics to determine what’s working and what isn’t. For example, if the percentage of customers who save a design is low, it may be because something is broken and the customer can’t load the design. Or there may be an overload of visitors from unqualified sources.

IBM software also provides CustomInk with the ability to monitor key paths through its site on a daily basis. This enables CustomInk to determine where people “fall off” on different paths. The company can see when changes it makes are beneficial, detrimental or neutral to customer behavior. For example, CustomInk has learned that small, aesthetic changes in color or type font, or changes in button styles or colors, can impact movement through the site and affect the drop-off rate.

Perspective

CustomInk drives home the point that a company doesn’t have to be part of the Fortune 500 to ride the waves that these social and technological changes are ushering in. In fact, because SMBs can often act in a more agile and nimble fashion than large companies, they may actually have an advantage over larger companies.

However, any business must start by making a conscious decision to transform their marketing team for this customer-centric world, and develop a strategy that revolves around customer engagement and interactions. Some key questions to get started include:

  • How can the business use customer interactions to better anticipate and respond to requirements, and improve the customer experience?
  • What are the different customer and prospect touch points in your organization, and how can they be strengthened?
  • Do we know where customers and prospects are talking about your products and services, competitive brands and related industry trends?
  • How do we best bring customer conversations into the company to help us better serve their needs?
  • How will we measure and analyze the results of what we’re doing?
  • How can we make the information and insights we get actionable?
  • What skills and solutions will we need to achieve our goals?

While each company will have different goals, metrics and requirements, one thing is crystal clear: the art and the science of marketing is undergoing a radical change. CMOs and marketing organizations need to take a proactive approach to use them to their advantage.

This is the sixth in a series of blogs by SMB Group and CRM Essentials that examines the evolution of the smarter customer and smarter commerce, and IBM’s Smarter Commerce solutions. For more information about CMO perspectives on several issues, see the full results of IBM’s 2011 IBM CMO study, From Stretched to Strengthened.


February 6, 2012

Swimming with the Smarter Customer: The Speedo International Story

—by Laurie McCabe, SMB Group, in partnership with Brent Leary, CRM Essentials

Recently, Brent Leary and I had the opportunity to talk with Gareth Beer, Ecommerce Manager for Speedo International and learn about how Speedo International is applying smarter commerce philosophies and solutions to better serve its customers. We think Beer’s insights about Speedo’s experience in this area illustrate how important it is for a company to start with a strong vision for delivering a great customer experience–and how to execute to make that vision a reality.

Start with the Customer

Anyone that’s ever been near a pool let alone belonged to a swim team knows the iconic Speedo swimwear brand. But, we do need to supply a bit more background to put this post in context for our discussion.

Speedo International is a subsidiary of Pentland Brands with headquarters and about 200 employees based in Nottingham, UK, and operations around the globe and sales in 180 countries. Up until 2008, Speedo International had been a traditional wholesale business, with retailers serving as its sole sales outlet to customers. The company had no desire to compete with its retail partners, but consumers were clamoring for better access to the full range of Speedo products, in all sizes and colors–which they couldn’t always find in their local stores.

Bringing Speedo International online was an obvious solution to providing customers with better access, but Speedo faced a dilemma common to many companies in this position–the threat of potential channel conflict. But as Beer told us, “Speedo understands that many customers will use the site to search, browse and add to the cart and ultimately buy at a local store.” Speedo’s goal is to give customers a place to search, browse and find information–and then purchase the product wherever they choose.

Zero in on Objectives

In line with these goals, Speedo International needed to create a site with detailed photos, images, descriptions, fitting guides, FAQs and videos of all Speedo products; the ability to purchase; and customer feedback mechanisms. Speedo had a jump-start because Pentland, its parent company, was already running IBM WebSphere Commerce for all of its companies, making this platform the natural choice for Speedo.

So Speedo’s ecommerce team got busy figuring out what analytics capabilities they wanted. They were looking for a solution that “would let us go to another level of thinking, beyond looking at visitors and traffic. We wanted to really understand the customer, how they behave, how they think and how they liked to be interacted with, so that we could optimize marketing, retention and recruitment,” according to Beer. The company also wanted the flexibility to gather and analyze new sources of information as requirements evolved.

After investigating different solutions, Speedo International selected IBM’s Coremetrics for several reasons. First, Coremetrics was available as subscription-based cloud service, and pre-integrated with WebSphere Commerce, which meant that Speedo didn’t need to spend time on technical implementation and integration.

More important, Beer advised us, was that “all the data is in one place and we have a common interface across the 12 Coremetrics modules we use. Other vendors have similar tools, but with Coremetrics, we get the different capabilities we need, from measuring the effectiveness of pay-per-click campaigns to creating personalized interactions with top customers.

Create a Virtuous Cycle

Some of the many ways Speedo uses Coremetrics are to:

  • Track KPIs for sales, orders, visitors, stock and margins, and its consumer index score, which rates customer experience with Speedo.
  • Gauge the effectiveness of pay per click campaigns and retargeting efforts.
  • Get a clear view of who the customer is, how they behave, and how they like to be spoken to.
  • Set and meet service level agreements to pick, pack and dispatch orders.

As a result, Beer’s team can deliver feedback to business decision makers more rapidly. “We can quickly pick up on trends, what’s working, what’s not, what colors and styles people like or don’t like. Then the business can make better commercial decisions faster,” Beer told us.

Using the Coremetrics Lifecycle module, Speedo also gains a complete view of its top customers, which enables it to do things such as offer more personal attention and rewards, and encourage them to post more ratings and reviews. In turn, this gives Speedo more data to feed back to the business, turn top customers into advocates, and generate more business.

Speedo International has held fast to its pledge not to compete with its retailers on price. However, about 15% of Speedo’s customers pay a premium to buy on the Speedo site. Speedo’s research indicates that these customers buy on direct because of the exceptional customer service experience that Speedo delivers–facilitated to a large extent by WebSphere Commerce and Coremetrics.

A Work in Progress

Speedo International launched a Facebook page about 18 months ago. It uses Coremetrics to make sure that Facebook information jives with information on its estore, and to track how many people go to the estore from Facebook. Speedo can append Facebook images, URLs, etc. with tags which feed into Coremetrics. Using these tags, Speedo can also create special product offers, or have people vote on colors on Facebook, and see how many people come to the estore as a result of these campaigns.

One of the most compelling parts of Speedo’s strategy that Beer discussed with us is to “put any Speedo store on top of WebSphere Commerce, and have one place underneath as a common foundation for all stock and inventory management.” In 2012, Speedo plans to launch a new Facebook store, a new mobile store and create stores in key European countries with localized content, currency and language. The unified WebSphere Commerce foundation will ensure consistency and continuity of the customer shopping experience across these different sites.

Summing Up

Beer summed up his perspective by saying “the business is all about the customer. We need to be in as many channels as customers are in and align them as closely as we can–whether the customer is on smart phone, iPad or in a brick and mortar store. The goal is to have consistency and visibility across these channels and heighten our understanding of the customer.”

We couldn’t have said it better.

This is the fourth of a six-part series by SMB Group and CRM Essentials that examines the evolution of the smarter customer and smarter commerce, and IBM’s Smarter Commerce solutions.

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