A Look Back at CRM in 2006

It’s hard to believe that it’s time to make predictions for the year ahead — it feels like I just finished that job, but here we are again. I dug up my 2006 predictions and was amazed at how close some of them were. The lesson I derive here is that I must not have been trying hard enough.

The funny thing is that no matter how advanced and risky you think your predictions are, reality and the march of time have a way of making them all look rather tame. That attitude is especially needed for the next two columns — this one looks backward and the next one tries to look into the year ahead. First things first.

The Crystal Ball

Last year I said that in 2006:

1. The economy and the pace of activity in CRM would accelerate. I was thinking about more emerging companies getting a boost and driving new activity, and I think that was pretty much on target. A CEO of an emerging company recently told me that her 100 person company has 23 openings, and I have seen and heard similar things from many people. People in Silicon Valley tell me it is hard to find marketing people again, and that salaries are beginning to rise as a result.

   All of these are good — though anecdotal — evidence that the pace of business in our sector and beyond is picking up. Next week we’ll try to figure out if this will continue.

2. I also said that there were (and are) a lot of companies that have been toiling in the shadows for about five years, and that they are ripe for a breakout. Two that I mentioned had very good years.

   Rearden Commerce, a category builder in employee spend management, just signed a big deal with American Express — the kind of deal that makes companies and categories. I wish I could buy stock.

   Another fast riser is Communispace, a company that builds customer communities to gather market feedback that drives innovation. You could add to that list companies like Centive and Xactly, which focus on compensation management; and Pragmatech and SAVO, which address content management. There are many more companies that I can’t mention here.

   A great place to look for examples is the AppExchange directory. There were 157 AppExchange partners displaying their wares at Dreamforce in October and the place was jumping. This trend has legs.

3. Where the big guys are concerned — Oracle and SAP, specifically — I really expected more and I am now somewhat disappointed by what was delivered.

   I said that Oracle needed to begin to deliver on its big plans for bringing together all of the disparate applications it suddenly found itself owning. That much was fulfilled at Oracle Open World in October, but the time table is still “out there” and 2007 looks to be when we will see if the vision matches the reality.

   On the other hand, SAP was disappointing. I said, “SAP is in the catbird seat in enterprise software. … Look for some inspired thinking from SAP on the future of enterprise software, especially CRM, as well as new products and services for the company’s huge installed customer base.” So, for the record, I don’t always beat up on the big guys, but it is fair to say that we are still waiting to see some results.

4. It makes me blush to read my predictions about the future of on-demand, but I am enough of a self-promoter to reprint some of them here:

   “On demand is the new darling. Salesforce.com’s revenue growth has been in the 80 percent range in year over year comparisons, and that will attract a swarm of new believers. The stock will swell. So is the revolution over? Yes and no. On demand enterprise applications continue to proliferate, and on demand is now a safe bet for the enterprise. So yes, that part of the revolution is over.

   “But that part will look like the appetizer as the whole ecosystem vision continues to gain steam. Salesforce.com has put Oracle and Microsoft in its sights with AppForce and AppExchange and the Salesforce.com partner ecosystem. CEO Marc Benioff is playing David to their Goliath and, frankly, I like his chances.

   “In 2006, Salesforce.com needs to convince major enterprise software buyers of its vision of federated computing on a grand scale. That’s something they’ve had some experience and success with before.”

Emerging Marketplace

The fact is that Salesforce continues to attract enterprise customers, their offerings for integration and customization have received a boost from recent announcements, and there are documented customers who are now buying the development and deployment technology without regard for the CRM components.

As good as that was for Salesforce, though, the company wasn’t alone.

NetSuite announced its own development environment, NetFlex, and it is in the process of building its infrastructure to go after a similar but not identical market.

The point here is that a marketplace is emerging for on-demand applications, development, and deployment services. With a viable market in place, traditional vendors will continue to feel the heat.

At this point, I am tempted to delve into what I think 2007 will hold in store, but that would be jumping the gun — come back next week. One thing I will say, though, is that the future is hard to predict and a little intuition won’t make you a guru.