CRM’s Big Shadow

One of the hallmarks of CRM is that its footprint keeps expanding. I think part of the reason is that we have taken to lumping everything that is not a back-office application area into CRM. In fact, some people are even using front office interchangeably with CRM these days, myself included.

I am of the opinion that CRM should cast a big shadow because there are so many things that we do in the front office that have not been automated and because CRM vendors like Salesforce.com have taken a lead in application development. It was natural for the two to come together. The front office is the last bastion of spreadsheet-based applications, and CRM vendors are providing the tools to do something about it. Moreover, as the epicenter of the on-demand revolution, the applications that modern CRM vendors enable tend to be on-demand as well. As a result, applications that are too expensive to develop for a small or diffuse market can become profitable.

Of course, as time passes, the spreadsheet applications that get turned into real applications begin to get a little distance between themselves and CRM proper. One great example is compensation management, which I think is one of the most important application areas out there, with quite a few vendors in the space including Callidus, Centive and Xactly.

Consultant Boom

Compensation management for salespeople is one of those things that is very near to CRM — and SFA (sales force automation) — but distinct from it. In the years ahead, though, I think compensation will both expand and distance itself even further from CRM. In doing so, it will become even more important to the corporation. How will that happen? Consider this:

There are several trends driving us in this direction. First, more and more people are reaching a point in their lives when they can choose to work in a different paradigm. The early rise followed by the commute from hell spiced with the knowledge that your engine is idling away a US$4+ commodity gets old fast. Carpooling will not be fun, and the bus or train might not go through your neighborhood. For those reasons, and because the corporate world continues to shed people to save on costs and boost competitiveness, I think we’ll see more people opting to become consultants.

That’s great, but have you ever pondered how companies manage the projects they hire consultants to do? Many of them get tracked in statements of work (documents) and good old spreadsheets. These spreadsheets encompass all of the challenges that bedeviled earlier generations of spreadsheet applications — small capacity, no ability to audit the process, minimal reporting and much more.

Similar Attributes

Managing a project this way is not for the faint-hearted. Interestingly, existing compensation management applications have many, but not all, of the attributes needed to manage consultants. They already track processes, milestones and delivery dates, and their infrastructures are way better than what you get with a spreadsheet. They also offer distinct interfaces for salespeople (the worker/consultant) and the sales manager (project manager). What’s left are some important capabilities like entering milestones and payment objectives and similar things that are different for consultants than they are for salespeople.

My reading of the tea leaves says that this is a big market waiting to happen, and unlike selling, where the largest benefit accrues to the company, a compensation system for consulting projects might be more of a boon for the consultants themselves. A good consultant might have multiple projects in various stages of completion, and a system that can track all of them and put them into a single screen might be very attractive.

On-Demand for a Specific Need

Nevertheless, there’s no market per se yet, and someone will need to start banging a drum to call attention to it. I guess that’s what I am for. Seriously, it makes a lot of sense, and producing an on-demand application that both corporate and consulting users can access to manage their projects makes a lot of sense.

Managing people who do projects — but who don’t technically work for you — is just one area where I think new applications will find fertile ground. As demographics and energy issues continue to converge, I expect that the software industry will find itself called on to help do what it has always done — innovate new products that support new business processes. In the last few decades our industry has had a green field and little pressure. We’ve been inventing things that have never existed, for the most part. The trick going forward will be to invent on-demand or for a specific and highly desired need.