Monday, July 28, 2008

Adapting to the present situation

While our economy is doing better than the pundits and talking heads would have us believe, we're still dealing with the realities of a more challenging environment. InformationWeek released a report that shows how some technology leaders are dealing with market conditions, and I find the news quite encouraging.

The majority of respondents are either holding steady with IT spending (28%) or increasing (33%). That means that less than 40% of the industry is actually reducing technology investments over last year. Of the projects that are being cut, the respondents' remarks suggest that they generally be described as really good ideas, but not critical to the firm's success. This is supported by the fact that only 23% of the respondents say that customer-facing projects are the targets of cutbacks. Rather, the main targets seem to be new hires and infrastructure upgrades. Of course, since personnel costs are traditionally the biggest line item on any departmental budget, it makes sense to hold the line there. And infrastructure upgrades are not as critical now as they were 3-5 years ago, when so many changes were taking place in that space.

The opportunities in this market, then, are competitively priced software development focused on customer-facing applications. So that's where I am targeting my efforts.

For more information, read the article: How CIOs Are Dealing With A Tough Economy

Wednesday, July 23, 2008

Testing research methods

I found an interesting article on CRM Daily that seems to up-end one commonly held belief about personalization. Normally, personalized pieces (Dear Bob) tend to get slightly better response rates than non-personalized mailings (Dear Neighbor). The next logical step would be try and deepen that sense of relationship by making the sender more human. The theory would be that response rats will improve if the potential respondent feels like they somehow "know" the one making the offer.

One researcher tested this theory by putting a photo of the "researcher" on the cover letter of his piece. He found that recipients who would have seen a picture (he used 4 different photos) responded at the same rate as those who would not have seen any photo at all.

My only issue with the research is that it does not address the most difficult hurdle in all of direct-mail: Getting the person to open the envelope. My theory is that his response rates weren't different because what's inside the envelope is irrelevant until they open the envelope. If the recipient opens the piece, they have self-selected themselves into a group that already has a higher propensity to respond to whatever is inside.

Is his research completely useless? No, because it shows that personalization does not necessarily improve response rates for those that get past the first obstacle. But I would really like to see if personalizing the outside makes a difference or not.

Link to the article on CRM Daily: Putting a Face on Market Research.

Monday, July 21, 2008

Apple gets stronger

According to a press release issued today, Apple sold 2,496,000 Macintosh® computers during the quarter just ended. That's a 41% jump over the same quarter last year. To me, this result is a combination Microsoft's Vista blunder and Apple's brilliant ad campaign which capitalized on that blunder. Combined with really strong iPhone sales - almost three-quarters of a million units shipped in the quarter - we could be witnessing the makings of a sea-change in corporate desktop computing.

It's not just consumers buying those machines, after all. And when the CEO buys an iPhone, she's going to demand that it work seamlessly with her laptop. We saw this start to happen a few years ago, but Windows XP was still the gold standard for desktop operating systems. So, the conversion stalled. But now, Vista has opened the door for IT departments to rethink their O/S strategies. And once they overcome their fear of supporting a mixed environment, anything could happen.

Apple's press release can be found here: Apple Reports Record Third Quarter Results

No blank spaces

It appears that the airlines are poised to sell advertising space on self-printed boarding passes. Consider the power of knowing exactly who is traveling to Dallas, and when. Based on some fairly easy to see patterns (time of day, number of people traveling together), it's easy to figure out whether that individual is making the trip for business or pleasure. These make for very targetable* groups, with individualized advertisements printed for virtually no incremental cost. Analyzing the data, implementing the targeting, updating the software, and, of course, selling the ad space aren't free. But, once you've done that for one client, it's easy to do it for many.

Who will be the first jump in? Restaurants? Entertainment?
What kind of business will this spawn? Data mining and analysis? Graphics with customizable elements?
Who is going to freak out with so-called privacy concerns? and how will the airlines respond?

No matter what, this is definitely something to keep an eye on, because it will change the nature of travel-oriented marketing. And it will have an impact on the airline industry's top-line performance.

I learned of this on the CRM Daily website, in an article published on July 21, 2008: Airlines to begin selling ads on boarding passes.

Is SAP going to make some noise?

A case can be made that SAP has made plenty of noise over the past 10 years or so. But for whatever reason, $16 Billion in annual revenue and 25%+ market share in the ERP space just doesn't seem to bring out the headline writers.

Of course, ERP software doesn't directly impact consumers, and their chiefs aren't clamoring for the spotlight (ahem, Mr. Ellison). But they've been pretty steady in terms of revenue and profit performance for a reasonably long period of time, now. Plus, their strategic direction appears to be quite sound. SAP has improved their release strategy (offering less disruptive, but more frequent updates), targeting small and midsized businesses, allowing developers to extend the application, and driving more integration with MS Office and Business Objects. Coupled with an aggressive sales force and smart brand-awareness decisions, it seems to me that SAP is on the right track. I haven't followed their acquisitions, so that's still an open question.

For more, read the CIO Magazine Article.

Tuesday, July 15, 2008

Intel stays strong

Intel reported a 25% jump in profits. Most of the increase came from global laptop sales, according to a report in this afternoon's WSJ. What will be interesting to see is how much correlation there continues to be with Microsoft. In the past, the two firms rode the same waves together. But as firms hold back on moving to Vista, and begin to explore other alternatives, we may start to see a gradual decoupling.

Intel has taken advantage of more price competition in mobile PC's, along with poor performance by AMD, to make this move. Look for them to build momentum as the year progresses. And remember, no matter what the market looks like, someone is always making money!

Monday, July 14, 2008

Google is winning

It appears that Google is winning the traffic war. It's not surprising, since even novice web users are inclined to "Google" things, drawing traffic to that sight. The graphic to the right was pulled from an article on C-Net, which cites research conducted by Nielsen Online.

Will this mean that Google can firm up their advertising rates? Will Microsoft ever have a website that draws real traffic? To be honest, the only reason I go to their site is to fix problems with their software! But I use Google to publish my blogs, to chat with colleagues around the world, and to research products and solutions. I use Google Earth to verify driving directions. I use Google Maps on my cell phone to do the same, and use their SMS capabilities to get information downloaded to my PDA in under 10 seconds.

I believe that Microsoft's period of dominance is coming to an end.
I believe that Google is just getting warmed up.

The link to the C-Net article: Google wins over more Net users in June

Wednesday, July 9, 2008

The next competitive frontier .... again

Some industry analysts are predicting an increase in demand for Customer Relationship Management systems over the next few years. A report by AMR Research concludes that new CRM's will need to be deployed in order to meet the growing expectations of consumers and corporate buyers. These expectations a basically centered on an improved shopping and buying experience, including product research, buying history, and things as mundane as easy-to-use shopping carts. Also fueling this resurgence is the fact supply-chain management and other back-office logistical improvements have already wrung the most dramatic cost savings out of the system. While there are efficiencies yet to be gained, they will become more and more difficult to achieve. That leaves the customer experience as the next competitive differentiator.

If this sounds familiar, it's because we were at this same place not too long ago. Products and, to a lesser extent, services are becoming commoditized (a new word!) with astounding speed. Personalized service using people is terribly expensive to deliver. The solution we have at our disposal today is to apply technology to make our companies easy to do business with.

For a consumer-oriented product, this means managing preferences and maintaining privacy. For business-to-business, the issues are very different. The corporate buyer wants to ship to multiple locations, include accounting information, set up frequently purchased items and track ordering and pricing trends. These are pretty easy for the common CRM systems. And therein lies the potential for the industry.

An important obstacle is, of course, finding the budget in these uncertain times. It will be hard to justify the investment based on an increase in sales, but the risk of customer attrition is very real (if difficult to quantify). Plus, we all know that CRM implementations don't always succeed. But notice that I'm really not referring to sales person use of the system. Rather, the next benefit that CRMs can deliver will be their incorporation into customer-facing applications, with direct order entry and management. Using the CRM to handle this gives the salesman a consolidated view of what the customer is really doing, instead of just a place to tell his boss what he's been doing all month.

Here is a link to the CIO Magazine article: The Future State of the CRM Market

Monday, July 7, 2008

Security still tops the list

CIO Insight, in yet another survey, has found that 41% of "IT Pros" consider that device security is the biggest challenge in the Enterprise Mobility space. No other choice captured even a third of the responses. And the list even included such basic concerns as Containing costs, Integrating applications and Multiple platform support.

Unfortunately, I don't believe that users sense that this is such a big deal. Think about "your" phone. Did the company provide it? Do you password protect it? Are you more concerned about the inconvenience of not having it than you are about securing the data that is on it?

Now consider these same questions as they relate to "your" laptop. Unless the end user truly cares about the consequences of device security, then the IT security guys are fighting an uphill battle.

Here's a link to the survey results at CIO Insight --
Enterprise Mobility Survey

Wednesday, July 2, 2008

The pressure might be mounting

I didn't realize this until today, but there wasn't a single U.S.-based IPO launched in the second quarter of this year. That hasn't happened since Carter was in the White House and only a few people even knew were Iran was. Obviously, people are waiting for conditions to be better than they are now, hoping to stretch their current dollars out before looking for new money. But someone is going to take the leap. Some company is going to decide that they need to expand and that even a less than spectacular IPO is better than nothing. And word will get around about how they did... I suspect the first one in will come up a bit short of hopes, but a little better than expectations. Then a few more will make an attempt, and they'll do better than they had expected. And then momentum will start to build, and the general market will start to turn around.

How long? That's anybody's guess, I suppose. My guess is that we're looking at the first brave IPO will come along about mid-third quarter. A few more will pop in before the end of the year, and then the first quarter will show some major activity. That means the housing market recovery is still about 9 or 10 months away, and in the meantime the employment market will go through ups and downs, but nothing all that dramatic.

I welcome your opinions! Please comment.