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Trend: Social CRM Consolidation

If you’re wondering what CRM is, here’s a definition: “CRM 2.0 is a philosophy and a business strategy, supported by a technology platform, business rules and processes, designed to engage the customer in a collaborative conversation to improve human interactions and provide mutually beneficial value in a trusted and transparent business environment. It is the company’s response to the customer’s ownership of the conversation.”
 - Paul Greenberg



So, what’s Social CRM? “Social CRM adds a whole new dimension to the traditional view of customer relationship management. The focus is undoubtedly on people and not technology. It’s about joining the ongoing conversations our customers and prospects are already engaged in — not trying to control them. It’s about using any tool available that will allow us to meaningfully engage with more people like them. It’s realizing people like doing business with people they like — and understanding we love doing business with people we trust.” – Brent Leary

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Social Software Is In the “Cambrian Explosion” Era


Last weekend, I visited New York’s Museum of Natural History and Sciences. I’m always fascinated by the dawn of life, and often draw a lot of parallels from the era of many new organisms and how many evolved and many who didn’t adapt to their environment. In fact, the metaphor works very well in the fast moving social software space, as we’re currently in the Cambrian Explosion, where many new species are appearing (I’ve mapped over 100 community platform vendors, and E&Y has found over 125 social monitoring firms). The barriers are so low for entry, and with a recession in place, we’re seeing an explosion of new firms. Those that combine and create new value evolve and will eventually move to land, those that don’t make the right partnerships or develop sophisticated solutions for enterprise buyers will become the extinct “Trilobites”

Community Platforms and Listening Platforms Combine To Create SCRM Suites
Lithium, a community platform, has announced their acquisition of social media measurement company Scoutlabs. This combination paves the way for social point ware software to evolve into a greater suite of enterprise social software which can evolve to Social CRM. Expect more of these acquisitions and partnerships to occur over the coming year. Ray Wang, my business partner, maps out what the Lithium and Scoutlabs acquisition means.

Next Generation Consulting Firms Will Rival Complacent Incumbents
On a similar note, Dachis Group, which has a hefty war chest of $50mm backed by Austin Ventures, has made some strategic acqustions in the social business arena. Aside from key hires from Forrester Research (like Peter Kim, Tom Cummings, and Cynthia Pflaum) have joined the team along with Caroline Dangson, Dion’s enterprise consulting group, Xplane, Headshift, and most recently the Enterprise 2.0 Adoption Council, a group of end user pioneers. This star team has the makings of a next generation consulting firm, and can have a powerful impact as they go to market.

Many Social Software Providers Will Become Extinct “Trilobites” –Avoid Them Now
This is just the start, expect more consolidation, and market changes, to protect your bets from investing in a Trilobite, it’s important you pay attention to the trends at hand.

Continued acquisition of social point products to build SCRM Suites. Expect more VC funding into this space for point product social software firms to acquire supplementary vendors to increase user base, and increase the number of SCRM use cases. Lithium wasn’t the first, Jive Software acquired Filtrbox, a social monitoring firm, but they didn’t have the large enterprise footprint that Scoutlabs currently does. We also saw Twitter client CoTweet be acquired by direct/email marketing firm Exact Target. Tip: Watch for the investment pattern at the VC level to see how they pull their portfolio together. It’s commonly known that VCs will make introductions between their portfolio investments and encourage them to partner and eventually align.

Expect a new class of social business consulting firms to emerge. Dachis Group has assembled the right team, and has first mover opportunity to beat McKinsey, Deloitte, and system integrators to the punch. They have thought leadership, research, strategy, implementation, and support. What’s missing? Expect them to acquire or build an enterprise software suite that connects disparate systems together (much like Salesforce Chatter). Despite their huge talent draw, their biggest challenge won’t be going to market (it’s mainly green playing field) but the internal culture strife as many independent voices, egos, and styles are forced to work together. I must say, if they can pull it off, then they can help their customers with the same problem.

Don’t expect a Social CRM suite to emerge that “does it all”. Expect many vendors to line up behind the Social CRM monikor, but don’t expect them to be successful. In fact, as a buyer, you must ask them “how many times have you integrated your existing systems with a SCRM system” to find out how successful they really are.

Source: Jeremiah Owyang link

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