September 9th, 2009 by Denis Pombriant, founder and managing principal, Beagle Research Group

By Denis Pombriant, founder and managing principal, Beagle Research Group

Market analysis firm IDC figures the market for service and support software will reach $4.2 billion before the end of the first Obama administration. That’s reason enough for software vendors to want to be all over the market like a cheap suit, like white on rice, like a junkyard dog. But as the market moves from on-premises to on-demand you can expect the revenue potential to go way down. That’s the beauty of on-demand computing — score one for the customer.

But whether there are four billion of those dollars or just one billion, that’s still real money — and enough to motivate the behavior of lots of people — so it was no surprise that both Salesforce.com and Oracle shored up their service and support offerings this week. What was fascinating to me is that, despite all the secrecy surrounding each company’s announcement, which I witnessed first hand, the two CRM titans managed to make similar announcements within a day of each other.

I attribute the coincidence to the simple logic of the situation: Each company has built out very good offerings in sales and marketing, so it was time that each gave some extra attention to service and support.

[More after the jump…]

To be rigorously fair, both companies had already devoted significant time and attention to the subject and both had made service-and-support–related roadmap announcements earlier this year or very late last year. It’s no surprise that they decided to redeem their pledges — in tandem with expansions into social media — and September is a great time to do just that. So what’s what and what’s different? Well…

On Tuesday, Oracle announced integration between Oracle CRM On Demand and InQuira’s Web self-service applications. According to the press release, the integration lets customers go seamlessly from self-service to live-agent–assisted service — a big deal because it enables customers to escalate their service requests and also provides the service agent with a warm case full of basic information about both the customer and the problem. This completes a trip started with integration, announced last year, between InQuira and Oracle’s on-premises service and support systems.

Meanwhile, on Wednesday Salesforce.com redeemed a promise made when it announced the acquisition of InStranet (in August 2008). Salesforce.com said today that it has successfully ported InStranet’s technology to its cloud platform; customers can now use all of that cloud-platform functionality, such as user-interface development and customization tools, as well as workflow and approvals and the platform’s knowledge-publishing capability.

To me, Oracle’s announcement is more about service – and I think it’s important to tease apart service and support here.

Service involves a customer issue that can only be dealt with by the vendor. Support falls into the category of how to use or fix a product. This in no way elevates one over the other, of course — each remains important. It’s just my observation.

The new Oracle/InQuira integration takes a customer who has a service issue from a self-service modality to an interaction with a live agent while preserving the thread of the interaction. Not only will this mean an end to “Can you give me your account number again?” but hopefully we’ll see faster, more-accurate service as well.

The Salesforce.com announcement says that customers with how-to-use/how-to-fix support issues can now access the wisdom of peers. This is a good thing and a little brave on the part of companies who deploy the option: Such a move says a lot about the faith they place in their customers and ultimately the confidence they have in their own processes and procedures. Using social media such as Facebook, the Salesforce.com solution helps companies gather input from customers and organize it through stack ranking and other crowdsourcing techniques to bubble up answers to support problems.

Users appreciate the Salesforce.com solution because it has a very low cost profile; customers should appreciate it because it gives them the answers they need much faster. For very similar reasons, users and customers should appreciate the Oracle approach as well.

Frankly it’s nice to see such heavy investment in customer service and support and the resulting benefits. I think these announcements say a lot about the relative importance in today’s economy of keeping existing customers happy versus the never-ending quest for new customers. It speaks to the growing maturity of the CRM market and the growing clout that customers have. Good for us – and score another one for the customer.

On another note, Oracle has seen a string of recent successes in CRM. The company has made some good numbers of late and is generating some interesting products. It’s been a few years since Salesforce.com has seen a challenge to the degree now posed by Oracle, but following last week’s launch of its Contact Manager Edition, Salesforce.com has had two consecutive weeks with big announcements. Simply put, while both sides are investing heavily in research and development and have the goods to show for it, I would give the edge to Salesforce.com for the moment, just based on raw sex appeal.

But two weeks is just a snapshot. Oracle OpenWorld is coming in October, and Dreamforce is in November. Expect some fireworks.

Denis Pombriant, founder and managing principal of CRM market research firm and consultancy Beagle Research Group, has been writing about CRM since January 2000, and was the first analyst to specialize in on-demand computing. His 2004 white paper, “The New Garage,” laid out the blueprint for cloud computing. A CRM magazine columnist, he often guest-blogs with us at destinationCRMblog.com, but his own blog can be found here. He can be reached at denis@beagleresearch.com, or on Twitter (@denispombriant).

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