Total Cost of Ownership (TCO).
It’s no coincidence that the last SaaS risk may actually be a SaaS
reward. SaaS entry costs are certainly lower and SaaS converts capital
expenditures into operational expenses (capex to opex). Studies form
analyst firms such as Yankee Group and Gartner have illustrated that
even with the recurring nature of the SaaS subscription model, the
cumulative effect of subscriptions may still be much less than the
one-time capital expenditure associated with on-premise CRM systems.
Verification strategy: As suggested, to determine whether SaaS TCO is a risk or a reward, create a multiple year cash projection that is reflective of your organizational environment. For on-premise systems, don’t shortchange the calculation by failing to include real world expenses such as computer hardware, redundant systems, platform software (such as databases, operating systems, backup programs, etc.), application software annual maintenance fees, and labor associated with system administration, database administration, near annual system upgrades, information security and IT trouble-shooting. Also remember that hardware must be upgraded or recycled about every three years. Realistic cost projections should also include the management time involved with operating in house information systems.
Focus on Core Competencies.
It’s been my observation that this SaaS reward varies in importance by
region; being a top purchase criteria in America and one of a top 3 or 4
in the Middle East, Latin America and Eastern Europe. In a conversation
I had with Gartner’s Rob Desisto, he commented that cost is not the
primary decision criteria for SaaS, instead limited resources and time
to market are the most influential factors. Clearly, outsourcing a
non-core competency such as business software administration to outside
experts removes what is often viewed as a headache function and
reallocates management time to more critical areas.
Verification strategy: SaaS providers manage the IT infrastructure, delivery platform, maintenance releases, new version upgrades, backups, disaster recovery and information security. Even though these functions are handled by the provider, IT buyers are wise to understand these processes and in particular their frequency and how they may affect the customers utilization of the application.
SaaS pricing models are normally per user per month subscriptions. This
type of utility based pricing is simple, predictable and reduces cost
surprises and overruns.
Verification strategy: The caveat here is to avoid shelfware, or maybe its now called cloudware. Vendors often require customers to prepay SaaS subscriptions in order to secure aggressive discounts. While such a move may be financially worthwhile, it is generally cost ineffective to pay for user subscriptions prior to the go-live cut-over or before those users come online. Instead, defer most user subscriptions during the implementation period and agree to a schedule whereby subscriptions are activated as users begin using the system.
Accelerated Time To Market.
With no hardware to implement and no software to install, SaaS
deployments are much faster than on-premise CRM software
implementations. Due in part to their browser-based interfaces and
intuitive navigation, on-demand systems often also achieve a shorter
learning curve and more successful user adoption.
Verification strategy: Implementation consultants are very valuable, but expensive. A time and cost implementation comparison between SaaS and on-premise deployments will reveal the cost savings.
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Vendors have a better shot at closing deals for large-scale B2B software purchases when they are upfront and honest about the quality of their products, a new study from TrustRadius suggests.
There is a bit of a trust gap between what is promised in negotiations for these deals and what actually is provided, indicates the poll of more than 650 technology vendors and buyers -- including many that spend more than US$50,000 on B2B software deals.
Eighty-five percent of participating vendors claimed to be upfront about the limitations of their products, while only 37 percent of customers said the vendors met their expectations for honesty.
"This is especially troubling when you think about the scale of these purchases," said Julie Neumann, director of content at TrustRadius. "Twenty-three percent of buyers reported spending over $100,000 per year on their solution, and several said picking the wrong software could put their jobs at risk."
A large percentage of buyers said they trusted their colleagues and peers when making a purchase decision, the study found. However, relying on that group alone often can be too limiting, and additional input from outside sources is required.
Peer reviews rose from the fifth most-popular information source in a year-ago TrustRadius survey to the second most-popular in the latest study, which was released last week.
Only 23 percent of respondents said that a vendor was highly influential in determining their buying decision, and those vendors were twice as likely to embrace authenticity than others. Among buyers who said they worked with a very influential vendor, 56 percent of them said the vendor was very upfront about the limitations of its product.
Demographics are an important consideration, the report also noted, with millennials being very influential. Many of the surveyed companies used buying committees, and a majority of the members of those committees were millennials. More than 45 percent of buyers were 25 to 34 years old, while 30 percent were 35-44 years old.
"Over the past year, as companies from Equifax to Facebook have squandered whatever legacy of trust they may have earned, concerns with concepts around trust have entered into new areas of business and industry," said Charles King, principal analyst at Pund-IT.
"That means in processes and sectors where trust is a critical issue, including B2B software, concerns are even higher than normal -- and for good reason," he told the E-Commerce Times.
Trust is a critical component of big-ticket software purchases, according to Gerry Giacoman Colyer, head of growth at Siftery.
"This is true not only because of the expense involved, but also because of the high variance in implementation outcomes," he told the E-Commerce Times. "Getting it right can lead to substantial productivity improvements, while getting it wrong can have costs that go far beyond the cost of the software alone."
Companies usually require more than just a good sales pitch and third-party review before pulling the trigger on a large-scale B2B purchase, noted Cindy Zhou, principal analyst at Constellation Research.
"When it comes to B2B enterprise purchase influencers, my research shows the initial strategic discussions originate from peer referrals and analyst recommendations," she told the E-Commerce Times. "Once a shortlist is determined, then buyers look at online reviews and other third-party sources.Vendors can help themselves by being transparent about the true value of their software and providing relevant customer references in a similar industry and similar sized company, Zhou pointed out. However, buyers need to be aware of the monetization model of the review site they are using, she cautioned, to understand how objective the reviews really are.
Inbenta on Thursday released new application programming interfaces and software development kits that let enterprises customize chatbots.
The company offers an artificial intelligence-powered natural language search and conversational platform.
The new APIs and SDKs facilitate a number of chatbot capabilities:
The tools may be new to users of Inbenta's tech, but they are hardly innovations.
Webhooks, for example, have been around for about a decade, noted Holger Mueller, a principal analyst at Constellation Research.
"Nothing really new here," said Rebecca Wettemann, vice president of research at Nucleus Research.
"From Inbenta, it's going to be important to hear about time to value, speed of integration, and the ability to leverage outside data to improve chatbots dynamically over time," she told CRM Buyer.
Although the announcements aren't groundbreaking, they're "solid blocking and tackling -- a good way to integrate with third-party systems," Mueller told CRM Buyer.
The key to what has been working for Inbenta "is an NLP engine that grows over time and, more importantly, the fact that answers are contextual," observed Ray Wang, principal analyst at Constellation Research.
"In this area of chatbots and expert systems, infinite ambient orchestration is key," he noted.
The chatbot's ability to work automatically with back-end systems is a plus, Wang told CRM Buyer.
Further, the integration of Inbenta's natural language search engine with its Content Digest "is not easy to do," he pointed out, and it's "something only a handful of vendors, including Inbenta, can do."
Seamless escalation is another plus because "most systems have static rules and triggers," Wang said. "It appears Inbenta's doing this in a variable manner."
Chatbots work well to answer Level 1 and 2 questions, he said. More complex scenarios still must be routed to humans, but they "must be tagged so the system learns why they were routed and how that resolution was addressed."
Interest in custom AI chatbots has been growing, suggests a survey of 530 European and North American companies Spiceworks conducted last month. Among its findings:
Businesses need to move carefully when outsourcing customer service operations, the research also suggested, because there are big differences depending on how familiar reps are with the local language, how close they reside, and whether the customer can figure out the company's relationship to the service provider in a short amount of time.
The firm conducted a survey of 468 people who had called a business or medical facility within the last month, and the results showed that 77 percent of people who thought they got through directly to the business were completely satisfied with their experience. Only 45 percent of those who said they got through to a call center were satisfied with the results.
"The largest number of respondents said 'our priority is to speak to a person,'" said Elizabeth Ballou, content developer at Clutch.
Study participants did not want to speak to a voice prompt response system, but to an actual customer service representative who could listen to their concerns and answer their questions or act on them, she told CRM Buyer.
About 54 percent of respondents said they were calling to schedule an appointment for a fitness- or beauty-related service, or for a medical or work-related visit, according to the report. About 12 percent were trying to handle a billing issue, and 6 percent were dealing with a technology-related problem.
About 57 percent said they dealt only with a human, while 22 percent dealt only with an automated call menu. Twelve percent dealt with a combination of a human and automated call menu.
Companies should determine how much time their employees spend on the phone, Clutch recommended. If they decide they need a voice services provider, they also should determine just how far away they want that provider to be located.
Businesses should attempt a trial run before making a decision to bring a call services provider on board, Clutch recommended.
One of the key issues that companies face when considering the right mix of customer service options is balancing the expense of running a customer service infrastructure with the cost of staffing with live agents, said Cindy Zhou, principal analyst for digital marketing transformation and sales effectiveness at Constellation Research.
For example, companies should have metrics on whether there are chat features on the website and mobile application, and whether response times in those areas are fast enough, she told CRM Buyer.
If a company has a natural voice response system on the front end of customer service, it can provide hours of operation and mailing addresses via the automated system, thus freeing up human resources for more complicated customer service needs, Zhou pointed out.
Beyond automating low-level customer service tasks so that people can handle more sophisticated customer service priorities, companies should consider whether to invest in a system that is good enough for customers to believe they are talking to a live operator, or at least coming close to talking to a live person, said Jim McGregor, principal analyst at Tirias Research.
"This is where AI technology comes in," he told CRM Buyer. It "can not only make the organization more efficient, but improve the customer experience."
New technologies using AI are becoming capable of very sophisticated customer interactions, said Paul Teich, principal analyst at Tirias Research.
They may use sentiment analysis, speech recognition, advanced voice synthesis and video animation to deliver results similar to those obtained through direct human intervention, he told CRM Buyer."When we talk about AI Inference as a Service," he said, "this is one of the near-term potential applications."
Adam Smith famously referred to "the invisible hand" of the free market in his landmark book The Wealth of Nations, and with that made himself one of the very first political economists. Smith's observation was so on point that most of us assume markets run through the agency of individuals pursuing their enlightened self-interests. A lot of this drove the evolution of CRM as a tool for tracking customers.
If you pay attention today, you can notice the not-so-invisible hand functioning in multiple areas. For instance, if you've been following the aftermath of the school shooting in Florida, you know that a group of kids kick-started a nationwide activist movement to get something done about gun safety. The #MeToo movement -- women banding together to change the workplace by eliminating sexual harassment -- is another example. So is the Black Lives Matter movement.
What they have in common is the initiative by engaged individuals to cause change in what essentially are "marketplaces" in the broadest conception of that term. Much closer to home, even in the technology world we're seeing the stirrings of user dissatisfaction with social media, and it's not clear where this will go. Its impact on CRM could be big, because social has become one of the key channels linking vendors and customers.
A recent article in Wired, "Facebook Doesn't Know How Many People Followed Russians on Instagram" by Issie Lapowsky, documents Facebook's foot dragging on producing information for the various inquiries surrounding the 2016 American election.
Jonathan Albright of Columbia University's Tow Center for Digital Journalism, has been looking at the details and producing information that's uncomfortable to Facebook. He's been quoted in Wired, The New York Times and elsewhere.
Albright's work has uncovered many things concerning Facebook's approach to the investigation that you might consider passive-aggressive. For instance, when asked why it had not produced information about how many people had seen Instagram information created by Russian-operated troll accounts, a Facebook spokesperson said, "We have not been asked to provide that information." (Facebook owns Instagram.)
It's not necessary to repeat the article here; it's worth reading, but that's your call. It documents how Facebook has assisted investigators so far, but only if they ask the right questions. The final paragraph summarizes this point:
"Facebook has shown consistent reticence in detailing how these trolls infiltrated its platform and who that propaganda reached. They've repeatedly had to correct prior statements about the reach of these ads and accounts. By working with outside researchers like Albright, the company might be able to paint a more complete picture, but Facebook has been unwilling to open its data up to researchers."It's not necessary to re-examine every time Facebook denied its involvement or disputed findings that upwards of 150 million people saw content from the Russians, or that all the U.S. intelligence services have agreed that the Russians did indeed hack the election. That's all very interesting from another journalistic angle but not this one.
The totality of Facebook's unwitting involvement in the hack combined with its efforts to downplay its importance brings up a bigger issue for Facebook and, by extension, all social media: How useful are Facebook and social media generally, considering the Russian hacks?
A glib answer might be that they don't have to be terribly useful because they are free, and users get whatever utility they want from using them. That argument misses the point. If Facebook's utility were small or especially if were disputable, its business model would be in serious trouble.
Social media's primary product always has been the user. It is valuable to each of us when we use it to gather information about our personal graphs, and we knowingly pay an in-kind fee by letting social sites collect data about us, which they then can sell to advertisers. It's a classic network effect -- the greater the audience, the more valuable the output of its data.
But what happens if the veracity of information on social media is in doubt? Social media's value is directly proportional to its veracity. If one can doubt that veracity, then it might be prudent to seek alternatives. People and corporations that invest heavily in using information from social media might begin doubting if their investments deliver value.
Facebook's approach to the hacking scandal so far has been to deny and ignore it, only admitting something when there's no other choice. This presents another problem associated with stonewalling -- dissipating trust. However unpleasant the facts, the more a party tries to ignore or hide them, the lower the market's trust in that entity.
The truth value of what people post on the networks and what they believe about the truthfulness of others' posts makes social media's world go around. That truth is what makes some people spend hours a day surfing the sites. Once that trust begins to erode, even a little, the business model can begin to unravel.Whoever is advising Facebook on its strategy should reconsider. It's human nature to dislike dealing with criticism and serious accusations. However, impinging the free flow of information won't solve the problem. Free markets depend on transparency, and Facebook is a free market of ideas. If it stops being that, or even if people just stop believing it, then there's no reason for them to continue using it.