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August 25, 2013

Will PRISM refract the Dollars away from US Cloud Service Providers?

The recent revelations of PRISM surveillance program in operation by USA's National Security Agency (NSA), appear to have far more implications on the financial side.  For starters, PRISM is United States of America's government code name for electronic data collection & data mining.   This was an effort towards the fight against terrorism.   This program appears to be in existence for six years, but came to light recently and has caught world's attention with mixed reactions.  Some of the prominent international companies headquartered in USA have been identified as being part of this program.

A new dimension to this episode is that there is a financial angle, from the context of doing business with U.S. based companies (or the companies under U.S. jurisdiction), more specifically to US cloud service providers.

As per Gartner's research, the public cloud services market which was at $111Billion in 2012, is expected to double in the next five years.   This growth projection is monumental especially when compared to the global IT market growth, which is only 3 percent.   Thus in many ways, cloud market is a gold rush dominated by US players, who are distantly rivalled by European and Asian cloud service providers.   The rest of the world has been taking measures to become competitive in the cloud space, with some backed by government factors in the respective regions.  However, this move may be expedited with the leaked details of PRISM surveillance program.

The recent report from Information Technology and Innovation Foundation, a think tank from USA, predicts that the US CSPs are expected to lose 20 to 35 B in the next five years -   The figures derived by the author, by his own admission is not scientific, but rather an inference based on various factors, such as initial reactions from various sections of the society and smaller samples of financial measures.   Although, the extent of impact may be debatable, there certainly is a strong evidence of some material impact to US cloud service providers.   The report also mentions about certain moves initiated in the European region in direct response to PRISM leaks.

One cannot resist drawing parallels on this episode to the formation of unified currency (Euro) in the European region back in the late 1990s.   That move was primarily born out of political initiatives from Germany and France.  Although, there were many reasons behind that move, it was also seen as a competition and check to US Dollar's dominance in the international market.

With Europe coming out of recession, the technology spending is only expected to go up and the US cloud service providers will be better served to take a notice on this situation and take steps to improve the customers' confidence on the confidentiality of their proprietary information.   After all, as the saying goes, "necessity is the mother of invention" and the need of the hour is the strong assurance of data security.

August 22, 2013

CRM and Maslow Need Theory

One might wonder what Maslow's need theory and CRM have in common. Rather, are these in any way related? Believe it or not, this need theory has played an unseen role for defining a CRM roadmap across industries. In this blog I will try to instantiate need wise impact made by Maslow's theory on defining a CRM strategy (Telecom perspective). For those who are not aware of Maslow's need theory, please read this.

Physiological needs are basic requirements for customer to be with a company. If these requirements are not met, the customer will churn. For a company's CRM strategy, physiological needs form a part of core value proposition to customers. As a first step, any company which forays into the telecom market, needs to possess basic network infrastructure, good connectivity, rating and charging mechanisms etc. which transform into the physiological needs for a customer.

With customers physiological needs satisfied, safety needs dominate behavior. Company must assure customers of service/ product security, identity security, secure connectivity, safety against spam calls/ telemarketers, safe billing etc. As a customer, I should be guaranteed that I will get value commensurate to what I pay. If not, I have liberty to request a rollback. Safety needs help company build on core value proposition and create a brand image which is next building block of CRM plan.

Love, Belonging
After safety needs are fulfilled, third level is interpersonal which involves feelings of belongingness. This is a step where the company can carve a niche for brand differentiation. Loyalty programs are a strong way to communicate a customer's belongingness to a company. Very few Telco's offer loyalty programs to customers, which is primarily because of nature of the industry. If not loyalty programs, Telco's can make their customers feel cared for by personalizing their interactions such as greeting on one's birthday, suggesting usage based personalized plan and recommending location based offers.

Self Esteem
All customers need to feel respected; this includes self-esteem and self-respect. It is a part of final building block of CRM strategy - Customer experience. Customer service is a prominent field which involves customer respect and esteem. Serving customers with courtesy and dedication is the key to great customer experience. Moreover, there's always an opportunity camouflaged in a problem - unearthing the opportunity will make the customer feel heard and will elevate their esteem.

This need moves customer experience to an entire new level. Self-actualization is rare; however every company should try its level best to achieve this need. Some characteristics which I think define a company at this level are:
• Launching innovative offerings on a constant basis
• Being omnipresent, available to customers across time zones and across a variety of channels
• Maximizing value offered to customers
• Minimizing complaints reported by customers

Hopefully from today, Maslow will mean more to us than just a theory! To conclude, I think  that knowingly or unknowingly, CRM roadmap has followed and still follows Maslow's need hierarchy. What do you think?

August 6, 2013

How secure is your cloud based CRM solution?

A seemingly legitimate solution to a business problem is often a founding stone for another unforeseen challenge. As we grow with time and technology, we need to ensure that we do not complicate things today to have an unfussy tomorrow.

While cloud based solutions (such as SaaS CRM) are inevitable, the concept also has many dilemmas enveloping it. There are concerns and apprehensions about its sustainable future, one of those concerns revolve around security. 

The Enterprises of today need technology that can not only assist and better the core business operations but also house the need to scale up, go mobile & accommodate faster with newer customer & business information necessities. 
A seemingly legitimate solution to a business problem is often a founding stone for another unforeseen challenge. As we grow with time and technology, we need to ensure that we do not complicate things today to have an unfussy tomorrow.

While cloud based solutions (such as SaaS CRM) are inevitable, the concept also has many dilemmas enveloping it. There are concerns and apprehensions about its sustainable future, one of those concerns revolve around security. 

The Enterprises of today need technology that can not only assist and better the core business operations but also house the need to scale up, go mobile & accommodate faster with newer customer & business information necessities. 

There's no denying in the convincing rewards of moving to the cloud. However, the enterprises of tomorrow must acknowledge that there is a lot more! Chief technologists are concerned about the security of organizations' data as with new measures of security, sprout new hacking minds too.

Agreeing to Cloud Security Alliance (CSA) the top 9 security threats to cloud solutions are - 

  • Data Breaches
  • Data Loss
  • Account Hijacking
  • Denial of Service
  • Insecure APIs
  • Malicious Insiders
  • Abuse of Cloud Services
  • Insufficient Due Diligence
  • Shared Technology Issues 

You may download the research here - https://cloudsecurityalliance.org/research/top-threats

The idea of entrusting important data to another company is worrisome. CIOs hesitate to take advantage of cloud computing because it's difficult to find a trust worthy solution partner. More importantly, cloud solutions with privacy assurance are expensive - defeating one of the very objectives of moving to cloud. Discussing all 9 major security threats isn't the objective of this blog post, neither it is in the scope; one must muse over minimizing the risks - something that doesn't just shift the fulcrum of the issue into the future but resolves the existing challenge of security concerns. 

Data Encryption
Encryption of data isn't a new practice; and adopting the same technique when we host our information on cloud can do a lot. Consider this; a user enters a customer's information in the CRM through a mobile app or browser. This information is then encrypted with a secret pair of keys and stores it over the cloud servers. Here, a secret pair of digital codes called 'keys' encrypts the data. 

And while accessing the same information, the 'keys' helps decrypt the data and presents all the relevant information on the user's screen. Hackers or impish competitors who attempt to circumvent company's protocols shall retrieve only gibberish alphanumeric characters. Who-so-ever possesses the key, the best practice is to destroy and re-generate the keys more often. 

Encryption and Tokenization
Organizations incorporate a number of AES-based formats as encryption schemes which is used to secure cloud-based data before it leaves the enterprise network, with no impact on the usability or functionality of cloud applications.

They also provide customers with the option of retaining the data on-premises while using cloud-based applications. This concept is called tokenization where actual data resides locally in a token cache and tokens that are structurally similar to the actual data are sent out to the cloud. 

Have a third-party security solution partner
Many organizations don't want to have this complex mechanism done by themselves simply because of lack of expertise in cloud computing and security. A trusted third party can help evaluate various security solutions that fit your needs and keep things simple. It's always great to have a sense of security over your sensitive data and having spent more time on your core business operations.

Though, there are disadvantages of the above mentioned concept, it certainly is one of the most robust ways to secure data.


August 5, 2013

Marketo: Rising from the ashes?

Last week, the marketing automation software provider, Marketo announced its first quarterly results after going public, which exceeded consensus estimates.   The market cheered the news by sending the stock, over 20% north.   It was a sharp contrast to the market sentiment exhibited about a couple of months back, when Salesforce.com's announcement of acquisition of Marketo's bigger competitor ExactTarget, when the buzz in the market was other way around.

Marketo went public back in May this year.   In the IPO filing (Form S-1) with SEC1, in April 2013, Marketo, emphasized on its (potential souring of) relationship with Salesforce.com as well as the latter's (possible) acquisition of Marketo's competitor(s) as some of the risks to its business.   As of Dec 31, 2012, Marketo had around 79% of its customers integrated its solutions with some capabilities of Salesforce.com.   This clearly provided the warning on it sole reliance on the CRM provider.   Hence, it was no surprise that the market sent the stock down over 15% during the intraday, when the deal between Salesforce.com and ExactTarget was announced.

However, in the reverse of fortunes, if the latest quarterly results were any indication, Marketo's customers can feel a sigh of relief in the former's viability - Last Tuesday, Marketo announced its first public quarterly results, which demonstrated its continuous march towards growth: Increased Revenue - 14% from the previous quarter (and 62% increase over the prior year period) and narrowed per share net loss - $0.49 Vs $3.30 over the prior year period.    The customer base increased close to 2600 from the IPO filing figures of around 2000 customers.

All in all, my thought in this two part play is that it is not as easy as one may think for any CRM platform providers to shut the doors for any of its partners simply for the competitive reasons, when they have the ability to continue to provide their offerings.   This will certainly backfire on itself, with its own customers.  Even if the platform provider were to offer its own solution alternative, there are many soft expenses, such as internal trainings and tool adoption costs, which a customer will have to incur and they hence will be reluctant to go with the transition.  

From the solution partners' standpoint, it becomes more imperative that they are not tied any single CRM platform provider and position their solution as platform agnostic as possible for their own good.   Marketo currently has over three fourth of its customers tied to Salesforce and by its own recognition, it will be prudent to reduce this reliance and expand its reach with other CRM platform providers.

From the customer's standpoint, it is clear that solution portability should be one of the factors for consideration during its evaluation of process.   More than often, portability on the cloud is very difficult process, if not outright non-existent.   Hence, while making the switch to the cloud, just like any other platform change, they understand the relative importance of portability to them.   Also the platform providers' market & financial strengths, as well as that of the CRM providers' partners into consideration.  

1. Marketo's IPO filing report - http://www.sec.gov/Archives/edgar/data/1490660/000104746913003841/a2214086zs-1.htm#da77701_risk_factors
2. Marketo's (Q2 2013) financial results highlights - http://finance.yahoo.com/news/marketo-announces-revenue-increase-62-200500315.html