• September, 1 2008
  • By Ian Jacobs, senior analyst, Ovum

Socialized CRM

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At a conference for marketing executives back in May, Dan Nye, the chief executive officer of social-networking wunderkind LinkedIn, dropped what could have been a bombshell for those paying attention: IBM has more than 110,000 employees registered on the LinkedIn site. Microsoft has at least 25,000.

I was reminded of these staggering numbers by a recent CRM product announcement: Oracle’s June proclamation that it was integrating “social” functionality into its CRM applications. Oracle recently previewed a sales-focused on-demand application called Oracle Sales Prospector, aimed at getting salespeople to mine both internal and external data sources to discover potential sales prospects. In essence, Oracle will be providing tools to allow salespeople to tap into that network of 110,000 Big Bluers, and into the much larger number of employees of smaller companies out on the social networks of the world.

Oracle certainly did not invent the concept of social networking as applied to CRM. I remember sitting in the audience of a “Social Networking Shootout” held in Mountain View, Calif., back in 2003. At that event, executives from four social-networking companies were grilled on stage by a panel of judges, as well as the audience of tech aficionados, analysts, and a large pack of venture capitalists. (Hey, it was a different world five years ago!) One of the key questions that I felt went unanswered at that event was “Why are these systems simply not a feature of broad CRM suites?”

Time proved me somewhat shortsighted—and the utility to individuals, especially for job searching and socializing, has been proven. But the core concept of my question remains completely valid: Why do CRM suites not leverage the power of social networks? Oracle and other CRM specialists such as Salesforce.com have begun to work on that question, but the untapped opportunity for both sales and marketing organizations seems very large indeed. Even the sometimes staid SAP has been converted to the social-networking bandwagon, although its Cooshoo.com-powered Customrconnect application was just a small start.

There are two main reasons usually put forward for the growing relevance of social networking in a corporate context. The first can be called the “demographics is destiny” argument. That cohort of 19-year-old college students that cannot let an afternoon—or even an hour—go by without checking in on Facebook will be the workforce of large enterprises in short order. The second argument could be called the structural argument. The idea here is that rather than being a novel intrusion into corporate life, social networks are actually significantly better tools for modeling the reality of enterprises, which are inherently social organizations. Companies, after all, are built on the relationships between salesperson and customer, recruiter and job applicant, boss and subordinate, supplier and buyer, etc. Social networks simply attempt to formalize that jumble of connections.

But there is another factor that I believe could be significantly more important for companies to consider when deciding on the utility of social networks in their CRM efforts. User adoption has long been a major problem bedeviling enterprise CRM deployments and, while this might sound somewhat simplistic, the key reason for this is pretty straightforward: CRM suites, for the most part, have not been designed with benefits to the individual salesperson top-of-mind. Social-networking functions are, by design, aimed specifically at individuals—and can therefore help turn the paradigm of CRM adoption on its head: Users who see the benefits of using a tool are more likely to use it. While it would be overstating the case to say that a tool like Oracle Sales Prospector will convince salespeople to run and get their lapsed internal certifications renewed, such tools, if designed well, can only smooth adoption. And user adoption of CRM is an area where any little bit helps.

Ian Jacobs (ijacobs@datamonitor.com) is a senior analyst at Datamonitor.

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