• June 23, 2011
  • By Denis Pombriant, founder and managing principal, Beagle Research Group

Gas Prices Fuel UCS, Web Conferences

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What a difference a year makes. As I write this, the price of gasoline is ranging from $3.70 to well over $4 in some states. Last year, when I delivered the CRM Evolution keynote, gas cost at least 80 cents less, according to the people who track prices. Part of my keynote focused on the effect that high transportation costs will have on expanded CRM deployments as well as the modules that make them up.

High transportation costs still will drive companies to adopt all kinds of front-office technologies that reduce the need to travel. CRM is the logical place for those applications just as it has become home to social media, analytics, and a variety of marketing and sales enablement solutions.

The global economy is predicated on low-cost energy and transportation and depends on low-cost raw materials. Petroleum is often both a fuel and a feedstock for everything from the rubber in elastic waistbands to the fertilizer that grows our crops.

So, high fuel prices are disruptive, and companies will use this moment to gain an advantage. Those that buy solutions that reduce travel costs will be big winners, and so will the vendors of those solutions. The last decade has seen the growth of numerous front-office solutions that provide the added benefit of reducing the need to travel.

For example, unified communications systems (UCS) may be next on the CRM shopping list. They bring together calendars, voice, mobile, chat, and live video. Initially many vendors have positioned their solutions as ways to help lower the cost of communications and to accelerate business, because the solution type uses cheap Internet bandwidth instead of relatively expensive phone networks. But embedding UCS in front-office systems and business processes can help companies avoid some travel and deliver more effective services as well.

UCS is not a solution for every communication or transportation problem, and it doesn’t have to be. But it can drive significant improvement in top-line costs. That’s why CRM in the future will include UCS just as many systems now incorporate analytics and social media.

Then there’s the idea of Web conferences. We are all accustomed to attending conferences, which typically requires air travel and hotel stays. Those costs have to rise as the cost of fuel rises, and that poses a serious challenge for vendors that depend on conferences to educate their customers. That’s where Web conferences can be so valuable. They make it possible for people to give and receive information while avoiding the escalating cost of travel. For that reason, they have a big future in a world of $4 or $6 gasoline—and jet fuel.

Demographics play a role here, too. Fewer people are entering their most productive years, and less convention space is needed. In the past 10 years, many cities took the advice of consultants who encouraged them to build convention centers. But the sad reality is that many of them are operating at about 50 percent of capacity, well below the 70 percent that is considered optimal.

Those cities are having trouble paying their bondholders, and the situation will be compounded by high transportation costs. Entrepreneurs who can take advantage of changing demographics and new conferencing technologies will be the big winners. I don’t want to be a municipality that built a million-square-foot convention center on the assumption that the business will materialize. I am concerned that it won’t.

In the past decade, we’ve had ringside seats to multiple disruptions led in part by front-office technologies. Each time, the disruption was trumpeted by new technologies entering the space. CRM, on-demand computing, social media, and analytics all were disruptive and followed on the coattails of economic change. This time is no different, and that’s why I am bullish on UCS and conferencing.

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. He can be reached via email (denis@beagleresearch.com) or on Twitter (@denispombriant).

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