Misunderstanding CRM and Big Data

Listening to @peter_w_ryan, @markhillary and Alexey Minkevich talking about #CRM and #BigData at the Institute of Directors, sponsored by IBA Group.

Peter cites an Ovum survey showing that Customer Satisfaction is now the number one concern of management, and argues for what Ovum calls Intelligent CRM. (CA announced something under this label back in October 2000. Other products are available.)

Mark says that CRM and Big Data are widely misunderstood, which is certainly true. My own opinion is the first misunderstanding is to think CRM is about managing THE relationship with THE customer, and I completely agree with Clayton Christensen (via Sloan) that this isn't enough. What we really need to focus on is the job the customers are trying to get done when they use your product or service.

Who is good at CRM? Peter cites an example of a professor of marketing who got a personalized service at a certain chain of hotels and has been talking about it ever since. (That's a pretty good coup for the hotel, if we take the story at face value.) Mark cites the video game market, where both the console manufacturers and the large game publishers are able to collect and analyse huge quantities of consumer behaviour.

Is CRM with Big Data merely a new way of taking advantage of customers? Although most people seem oblivious to the privacy and trust risks, the Wall Street Journal this week suggested that the consumer is becoming more savvy and less susceptible to exploitative loyalty schemes and promotions. This might help to explain why Tesco, once a master of the science of retail, now seems to be faltering.

If there is a sustainable business model based on CRM and Big Data, it must surely involve using these technologies to engage intelligently, authentically and ethically with customers, rather than imagining that these technologies can provide a quick fix for stupid organizations to take advantage of compliant customers.

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Related Blogs

Customer Orientation (May 2009)

The Science of Retail (April 2012)

Other Articles

Martha Mangelsdorf, Understanding your customer isn't enough (Sloan Review May 2009)

Shelly Banjo and Sara Germano, The End of the Impulse Shopper (Wall Street Journal 25 November 2014)

Intelligent CRM

AI-CRM "An intelligent CRM system with atuo-learning-tunning engine (sic), Aichain offers the most widely used open source business intelligence software in the world." Last updated March 2013

CA rolling out customer relationship management software (ComputerWorld October 2000)

IBA Group "maintains its focus on IT outsourcing that has become a strategy for many organizations seeking to improve their business processes"

Don Ferguson

My one-time debating partner Don Ferguson (IEEE Software Point/Counterpoint November 2007 - see my blogpost on Boxing Clever) has moved again - this time to Computer Associates.

He has been an IBM Fellow (responsible for Websphere, among other things) and (until last week) a Microsoft Technical Fellow. So a major coup for CA then.

I gather he is going to be leading a team working on something to do with CA's Enterprise IT Management (EITM). I hope to have more details to report in due course.

Look Back in Ingres 2

[Updated]

In my earlier post Look Back in Ingres I discussed Mark Barrenechea, who moved from Oracle to Ingres via Computer Associates (CA). Ingres has been spun off from CA, and is now funded by Garnett & Helfrich.

The latest issue of Business Week (Sweet Revenge, January 22, 2007) has a lot more back-story about Terry Garnett himself. Garnett, a former senior vice president at Oracle, had sworn revenge on Larry Ellison after being fired. Hence the drive to recruit loads of ex-Oracle people.

Fake Steve Jobs is sarcastic: "Here's to you, Terry Garnett, O master of revenge! O skillful manipulator of the press!"

The popular press (and joke websites) like to depict this kind of corporate battle in personal terms, and there may well be an element of truth in this case. But this is not just a battle between two individuals.

The Business Week story describes Ingres as a startup, but this is misleading. Although its corporate vehicle has been reconstituted, Ingres itself has a long history of rivalry with Oracle. Indeed, they started at around the same time with almost identical names. Oracle (founded 1977) was once Relational Software Inc; Ingres (founded 1980) was originally Relational Technology Inc. Ingres was less commercially successful than Oracle, and was acquired by Computer Associates in 1994.

So there is an element of corporate revenge here as well. Is the new Ingres likely to do serious damage to the old Oracle? I somehow doubt it; the old Oracle faces many challenges, but Ingres probably isn't the biggest threat at present.


The Ambassadors of Agamemnon Visiting Achilles 1801. (By the painter Ingres of course.) Achilles sulked a lot, because he didn't get the rewards he thought he deserved. He'd have gone down a treat in Silicon Valley.

Wikipedia: Ingres (database), Ingres (painter), Oracle (database company)
Technorati Tags: CA Computer Associates Ingres Oracle

Look Back in Ingres

June 2003. Mark Barrenechea leaves Oracle (on the day it announces its purchase of PeopleSoft - this is a total coincidence, he tells ComputerWorld). And joins Computer Associates (CA) [CA Press Release]. He tells Dan Farber:

"All markets consolidate over time. Microsoft has the desktop, Oracle is the database leader, and SAP is the leading application vendor. The market that hasn't consolidated is management software. For me personally, I can have high impact at CA. CA has the opportunity to be recognized as one of top two software companies on earth." [ZDNet, July 2003]

November 2005. CA forms partnership with venture buyout firm Garnett & Helfrich to spin off the Ingres open source database unit [CA press release]. Mark Barrenechea joins the board of Ingres Corporation as CA's representative, together with Michael Rocha, another ex-Oracle executive.

January 2006. CA promotes Mark Barrenechea to CTO [CA press release].

May 2006. Barrenechea leaves CA to join Garnett & Helfrich. He explains his reasons to ComputerWorld.

"For me, it means taking 84 [fiscal] quarters with operating experience in software and now being able to apply that to creating independent companies and helping build management teams and what I think of as relevancy in the market. That's an opportunity I could not pass up."

High impact, huh?

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Footnote on Ingres. This is the name of a French painter (pronounced ANGr) [Wikipedia] as well as a historically important database system [Wikipedia]. Michael Stonebraker, the inventor of that database, once told me he had been unaware of the painter at the time.

Technorati Tags: CA Computer Associates Ingres

Software Pricing at CA

Following up my previous posts on Software Pricing, I had a useful conversation with a couple of people from Computer Associates (CA), which is one of the software vendors leading the move towards new models of software pricing and revenue. For several years CA has offered alternative (flexible) licensing arrangements for some of its main products, and is strongly committed to progressing the business model.

In recent years, CA has found many corporate customers interested in talking about output-based pricing - but fewer customers willing to put it into practice. While customers are very happy to share the downside risk with a software provider, they are rather less keen to share the upside risk. However, there have been some limited successes with output-based pricing and even value-based pricing. For example, for one mobile phone operator, the software license is geared to the number of subscribers. CA is eager to expand this kind of deal.

Clearly this kind of deal means that revenue is dependent upon a lot of factors that are outside the software provider's control (although this is no worse than for traditional forms of software licensing). Risk mitigation on both sides (supplier and consumer) typically results in hybrid deals, combining some elements of input-based or subscription pricing with some elements of output-based pricing, arranged in bands with defined max/min values.

Software services are composed with hardware and other services to produce solutions. The problem of reasoning about the pricing of services in complex composition/decomposition hierarchies is closely akin to the general service management problem - where SLA hierarchies also follow a complex and difficult algebra.

What most people are currently doing in service monitoring and management is largely bottom-up - paying attention to the behavior profiles and operational policies associated with single web services. This suffers from a number of problems. It is not scaleable (in terms of size or complexity), it is not accessible to non-technical managers, and it provides no visibility of the link to business value.

CA is therefore committed to providing integrated service management, with a comprehensive top-down view of the business process, and this is the thinking behind recent developments in CA WSDM. There is some functionality I'm not allowed to talk about yet, and I guess some of this will appear in time for CA World in November. Watch this space.


Related posts Software Pricing (August 2005), Value-Based Pricing (August 2005)

Portfolio Management

Computer Associates acquires Niku, variously described as IT Governance, Business Portfolio Management, Enterprise Portfolio Management and Business Service Optimization.

Niku's main product is Clarity, described as "a project and portfolio management solution that provides comprehensive management of IT projects, programs and initiatives as a portfolio of projects". Some of the marketing material talks so generically about investments and assets that the product appears to be usable for managing any investments, not just IT acquisitions and developments.

The obvious comparison is IBM's acquisition of Systemcorp, which is now incorporated in the Rational product suite as Rational Portfolio Manager. Other independent tools include Planview. Presumably Clarity is being positioned as CA's offering in this space, and I look forward to seeing appropriate integration with other development tools from CA and third parties.

Portfolio management is seen as a way of connecting the business with software development, and extends the scope of the software process. Besides good tools, there is a clear need for process guidance. See for example Scott Ambler's piece on Extending the RUP with the Portfolio Management Discipline.

Much of the time, an IT portfolio is assumed to be a portfolio of (development) projects. Like an open-ended development programme, but with greater distribution of responsibility and diversity of outcome. While many of the disciplines of programme management also apply to portfolio management (including quality management and risk management), there is a greater emphasis on business investment and ROI. Some proponents of IT portfolio management (arguing from the analogy of financial portfolio theory) see it as a way of smoothing IT risk across the enterprise. See for example this IBM paper on What CIOs can learn from portfolio theory.

But of course IT isn't just about projects. IT management includes the delivery and support of services via a complex set of assets and relationships. A complete IT portfolio includes assets, contracts, services and lots of other stuff.

CA already has a separate tool (Unicenter Argis) for portfolio asset management. In the longer-term, it would make sense for CA to bring together all aspects of IT portfolio management into a single tool, to support optimization across the whole of IT.

Technorati Tags: ComputerAssociates IBM IT Portfolio Niku Rational Unicenter

Death of Software?

There is no shortage of activity in the IT industry, but much of this is simply adding bells and whistles to existing inventions. Large software companies such as Computer Associates apparently spend huge sums on R&D, but much of this is consumed by the need to maintain and upgrade a large portfolio of software products. 

So is software engineering reaching a kind of innovation plateau? Eric Newcomer of software firm Iona thinks so. "I think we are entering a phase of refinement rather than innovation. The most significant innovations are over."  

Paul Brown of software firm FiveSight half agrees. He suggests we may be reaching a phase where the remaining questions are either trivial or imponderable. However, he makes an important distinction between software technology and software practice; he argues that software practice is primitive and largely unsupported by science. (I agree.) He suggests that the first open problem to solve may be to find a way to marry entrepreneurship with the economic and intellectual climate to create the next kind of innovation. 

If we try to measure innovation in terms of product features or patent applications, we may be unable to differentiate between the trivial and the significant. This already happens to some degree in pharmaceuticals, where drug companies often spend fortunes trying to make trivial changes to existing products, simply in order to have something new to patent and sell. (A so-called innovation here may consist of a slightly different molecule with almost indistinguishable medical effects.) 

We haven't quite reached this stage with software - but it may be coming closer ... 

 

See also Innovation or Refinement? (November 2004), What does a patent say? (February 2023)