Wanted: Orange shirts for green guys.
Needed: Community members with strong commitment, passion and vision.
Yes, Spiceworks is calling all to a new form of community. It is a new way of buying and deciding how to buy IT solutions. It is one that is “spicing” up the sale of software and IT solutions. The company’s name will be a new concept for most of my readers, but I feel that there are some significant trends to track.
About a year ago, one of the founding partners of Altimeter asked me to share my perspective on VRM. Sigh , I HATE acronyms. I tried to control a visceral response. Here was a new three-letter acronym in the market. So, I obligingly asked, “What is VRM?” The response was Vendor Relationship Management. The look was: “What are you, Stupid?” When I asked how VRM is different than Supplier Relationship Management (SRM), I got a dispassionate look. Yes, the social guys are labeling what is known in enterprise applications as SRM as VRM. SRM and VRM are procurement systems that are coming from different starting points, but are attempting to put the “R” (relationship) into the world of procurement.
In March, this little known community – Spiceworks — crossed this chasm. Spiceworks is a community service designed to help small and medium businesses with improving networking decisions. The community targets directors of IT that are buying materials, supplies and services to improve their IT networks. Spiceworks recently added capabilities to enhance buying. The company added features like Request for Proposal (RFP), purchase list management, organizing what they need to buy and evaluating purchases through ratings/reviews.
Social is converging with supply chain management. It is on the edges, and in the words of one of my fellow partners at Altimeter, Jeremiah Owyang, “There are two degrees of separation now. Soon it will be one….” It is for this reason, that I have been investing my time in understanding the definition of social applications and sharing insights on the pending convergence.
Why I think that it Matters:
For me, Spiceworks is a poster child of what is to come for enterprise applications. It is a friendlier, more effective buying experience for four reasons:
Upside Down. Changing the Paradigm. It brings social to the business-to-business (B2B) experience. To do this, the community launched 270 vendor pages and encouraged vendors to develop vendor ambassador personas –green guys– in the community. A green guy’s role is to SERVE the community. It is only after they SERVE the community can they earn the right to service the business. Today, there are fifty green guys—vendors– active in the community. A green guy, like Lauren Mccadney affiliated with CDW page is live at: http://community.spiceworks.com/profile/show/Lauren%20(CDW)?filter=contributions.
My point of view: As you enjoy your cup of coffee this morning, consider JUST HOW DIFFERENT THIS IS. Let me repeat: a process where vendors serve the community first before they can ask for the sale. This is a polar opposite from the traditional license sales model of enterprise applications.
Relationships matter. The world of social is moving downstream to shape the face of enterprise applications and the enterprise application market is moving upstream embedding social capabilities. I question how this will evolve? In my quest for the answer, I asked Spiceworks for their perspective. I asked, “Why did you build this functionality versus embedding existing Supplier Relationship Management (SRM) software?” Their answer was interesting. They felt that it was easier to build the functionality for three reasons:
- Right fit for the market. The Small and Medium Size Business Market (SMB) needs an easy to use solution. Their term is “lightweight.” The belief is that the existing SRM functionality is too complex for this market.
- You can put enterprise into social, but it is tough to put social into enterprise applications. Spiceworks perspective is product marketing teams within enterprise applications are not as focused on the social principles that build community. Social is at the core of this new offering. The belief is that it is easier to build transactional systems around the needs of social communities than to put social into enterprise applications. (This is an interesting conundrum. And, it is a point of view that Salesforce with Chatter or SAP with Streamworks does not endorse. But, my users of Salesforce Chatter or SAP Streamworks discuss openly how the social workflows are not well-integrated into the business application. So, I am watching to see how this evolves.) (Is this analogous to you take the girl out of the country, but you cannot take the country out of the girl?)
- Integrated Workflows. The workflows in a community buying experience are different. Spiceworks felt that it was easier to deliver integrated workflows by building the solution too. In their words, “social is part of their DNA.” It took them three months to build.
My Point of View: We are on a collision course between social reformers and ERP expansionists. I believe that the drive to design enterprise applications from the outside-in to be market driven and the need to build around relationships will tilt in the favor of the social reformers and not in the favor of the ERP expansionists. The discontinuity of this technology trend will drive more and more buyers to cloud services.
A new chance to design reward systems. Last week, when I was at SAP Base Camp, there was a discussion of how they get feedback from customers. SAP has 24 industry groups designed to get customer feedback. I give SAP kudos for designing one of the best customer advisory systems in the industry. However, the governance model for the customer advisory boards for enterprise applications even in a more advanced form like at SAP is missing a critical ingredient. It is one that was not possible in the 1990s when enterprise applications evolved.
My Point of View: It is not sufficient to accept input equally from customers, instead, I think that the governance model should reward customers based on knowledge and rate input into development based on knowledge and contribution to the community. This is counter-intuitive to the traditional enterprise application customer advisory boards that reward two types of behavior: those that yell the loudest or the company that pays the most maintenance. In social communities, the reward systems are critical to driving engagement. For example, Spiceworks rewards community members based on a “heat rating” based on the spice level of peppers. Community members compete to see who has added the most “Spice” to the community via a “heat index” based on pepper nomenclature (see figure 1). Believe it or not, members of this community want to be a Capsician. As a result, all users of the community instantly know the “credibility” of the user giving input. Bottomline: Users of software are not equal in either insights or knowledge. Communities give us new ways to drive reward systems and to categorize feedback based on a span of knowledge.
Figure 1: Spiceworks Pepper Index
Not just about Transactions. It is a way for vendors to get feedback about options, new products, services and market requirements. It can fuel innovation networks. AMD and Intel are using it to gain early insight on features and market drivers. Communities can play a new and exciting role in bi-directional feedback for innovation networks.
My Point of View: The “ends” of the supply chain are frayed. CRM and SRM are not sufficient APIs or adaptors to connect value chains. There is no “R” or relationship in these enterprise applications. These adaptors and aligned, enriched relationships are an important steps in defining outside-in processes for demand sensing, insights for open design networks and ensuring social responsibility. This is a trend that has broader implications.
Talking to Spiceworks both excites and depresses me. I love what they are doing, but I wish that it had broader applicability. I would like for there to be a Spiceworks type of community for supply chain management technologies. I firmly believe that the traditional method of selling enterprise applications for supply chain– licensed sales with long sales cycles – is broken. It only rewards the sales person that gets a large paycheck. I would love to see supply chain applications sold on a community built for the community that can accelerate value and technology evolution. I feel that this is a much better model than customer advisory councils.
I have read three surveys this week that estimate that supply chain managers trying to understand social concepts is less than 3% of the population. While the flames are burning up the processes of marketing, and challenging the processes of human resources, the supply chain management community is largely unaware. This is my source of depression.
What do you think? Should VRM and SRM be allowed to co-exist? How do you think that the worlds of social communities and enterprise applications will collide? Are you ready for a friendlier, more social buying experience?
I am in seat 1C on flight 1771 on my way to San Diego. I am traveling between two client engagements. One on the revisiting of Sales and Operations Planning to be outside-in on Software as a Service platforms and the second to better understand how to use structured and unstructured demand signals. This is my world. I am bridging between the old and new worlds of Supply Chain Management. It is keeping me hopping. Watch for more posts next week.