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The CRM Market Has Gone Majority
Technologies don’t just grow up and get adopted just because they’re good or interesting or even valuable. People adopt innovations – new ideas, practices, tools, methods, or technologies – at different rates. Some adopt quickly, some very slowly, if at all. Most are somewhere in between. The study of adoption velocity is called Diffusion Research. Geoffrey Moore made the adoption curve popular, but Everett Rogers is the guy who did the real scholarly work.
Diffusion researchers use the following terms for the typical ranges of adoption velocity:
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Innovators
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Early Adopters
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Early Majority
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Late Majority
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Laggards
Individuals tend to fall into different categories relative to different innovations. For example, someone may be an innovator in his/her personnel policies but a laggard in his/her use of technology. Understanding adoption velocity is important for two reasons:
Adoption velocity governs when a particular technology will be bought in relation to the overall life cycle of that technology.
Adoption velocity governs where and how we get to play in the market as a whole.
If the market is still in the early adopter phase, a value proposition based on technical elegance and “big benefit as long as you’re willing to do a lot of customization and integration” is bang on. If you believe there are enough individual buyers or micro markets that behave like early adopters even if the market as a whole has shifted, you’re also probably in good shape.
For example, take a market that I’ve spend some time in: CRM. It is my contention that the market for CRM software as a whole has moved into the early majority phase, particularly in the large enterprise space. Siebel, the market leader, certainly understands this and behaves accordingly. I don’t see how the sizing data, overall breadth and scope of the supporting value networks, and the cumulative market cap of all the players in the space (even considering the miserable performance some of the smaller players are turning in) can lead you to any other conclusion.
This means that most customers now buy like majority buyers. It also means that potential go-to-market partners will affiliate into value networks according to majority-like criteria as well.
Early majority players—customers and partners—value the strength and reliability of a vendor along with the compatibility of the offer versus the elegance of the technology. They want safe, incremental improvement, delivered by solid, viable, reliable players. They want standards. They don’t want to take chances. That’s what the early adopters were for and that game is played out by the time the market as a whole moves to this new phase.
While the total market may have taken on the buying behaviors of the majority, that doesn’t mean there are no opportunities for second tier players. Even given Siebel’s obvious success, there are still huge swaths of the middle market that are still fumbling around with lightweight products like Act! that are potential buyers of an integrated CRM package if it’s sized, priced, and spec’d appropriately.
What will it take? For one thing: a solid reference base of customers that gives the middle market comfort. A strong track record of rapid and low-cost implementation, high customer satisfaction, and high rate of deployment give further comfort. Finally, it seems fair to assume this market wants comprehensive feature sets that minimize the customization and integration required to digitize a firm’s sources of uniqueness vs. making basic functionality appear.
Another possibility open to second tier players is to attempt to overcome deficiencies in the broader market with a strong and concerted vertical strategy. The difficulty is that the big-name players have spotted all the same verticals. Let’s face it; you won’t be the first firm to notice that financial services firms spend a lot on technology. In fact, I’ve yet to see a firm that doesn’t have financial services listed as one of its top three verticals.
Finally, you can also play effectively with a disruptor strategy, but that requires a focused targeting of visionary players that don’t value a sustaining technology. It means resetting on another technology S-curve. More on this in a following section.
But one thing is clear. The large enterprise market is consolidating around Siebel with room left over for PeopleSoft, Microsoft, and possibly Oracle or SAP if they ever get their act together (don’t put a lot of money on this). Second tier players will always find an enterprise bone here and there. But, lets’ be clear: some nice partner announcements and a couple of wins in some good-sized firms do not suddenly make you a credible enterprise grade player.
. . . continued
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Kevin Hoffberg
Last modified:
05/03/06