CIO Concerns – July 2020

Boardroom Insiders CEO Sharon Gillenwater discussed the top of mind issues for CIOs due to the pandemic.  Initially, the CIOs’ focus was on transitioning to work from home along with tightened security.  There were also “stepped up initiatives around cloud, automation, and e-commerce in order to keep the business running.  In fact, COVID-19 did more to speed up their digital transformation plans than anything else in recent history.”

“You can’t speed up the culture of an organization. You can roll out technology maybe faster… You have to be careful about speed over perfection. Speed is one thing, but you have to make sure that you don’t introduce any security risks, so it’s sort of combining those two things together [that] I think is extremely important at this time.”

Box CIO Paul Chapman

The Boardroom Insiders research team spent two weeks reviewing recent CIO interviews and identified five positive by-products of the pandemic that are improving the resiliency and capabilities of the enterprise.  First off, tech leaders have emphasized upskilling and reskilling their teams to address skills gaps.  Tech vendors have rolled out “a whole host of free training and education programs.”  As these programs are virtual, CIOs are encouraging their staff to attend these sessions with zero travel costs and registration fees.

Likewise, CIOs are using the time at home to hone their leadership, communication, and team engagement skills.  CIOs have found their teams to be more productive, collaborative, and agile, with rising morale.

The third silver lining is the acceptance and integration of new tools into business workflows.  Many of these changes were a necessity due to operational dislocations, but these new tools are “driving new levels of productivity and employee self-service across the enterprise.”

The work from home experience has also served as a “future of work lab” which forced executives and managers to “rethink business processes.”  This rethinking has “driven a wave of innovation internally” and let management observe how a remote workforce behaves.  This forced experiment has helped CIOs “map out a vision of what the future of work should really look like at their companies.”

Finally, the pandemic has encouraged CIOs to test and revise their business continuity plans and enhance security tools and protocols, readying the firm for the next crisis.

Gillenwater described the current situation as a balance between navigating COVID and growth-focused initiatives:

  • Evolving work-from-home into a long-term roadmap for the future-of-work
  • Enabling security everywhere and agile/mobile/digital/cloud everything
  • Scenario and business continuity planning, in an attempt to plan for future changes and challenges
  • Accelerating digital initiatives, at a pace that many say they’ve never seen before 
  • Cost cuts/expense management, an inevitability in an economically trying time 
  • Reprioritization and refocusing of IT investments and projects
  • eCommerce, as part of the rush to digitize
  • Innovation, to identify and capitalize on future opportunities 

Salesforce: Another “Blowout Quarter”

Salesforce Maintained its growth trajectory in Q4 2018 (Source: Saleforce.com).
Salesforce Maintained its growth trajectory in Q4 2018 (Source: Saleforce.com).

Salesforce announced another “beat and raise” quarter last week with strong revenue growth across all of its clouds and regions. Their Q4 earnings hit $2.85 billion, up 24% year-over-year (21% in constant currency).  For the full year, revenues rose 25% (24% in constant currency) to $10.48 billion.  SFDC has a three-year compound average growth rate (CAGR) of 25% with revenue nearly doubling over the period.  Growth has been so rapid that their Q4 2018 revenue was more than their full FY 2014. 

Salesforce claims it was the fastest enterprise software company to reach $10 billion in revenue and will be the fastest to hit $20 billion.

CEO Marc Benioff attributed ongoing growth to a number of factors including its sales team which drove a “blowout quarter,” lauding the “performance of that organization and their acuity.”  Other factors included a growing set of CEO-level relationships, an “incredible increase in investment activity” fueled by the recent US corporate tax cuts, and digital transformation

It doesn’t matter if they’re a consumer product goods company CEO or financial services or retail or any industry or any geography. Every CEO is thinking about their digital transformation. And I think you and I know that every digital transformation begins and ends with the customer. 

This is very powerful. And it’s why we have so much activity in our company. Of course, we’re the number one customer company in the world. No other company in the history of the software industry has been as focused on customer-relationship management, but how companies can have a customer transformation at Salesforce. 

And this, and this alone, focus, has accelerated our growth. You can see that in the numbers. So certainly, how we finished our year in fiscal year 2018 is not where we thought we would start. We raised guidance I think almost in each and every quarter, and yet we still ended up above that. And that’s why we’ve raised again here $150 million. This is the most we’ve ever raised in the history of the company, because we’re just ahead of where we thought we would be

So, we are, obviously $10 billion is now behind us, and $20 billion is ahead of us. And it’s our dream, we’re going to be the fastest to $20 billion. 

But when you have $20 billion already on and off the balance sheet, you know that that is – we’re a huge step on the way there. So that’s what I couldn’t be more excited about the position the company is in, its competitiveness, its ability to perform, the quality of its customer relationships, the quality of the products, the integration of the acquisitions, the culture, Fortune number 1 best place to work. All of these things have come together in just a really beautiful way, and I’m extremely grateful.

Salesforce has several other factors fueling its growth: The annual Dreamforce event drew 170,000 attendees last year, the firm has a clear social mission that resonates well with millennial employees (and now decision-makers), and it was an early mover into cloud computing, mobile-first design, IoT, partner ecosystems (AppExchange), and artificial intelligence. 

Finally, being cloud-only, the firm does not have to fight a rear-guard action to retain enterprise clients as they migrate to the cloud.  So while SAP and Oracle must fight to retain their customer base as companies make the leap to the cloud, Salesforce is there to poach their new clients.

Salesforce COO Keith Block on 4½ Years of Transformation

In a recent interview with CNBC, Salesforce COO Keith Block discussed the transformation of Salesforce since he joined 4 ½ years ago.  Based on FY 2019 Guidance, revenue will have roughly trebled during his tenure as the firm transformed itself into a multi-cloud platform supporting companies of all sizes.

“We’ve moved very, very aggressively, both globally, in terms of our international expansion, as well as moving into the enterprise,” said Block.  “And if you look at our business mix, you can see that the enterprise business has been on fire.”

SFDC also adopted a verticalization strategy last year beginning in financial services and healthcare. The initial offerings focused on wealth management and a Health Cloud, but the firm recently announced a retail bank solution. “So, we have deep industry expertise, deep industry knowledge. Our customer-facing teams are focused by industry. We’ve released products specific to those two industries.”

Over the past 24 months, Salesforce has emphasized CEO-level discussions concerning digital transformation.  “We have a steady drumbeat of CEOs who are coming to us to talk about: What does digital transformation mean in my industry? What is your point of view? What is disruption? How can I leverage all these amazing technologies of cloud, mobile, social, data science, artificial intelligence in changing our business model? And it is a regular dialogue with the CEO.”

Block described his biggest challenge over the past few years as one of market awareness.  “Some companies thought we were just in sales force automation and clearly we’re not; we are a customer success platform.”

A Salesforce Investor Day slide (Nov 2017) demonstrates the growth in TAM and revenue due to new clouds including commerce, industries, communities, and collaboration. Over the past four years, the firm has also added new platform capabilities including Lightning, Einstein, IoT, Heroku, Analytics, and Trailhead.
A Salesforce Investor Day slide (Nov 2017) demonstrates the growth in TAM and revenue due to new clouds including commerce, industries, communities, and collaboration. Over the past four years, the firm has also added new platform capabilities including Lightning, Einstein, IoT, Heroku, Analytics, and Trailhead.

The firm also has undergone a cultural change “to think differently about the life cycle, the relationship, the strategic nature of going after those customers.”

Internationalization was also key to supporting global enterprises as enterprise companies need to provide global service.

Salesforce has also benefited from three annual releases instead of big bang offerings every few years.  Block noted that both technology and markets change too rapidly for such approaches.  “Increasingly, customers are embracing the notion of agile, very quick.”

Transformation (Not Digital) is the Key to Digital Transformation

Searches for Digital Transformation on Google
Searches for Digital Transformation on Google (Source: MIT Sloan Management Review)

George Westerman, principal research scientist with the MIT Initiative on the Digital Economy, wrote an excellent article on Digital Transformation titled Your Company Doesn’t Need a Digital Strategy.  His key point was that the true value in digital transformation comes from using digital technologies as the fulcrum for transformation not as the objective.  When focusing simply on a technology for technology’s sake, the return on investment is much lower.

In the digital world, a strategic focus on digital sends the wrong message. Creating a “digital strategy” can focus the organization in ways that don’t capture the true value of digital transformation. You don’t need a digital strategy. You need a better strategy, enabled by digital.

Westerman cautions that technology doesn’t provide business value in a vacuum, but only when fused with a business strategy that transforms a key aspect of your business such as product delivery (e.g. e-commerce), customer understanding (e.g. analytics), “radically synchronizing operations” (e.g. IoT), changing business models (again IoT), etc.  Thus, “technology’s value comes from doing business differently because technology makes it possible.”

For example, sales intelligence isn’t about providing reps with additional contacts or feeding them with business factoids so they sound smooth on calls.  It is about transforming sales and marketing processes by infusing relevant, accurate, and timely intelligence into sales and marketing workflows; aligning sales and marketing objectives; prioritizing activities; and making sales reps more efficient and effective at selling.

Westerman offers four strategies for digital transformation:

  1. Get Away from Silo Thinking — Focusing on a technology strategy (e.g. Mobile, Big Data) can be limiting and ends once the technology has been implemented.  A technology focus results in incremental improvements, whereas a business transformation strategy employs multiple technologies and management interventions.  You begin with the objective and then determine the digital processes and workflows for implementation.  “A customer intimacy strategy, for instance, uses mobile along with other digital technologies to constantly increase personalization, engagement, and satisfaction.”
  2. Don’t push the envelope too far, too fast — Overly ambitious strategies may be very risky while more mundane projects may be ignored.  Cutting edge technology may not be ready or implementation strategies may not be understood.  “Business leaders leave easy money on the table if they ignore incremental steps and pursue risky opportunities that may not be ready to pay off yet.”
  3. Don’t ask your tech leaders to drive transformation alone — This is an old piece of advice, but still relevant.  Early CRM projects often failed due to a top down approach that lacked support from sales and support teams.  The CTO or CIO needs to work with other C-level and mid-level executives that provide expertise in the industry and function.  For example, The CTO cannot transform sales and marketing by fiat, but must work with sales and marketing management for expertise, cooperation, risk mitigation, implementation, and communication.
  4. Build essential leadership capabilities, not just technical ones — Digital transformation isn’t a project but the ongoing development of enterprise capabilities and business value.  Digital leaders should “create a transformative vision, engage their people in that vision, and then govern strongly to chart a course across a whole portfolio of digital transformation efforts — some planned and some yet to be discovered.”

Not all problems require expensive cutting edge technology.  Many problems are still soluble through low tech solutions, small dollar investments into current platforms, and modified processes.  A focus on technology not only brings about silo thinking, but could increase complexity and cost.

I’m reminded of my high school Geometry teacher who said, “there are two ways you can kill a fly.  You can use a fly swatter or you can use a bazooka.”

I suspect the bazooka would be a lot more fun, but costlier and riskier.

That being said, there are also great risks in moving slowly or lacking a digital strategy.  Forrester highlighted the risks of being a Digital Dinosaur.  The author Nigel Fenwick noted that the digital predators are customer obsessed:

While all companies profess to put customers first, it’s clear from the data that executives at digital Predators care more passionately about the customer across multiple dimensions: In every customer metric we measured, these executives rated the importance of the customer higher than peers in transformers and dinosaurs – in short, they are not just customer obsessed, they are really, really customer obsessed.

And consistent with Westerman’s advice, customer obsession is a business objective, not a technology focus.  It is this deep understanding of customer needs that both informs the business and technology strategy and creates a defensible technology advantage.

Digital Transformation and Sales Intelligence

Data Source: “The 2016 Guide To Digital Predators, Transformers, and Dinosaurs," Forrester Research, May 2016.
Data Source: “The 2016 Guide To Digital Predators, Transformers, and Dinosaurs,” Forrester Research, May 2016.

Forrester released a study titled “The 2016 Guide To Digital Predators, Transformers, and Dinosaurs” which argued that companies need to quickly transform themselves into digital businesses.  The study broke businesses into three digital categories: Predator, Transformer, and Dinosaur and evaluated the percent of business that are either digital services or sold online.

Predators are already generating over 80% of their business digitally and will grow their business to 90% by 2020.  For them, digital is a foundational element of their operations.

Likewise, transformers are quickly evolving into digital businesses while dinosaurs are plodding along.  In 2014, only one in six dollars was generated digitally at transformers, but by 2020, two of every three dollars will be digitally mediated at transformed businesses.

At the dinosaurs, only one in three dollars will be digitally generated in 2020.

Forrester found that transformers are customer-centric in their business strategy and processes.  Customer obsession is part of their corporate DNA:

While all companies profess to put customers first, it’s clear from the data that executives at digital Predators care more passionately about the customer across multiple dimensions: In every customer metric we measured, these executives rated the importance of the customer higher than peers in transformers and dinosaurs – in short, they are not just customer obsessed, they are really, really customer obsessed.

  • Nigel Fenwick, Forrester VP and Principal Analyst

Overall, Forrester found that 29% of current total sales are influenced by digital, but that 47% would be digitally influenced by 2020.  Thus, any business that wishes to remain competitive must have a digital strategy which encompasses sales, marketing, credit decisioning, contracting, and all of the elements across your sales funnel.

My blog focuses on sales intelligence (with some discussion of marketing intelligence and DaaS), so I’m covering a subset of this transformation.  But sales intelligence is a key element of the digital transformation of sales and marketing.  Its goal is to make sales reps more efficient and effective at generating revenue through

  • Improved understanding of customers and prospects.  Whether the company is employing ABM, ABSD, social selling, trigger selling, or other techniques, customer-centricity begins with an understanding of the customer at the contact, company, and industry level.  Sales intelligence vendors go beyond firmographics and contact data to deliver business descriptions, SWOTs, biographies, social posts, industry research, financials, analyst reports, technology platforms, etc.
  • Current Awareness. Improved awareness of changes at customers and prospects helps to improve account planning, messaging, and forecasting.  Where once this intelligence was delivered as generic company news, the sales intelligence vendors have refined their tagging and now provide high precision sales triggers which are accurate at both the company and business topic level.  Some have even begun to integrate sales triggers into their prospecting engines.
  • Reduced busywork + improved data quality.  Sales intelligence vendors cut the time wasted on busywork through the implementation of DaaS enrichment of accounts, contacts, and leads.  Enrichment provides more accurate firmographics, corporate linkage, and contact information which is then propagated to downstream systems.  It also reduces the keying done by prospects on web forms and sales reps in CRMs.  Furthermore, targeting, segmentation, and messaging are much more accurate when the ongoing maintenance of account intelligence is managed by a third party.

Over the past decade, sales intelligence firms have grown from standalone web information portals to integrated workflow services that deliver a broad set of account intelligence to CRMs, marketing automation platforms, sales acceleration (ABSD) services, Google Chrome, web forms, and mobile devices.  Thus, sales intelligence is now becoming available to sales, marketing, and service departments across a broad set of platforms and devices.

If you would like to read more on my thoughts concerning the digital transformation of sales and marketing, I have also discussed the topic on Sparklane and Avention’s blogs.

Data Enrichment Assists Digital Transformation

Blog on the Sparklane UK website discussing how sales and marketing can prepare for Digital Transformation.
Sparklane Blog

In a blog on Sparklane’s website, I had the opportunity to discuss how sales and marketing can digitally transform their departments by focusing on data enrichment and sales intelligence.

Firms have traditionally taken a haphazard approach to data quality, failing to recognize that data quality is a function of both initial data (keyed data, web forms, trade show scans, purchased lists, etc.) and time.  Data is dynamic.  It can be accurate today and inaccurate tomorrow.  That’s why data quality is often broken down into three dimensions: Accuracy, Completeness, and Timeliness.

So not only are firms failing to enrich data in real-time as data is acquired (or batch if purchased), they are ignoring the simple fact that

  • Companies relocate
  • Offices are shuttered
  • Execs change companies or positions within companies
  • Corporate URLs and email domains are changed when companies are acquired or renamed
  • Companies grow and shrink

The result has been saw-tooth data quality charts with quality spiking at data refresh and then quickly declining.  Both company and contact data are subject to data decay with contact data declining at a rate of 25% per annum (A recent Radius study has it at 27%).

To address this problem, firms should evaluate third-party solutions which provide a reference database matched against their sales and marketing datasets.  By standardizing on a reference dataset, sales and marketing operations can deploy a single source of truth across data acquisition (e.g. list loads, prospecting, web forms) and maintenance (ongoing updates to their CRM and Marketing Automation platforms).

There are many benefits to this approach:

  • Web Form and other keyed data is immediately verified and graded.
  • Lead Scoring is based upon richer and more accurate data.
  • Duplicates are detected before being created, allowing leads to be matched to current customers and prospects.
  • Leads from subsidiaries and branches are tied to ABM accounts, ensuring they are properly scored and routed.
  • Addresses, Phones, and other key firmographic and biographic fields are standardized ensuring they are properly segmented, targeted, and routed.
  • Sales and Marketing no longer waste resources targeting individuals who have left an organization.
  • Sales has more complete data for lead qualification, prioritization, and messaging.
  • Higher quality data is propagated to downstream systems, reducing the long-term cost of maintaining those platforms and helping prevent downstream errors and duplicates created by low quality upstream data.

And those benefits are simply those from cleaner data.  That is before we begin to consider the value of sales intelligence platforms in account planning, messaging, current awareness, identifying additional contacts at current accounts and prospects, and opportunity prioritization.

So if you want to begin to improve enterprise decision making and efficiency, an excellent place to start is in improving the data which is the lifeblood of your digital platforms.