Does Salesforce’s Refreshed SMB Strategy Add Up?

salesforce logoSalesforce hosted its second annual Analyst Summit last week. This year’s format was much more engaging and interactive format than last year, sparking lots of interesting questions and discussions among analysts and the Salesforce team.

At a high level, Salesforce’s executives laid out the company’s key themes for 2016, which included:

  • Continuing to invest in its core CRM space to maintain market dominance. To that end, Salesforce recently introduced its new Lightning user experience and development framework, along with Trailhead, its interactive learning platform to help users and developers transition more quickly and easily to Lightning.
  • Using IoT to strengthen customer engagement. Salesforce announced Thunder, its IoT Cloud, at Dreamforce 2015. Salesforce’s Adam Bosworth emphasized that while Thunder isn’t yet ready for prime time, it is in pilot with several customers. Salesforce is focusing on connecting IoT with business processes and customer experience to help its customers to help drive sales and revenues.
  • Reimaging Wave Analytics to provide better insights to users. Salesforce initially launched Wave Analytics as a platform in 2014, with plans to develop apps on top of the platform over time. After hearing from customers that it was too expensive and focused too much attention on the platform play and not enough on providing enough prebuilt apps for business users, Salesforce introduced its next iteration of Wave at Dreamforce 2015. In addition to a streamlined pricing model, the new version offers prebuilt sales templates and apps that make it easier for sales reps to get more value from their customer data.

Of most interest to me, however, was that Salesforce devoted more time to its strategy and solutions for SMBs than last year.

From SMB Startup To Enterprise Powerhouse

Salesforce.com website circa 1999, courtesy of Internet Archive Wayback Machine (https://archive.org/web/).

Salesforce.com website circa 1999, courtesy of Internet Archive Wayback Machine (https://archive.org/web/).

When Salesforce was founded in 1999, it was focused on the SMB market. As a cloud pioneer, Salesforce captured the market’s attention with its story of faster, easier, better and less expensive CRM. While SMBs were its target in the early going, the marketing genius of Benioff and a stellar sales team quickly moved Salesforce upstream, and capitalized on replacing enterprise dissatisfaction with Seibel to become the undisputed 800-pound CRM gorilla in the enterprise market.

To accommodate demands from large customers and a rapidly evolving market, Salesforce expanded its vision over the years to become what it now terms a “customer success platform.” Today, this platform encompasses many parts and solutions, including:

  • Multiple editions of its core CRM solution
  • A veritable storm of clouds (sales, marketing, service, community, etc.)
  • New Thunder and Lightning initiatives
  • More than 35 acquisitions, from ExactTarget to SteelBrick.

However, as I wrote in this post, Salesforce’s SMB Story: Great Vision, But a Complicated Plot Line, amid its enterprise success, the Salesforce story became harder for the average SMB to parse through. And, while the vendor offered relatively low entry-level pricing for it former Group Edition ($25/user/month), SMBs faced a steep jump to Professional ($65/user/month) if they needed more functionality that many wanted, such as pipeline forecasts, campaign management, contract storage and quote delivery, custom reporting and dashboards.

Either as a by-product or intentionally, Salesforce’s SMB story has evolved to focus on the “fast growth” SMBs and digital elite, where it has done an excellent job of capturing market share.

But when it comes the vast majority of SMBs the math is revealing. True, Salesforce is the #1 CRM vendor in SMB: SMB Group’s 2015 Routes to Market study shows that 25% of SMBs (1-999 employees) that currently use a CRM solution use Salesforce. However, 75% use other brands, from old-guard competitors such Microsoft and ACT!, to newer ones such as Insightly and Pipeliner. And then there are all of the SMBs still using Excel, email and/or basic contact management solutions.

Furthermore, according to Salesforce, about 150,000 businesses in total use its solutions, and about one-third of them (or 50,000) are SMBs. When you consider that there are roughly 6.5 million SMBs with employees (plus another 17 million or so solopreneurs) in the U.S. alone, Salesforce has barely scratched the surface in SMB market.

Salesforce’s New SMB Story

Recently, Salesforce has begun to refocus its SMB story, for a few reasons. In addition to the huge, untapped market potential, Salesforce sees SMBs as canaries in the coal mine in terms of requiring the simplicity and ease of use that all businesses—even large ones—increasingly demand from business application vendors. Salesforce also wants to tap into SMB diversity and innovation to help keep pits own focus fresh.

Screen Shot 2016-01-19 at 12.57.27 PMTo that end, Salesforce has recently taken a couple of big steps to refocus its SMB story, including:

  • Launching SalesforceIQ for Small Business at Dreamforce in September 2015. Positioned as “the smart, simple CRM to grow your business,” SalesforceIQ, at $25/user/month, replaces Group Edition as the vendor’s CRM entry point for SMBs. Based on the acquisition of RelateIQ, SalesforceIQ automatically captures, analyzes and surfaces customer information across email, calendars and other channels, using pattern recognition to provide users with sales insights and proactive recommendations.
  • Announcing a free integration between Desk.com, Salesforce’s small business customer service app and SalesforceIQ. The integration gives give SMBs a unified view of their customers, enabling them to provide the more connected, personalized experience that their customers will increasingly demand.

Screen Shot 2016-01-19 at 1.02.03 PMSalesforce also quietly rolled out Trailhead  in 2014, and then showcased it at Dreamforce 2015. Trailhead provides users, developers and administrators with a guided, learning path through the key features of Salesforce to help people get more value from Salesforce solutions more quickly. According to Salesforce, Trailhead earners have passed more than 1,000,000 challenges, earning more than 250,000 badges.

In addition, Salesforce’s AppExchange—one of the first and most successful app stores, which just celebrated its 10th birthday—offers more than 2800 applications that integrate with Salesforce). Many of these are SMB-oriented, and Salesforce continues to ramp up SMB partnerships and integrations, with vendors from MailChimp to Slack to Sage Live (link to blog) on board.

Perspective

There are many things I like about what Salesforce is doing in the SMB space. I think SalesforceIQ gives SMBs a much better bang for the buck than Salesforce Group Edition. Furthermore, the integration between Desk.com and SalesforceIQ gives SMBs a cost-effective way to improve their customers’ experience, and level the playing field against larger companies in today’s increasingly social, omnichannel world.

Salesforce’s ecosystem is also a huge plus for SMBs that are already Salesforce customers. The AppExchange makes it easier for SMBs to find apps that will work well with Salesforce, and reduce potential integration issues. Meanwhile, Trailhead is one of the most fun training programs I’ve seen in the business applications space.

But, Salesforce will need to do more if it really wants to become an SMB mainstay. First, of all, Salesforce needs to improve SMB segmentation and understanding. Sure, it gets those Silicon Valley startups, but it needs a deeper understanding of the broader SMB landscape and their diverse attitudes and requirements.

This leads to my next point, which is that the broader swath of SMBs still need a lot of business and conceptual education about how and why sales, marketing and customer service are changing, and what they need to do to succeed amidst these changes. Salesforce paved the way in educating SMBs about the big picture benefits of the cloud, it should have the same lofty goals in terms of educating them about the new customer journey.

In addition, Salesforce says that there is “a clear migration path” from SalesforceIQ to Sales Cloud. While it sounds like Salesforce can easily migrate data from SalesforceIQ to Sales Cloud, the applications are built on different code bases, and have different user interfaces. So its not intuitive as to how this works in real life in terms of user learning curves. As important, what is the strategy for all of the ISVs on the AppExchange that target SMBs? They’ve integrated with Sales Cloud offerings, not with SalesforceIQ. Since Salesforce is now pitching SalesforceIQ to SMBs, what do they need to do, and how will Salesforce help them? Another question is how does Lightning—and Thunder for that matter—fit into the SMB story?

That said, as evidenced at this event, Salesforce is listening, and is formulating plans to increase investments to educate and engage SMBs both locally and online. While engaging the broad SMB market is never easy, Salesforce has the right attitude, and the brand and budget to create a wider lens through which it can gain the pulse on SMBs it needs to capture SMB attention and market share.

My Top Posts From 2015

new-year-images- collectionSeems like we blinked and its already 2016! I hope your New Year is off to a great start. Here are my most popular blogs from 2015.

Thank you again for reading and commenting on them. And please let me know what SMB related tech topics are of most interest to you in 2016.

SMB Group’s 2016 Top 10 SMB Technology Trends

Making The Internet of Things Real For SMBs

Are You Keeping Pace With Your SMB Customers?

Taking the Plunge: Triggers for Small Businesses to Move to SAP Business One

Trends in Small Business Adoption of Mobile Solutions

Cloud Is The New Normal for SMBs—But Integration Isn’t

SMB Spotlight: Empowering A Billion Women by 2020 Teams Up With Xero

The Cloud: Mother of Re-invention for IBM

Charting a Course in the ERP Clouds

Mobile Solutions Play a Big Role in Small Businesses

SMB Group’s 2016 Top 10 SMB Technology Trends

Foggy Crystal Ball-128x128Here are SMB Group’s Top 10 SMB Technology Trends for 2016! A more detailed description of each follows below. (Note: SMB Group is the source for all research data quoted unless otherwise indicated.)

  1. SMBs That Make the Business-Technology Performance Connection Outpace Their Peers.
  2. The Battle for Self-Employed Workers Heats Up.
  3. SMBs Tune in to IoT Possibilities.
  4. Public Cloud Is a Done Deal, but Cloud Variants Remain Hazy for SMBs.
  5. Security Remains the Elephant in the SMB Room.
  6. Mobile Solutions Occupy a Bigger Part of SMB IT Real Estate.
  7. SMBs Rethink CRM.
  8. SMBs Move Up the Cloud Analytics Curve.
  9. SMBs Streamline Internal Processes to Focus on Business Growth.
  10. More Tech Vendors Use Big Data to Provide New Business Services to SMBs.

Detailed SMB Group Top 10 SMB Technology Trends for 2016:

  1. SMBs That Make the Business-Technology Performance Connection Outpace Their Peers. SMB success is increasingly tied to technology. SMBs that view technology as critical to improving business outcomes are outpacing their peers in terms of business growth. According to SMB Group’s 2015 SMB Routes to Market Study, 29% of SMBs view technology as helping them to significantly improve business outcomes. These “progressive” SMBs are 18% more likely to forecast revenue increases than their peers. Progressive SMBs spend 29% more on technology, are 55% more likely to have fully integrated primary business applications (financials, CRM, HR, etc.) and are 86% more likely to use analytics than their counterparts. By using technology to streamline workflows, slash time spent on repetitive data entry and inefficient processes, gain better insights into opportunities and threats, and create new business models, progressive SMBs are well positioned to tap into new customer requirements, improve customer engagement and experience, and enter new markets. As they move forward, they will continue to outpace their peers and reshape the SMB market.
  2. The Battle for Self-Employed Workers Heats Up. According to April 2015statistics from the U.S. Government Accountability Office (GAO), more than 40% of all U.S. workers are contingent, which includes the self-employed as well as temp workers, contractors, on-call workers and part-time employees. That number represents a 10% increase from the previous GAO survey in  The survey spans industries from construction to pet care, and from professional services to Uber and Lyft drivers. This trend shows no sign of abating, with the GAO predicting the percentage of self-employed workers to rise to 50% by 2020. Self-employed workers need tools to manage finances, build brands and grow their business—but they must do all this on a shoestring budget. SMB Group’s 2015 SMB Routes to Market Study shows that consequently, many of these workers rely on Excel spreadsheets: 40% of self-employed workers use Excel for accounting, and 85% use Excel or email (such as Outlook or Google) for sales and contact management. On average, median annual spending on technology for businesses with one employee is approximately $3,500, which includes client devices, productivity software, business software, Internet connectivity and mobile data service and device expenses. Vendors such as FreshBooks and Square have been pioneers in developing solutions specifically for self-employed workers. But more vendors, such as Intuit (with QuickBooks Self-Employed) and Sage (with Sage One), are following suit. Although the sheer market volume creates great potential, rapid scale will be required to attain and sustain profitability in this cash-constrained segment.
  3. SMBs Tune in to IoT Possibilities. The Internet has delivered its latest game changer: the Internet of things (IoT). As with the Internet innovations that preceded it, IoT presents tremendous potential for disruption—along with all of the opportunities and challenges that accompany this type of sea change. Yet IoT is still just a buzzword for most SMBs. When asked in SMB Group’s2015 SMB Routes to Market Study, “What are the top three technology areas that are most critical for your business to invest in over the next 12 months?,” IoT ranked at or near the bottom. Only 18% of small and 13% of medium business decision makers selected IoT as one of their top three priorities. But factors such as vendor education and early success stories will help SMBs better understand IoT use cases and opportunities, both to improve internal operational efficiencies and to create new product and services offerings. SMB Group research indicates that SMBs in retail, wholesale/distribution and discrete manufacturing (e.g., auto, electronic equipment) are likely to lead the SMB IoT charge. Regardless of industry, IoT solutions built to move critical, trigger-based data to the Internet (through smart gateway solutions and applications) and store less important data locally will be key to helping SMBs avoid information overload and achieve successful IoT outcomes.
  4. Public Cloud Is a Done Deal, but Cloud Variants Remain Hazy for SMBs. Cloud solutions are already part of the business fabric for most SMBs, with the adoption of cloud solutions surging across all solution areas, according to SMB Group’s 2015 SMB Routes to Market Study. In fact, the cloud is poised to overtake on-premises deployment in the next year in areas such as collaboration, file sharing and marketing automation. Cloud adoption is also growing in areas in which it has traditionally lagged: Almost one-third of SMBs planning to purchase accounting and ERP solutions say they plan to purchase a cloud offering. But for the most part, SMBs have been choosing public cloud options—despite several vendors’ vocal promotion of private and hybrid cloud alternatives. Although each variant has its pros and cons, most SMBs remain confused about what private and especially hybrid clouds are as well as when and why they should consider them. Most vendors define hybrid cloud as the integration of a public and private cloud; but because private clouds are still rarely utilized by SMBs, the hybrid cloud notion remains hazy for SMBs. Microsoft with Azure Stack for Windows Server, IBM with its Bluemix-powered “cloud everywhere” platform and Dell with Dell Cloud Manager are trying to make private and hybrid cloud options more accessible and manageable. But unless and until vendors offer more articulate, relevant and compelling alternatives, SMBs will continue to opt for the public cloud in the vast majority of cases.
  5. Security Remains the Elephant in the SMB Room. As SMBs rely more on technology to run their businesses, the requirements to secure and protect data and access become more critical and complex. SMB Group’s 2015 SMB Routes to Market Study shows that medium businesses rank security as their second most pressing technology challenge, while small businesses rank it as their number-one challenge. However, many SMBs feel overwhelmed, confused and completely inadequate to deal with the magnitude of the seemingly endless potential for digital security breaches that could wreck havoc on their businesses. All too often, they continue to take an outdated, ineffective, 1990s-era “whack-a-mole” approach to security, deploying point solutions to ward off the security threat du jour. However, vendors are delivering more holistic, end-to-end, risk- and rules-based solutions for SMBs. These solutions can enable them to close off the biggest vulnerabilities to their most critical corporate data, wherever it resides—whether endpoint devices, mobile apps, on-premises infrastructure and applications or the cloud. Although most SMBs will need help understanding this approach, once they do, they will be able to face and address the security elephant in a more effective way.
  6. Mobile Solutions Occupy a Bigger Part of SMB IT Real Estate. SMBs continue to turn to mobile solutions to help redefine business processes and pursue new opportunities. SMB Group’s2014 SMB Mobile Solutions Study indicates 59% of SMBs view mobile solutions and services as “critical” to their business. The effects of mobile adoption impact traditional IT in endless ways. For instance, 85% of SMBs see mobile apps as complementing traditional business apps; 70% believe that mobile apps will replace some of their current business applications; and 48% say their employees are doing significantly more work on mobile devices. As important, mobile solutions account for a growing share of SMB technology budgets, with median spending on mobile solutions as a percentage of total technology spending rising year-over-year. However, while they’ve been swept up in the mobile tsunami, many SMBs have yet to put mobile strategies and solutions in place to optimize their mobile investments. SMBs will need better guidance from vendors both to effectively manage and protect mobile assets and to better integrate them with traditional business applications and infrastructure.
  7. SMBs Rethink CRM. SMBs need an integrated, holistic view of their customers, but “enterprise” CRM has proved too complicated and costly for most. The good news is that vendors are crafting CRM solutions specifically designed and priced for SMBs. These solutions go beyond contact management to help SMBs improve the customer experience; compete in a social, omnichannel world; and access analytics to stay ahead of their customers’ expectations. Examples include Salesforce, which introduced Salesforce IQ as its new sales management entry point for SMBs and followed up with a free integration for SalesforceIQ withcom customer service. This combination provides sales and customer service reps with a complete view of customer interactions across sales and services. HubSpot launched Connect to integrate customer data from different applications, such as billing and payment data from FreshBooks and customer service records from Zendesk, into HubSpot, for a more complete customer view. Meanwhile, SAP rolled out SAP Anywhere & Everywhere to help SMB retailers and etailers manage sales, marketing, ecommerce and inventory activities in a more cohesive way. And Infusionsoft, which has focused on very small businesses from the start, is adding new capabilities to enable buyers to better personalize the Infusionsoft experience to their style and preferences. These vendors—and others—will help more SMBs realize that the time has come to modernize and integrate their CRM approach.
  8. SMBs Move Up the Cloud Analytics Curve. Vendors have been making big investments to build powerful yet cost-effective cloud-based analytics solutions. Designed for business users instead of data scientists, these solutions offer user-friendly interfaces, guided discovery, visualization tools and natural language capabilities to help users quickly get actionable insights from their data. For instance, IBM’s Watson Analytics minimizes the effort required to turn raw data into insight via visualizations. Users connect their data source to Watson and then query Watson about the data in plain English (or their native language). Watson then builds a dashboard or graphics so users can easily visualize the findings. It also offers a built-in predictive engine, which can, for instance, generate personalized offers based on customer preferences and purchasing histories. Another example is Tableau, which recently introduced Vizable, designed for a touch-based, mobile world. Vizable reads a spreadsheet or .csv file, determines the key categories and then displays an initial graphical view of the data that users can explore by pinching, swiping and dragging on the iPad. Vizable also offers a built-in animation engine to help users understand why results change as they manipulate the data. With clear benefits and easy access, SMBs are shifting from on-premises analytics to the cloud. This is particularly true in medium businesses, which cite analytics as the second most critical area to invest in over the next 12 months. Although most of these businesses currently use on-premises analytics solutions, among those planning to purchase or upgrade in this area, 48% plan to use cloud-based analytics solutions. This trend will strengthen in 2016, as more SMBs seek out analytics solutions that are easy to buy and use in order to stay ahead of the market and their competitors.
  9. SMBs Streamline Internal Processes to Focus on Business Growth. SMBs say that attracting new customers and growing the business are their top business goals, according to SMB Group’s 2015 SMB Routes to Market Study. Unfortunately, many SMBs waste so much time managing the daily internal grind of financial, human resources, procurement and other back-office processes that they don’t have time to focus on growth, opportunity and innovation. But SMBs in fast-growth industries such as software and biotech are role models for a more modern, automated and often cloud-based approach—one that enables them to spend less time on back-office processes and more time on decision making. In turn, early SMB adopters across the spectrum are taking note. They are replacing or foregoing outdated, disjointed back-office systems with next-generation solutions. These solutions enable them to automate drudgery and gain time-saving, visibility, collaboration and decision-making benefits that give them the flexibility to adapt to changing market requirements. As early adopters reap these advantages, pressure is mounting for SMBs that have resisted change. They will need to bite the bullet and update the way they run the business, or they will fall behind their more nimble peers.
  10. More Tech Vendors Use Big Data to Provide New Business Services to SMBs. Tech vendors are increasingly applying analytics to challenge traditional service providers in “non-IT” areas. For instance, Intuit recently launched a new financing alternative in partnership with OnDeck. The service uses small businesses’ QuickBooks accounting data to qualify applicants for lower-rate loans than those available from traditional lenders. Intuit also formed a partnership with Stride Health, which integrates Stride Health’s personalized health insurance, healthcare and compliance management within QuickBooks Self-Employed. Meanwhile, Intacct, which provides cloud ERP software, has partnered with Pacific Crest to provide SaaS businesses with real-time comparisons of their performance relative to their peers and pinpoint specific levers for improving their execution. And IBM continues to push Watson deeper into healthcare, with a planned $1 billionacquisition of medical imaging company Merge Healthcare. IBM’s intent is to apply image analytics to medical images taken by Merge, which are used in medical specialties such as radiology, cardiology and orthopedics. Big Blue also purchased the Weather Company’s digital assets (everything but the TV network). IBM will use the Weather Company’s forecasting data and technology to create services to help weather-reliant businesses to maximize profits. Because so many industries rely on weather data, the opportunities are endless. For instance, retailers need to know if they should stock up on groceries before a winter storm; farmers use weather data to maximize crop yields; and construction workers monitor the weather to determine the best times to pour concrete or operate a crane. As these types of services proliferate and become more powerful and convenient, they offer new ways for SMBs to grow and innovate.

If you are interested in learning more about licensing options for SMB Group’s 2016 Top 10 SMB Technology Trends, please contact Lisa Lincoln, Director of Client Services at lisa.lincoln70@smb-gr.com or 508-734-5658.

 

The Top Five Warning Signs That You’ve Outgrown Your Accounting Solution

Does your business have the tools it needs to support business growth? Or are the systems you’re using holding your business back?

I recently participated in a webinar, Keeping Ahead of Change, with Sage’s VP of Product Marketing, Diane Haines. We discussed a common dilemma that many SMBs face. While today’s business environment offers SMBs plenty of opportunities to innovate and grow, many find themselves unprepared because they’re still relying on software solutions that worked when they were very small, but can no support business growth.

Accounting software is often the first business software small businesses buy. Many times, small business owners opt for the least expensive or easiest accounting solution they can find, and add new software to help with other functions as needed.

Tacking on point solutions, spreadsheets and manual workarounds can get the job done for a while. But, as businesses grow, they become more complicated (Figure 1). You hire more employees, and create more offerings. Different regulatory requirements start kicking in, and maybe you are in more markets. Business growth and profitability are still extremely important priorities, but other issues start coming to the forefront.

Figure 1: As Businesses Grow, Challenges Change

Slide1

At a certain point, solutions that used to work no longer fit your needs. Trying to manage a growing business with a jumble of different solutions, spreadsheets and pencil and paper creates a drag on the business, and you wind up spending too much time just keeping up with the day-to-day. As a result, it’s tough to be proactive, and to take advantage of new opportunities to grow in a scalable way.

The top five warning signs that the software you’re using today may be holding your business back include:

  1. Too Much Time, Too Many Errors. Accounting software is supposed to make running the business easier. But if you’ve outgrown the solution, you’re probably spending too much time creating “customized” reports outside the accounting software for things like billing, payments, and sales forecasts. Users may have to re-enter info into different programs and documents, and have to update and reconcile multiple spreadsheets–which is not only time-consuming, but greatly increases the risk of errors.
  1. Poor Visibility Into Data for Decision-Making. All businesses need to track and measure metrics and key performance indicators, but many struggle to do this efficiently. Many SMBs feel like they’re in information overload. You have plenty of data, but can’t find the right data when you need it, or it’s difficult to pull the data into a unified view to see how different aspects of the business work together. For instance, it may take days or weeks to generate reports required by different stakeholders, or take too long to close the books. Without a more comprehensive business management system that automates and integrates information across the business, it becomes more difficult to manage, measure and make the right decisions as a business grows.
  1. Everyone Has Their Own Version of the Truth. When people rely on different spreadsheets and reports, generated with different data from different systems, they can end up with very different views of what’s going on and what actions they need to take. When this happens, decision-makers can waste precious time reconciling these different views and finding common ground to base decisions on.
  1. Insufficient Time/Resources To Grow the Business. When you spend too much time on day-to-day business processes, its tough to carve out the time and resources to do things that will really move the business ahead, such like upgrading front end sales and marketing to attract new customers, or improving customer service so existing customers become repeat customers advocates for your business.
  1. Poorly Equipped for Business Expansion. If you are looking to expand your business to new countries, you need to be able to track exchange rates, convert currencies and consolidate financials across the business, and the entry-level accounting software you have can’t easily accommodate this. Similarly, if you want to add new product or services, or add a direct B2C channel to supplement your B2B business, things can get cumbersome and clunky if you have to use a lot of workarounds.

If any of these top five warning signs sound familiar, its time to think about how you can manage your business in a more automated, integrated and sustainable way. But change can be hard, even when the need to change is clear. Tune into the Keeping Ahead of Change webinar to learn more about these challenges, how a more complete business management solution can benefit your business, and advice for how to how to start managing your business in a more automated, integrated manner so you’ll be ready for opportunity when it knocks.

 

SAP Anywhere – Enabling SMBs to market, sell and commerce with an integrated front office solution

The retail sector has a well-earned reputation as one of the most challenging industries for participants to navigate successfully. Retailers – be they traditional brick and mortar companies, online sellers or, often, a combination of the two – must manage complex supplier relationships and inventories while also catering to the sometimes mercurial wants and needs of their end customers. For retailers, “supply and demand” is more than a trite catchphrase. Rather, it encapsulates an ever-shifting and intricate relationship that demands real-time data, accurate forecasting and efficient operations if the retailer is to generate profits in a business characterized by razor-thin margins.

SAP_Anywhere

In short, retailers truly need a 360-degree view of their business, encompassing suppliers, consumers and the many processes that connect the two. With little room for error, retailers and etailers must not only track critical operational metrics closely, they must continually strive to make their processes more efficient and effective.

Retailers sit at the nexus between wholesalers and distributors on one side, and end buyers on the other. They must deal with product availability and pricing demands from their suppliers, while keeping their store offerings competitively priced and in line with current customer demands. As friction-free online shopping options proliferate, maintaining customer loyalty as well as profitability is proving increasingly elusive. Among the operational challenges retailers face:

Retail businesses encompass supply-side and demand-side

Supplier-side Challenges:

Product availability and pricing: All but the largest of retailers are at the mercy of their suppliers, who can set prices close to retail selling prices and whose products may not always align with changing customer demands.

Incoming inventory management: Retailers need to maintain inventory levels and mixtures aligned with the current and forecasted consumer preferences, which aren’t always the same as the suppliers’ preferences and product lines.

Buyer-side Challenges:

Outgoing inventory management: Retailers must have good visibility into inventory levels and purchasing trends to ensuring that inventories are stocked to meet both current and future demands, while limiting overstocking and forced discounting.

Customer satisfaction: In addition to ensuring that they have the right product selection and price points, retailers must work to engender customer loyalty while also increasing the number and value of products each customer buys.

Commerce operations: As higher percentages of retailers enter the online selling realm, they must deal with everything from cart abandonment rates to rapid and accurate processing of orders and shipments.

In addition to the above challenges, retail and distribution business today need to think globally. Digital commerce enables them to setup web-shops and transact beyond their geographic borders and becomes players in a global economy. This is where SAP Anywhere will benefit from being part of the larger SAP company. Most global businesses need more accurate multi-currency exchanges. Does the solution calculate financials in local currencies and support local tax compliance? What languages does it support?

Having a reputable cloud provider handle these and other critical business processes – as well as providing the platform for commerce sites in some instances – frees companies from performing these tasks, which are often outside of their areas of core competency.

 Target Market:

SAP Anywhere is targeted at companies with between 10 and 500 workers. Built from the ground up for the SMB market. It leverages SAP HANA to mine the data for real-time analytics and insights.

SAP Anywhere is a cloud-based solution, it will be delivered as SaaS (software as a service) by SAP in a public cloud (Amazon cloud for the US market). While it can be accessed through either mobile devices or desktops, SAP is emphasizing that it will allow SMBs to manage their business from anywhere using their mobile devices.

Perspective and Go-to-Market Channel Implications:

SMB spending on digital commerce solutions is increasing, especially for solutions that are simple and aimed at improving customer experience across mobile, social and web. This new category of front-office solution for small businesses will open new doors for SAP and will necessitate a new channel approach. In North America SAP plans to develop new channels where SAP has not gone before for SAP Anywhere and not restrict it to their existing Business One channel partners. There is also potential for affiliate partners like PayPal, eBay, Facebook, etc. Success with SAP Anywhere will also require partnerships with other type of affiliate solution providers, as part of an expanded ecosystem, that can help specialized SMBs setup sophisticated web-presence instead of the generic out-of-box experience.

 

BizSlate: Weaving QuickBooks Into ERP for Small Businesses

Laurie:  Hi, this is Laurie McCabe from SMB Group and today I’m talking to Marc Kalman, who is the CEO and founder of BizSlate, which provides inventory management solutions for small businesses. So, welcome Marc!

Marc:  Thank you. Glad to be here today.

Laurie:  Thanks for coming. We’re here at the QuickBooks Connect conference, a very appropriate place to be talking about small business solutions. I’m wondering, before we get into the specifics of what BizSlate does, can you tell us about your role how the company got started?

Marc:  Sure Laurie. I’ve been in the supply chain technology field my entire career. I started off as a software engineer right out of college, did that for about nine years and had the opportunity then to move into more of the practitioner side of things where I was an EDI (electronic data interchange) analyst for a while, I was a supply chain specialist at companies like Coach Leatherware, and then I had the opportunity to direct a team for a nine division accessories business in New York City. From there, I started my last company, which was, and still is a successful EDI provider, Easy Come Software.

What we found was, because of our unique way of addressing the market for small businesses, we were upwards of 90% more efficient than any of our competitors as far as a supply chain capabilities around EDI were concerned. That led to our customers calling up after a while saying, “Hey Marc, this is great what you’re doing for us in the world of EDI. While in our case it might be 70% or 80% of our business, it’s two customers and we have a thousand customers and we’re using QuickBooks and we want to see our inventory and we can’t keep track of things correctly. And people are traveling and need access to real-time information quickly to make important decisions and keep up with the market.”

So it caused me to look at what was going on in the supply chain space for small businesses and I saw that it was a big problem. I’m very passionate about the space, I’ve been involved with it for a very long time and decided, you know what? I’m going to go do something about it and so here we are.

Laurie:  So, what specifically does BizSlate do?

BizSlate_Logo2Marc:  So, we obviously we do integrate with QuickBooks, predominantly focusing on QuickBooks Online right now. That seems to be the direction that QuickBooks is pushing everybody towards anyway, and we want to be the forefront of that.

Laurie:  Right. And new companies are starting more with cloud-based offerings.

Marc: Exactly. We are web-based, and we focus on helping small businesses improve how they manage everything–customers, orders, vendors, inventory, logistics of the supply chain–and give them the tools that they need to succeed this very intense, omnichannel market.

Laurie:  Does it plug right into QuickBooks, Marc?

Marc: It does, seamlessly. We connect right to QuickBooks through APIs, so as you process documents in our system, let’s say like you post invoices or you receive inventory, if you go into QuickBooks you would instantly see those transactions.

Laurie:  It sounds like it kind of fleshes out QuickBooks beyond accounting and basic financials into what other companies would call ERP or Enterprise Resource Planning, with functionality that manufacturers or distributors might need.

Marc:  Correct. And you know, QuickBooks is great from an accounting system perspective. But certain businesses, particularly product-related businesses that have to track inventory, as they evolve, the operations aspect of QuickBooks doesn’t always keep up with the rate of growth. This causes companies to start looking outside of QuickBooks, at companies like MAS 90 or Dynamics. And until now, QuickBooks really hasn’t had a lot of defense against that. In fact we just did a demo for someone earlier and they said, “You know, QuickBooks plus BizSlate equals NetSuite.”

Laurie:  What are you finding in terms of the sweet spot of customers that are interested in BizSlate? I would expect you have a lot of QuickBooks users that say, “I like QuickBooks but I need more.” Any other kinds of people coming by that are interested?

Marc: There are two key areas that customers are attracted to us. One is what you just described, where someone is using QuickBooks, loves it, or their accountant wants them to stay on QuickBooks. They don’t want to have that disruption of having to change the whole system, they just want to expand functionality. We give them a nice path to be able to do that with a system that will help them not just today, but sustain them for the future. Also, the power that we offer is at a very affordable price. So we also find companies that use solutions like NetSuite that maybe aren’t capitalizing on all of the capabilities that NetSuite offers, or it’s too complex, it’s too big, it’s too expensive. This is an opportunity for them to get the same efficiency but easier, and more affordably.

Laurie: Is there a sweet spot in terms of company size for BizSlate?

Marc:  We are primarily focusing on businesses that are fifty million in revenue or less. Industry-wise, we have a lot of traction in apparel, footwear, also housewares, consumer goods, and electronics

Laurie:  A lot of companies are targeting small businesses who are outgrowing QuickBooks. So why BizSlate? What makes you different?

Marc:  That’s one of my favorite questions. Because we get it. We understand small businesses. Small businesses today are understaffed and overworked. People are doing fifteen different jobs at the same time and that’s on a good day. They don’t have time to sit in front of a computer processing documents. Every single person at that company needs to focus on the growth and profitability of that organization. It’s actually detrimental to the business in a very aggressive market to have people who are wasting time on a lot of data entry.

When some vendors target small businesses, they just don’t understand what these small businesses need. They say that they do, but they don’t. These providers, what they say is, “Well, for a small business it has to be affordable,” right? It does. Has to be easy, and it has to be easy, right? But to get there, the typical provider does that by removing value. But this removes ROI. So where BizSlate is different is we bring enterprise value, the kind of tools, the intelligence that small businesses really need to be able to capitalize on the market. But we do it in a way that is affordable and easy and gives them tools that to really rev the business up and focus on things that are more important to the company.

Laurie:  I think you hit the nail on the head. Time is usually the most precious resource for many small businesses. So how long on average does it takes somebody to get up and running on BizSlate, and how do you help them get productive more quickly?

Marc:  Every customer’s a little different. There are different levels of complexity. We start our promise to our customers with ease of use by making sure that the software itself can be learned and trained and used without anybody ever having to teach somebody something. Now that said, that doesn’t mean we don’t support our customers. In fact, I believe we’re one of the few, if not only, providers of this type that offer free unlimited phone support.

Laurie:  That’s a big deal.

Marc: Because we want to make sure our clients succeed, it’s not just about selling software here.

Laurie:  Yes, in a subscription model you really want to keep them once you get them.

Marc:  Exactly. And we’re passionate about small business, I come from the space. Half the employees at BizSlate come from the space. We are really here to make a difference and we want our clients to be successful. As great as our software is, we want to be known for the service that we offer and really make a difference.

Laurie:  Last but not least, is there anything here at QuickBooks Connect that you’re highlighting that you’d like to just give a shout out for?

Marc:  We have two very exciting themes here at the show. Number one, we just found out that we were selected as one of the top twenty cloud providers of 2015 by CIO Review magazine.

Laurie:  Congratulations.

Marc:  Thank you, we’re very excited. Also we’re just finishing up QuickBooks partner certification. In about a week or two, we should be listed on apps.com so everybody will be able to find us.

Laurie:  That’s great. It looks like you’re having a good time at the show too.

Marc:  I’m having a great time. I’m meeting lots of great people, having great conversations, and excited to see that there’s a lot of interest for what we’re doing.

Laurie:  Well Marc, thank you so much for talking to me today and sharing this information so people can learn more about BizSlate and connect with you.

Marc:  Thank you.

Intuit: Finding New Footing In the Small Business Cloud

For Intuit, small business is big business. The company has long dominated the very small business, or VSB (1-19 employees) accounting market in the U.S. (Figure 1), and in the last few years, has also been campaigning hard to win global business against incumbents in countries such as Canada, U.K., India and Australia.

Figure 1: U.S. VSB Accounting Solutions Purchased/Upgraded in Last 24 Months

Slide1

Yet Intuit has had a mixed track record in terms of evolving from a traditional package software model to a cloud-based services and platform company. Although Intuit initially launched QuickBooks online in 2004, the vendor seemed conflicted about how best to navigate its own transition to a cloud based business model for several years. However, it started getting serious about the cloud a few years ago, and today QuickBooks Online has grown to serve over 1,150,000 small businesses.

Meanwhile, the company has continued to wrestle with how to grow its business beyond its core QuickBooks franchise. This past summer, Intuit announced plans to divest several businesses, including its original Quicken consumer finance product; QuickBase, a collaborative workspace to build custom apps; and Demandforce, an automated marketing solution for small businesses. In addition, the vendor laid off about 5% of its workforce this past August.

Given the opportunity to attend this year’s QuickBooks Connect conference, I was curious to learn more about Intuit’s transformation strategy, and how it will grow its small business footprint. At the event, Intuit emphasized plans to:

  • Double down on small business financial management-related services that leverage the QuickBooks Connect platform. With plans to take Quicken, QuickBase and Demandforce off its plate in the works, Intuit can free up resources to concentrate on innovation in small business financial management. The vendor announced new solutions to help retailers and e-tailers automatically connect QuickBooks to inventory and sales data across multiple channels. This includes integrating data from e-commerce providers like BigCommerce and Shopify, as well as integration for QuickBooks Point-of-Sale. Intuit also showcased a new QuickBooks financing option, offered in partnership with OnDeck. The QuickBooks FinancingLine of Credit uses small businesses’ QuickBooks accounting data to qualify applicants for lower-rate loans than those available from traditional lenders. Intuit also highlighted its partnership with Fundbox, which provides advanced payments for outstanding invoices in QuickBooks to help improve cash flow.
  • Bet the future on the cloud and big data. While Intuit will not abandon desktop users, it has shifted its resources (and partner ecosystem, see the next bullet) to the cloud. According to Intuit, QuickBooks Online accounted for 60% of new sales in FY15, and the company expects that to jump to 70% in FY16. As it transitions more customers to the cloud and the QuickBooks platform, Intuit gains access to more customer data that will enable it to create–and monetize–a broader array of financial services for small businesses.
  • Ramp up its ecosystem and platform play. Over the past year, Intuit has grown the number of third-party apps that integrate with the QuickBooks platform from just over 300 apps to more than 1,500. At the event, Intuit announced that it has set up a $4 million co-marketing fund to help developers promote apps developed on the QuickBooks platform. Through the program, the vendor will double developer partners’ marketing investments of $10,000 to $20,000. For example, if a partner spends $10,000, Intuit will double the match to $20,000.
  • Boost its focus on the self-employed sector. Last fall, Intuit announced QuickBooks Self-Employed, its somewhat late counter to rival Freshbooks, which launched in 2003, and now claims to have over 5 million users (though Freshbooks doesn’t disclose the number of paid subscribers). Designed to provide the rapidly growing self-employed segment with tools to organize and manage their finances, QuickBooks Self-Employed enables users to connect bank and credit card accounts to import transactions, and categorize them as either business or personal. The solution also automatically assigns them to the proper IRS Schedule C deduction category. According to Intuit, QuickBooks Self-Employed currently has about 25,000 paid subscribers. At QuickBooks Connect, Intuit highlighted a new partnership with Stride Health, which integrates Stride Health’s personalized approach to managing health insurance, healthcare and compliance within QuickBooks Self-Employed.
  • Strengthen its accountant solutions and network. Intuit introduced Trial Balance within QuickBooks Online Accountant at the event. The solution helps accounting professionals save time by pre-mapping most of the accounts from QuickBooks Online Accountant to an Intuit Tax Online form, reducing or eliminating manual data import, export and entry work. It also gives accountants one, centralized location to store the work they perform for clients. Intuit also launched a New ProAdvisor Fathom Partnership, designed for accounting professionals who want to deliver more frequent, engaging advisory and management reporting services. The new partnership provides ProAdvisors with exclusive benefits, including a free Fathom single company license for life, discounts of up to 50% off licenses for their clients and dedicated support for ProAdvisors and their clients. Intuit also hosted a special VIP event for key accountant partners. Intuit used the VIP event to provide partners with deeper insights into Intuit’s plans, and to tap into partner ideas and recommendations to strengthen QuickBooks small business and accountant solutions and programs.
  • Grow globally. Intuit currently provides localized versions of QuickBooks in the UK, India, Canada, Australia and Singapore, with plans to launch in France and Brazil later this year. Intuit’s commitment to global expansion was underscored by a large accountant and developer representation from these countries, especially the UK, Canada, India and Australia.

Perspective

Intuit has traveled a somewhat rocky road to the cloud, but now seems to be finding its footing. It has elevated QuickBooks Online to flagship status; significantly ramped up developer activity on the QuickBooks platform; is gaining awareness and customers in new geographies; and continues to have a large, loyal accountant network.

This doesn’t mean all will be easy climbing from here on in. Intuit needs to play an aggressive catch-up game in the race to win self-employed customers. Furthermore, while Intuit is focusing on helping small businesses better manage their financials, VSBs (businesses with 1-19 employees) seem more concerned with business growth. According to SMB Group’s 2015 SMB Routes to Market Study, VSBs rank growing revenue and attracting new customers as their top two business challenges–ahead of improving cash flow, maintaining profitability and obtaining financing (Figure 2).

Figure 2: Top U.S. VSB Business Challenges

Slide2

Meanwhile, competition for customers in new geographies will be fierce and nuanced with global complexities. And, in all cases, Intuit is competing for limited IT dollars: 62% of VSBs spend just $1,000-$9,999 on IT annually (SMB Group’s 2015 SMB Routes to Market Study).

Figure 3: U.S. VSB Annual Technology Spending

Slide3However, Intuit’s tack to build new, data-driven services for small businesses–such as its new lending service–provides the company with an exciting opportunities to disrupt the status quo and create new revenue streams, such as Intuit is doing with QuickBooks Financing. While other companies may launch similar services, Intuit’s dominant market share in the U.S. provides it with a unique advantage. While its too soon to know how this will actually play out, Intuit’s ability to capitalize on this potential will likely prove to be the biggest factor in spurring the company to the next level of growth.

Note: Intuit hosted me at QuickBooks Connect and paid for my travel expenses. 

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