PipeNetworks have survived ANZ pulling the plug on their finance and have emerged from a share trading halt to announce that Project Runway is pushing ahead. It is great to see that even in tough financial times that profitable and well founded projects can still get through with smart companies banding together. It represents more than just a great opportunity for these companies though, overseas traffic charges are one of the major things keeping a floor under Australian internet prices. In fact it can be argued that cheaper overseas traffic will have more effect on Australian internet prices than the NBN project. Maybe with Project Runway, an NBN without Telstra and a canning of the internet filtering scheme we can actually get somewhere. It’s Christmas time, time to wish for miracles.

As far as I am concerned, having a website without having a CRM/sales system behind it is like having a shopfront with no shop. People can view your products, but they can’t offload their hard earned cash. Why do that to yourself?

Unfortunately it seems that companies need to literally see people banging on the store door (via hits, emails, phone calls etc.) before they will open the store. How many customers have you missed in that time? You’re paying for the store location, so why not fit it out inside?

Salesforce announced at Dreamforce that they are taking this view to another level. Your website should be linked into the core of your company. Every process your company runs should be accessible (and deliver value) to the customer at all times. Zdnet give it good coverage, but I think Smoothspan explains it best. The basic premise is know your customers, and then deliver the best experience you can to them. CRM’s have always tried to get close, but it requires a company to be completely online and committed.

An article by Andrew McAfee triggered my interest today, what will happen to technology in a recession? Or more specifically, what technology actually excels in a recession? Some IT leaders have commented in the NY Times, but I would like to focus more specifically on software technology.

The most obvious answer is that the cheapest software wins. Deploying SAAS and other Web 2.0 models are not just about delivering new functionality; they are about driving down costs through low delivery costs and economies of scale. With employment at near record lows (and salaries at record highs, especially in IT) no-one wants to take on more staff.

I think that the silver lining to a recession is that the weak get weaker and the strong get stronger. A renewed focus on what works and how to efficiently deliver value is a good thing for any company. With SAAS systems now gathering widespread acceptance a recession will, in my opinion, accelerate the growth of these systems. The current financial crisis has also highlighted how interconnected the world is, and SAAS systems delivered from data centres thousands of kilometres away will again gain more acceptance.

Unlike the article I don’t think it is necessarily a case of socially driven applications gaining traction, I also think CRM and ERP systems will see an increase in popularity. Customers are no longer so easily separated from their cash, and every inefficiency in the supply line is being watched like a hawk. Adopting best practice from a new technology package is a great way to address these issues.

I have now been working with CRM systems for 5 years. It is only recently that I have seen the industry  (finally) mature to a stage where it is no longer engaged in a straight up feature war. This has been driven by two things; a maturity of product offerings and a recognition by customers that they should be making decisions based on an analysis of their own requirements, rather than a feature comparison matrix. To this end, here are my top 5 criteria for selecting a CRM system:

Usability - Without this, nothing else matters. If your users will not adopt and use your selection, it’s a waste of time and effort.

Alignment - What do you want to do with your CRM system? If you are looking to manage contacts & contact activity, you’d consider a completely different slate of products than you would if you were looking to customize a product to support your entire business process.

Product delivery - SaaS vs. client/server is a big consideration. Do you need an offline client, or is a plugin enough? If so, how robust does it need to be? This could direct you toward a client/server solution. Do you have an IT department and any in-house expertise? If not, could direct you toward a SaaS product.

Integration needs - While it is easier than ever to integrate SaaS products with other systems, some scenarios definitely call for an on-premise solution. This could be a limitation of your current software packages that you rely on but have no interface into.

Pricing - Do you have capital up-front? Do you want to buy your solution? If not, SaaS products are much easier to get started with. In some cases though, they can end up costing more in the long run. There is also a great price difference in different SaaS products and even within themselves based on functionality.

I am really focusing on user interfaces at the moment, both due to requirements at work and personal interest. It is one of those areas where the computer science ends, and the people science begins. It is very rare to come across a good user interface, in fact UI’s have reached the stage of ridicule in many cases. One of the many defences IT people use is “my software is simply that complicated”. It needs the fields, options, checkboxes etc. otherwise you are losing functionality. I disagree, you just need to understand your customer better. Have you benchmarked and user tested? There are some good podcasts and consultants out there that hammer home the importance of user testing (and I don’t mean using UAT to check for bugs!).

Getting to my point, I was recently looking at changing banks. One of my biggest concerns (after interest rates) was the user interface and capabilities of the bank’s online banking system. These days banks provide a lot of functionality online, so it is very important to me that it I get a functional yet no-nonsense interface. Thankfully most banks provide some kind of test drive, but really this doesn’t provide a detailed enough coverage.

Fortunately PC Authority magazine has done a user interface and basic functionality/security comparison for all the major Australian banks. I have included a copy of their comparison matrix to the left. The winner was the NAB, followed by the Bank of Queensland (who prove a top Internet offering is more about a quality rather than quantity spend). Some more informal user feedback would suggest that users actually care more about the interface than the security of their online banking. Phishing and viruses regularly make the quality of website security a moot point.

These days the internet banking site is often the sole point of interaction a customer will have for months at a time. Banks should be understanding this and really giving their user interfaces a higher priority. What is the cost comparison between customer care staff training and a decent usability review? I would argue that the usability review delivers a much better ROI.

SAAS is a cheap delivery model right? Well it depends if you are a technical or a business oriented person. There was a very interesting article on Business Spectator today regarding the costs of deploying SAAS software.

One of the most interesting statistics for me was that Salesforce.com (one of the few genuinely profitable SAAS success stories) spends half its revenue on sales and marketing. When I think about it it makes sense, but I guess coming from a technology background it isn’t something that I would have initially thought of. The scary thought that comes after this is what percentage of revenue is taken up once you include support as well? The even scarier one is are you really achieving scalability if these represent the vast majority your costs?

As the article points out, there are three economic fundamentals:

1. How much it costs to attract new customers (known as subscriber acquisition costs)
2. How much money can be extracted from those customers in regular subscriptions (known as “average revenue per user”, or ARPU)
3. How often subscribers drop out and have to be replaced (the churn rate)

For point 1 I think SAAS companies still rely on their old mantra that the SAAS model generally is still struggling for widespread momentum. I think this still holds true, but perhaps these days more because of the costs of migration and training rather than lack of market acceptance or knowledge. The sales and marketing costs are therefore quite high as they are pulling lagging and inflexible customers into what is now a competitive market place with low barriers of entry.

These low barriers of entry tie into the last two points. Companies can theoretically treat SAAS software like they would their telephone company and switch at any stage. This means that new entrants can come in and undercut the established players, keeping subscription revenues down across the board.

The interesting part for me is that online classifieds is somewhat like the SAAS model. It relies on subscriptions and has a low barrier to entry. Why are they so profitable then? I have a few ideas:

• A new twist on the established classifieds model, rather than a whole new model
• Industry maturity leading to a consolidation of players (and profits)
• The difficulties in targeting consumers online

To be honest I really feel like I am missing something here. Can anyone help?

New Digital Media have today announced a partnership between Ebay and CareerOne. Well I use the word ‘partnership’ loosely, because essentially it is a cross-linking agreement. There is a new sub-domain of CareerOne with an Ebay header, and on the flip side Ebay have added a Jobs tab and CareerOne banners smattered through their website.

I understood the MySpace cross-linking. Like their parents, News is trying to get the lazy kids of today to roll their eyeballs over some job ads. But in this case I think the word ‘integration’ is used a bit freely in both partnerships, tacking the header of one site across the body of another is not integration. I know people are going to think I am sponsored, but LinkedIn and SimplyHired did a much better job of integrating two different partners online. Maybe that is unfair because there were more common interests? I think that is the point. A recruiter wouldn’t partner with an auction house in real life, so what makes anyone think it would work online?

There is however a point that I am much more interested in. Maybe Ebay partnered with the wrong News Digital child. Maybe real estate has more in common? Ebay does after all have a Real Estate category, albeit languishing away the Home category. Ebay don’t have much to lose either; the Home - Kitchen category has 9000+ listings, while the Home - Real Estate category has 167. In fact RealEstate.com.au already has general advertising live on Ebay, they just need to take it that little step further.

Let me say this from the start, I think Open Source software is the way of the future. Let me also say that I am not a lawyer. On that point I find it incredibly ironic that the urban definition of the IANAL acronym disclaimer directly references the GPL. This is even taken one step further with another more ridiculous acronym created during a GPL discussion, which conclusively proves that giving acronym loving nerds a sniff of legal jargon is a recipe for disaster.

It also helps explain my point, the GPL isn’t the Open Source saviour some people think it is. I hate to list points, because the people feel they need to find a way to argue against each one rather than the logic as a whole, but I am going to do it anyway:

1. Money = Evil - Any efforts to profit from Open Source development work is treated with scorn. Comments such as “To release a non-free program is always ethically tainted” frustrate me. Equally promoting an Open Source product does not give you licence to trash commercial software. They are your competitors, if you think you are on their level then treat them with respect.
2. Discourages Integration - The GPL is brilliant for making utilities. Compilers, databases and graphics programs are all essentially utilities that you interface with in a certain way, but never extend or deeply customise for your own purposes. Deep integration is one of the biggest competitive advantages that Open Source has over commercial software packages, so why make it hard? For example SugarCRM allows web service integration; but even modules, templates and dashlets that integrate within the existing API’s are considered to be covered under the GPL. Is this really a deep extension of the core product?
3. Patent Protection - Patents are either loved or hated, usually depending on whether your name is on one or not. Regardless, the fact is that they are not going away. Open Source products are just as vulnerable to patent infringements and litigation as commercial software is. As the lines between Open Source and commercial work continue to blur, it is emerging that corporate indemnification is almost becoming a quality assurance stamp. A community cannot offer indemnification, so they really need to focus on their competitive advantages. Stay away from heavy duty licences that just muddy the waters for smaller businesses and institutions, don’t forget a hatred of licences seeded your whole industry!

As with anything legal there is no ironclad solution. As far as I can see the solution is to make it as easy as possible for people to contribute maximum value with minimum overheads and receive value for whatever purpose they desire. Rely on the fact that producing a commercial product that is 99% Open Source is not a safe, competitor-free business model!

By now there are so many recruiters on LinkedIn that it is pretty clear it works as a recruitment tool. But what about as a retention tool?

The first clue I had about this was that a when a staff member was preparing to leave a company they tend to start pumping out the recommendations (and more selfishly, requests for recommendations). The best way to get great recommendations is to first write them for others, and I think the key points are best covered here. The same rules as resumes apply, don’t waffle and put in hard facts where possible. If an HR Manager starts seeing their employees engage in this mass-recommendation tactic then the warning lights should be on, just as they would be on if you saw them tidying up their CV at work.

On a similar note you might notice that the employees are becoming more connected to a competitive organisation, this could be as blatant as linking to a competitor’s recruitment manager or an industry recruiter. Again the real world parallel is seeing them having coffee downstairs with one of these people.

The LinkedIn company pages are also a great retention tool. For example looking at the realestate.com.au company profile gives the realestate.com.au HR manager a guide as to where their people are coming from and going to. The popular profiles might also suggest who is networking hard (or being recruited aggressively) within your company. It would help to keep this page up to date, it might be something that potential hires would find useful. I might have a crack at updating it now, I see LinkedIn have added the ability to upload company logos and company blog RSS feeds, cool!

It is all happening in the world of Australian Online RealEstate tonight! The Realestate.com.au board have announced the immediate departure of their long serving (since 2001) CEO, Simon Baker. This was a huge surprise, although the fact that he sent out about 50 LinkedIn recommendation requests to people (myself included) late Friday night should have been a bit of a warning. Anyway at least Domain isn’t having the last laugh, their website is currently completely broken, simply stating that “an unexpected error has occurred”. I would say their support team are going to wake up to hundreds of thousands of error emails and a big headache tomorrow.