43% – Email/Spreadsheets

22% – Online data Service (Hoover’s, InsideView, Jigsaw etc.)

18% – Social Network (Facebook, LinkedIn)

12% – Twitter

4% – Other

OK, this tells me a few things. First, and not surprisingly, Outlook and Excel still rule the office world. This can mean one of two things. On one hand, many CRM tools are built to work alongside these office staples. But, if email and spreadsheets are where most people spend their time, there is a chance they may not be getting the most out of their CRM system. I see this as an adoption issue, one that can be cured internally as well as through easier to use technology (something I know we at SugarCRM are always striving towards).

This can also mean that there is simply a ton of potential business still out there. Look, the fact that Salesforce.com was able to drum up over a billion dollars in annual business, and it only sells one product in one deployment mode – means there is a green field still out there. Business, especially the smallest ones, need CRM and are looking for simple, low cost and easy to use tools.

Other insights from the poll tell me that more and more, sales organizations are seeing the value of third party data sources like InsideView. As the social media hype bubble only gets bigger, it is great that companies do realize there are companies encapsulating this explosion of data into useful, compact tools for sales reps and other roles to leverage in their daily business activities. Also, these excellent data aggregators can help append the data in a CRM system (and clean it up) to drive more powerful reporting, segmenting and decision-making initiatives.

Finally, Twitter is not a fad. Or, I should say the medium that Twitter has created (short bursts of communication) is being considered valuable by businesses. For many, this is a “no duh” statement. But there are still millions of small businesses yet to invade the Twitterverse.  These last two points, social data aggregation and social CRM, will be the most interesting to watch in 2010.

I will be taking a short break from Outsiders, but before I go I wanted to throw my two cents into the already overcrowded “predictions” market that observers and analysts so love to do in this industry. Truth be told, I always hated doing these as an analyst. They seemed so canned and vague. In retrospect I think I was too far from the buying market to understand the difference between high-level tech trends and how the IT decision makers would behave in the coming 12 months.

So, let’s see if nearly three years on the front lines has changed anything. I am limiting myself to four major items. I figure this gives me either enough smart predictions to look like a genius, or just enough rope to hang myself this time next year.

Here we go…

SFA Will Take on a Whole New Meaning, and Redefine CRM Once Again.

OK, this sounds very vague, I know. But bear with me; I swear this might make sense. What I mean is that the convergence of the consumer web with business apps, the ever-expanding web-savvy sales workforce, and the growing trend towards simple data integration into apps (social media, sites like Jigsaw and tools like InsideView, etc.) is redefining SFA.

We have moved on from the old model of SFA as a container of static information. The original beauty of SFA was that managers and sales people could share some parts of what were once proprietary (at the user level) contact lists. Soon, activity management, workflow etc. was slapped on top. But now, new ideas about data aggregation and usage, as well as merging online and offline sales activities – has forced the hand of CRM providers.

What will result: far more agile applications that are easier to use and own by sales reps; leveraging all sorts of unstructured data and networks – but yet managed inside the confines of what will look somewhat like traditional CRM. This will allow for better data stewardship and insure compliance inside organizations.

In a larger sense – I see this breaking CRM fully away from the suite approach that was in vogue for a while. As “enterprise CRM” and “SMB CRM” become nonsense words, and tools are built around actual business needs and not how much money the company makes or how many users it has in a system (ridiculous, arbitrary holdovers from the last generation of software development) , we will see more “sales” focused tools gaining market share, as well as “marketing” and “support” tools. Social CRM will play a big part in driving a lot of this, which brings me to my next point…

Social CRM is (Pretty Much) Ready for Prime Time.

What 2010 prediction piece would be complete without something about “social” anything? This has been beaten to death, but I find I have a more middle of the road feeling about social in 2010. Others seem to say “it’s here, man, deal with it or eat dust” or the more impractical “it’s just a fad at this point” (which reminds me of the SaaS naysayers in 2003).

I think in regards to social CRM that 2010 will be an important year – but that we will not see the “killer” social CRM app emerge until later in the year.  Salesforce did a paste up job with Chatter.  And I think the more data-focused applications like InsideView are still figuring out social. They have the unstructured media stuff I mentioned above down pat, and are growing their businesses, but there’s still a little left to do in terms of nailing social.  Another company to watch is Gist, they are doing some cool stuff.

When it comes to traditional CRM players making the move to social, I don’t think the older enterprise players have agile enough architectures to handle the metamorphosis. This is beyond simply slapping a Twitter window into the UI.  I think a simple, focused UI with easy to leverage social media connectors will be the winner here. The tool has to have the ultimate user-configurability, as well as a simple method for importing and leveraging unstructured and social data for traditional CRM workflows and reporting. It will be interesting to see who gets there first.

Open Source is Still Important in 2010, and Still Not a Business Model.

Some have argued that open source is becoming a moot point in terms of CRM. I agree and disagree. Paul Greenberg says that SugarCRM has dominated the open source side of CRM so much that it has left the model off the table for anyone else.

But what I think Paul does not do a great job of explaining is that in order for a CRM product to be successful these days (and a CRM company to do so) there has to be elements of open source in the mix. The software from all providers is looking more and more open (a good thing). And the move towards social and all of the agile and open development needed on top of those platforms will undoubtedly come from open source. So, open source is alive and well in the CRM and apps sector in general.

However, I do agree that just being an open source company will lead to the kind of meteoric growth vendors like SugarCRM experienced. That ship has sailed, sorry guys. What will win the CRM game – and frankly it is sad that this hasn’t always been the case – is smart, agile product supported by a company that understands and engages well with its customer base.

Older SaaS Players Will Begin to See Pressure from True Cloud Applications

Look, I am not claiming Salesforce.com will be seeing huge drops in revenue. However, I do predict that some of the haze will clear around cloud computing, and companies will wise up to the marketing BS that older SaaS guys are spouting.

As more and more true cloud platforms come to the fore, from Microsoft with Azure and of course Amazon and even VM Ware with V Cloud Express, end-user organizations are going to have much more choice in how they deploy applications. Before, it was “SaaS or in your own datacenter.” This is so not the case anymore. Companies can gain the kind of control they need to create differentiated applications, without having to run infrastructure. And companies like webappVM are making this easier than ever to do. What’s more, companies can use these tools to port their apps to and from any environment. Try doing that with a traditional SaaS product.

…Ok, those are just a few of the things I think we’ll see happen in and around the CRM world in 2010. I will of course check back a year from now and see how I did. But feel free to comment now and tell me how insane I am for thinking up these predictions.

I wish all the Outsiders readers, and the greater CRM and Sugar universe, a happy and healthy holiday season, and a prosperous 2010!

Below is my knee-jerk response…I think most of it makes sense in defining true cloud computing vs. multi-tenant SaaS providers stealing the term for their own devices…

…The true essence of cloud is about scalability, and utilizing resources as needed. You can argue that a per-user licensed concept like CRM is anathema to what the cloud promises. What I mean is – the cloud is a delivery platform for either computing resources or applications. The apps themselves are NOT clouds or cloud computing. There is nothing you can do with Salesforce.com (or any other SaaS CRM) that you cannot do in any other environment – actually you have less power in a monolithic multi-tenant cloud environment because you are fixed to the vendor’s resources, SLA and terms of service. The cloud is a limiter, not an enabler here.

Now, if you take a product built for the open cloud such as SugarCRM – now you have choice. Choice in deployment options (public cloud, private cloud, vendor-hosted, partner-hosted etc.) – and you have various access levels therein. And, when needs change, you can move from one cloud environment to another. That limits risk, and opens up options for greater (or less) access, control, costs, as needed. None of the old multi-tenant SaaS products can do this – as they are tethered to that singular, limited environment. It is not a “bad” thing necessarily – but it is simply a limitation and NOT indicative of the openness and portability I associate in my definition of true cloud computing.

How does Microsoft fit in? They are creating an environment that is well suited for application deployment, development, or both. Instead of taking a Salesforce.com lock-in approach and saying “only Microsoft apps are going on Azure!” they realize the value of true, open clouds and are saying “come one, come all!” because it is the flexible, scalable environment (not the lock-in app strategy) that will enable the cloud concept to thrive among businesses of all sizes.

To put it more shortly: Clouds are operating environments that enable users to either scale compute power or deploy applications without having any infrastructure in-house.

Multi-tenant SaaS is NOT cloud computing, it is just a delivery model for static, traditional applications.

Why? Well, for a number of reasons. For one, Microsoft is looking at the cloud as less of a compute power play as many of the early cloud players saw it, and more of a distributed business stack, available at any time and with scale. What I mean is, Microsoft is probably the most application focused cloud player out there. (Note: I don’t believe anything Salesforce.com does is really cloud computing.)

Microsoft owns, operates and understands a full service stack. This is a big benefit when porting to a cloud environment. While it may seem like a limitation, it is actually in my opinion a strong point. Microsoft is able to fully control the OS, database and web servers etc. as it creates a cloud environment. Sure, there is a proprietary aspect – but most of the apps running on top of Azure will not touch anything other than the database in any profound manner. Other cloud providers are working with a few distributions of Linux and other open source back end components – which is great for economy and scale – but these providers do not “own” the system entirely. It’s just a “nice to have” Microsoft has in its favor.

Another big factor is that Microsoft has been playing more of an interoperability game with Azure than it ever has – as far as I’ve seen. I mean, they are working closely with us, a PHP-based application, to make sure Azure can support apps written in as many languages as possible. This is a major development (in a good way) from even a couple years ago when IIS was not the ideal web server for running PHP apps (to put it lightly).

All told, when it comes to applications in the cloud, it will be the large scale providers – not the small, limited vendor-hosted SaaS providers that will realize the potential of running your business in the cloud. Vendor-hosted SaaS is great for some companies and a lot of different business needs, but for truly cloud-based operations – these guys fall short.  It is great to see companies like Microsoft supporting the notion of the Open Cloud.

For those of you not cloud savvy, a bit on Azure:

Windows Azure is an Internet-scale cloud services platform that is hosted in Microsoft data centers. It provides an operating system and a set of developer services that can be used separately or together. Windows Azure offers a scalable infrastructure with a pay-as-you-go pricing model that enables customers to pay for the service as they consume it, rather than buying and managing on-premises technology.

So, basically you get everything you need to run a set of apps – operating system on up – in a pay as you go model. It is the true vision of cloud or utility computing.

What does this mean for Sugar users and developers? Well, it extends the promise of the true cloud. Now, developers can run and test multiple instances (spun up in seconds) without having to download, install, run, etc. anything on site.

Users get a seamless stack of solid infrastructure delivered on-demand, one that will work with all the existing Microsoft stuff they already bought. Here we are seeing Microsoft able to scale in ways only Linux and other open source infrastructures could in the past.  And the best part – you don’t have to perform maintenance a single part of this stack.

Speaking of scale – it is funny that Microsoft with Azure has shown the ability to supersede SaaS in a way. Yeah, Microsoft has its share of “Live” or SaaS applications – but it is really evolving ahead of the curve here. Look, ten years ago SaaS apps were cool and the “next big thing” only because open source or cloud scalability hadn’t been invented. Now, we are beyond SaaS. The Open Cloud means that we are not stuck to a single monolithic, fixed deployment choice: one controlled by a single vendor.

Instead – we can choose a variety of applications from a number of vendors, and run them in any number of locations in the cloud. Or, we can install them in our own private clouds leveraging the web as a platform for both delivery and development.

Yeah, it is indeed blue skies for companies leveraging the Open Cloud…

But the move is a little more than a “Microsoft alternative” situation. While Open-Xchange does of course handle a lot of the tasks as Microsoft’s tool, the Sugar/Open Xchange connection goes a little deeper, and does some really cool stuff.

The collaboration between the two products allows users to aggregate all of their contacts across various social networks (Facebook, LinkedIn, Xing, etc.) and store them in Open-Xchange as mail or phone contacts. And it enables these relationships to be quickly imported into Sugar.

What this means is that users of Sugar and Open-Xchange can now begin the valuable task of not only connecting to the myriad company connections not in their CRM database but rather in the vast world of social networks, but these users can also segment these lists. (Oh, and did I mention all of this data can be accessed anywhere, in the cloud, by any device?)

One of the issues of social media is that it is jumbled and inclusive. The unstructured nature of it all makes the typically neat and ordered tasks of online and direct marketing difficult. But with segmentation tools – and the ability to easily import all these contacts into a marketing automation system like Sugar – companies can now more effectively reach out to these vast contact lists.

SugarCRM and Open-Xchange are starting to bring real business value to the realm of social media. And this is a trend that will only continue.

But on site software is still a popular option, and operating environments do come in to play when it comes time to make a decision.

I have heard a lot of Mac users over the years complain that a lot of popular CRM applications are not well configured to run in Mac OS environments. Again, the SaaS angle has helped – but for those on site deployments, pickings are somewhat slim.

Luckily for Mac-using CRM lovers – it is now easier than ever to get your Sugar deployment screaming on a Mac. Thanks to BitNami – Mac users can now quickly download a Mac-OS ready Sugar stack.

SugarCRM has worked hard to make sure it plays nice with any operating system – Mac, Windows and of course Linux – and here is just more proof, and more choices when it comes to getting up and running in any environment.

Microsoft has been making it easier and easier for PHP and other web developers to work in their platform configuration. Now, developers can actually access and develop the Sugar Community Edition natively on a Windows environment.

I see the future vision being this: Microsoft (as well as a lot of other providers) hosting large platforms that allow developers not to only access apps to download, or act as hosting providers – but acting as cloud-based full service environments so developers can easily make deep customizations and extensions, and either manage, distribute and even monetize these without making a single dollar investment in hardware or storage on their own sites.

Stay tuned for some very exciting announcements from SugarCRM around this concept. The Open Cloud is all about “anytime, anywhere” when it comes to access, deployment, development, etc. of applications…things are just starting to heat up.

There’s a strong difference between a SaaS vendor providing customization capabilities and functionality extensions and another vendor that provides honest-to-God access to the underlining architecture to allow for true deep-dive alterations. The first allows for what I like to call “topographical customizations,” the latter the ability to get down and dirty, so to speak, and truly alter the functionality at its foundation.

And this isn’t simply a sales pitch for open source. I’ve come across a number of proprietary vendors that offer capabilities along these lines. I give Microsoft a lot of credit with today’s unveiling of Azure. While it is something of a “walled” approach to cloud development, in the sense that developers can only utilize Microsoft code and Microsoft environments, Microsoft environments are much more inclusive than many of the closed-source SaaS products on the market today.

With Azure, developers can build application that run at the OS level and not simply extensions from the core system. In addition, the ecosystem surrounding Azure is much larger and all inclusive than say Salesforce.com’s.

Ideally I’d like to see more open sourced-based cloud computing environments and development tools, but in the meantime, standards-based environments such as these are a step in the right direction and should offer customers improved portability and flexibility for years to come.

Savio’s post is about the experience factor of the Linux desktop OS: people tend to pay the extra $50 for a Windows Netbook he argues because they simply know what to expect from Windows.

But what about in nascent areas where there is no commonly perceived notion of what “good” or “bad” customer experiences are? Savio makes a good point with the Kindle comment – e-readers are new, so its really up to the best marketing and design teams to offer up an experience that becomes the touch stone for a “good” product experience.

Look at Apple – it killed two birds by essentially changing the MP3 player game and the user definition of a strong experience by debuting the iPod and iTunes together. Users got a superior device, but also a network of songs, shows, and a like-minded community; in short, a total immersion experience.

How can we take these very gadget-centric concepts into the realm of B2B selling?

I’m not 100% sure. But I do think that for the most part, we are really only at the beginning of seeing strong multi-channel, interactive sales approaches in B2B. I think when e-commerce first showed up – people thought: “Ok this will be my unassisted, standalone web store that hopefully will increase top line revenue somehow.”

Now, B2B sales organizations are starting to understand that e-commerce and traditional sales-assisted deals must be merged. Multi-channel, multi-touch point sales cycles are becoming the norm.

So, if you are in an industry that is not yet fully converted to hybrid online and offline sales processes, with smart and nimble sales teams that create a superior buying experience – then I would say you have a great opportunity before you. By mixing a little technology with a lot of customer-centric thought and strong sales efforts, you can monopolize the customer experience mindshare in your respective industry.