*(note this post is my personal opinion, not necessarily those of VoiceSage, etc.)

CEBP – How To Put a Number on  A Market Size

An interesting thing happened a few weeks ago. I followed up on a comment made by Melanie Turek from Frost and Sullivan on Twitter, and we exchanged email addresses off line. I was asking her what value are analysts putting on the CEBP market (I needed an external benchmark for a business plan). The stimulating to and fro ended up in a blog post,  which was re-tweeted by some very interesting people. The upshot is:

- Some people don’t think CEBP is a market of its own, but a collection of other assets and capabilities (presence, IVR, SMS, Conferencing, ect)

- Some people see CEBP as a subset of Unified Communications (UC), which still makes it a big market;

- Some people agreed with regards CEBP being disruptive to professional services and Systems Integrator plays (i.e. if you are charging a stack of money for integration, maintenance, and upgrade of CEBP related initiatives, you are dealing with the wrong people).

In the same week Pat Murphy, formerly of Jaduka and Alan Quale, Respected US based Telecoms analyst (and eComm presenter), released a “What is CEBP” report. This report put the CEBP market at circa $3-$4bn by 2012. Outbound messaging, Hosted Outbound Dialling Services; Alerting; etc. These are are all existing “product-meta-tags” that size the early CEBP market at circa $4bn. This gives the early entrants something significant to aim at (note, if you think this is a big number SMS Alerting notifications for the UK enterprise market alone are about $1bn). According to Pat and Alan the early technology pieces are now in place and it’s time for CEBP to “Cross the Chasm”. Patrick tells us the report has been downloaded nearly 3,000 times, indicating a strong interest in the subject. This certainly reflects the welcome we are seeing for the VoiceSage offer in the UK marketplace and beyond.

This week sees a new Opus Research report on “Recombinant Telephony“, (authored by Dan Miller of Ovum, and Thomas Howe, of  Light and Electric) includes all the different types of communications  modes that can be re-mixed, re-presented, and re-packaged for new and interesting use-cases. The report says that recombinant telephony will be a $50bn market in 5 years time. The big slices of this are likely to be Unified Communications (UC), Cloud based infrastructure investments; and Services businesses (System Integrators, BPO’s, and related) with a relatively stagnant “Client Install” (traditional on-premises?) segment as well. The report does not have a specific take on CEBP within that recombinant marketplace. Other reports and conversations might lead one to believe that Unified Communications players believe that CEBP will be a significant driver of their $9bn opportunity. The Telco2 Report “Voice and Messaging 2.0: Innovators Directory 2009“, has some useful definitions and the term “Integrated CEBP Specialist” for VoiceSage which is an interesting perspective, in that like the conversation with Melanie Turek, the “integration is already in the product”.

A recent Telco2 email update from their most recent industry brainstorm in Nov 2009 indicated that over 60% of those in the room believed that the major opportunity for Telco’s moving forward was in enabling business processes. We are seeing similar announcements from others in the information-communications convergence space. CEBP is moving front and centre.

My initial instinct was that if UC isn’t radically redesigned, it wasn’t going to hit that future revenue mark.  Then Cisco came out with a series of announcements : Pulse, and broadening the invite cycle (see Dan Miller’s excellent take on it here ), and the central role of “Social Software” approaches in the new “Open Innovation- Collaboration Nets” paradigm. Yes I used the work paradigm. This, in the same week in which Microsoft announced that their Azure Cloud will allow you to find and download applications in an “iTunes” like manner that is radically simple, is also a huge shift. Make no mistake about it, Microsoft will have Outlook 10 in the cloud, and will have very cool ways to integrate it with their Unified Communications offer. IBM release Smart Analytics Cloud so you can build your own private information analytics cloud. I also happened to be at a presentation at BarCamp Cork on vBlock by Damien Sheridan of Nexus Technologies , and I was struck with how vBlock made massive scaling a doddle for IT managers (more here). These are seismic shifts in the infocoms space.

What will be interesting to see is if the “release of these assets” to the cloud enables people to deliver the benefits they were seeking from “recombinant telephony” and communications services. This may become a matter of standards and integration approaches (i.e. can I integrate “this” with “that” seamlessly, and without dropping context).

So, I think CEBP will be cloud-SaaS based, with the Enterprise end user (be that the individual user, or the IT/Comm Dept), integrating various information and communication services “in that cloud”. Individual components such as “presence” and “conference” will trend downwards in terms of cost. But information, and knowing what to do with it, will trend upwards. And by “freeing up the information flow” many, many new areas will open up for CEBP. The more “loosly coupled – tightly integrated” you can be, the better I think.

Some Issues In Relation to Market Segmentation in CEBP

When you are proposing something the customer or client has no experience of buying before they have no way to evaluate your offer. In consumer settings people with no experience around a decision tend to make poor judgements around risks and exposures involved in that purchase. Mostly they over estimate the risks, and underestimate the benefits or visa versa. In the enterprise setting companies might just straight out “reject” a concept that is “not on the agenda” before formally investigating the offer at all . This is why some companies seem impermeable to innovation. By selling to an existing understood need, where there is a solution in place, you give the customer something to compare against. The competing solution gives you a frame. New products and services need a sponsor, with a budget, a frame, and with the drive to make something happen.

Consumer product companies understand this very well. When the original inventors of Instant Coffee launched their product they aimed their product against Ground Coffee (which you didn’t always have the time to make). It was a convenience product for the busy housewife (as she was the one who shopped, bought, and made the coffee). More recently Nespresso treats coffee production as an integrated system (i.e. you buy the entire easy to use system for producing a high quality coffee, every time, but are locked into using their coffee pods – for quality of coffee reasons. You also join a “club” or “tribe” of coffee lovers). People didn’t mind being locked in to using the pods because it guaranteed quality, ease of use, and “good coffee every time” (consistency). So, those that are experts that will probably still want freshly roasted beans that they grind down at home to make their own gourmet blend; there are the Nespresso “Masstige” segment, a near mass market segment who can get a near gourmet coffee quickly; you can get filter coffee which is pretty good and pretty fast (though not as good as Nespresso or gourmet), and of course Instant, which lacks depth but is often good enough, and is very fast. Now that you have suffered that Marketing Positioning 101 paragraph, what was it all about?

When I hear debates about Communications and Information technology in general I find that the same kind of thinking is behind the most successful companies. You can be a gourmet and grind your own API’s; you can get filtered services through mashup’s; you can get instant solutions through online pre-packaged services. You can also get Nespresso CEBP, iTunes for Enterprise, and Integrated Systems that enable you to do a very good job, at very high quality. And there is a place for all of the above. But no one seems to be putting out any taxonomy as to which approach might suit which customer, and at which stage of the industry evolution. Or indeed which kind of solutions might be best for different parts of the organisation, or at different stages of an organisations development. My take away, is I don’t think the industry has a good “positioning” on the various CEBP segments as of yet.

Why Should A Service Provider Pay Attention to Market Positioning?

The evolution of any market is something you have to think about up front. In straight head to head technical testing and evaluation, VoiceSage has beaten competitors head-on in ways that the customer can easily understand and evaluate (number of right person contacts, successful transfer rates, etc.) . We’re always better in ways the customer can measure in actual numbers. The challenge is to not become “boxed in” to some early category definitions (Oh those guys only do X, Y, Z) because their is more value to be delivered in a broader implementation.

To get a truly great disruptive solution through the gates you need to understand that your early customers aren’t always your future core customers, or that their needs, wants, and behaviours will be the same as later customers or later customers within the same company. Yet CEBP has so many uses across the organisation that the true value of it lies in applying it in as many places and processes as you can find. Again to quote an Industry analyst opinion “The opportunity for CEBP may lie between the existing product definitions”.  What I really like about the Cisco Pulse product is that it “automatically generates context” and understanding these contexts is one of the first stages to understanding organisation flow.

CEBP as A Matching Service

Pity there isn’t a set of “customer-needs-meta-tags”. Or is there? Well what about “Metrics”? Every role in the company usually has metrics attached to them (some soft, some hard). What if you were able to say that your Product-Meta-Tag was aimed at this Customer-Need-Meta-Tag? The VoiceSage Logistics product is aimed at the near elimination of the customer metric “Customer No Shows” (i.e. when a van pulls up to the door the customer is not present, even when a confirmation is in place). The Internal Resources that need to be aligned are the People (driver, call centre agent, customer, person on premises to receive delivery); the Things (object to be delivered, the truck, the drivers mobile device, the tools, the forms), the Process (The confirmation cycle, the co-ordination, the communication loops etc.). In a manner of speaking, the internal resource and communications pattern needs to be “balanced” with the “external needs and context pattern”. A pretty round about way of saying “we need a better way of matching our customer needs with our internal resources” or “our availability and resource flows”. Is this a problem worth solving? Datamonitor/Ovum thinks it is costing about $340bn a year.

Ah so far, this all sounds very like standard sales practice? Define your target, define the customer need, match the product deliverable to the customers measured need. Yes. Thank you. We’re on the same page.

So back to Melanie and the re-Tweets. Nobody is waking up in the morning and saying “What I need is a CEBP solution to address this problem”. Likewise they aren’t saying “What I need is Google wave”. What they do say, is holy cow, I have 300 unread emails, people are texting me to read that document before the meeting, oh the pin number for the conference call? That was in the original email! They are saying is “we can’t just keep adding call centre agents as the volume of our customer interactions scales”.

The current definitions of “the Market” are how incumbents have defined it. Good for them, they’ve educated a customer base about how to buy a product. And if they have “bad value” on the table you should take it away. Breakthrough products need to redefine markets. They need to take away the ‘bad value” and not just give “good value”, but ideally should create new value.

So, Is Social Computing Creating New Value?

One of the core pieces in the new Cisco announcement is that business is social (you may have read that as collaboration, but you would have misread it IMHO). Pulse is about generating and sharing personal context within the business, a bit like Twitter;  presence is gTalk; Enterprise Collaboration Platform is the “Facebook” of the enterprise; Directories are the LinkedIn,  I was thinking about Structural Equivalence and what it would take to build a great collaboration platform using web based, readily available solutions. The missing piece of the flywheel is the data release and capture of enterprise information. For the enterprise user/ sponsor, the security of data, and traceability of access, are key factors. That is why Salesforce.com may actually get some traction for its Social Enterprise play. It has security down to the field from its Force platform. Not to be underestimated in its importance to the Enterprise buyer. So I guess where I am zeroing in on is “Do people believe that enterprise 2.0/ collaboration/ social computing will provide value as an emergent property, due to the self organising, mutable, plastic nature of its capability?”. My guess is no. My guess is that the enterprise will become a demand-pull chain, just like Dell, but with the employee-collaborator accessing tools, resources, and people as they need, to get their job done. But they will do this within a defined colloboration network of teams, groups, and communities enabled by an underlying infrastructure of resources. The concept of Process will coalesce with the concept of flow. Metrics will evolve from hard wired “number of calls/hr” to metrics that underpin behaviour and emotion.  You can’t drive customer loyalty: you can drive the activities and events that drive customer loyalty.

We are only at the very cusp of Social Software development.

And Now, back to your normal programming.