RealMarket - From the Top Executive Interview

	From the Top
From the Top *- Executive to Executive -* Bo Manning, President and CEO of Pivotal shares his candid views about how CRM for the mid-enterprise is completely different than CRM for the large enterprise. Learn why Mr. Manning believes CRM success will sustain the industry for 20 years and beyond in this exclusive “From the Top” interview. Bo Manning, President and CEO, Pivotal RealMarket: You talk with CEOs from leading companies. What do they see as the number one issue or opportunity facing CRM today? Manning: The number one opportunity is to get very clear about your strategies regarding how you want to treat your customers and prospects. More specifically, determining the business case behind how one treats customers is paramount. Nothing else matters. This may sound easy. It is not. Pretend you could treat your customers any way you wanted without the restrictions of technology or existing business processes. Get crystal clear about how you want to treat your customers. The question is the same for every company but the answers vary significantly from company to company. RealMarket: How does customer treatment relate to a company’s business case? Manning: When it comes to CRM, only three things matter. They are increases in revenue, increases in margin and increases in loyalty. Everything else is just a story and doesn’t hold value as it relates to the formulation of the business case I just mentioned. RealMarket: Have you been able to identify winning strategies? Yes, there are two that I would like mention. First, design the technology implementation in an iterative way. No one can know everything they need to know up front thus no one can design it all up front. You have to take a waterfall mentality and complete your best first shot quickly and use what you learn as the starting point for the next phase of implementation. Second, is to institutionalize the way a company measures the performance of the new technology and processes. If you don’t, you will fail and you deserve to fail. RealMarket: Can you talk about a company that has been able to leverage that strategy? Manning: One that is very current is Premera - they are a large Blue Cross plan. They decided they needed to change the way they treat their customers. They got clear up front on what they needed to do. They are early in the implementation but they have the measurements in place. Another one is KLA Tencor - they serve chip manufacturers. They got very clear about the vision. First they went into a prototype to get more clarity. Second, the pilot phase allowed them to get even more clarity. They are now starting their company-wide rollout. There is a lot of talk that CRM doesn’t work. It works if it is done right. RealMarket: In a crowded market, how does Pivotal differentiate itself? Manning: In a pretty straightforward way, we are 100% focused on the mid-enterprise market. Specifically that includes companies, or divisions of large organizations with between $100M to $3B in annual revenue. We are not trying to serve small business with shrink wrap software. We are not trying to serve giant corporations by selling humongous software. The mid-enterprise market is different and we are focused on addressing the unique needs of companies in this market. That includes an architecture designed for mid-enterprise companies. First and foremost, companies require a product that is easy to customize, integrate and deploy. They don’t have the time or money to implement complex, humongous software. Ironically, companies in the mid-market are more demanding. They are big enough to demand a complete CRM suite that is easy to deploy. But they are not so big that they can throw the classic $300 an hour low-grade implementation personnel at the issue. We implement software with expert based front-end services of deeply skilled experts from our software factories. RealMarket: How about the business requirements of the mid-enterprise. Manning: Good point. Mid-sized companies want terms like try before you buy, fixed priced contracts and a respectful business style. RealMarket: Tell us about your relationship with Microsoft and how .NET plays in Pivotal’s future. Manning: .NET is a big-big part of our future. You know, luck is a good thing. We have been on the Microsoft technology platform way before .NET. There are a lot of software companies that spent a lot of money to migrate away from Microsoft. Now we see the Sun and Java bigots recognizing and appreciating the capabilities, cost and scalability of .NET as a great architectural foundation for the mid-enterprise. If you look at the trend line, .NET is a far superior foundation. RealMarket: When will we see .NET-based product from Pivotal? Manning: Today, we are as compliant with .NET as anyone. BizTalk is our key integration strategy. All our new code is written in C#. It is our history to be committed to Microsoft and we continue that tradition moving forward. RealMarket: Pivotal has taken aim at the larger CRM solutions providers with the “Pivotal vs. The Humongous” campaign. How has that played out for Pivotal? Manning: I believe extraordinarily well. We’ll see how the numbers turn out in terms of revenue growth. But after everyone releases their numbers for the quarter, I believe we will be the fastest growing publicly traded company. Why? We picked a great market and have addressed the unique needs of that particular market. RealMarket: But companies like Siebel, PeopleSoft, Oracle and SAP are now targeting the mid-market. Manning: Yes, they are definitely making noise in the mid-market but their intentions are nothing more than an afterthought. They have entered that market because the Global 1000 has slowed their CRM spend. When the Global 1000 starts buying again, they will be gone from the mid-market. It is a fleeting phenomenon. RealMarket: Suite versus best of breed. What is the Pivotal position on that question? Manning: We offer a complete CRM suite. Best of breed is dead in about every category. These days, I can’t believe why any company would go best of breed especially in the mid-enterprise. There are certainly a few exceptions for unique business models but CRM suites are the best choice. The integration issues are too big and the functionality too limited for best of breed products. RealMarket: What is the average size Pivotal implementation? What is the range and what percent are implementation services? Manning: The simple answer is that we can show you hundreds and hundreds and hundreds of examples of implementations where the services component is approximately equal to the software component. It ranges from 0.8 to 1.2 but as a rule of thumb it is equal parts between services and software. That is a proven fact for Pivotal implementations. Our average sales price is in the $300Ks. We see software deals from $50 to hundreds of thousands of dollars. For the humongous guys, the ratio is $5 to $7 of services for every dollar of software. RealMarket: Tell me more about Pivotal’s roadmap to providing better ROI and a more complete solution offering. Manning: We are continuing to map new functionality to mid-enterprise needs. Many mid-enterprises have physical and / or virtual contact centers. So in our next release you will see major functionality in the contact center realm. Second area I would point to is operational analytics. The third area is more sophisticated marketing to support more sophisticated marketing dialogs across multiple channels of customer communication. RealMarket: Looking to the future, what is the biggest change you see on the CRM horizon? Manning: From a customer perspective, I see customers continually getting smarter and smarter. Customers now know how they want to work with their CRM vendors. You can adopt the Siebel approach - bigger, stronger, faster approach. Or you can say, I will embrace the new reality and structure. People are no longer interested in technology fantasy. These projects are about margin, revenue and loyalty. From a competitive point of view, if you do not have a distinct market and value proposition, you are out of business. We believe deeply in web services for applications. Pivotal will provide functionality through the web services type of model rather than being exclusively built and delivered by Pivotal. We are now moving to the point in the market where the pragmatists are ready to jump in. And we are five years into a 20+ year market. ERP has lasted decades and companies like SAP are still selling a bunch. If ERP is on a 25 year run, CRM has at least that long. top of page