TripleTree CRM

SaleS, Marketing and Service
convergence:
HOW SAAS ECOSYSTEMS AND COLLABORATION
TOOLS ARE REDEFINING CRM

a tripletree industry analysis

SPotligHt rePort
WWW.triPle-tree.coM 7601 France ave S, Ste 150, MinneaPoliS, Mn 55435 12526 HigH BlUFF dr, Ste 300, San diego, ca 92130 952.253.5300

TABLE OF CONTENTS

INTRODUCTION 2

EXECUTIVE SUMMARY 3

WHY CONVERGENCE IS HAPPENING 4

ECOSYSTEMS 6

COLLABORATION 10

IT – SHIFTING MARKETING FROM ART TO SCIENCE 14

MARKETING AUTOMATION 16

THE CHANGING ROLE OF PROFESSIONAL SERVICES 18

CONCLUSIONS 21

APPENDIX 24 TripleTree, LLC

7601 France Avenue South
Suite 150
THE TRIPLETREE TEAM 26 Minneapolis, MN 55435

Minneapolis

t 952.253.5300
f 952.253.5301

San Diego

t 858.792.3406
f 858.792.3407

www.triple-tree.com

MINNEAPOLIS 952.253.5300 SAN DIEGO 858.792.3406 WWW.TRIPLE-TREE.COM Q3 2007 CRM CONVERGENCE PAGE 1

INTRODUCTION

Organizations are no longer making independent departmental decisions about
how to best serve their clients.

Driven by a range of compliance benchmarks, organizations have become aware
of customer information silos. The result is that they are now internally focused
on their varied customer touch points and where sales, marketing and service
workflows and processes intersect. Externally, the impact of consumerism and
the success of Internet communities are redefining how customer and business
experiences can be managed.

TripleTree is fanatical about understanding unique delivery models and how
they can create value for emerging companies. Few domains are being impacted
by innovative delivery models more than Customer Relationship Management
(CRM). Thanks to this innovation, critical customer and business information
can be shared, and performance can be measured by simple, powerful, common
systems that are engineered to automate customer facing workflows.

We’re convinced that the Software as a Service (SaaS) delivery model is a catalyst
for the next generation of CRM. As the micro-disciplines of CRM link with Web
2.0 tools (specifically collaboration solutions), we believe Business Relationship
Management could become a more meaningful description of the technologies
and processes that mesh to frame the customer experience.

For emerging vendors in the midst of this transformation, SaaS will create value
for its investors because of the well known benefits of recurring revenue streams
and lower costs of innovation. However, these firms will need to align with
platform partners who can provide the infrastructure and logic around other core
business components to truly emerge as leaders.

This report reviews:

- how the silos around sales, marketing and service are being
torn down because of SaaS;

- where leading vendor ecosystems are rationalizing new technology
platforms that can impact CRM;

- where Web 2.0 and collaboration tools are becoming
competitive differentiators for CRM vendors; and

- how the role of professional services is changing as SaaS proliferates.
For more on how TripleTree is
helping growth businesses with
TripleTree continues to work with terrific firms seeking their next plateau of
investment banking, strategic growth while also advising global acquirers on ways they can remain opportunistic
capital and long term advisory as new competitors enter the landscape. If your organization could benefit from
services, please visit our website our thinking and support regarding investment banking or strategic advisory
at www.triple-tree.com. services, please contact us.

PAGE 2 Q3 2007 CRM CONVERGENCE WWW.TRIPLE-TREE.COM MINNEAPOLIS 952.253.5300 SAN DIEGO 858.792.3406

EXECUTIVE SUMMARY

Application functionality is demand-driven, not supply-driven. Workflows
for IT, executive and knowledge workers are converging and the enterprise
applications that were engineered for yesterday’s processes aren’t keeping up.
Ten years ago legacy ERP, HCM, CRM and other enterprise functionalities were
designed and built around silos and departments – and for the most part these
solutions haven’t changed. Workflows today are broadly defined relative to their
domain or industry vertical. For CRM, they refer to a set of related end-to-
end business processes that produce a specific product or service that enhances
customer value. Because more of today’s workflows and processes are both cross-
departmental and may extend outside of an organization, the ways in which co-
workers can collaborate to support these processes can be erratic – leading to
unstructured, (or worse) undocumented activities. CRM software suites have
automated many of the business processes which tie together sales, marketing
and customer service functions and their accompanying workflows and activities.
While much was accomplished by legacy CRM vendors, new and meaningful
evidence of a convergence between key micro-disciplines within sales, marketing
and service is emerging. This is buoyed in large part by the need for users to share
information and the explosive growth of the SaaS (or “on-demand”) delivery
model.

SaaS is proving to be an effective mechanism for building and aligning the tools
necessary to facilitate inter-departmental collaboration and to alleviate some of
the pain associated with change management and re-implementation of legacy
software solutions. TripleTree’s perspective on the disruptive nature of SaaS is
based on several emerging trends: The capital markets have recognized the
growth (both in terms of user adoption and
• Ecosystems have formed around a handful of technology and business services revenue) and business benefits of SaaS,
firms. These are most often technical at their foundation, but the need for eight and are associating a premium valuation
(see page 9) “core” financial and operational components are becoming evident.
with vendors who can demonstrate the
• Collaboration technologies are tying together disparate workers to share ability to clearly track and optimize
information and better serve customers. In addition, they’re redefining vertical customer acquisition and loyalty. For
solutions and business platforms upon which new applications can be developed,
shared and marketed.
these businesses, the options for gaining
scale are numerous, however fast growth
• CIO’s are finally coming around to the reality that SaaS-based applications can alone doesn’t denote value creation.
benefit most departments within their organizations. Many Web 2.0 tools are
moving too quickly for IT to support in a traditional manner, yet the CIO and
the team have a role to play as customer data is shared and analyzed.
Positioning, messaging, pricing, a keen
focus on adoption and relevant partnering
• Vertical applications are increasingly relevant, especially in sectors like all have a role in the strategic thinking of
healthcare or domains like compliance. The information needs and converging
workflows around data quality and content sharing are critical elements of
CRM vendors offering a SaaS delivery
compliance and user satisfaction and are becoming increasingly intertwined. model. This, coupled with the rapid pace
of innovation around SaaS, should spur
• Marketing automation is emerging as the hub around which many customer – emerging vendors to identify and become
facing applications will orbit. In addition, traditional linkages that marketing
has with sales and service are growing stronger and new linkages with finance quickly visible within an ecosystem and
and HR are forming. to simultaneously leverage a collaboration
tool set to remain disruptive and become
part of a platform solution.


WHY CONVERGENCE IS HAPPENING

Convergence within CRM is becoming top-of-mind because the differences
between sales, marketing and service are narrowing, the related business processes
are becoming more integrated, and the value of customer retention is hyper-
appreciated.

The history of on-demand CRM grew from point-based solutions addressing
specific customer needs into burgeoning functionality and broader product suites.
At its worst, licensed CRM software deployments littered the IT landscape with
abysmal shelf-ware stories and an underserved small and mid-sized business
(SMB) market. However, as on-demand CRM took flight in 2001, good-enough
functionality and affordable pricing drove high user adoption and were early signs
of a broad trend in how application functionality could evolve and perpetually
innovate.

SaaS pioneers like Salesforce.com and Salesnet anchored broad on-demand sales
functionality and RightNow emerged as a leader in services. However, marketing
has been left behind. Vendors like Unica and Aprimo represent on-premise
software solutions that do not necessarily offer best-in-class functionality across
the wide range of needs confronting most marketing roles. It’s because of the
continued growth of sales and service, and the promise of marketing that CRM
remains a “top five” growth category among the two dozen SaaS domains and
verticals tracked by TripleTree (for a complete list of these domains and verticals,
see TripleTree’s SaaS Update Spotlight Report, September 2006).

Currently over 300 firms offer CRM solutions delivered via SaaS, but as
collaboration tools mature and vertical specialization takes hold, TripleTree
believes this number could double by late 2009. One reason for this growth is
that the influence of collaboration tools on business relationship management
solutions is influencing how vendor ecosystems are forming. Encouraged by hot
capital markets and the lack of competitive fervor from legacy software firms, ISVs
are attempting to broaden their functionality by joining ecosystems in the hopes
About TripleTree’s Sector-Q of building market awareness and client uptake. Also spurred by the enthusiasm of
Diagram on Page 5: ISVs to “join their family,” ecosystem leaders are scurrying to amass core business
functions. Borrowing from the old adage “membership has its privileges” is a
reasonable portrayal of how member ISVs will view these coordinated functions
In 2005, TripleTree established a
as ecosystems mature into more stable sales and delivery platforms.
graphical representation for mapping
markets and sectors as its Sector-Q As shown in Figure 1 on page 5, licensed or packaged CRM is no longer a “high
diagram (trademark of TripleTree) and growth” component of the enterprise applications sector as we project it to grow
schema. Originally designed to support at 3.1% CAGR through 2011. In contrast, TripleTree is projecting strong growth
client advisory assignments, the Sector- for SaaS-based CRM solutions and professional services at 54.7% CAGR through
Q diagrams now encompasses 15 2011. A number of factors influence these estimates: an expected strong rate of
versions covering a range of domains venture capital investment continuing in CRM; growth and proliferation of open
source CRM; growth of enterprise-class SaaS CRM deployments; broad and deep
and verticals and have become integral
penetration of the SMB market; and an evolution of collaboration-inspired CRM
to our research agenda.
solutions. Thus, by 2011 we estimate that spending on SaaS applications and

MINNEAPOLIS 952.253.5300 WWW.TRIPLE-TREEE.COM SAN DIEGO 858.792.3406

professional services will comprise over 50% of the overall CRM market (or approximately $8.4B).

Figure 1: CRM Sector Revenue Forecast: SaaS vs. Packaged/Licensed

(in $ millions)

$18,000
51%
$16,000 SaaS Delivered Growth 50%

$14,000
Estimated CAGR = 54.7%
39%
40%
$12,000

$10,000 30%

$8,000 28%
20%
$6,000
20%
$4,000 Packaged Software Growth
12% Estimated CAGR = 3.1% 10%
$2,000

$0 0%
2006-2007 2008 2009 2010 2011

SaaS-delivered CRM (includes subscription revenues for sales, marketing and service disciplines and SaaS-specialized professional -
services).

Packaged CRM Software (also includes maintenance and professional services revenues related to packaged software implementations).
n n SaaS-delivered CRM revenue growth as a percentage of the overall CRM sector.
Source: TripleTree, LLC & Industry Sources

Driving the growth in Figure 1, TripleTree’s proprietary database contains qualitative and quantitative rankings of over
300 firms offering CRM solutions via SaaS (TripleTree’s overall SaaS database now exceeds 1,100 firms). Using our
proprietary Sector-Q market map, TripleTree has identified approximately 80 micro-disciplines within sales, marketing
and service (See Figure 2) that are impacted by SaaS vendors and professional services firms focused on SaaS. The
Sector-Q is a framework used by TripleTree when advising business builders on how value can be quantified and strategic
alternatives assessed.

Figure 2: TripleTree’s Sector-Q for Customer Relationship Management
Live
Customer Chat &
Voice
& Web Self-
Self-
Product & Service
Service Delivery Support
Service
Interaction Presence
Service Training Standards Community Platforms
CSR Unified Mgmt
VOIP
Account Management Desktop Remote Contact Center Agents
Outsourced Contact Center
Sales Analytics & Reporting
Customer Service Portals / Microsites
e-Commerce & Order Management

Sales
Customer Asst’d. Product Dev.
Incentive Compensation Inbound Communication Order Processing
Team Performance Dashboards Contact Center
Human Capital & Performance Management
Life-Cycle Management
Sales Coaching & Training
Technical Support
Sales Operations
Negotiations & Contract Management Performance Management Case Management
Configuration Management
Proposal & Quote Management
Internal Communication Mobility Solutions / Dispatch
Field Service Management
Mobile Sales Case Resolution / Reporting
Presentation Generators Applications
Forecasting Account Preparation Customer Service Analytics
Channel Management Enterprise Feedback Management
RFP Response and Pursuit
Customer Experience Management
Opportunity Management
Territory Management Data Assessment Customer Data Hub
Web Site Analytics
Lead Conversion Analytics Partner Feedback Management
Marketing Analytics & Econometrics
Multi-Channel Sales Development
Product Management
Prospecting/Contact Management Product Engineering and Launch
Promotional Competitive Market Analytics
Management Lead Management Unstructured Data Analytics
Lead Qualifications & Scoring
Lead Development Outsourcing
Planning and Strategy Privacy Management
Marketing Planning and Calendars
Customer Information File
Web to Lead Pricing Strategy
Trade Promotion Marketing Resource and Asset Management
Event Management Alliance & Partner Relationship Management
Web Marketing External Communication Advertising Planning and Strategy
Email Marketing Media Intelligence and Monitoring
Campaign Planning & Optimization Product Content Management
Ad Placement & SEO
Marketing Spend Management

Marketing
Loyalty Marketing
Affiliate Management 1:1 Decision Data Marketing Product Messaging & Positioning
Support Quality Compliance
Marketing
Analytics Detection

Source: TripleTree, LLC


ECOSYSTEMS – A CORNERSTONE FOR SaaS PLATFORMS

Businesses and end-users have complex technology and information needs that no
“SaaS ecosystems are quickly enabling single CRM vendor can possibly satisfy. For nearly two decades, sales, marketing
SaaS vendors and users to integrate and service systems have been built in silos to address these needs, yet they have
unknowingly created limitations for sharing product, customer, and sales data.
multiple on-demand applications. These
These limitations stemmed from technologies that built a proprietary wall around
ecosystems typically permit integration
customer and market data and didn’t establish a means for information sharing or
and interoperability at a software code fluid collaboration. And, because these cross-departmental views were clouded
level via mutual APIs and web services; and disjointed, executives have been limited in their ability to tap valuable data
at a user interface level via common resources across departments. The result is that there are now thousands of
design elements; and at a sales and
business leaders in charge of ecosystems and most don’t realize it.

marketing level with joint procurement and
With workflows between departments flattening organizations, the task of
provisioning capabilities.”
re-engineering legacy applications to address these information sharing and
collaboration needs would be a significant, multi-year undertaking and be
– Jeff Kaplan,
extremely cost prohibitive. As application vendors realize that customers want
Senior Advisor to TripleTree/
more than just applications to tackle these needs, ecosystems are forming to
Managing Director, THINKstrategies
facilitate the integration of best-in-class solutions.

Ecosystems while not new, are being redefined as best-in-class SaaS and
collaboration tools permeate business units and IT departments. The productivity
leverage from linking these point solutions are beginning to illustrate that
“workflow integrations” are as much (if not more) important than “systems
integrations.”

To ensure rapid deployment and strong user adoption, integration of discrete SaaS
solutions still require the guidance of a professional services firm – both at a systems
SALES PERFORMANCE and workflow level. However, as Web 2.0 technologies mature, the move toward
Diamond Performance Group platforms will likely see SaaS vendors embedding more plug-and- play integration
www.diamondpg.com capabilities and added considerations for automating workflows. The goal for
WHY THEY’RE INNOVATIVE: these vendors will be to drive down customer costs associated with implementing
platforms (which may be one-time fees) while building up a recurring revenue
Diamond Performance Group has evolved stream. Illustrated throughout this report are a few considerations on how SaaS
its highly unique approach to performance ecosystems are beginning to link departments across an extended enterprise and
benchmarking around key metrics and where SaaS platforms may likely evolve.
behavior traits which can feed directly
into incentive compensation programs and Performance Management:
HR hiring profiles. This data allows sales Human Resources and Finance are two departments becoming more actively
managers to become better coaches linked to sales, marketing and service disciplines, making performance
for their reps and promote a culture of management a potential growth area in CRM. As these departments grapple
continuous improvement between sales, with manual processes and spreadsheet-driven information flows, SaaS vendors
finance and HR. – with performance management solutions – will see strong market interest from
customers focused on getting the most out of their employees.
KEY METRIC:

Focus on attributes of top performers to
drive financial results.


• Employee Optimization: Most sales executives will agree that
integrating a technology-based selling solution with a proven sales
methodology can be beneficial. The benefits range from equipping reps
to handle thorny account management issues and optimizing how peak
performers are managed to where incentive compensation can be best
positioned. As shown in Figure 3, this data can be captured and fed
to an HR department as useful information when hiring or facilitating
performance evaluations, and to the finance department as quantitative
INCENTIVE COMPENSATION
business and product results are measured.
Centive
www.centive.com
Figure 3:
Microdiscipline Cluster – Performance Management Solutions Voice Self-
Live & Web
Customer Chat &
Self-
Product & Service
Service
WHY THEY’RE INNOVATIVE:
CSR Unified Mgmt
VOIP
Account Management Desktop Targeting mid-market clients has allowed
Remote Contact Center Agents
e-Commerce & Order Management Centive to enjoy strong growth and build
Team Performance Dashboards
creativity into their solutions. While
Contact Center
Sales Operations addressing SarBox needs around reporting,
Technical Support
Negotiations & Contract Management Performance Management Service Case Management
Internal Communication realized Management
Centive has Mobility Solutions / Dispatch
Field Service
that gaining input
Inbound Communication
Mobile Sales
Sales from sales professionals can be invaluable
Case Resolution / Reporting
Account Preparation Performance Management Customer Service Analytics
Forecasting
Channel Management
as solutions are Feedback Management
Enterprise tailored and incentive
Internal Communication
Opportunity Management Account Preparation programs are designed.

Territory Management Data Assessment
Data Assessment
Customer Data Hub
Web Site Analytics

Multi-Channel Sales Development Lead Management KEY METRIC: & Econometrics
Marketing Analytics
Product Management
Prospecting/Contact Management Planning and Strategy Product Engineering and Launch
Management Lead Management Marketing Unstructured Data Analytics
External Communication
Planning and Strategy Maintain solution creativity and listen to
Privacy Management
Lead Development Outsourcing Marketing Planning and Calendars

Web to Lead
Pricing Strategy
your sales professionals.
• Incentive Compensation Management: ICM is a discipline being
Trade Promotion
Event Management
Marketing Resource and Asset Management
Alliance & Partner Relationship Management
Web Marketing External Communication
improved by the proliferation of discrete SaaS tools.Advertising an obvious It’s Planning and Strategy
Campaign Planning & Optimization
Ad area & of
Placement SEO convergence as Finance and Marketing Spend Management
HR departments begin to
Product Content Management

Marketing
Loyalty Marketing
Data Marketing Product Messaging & Positioning
collaborate on Marketing and Detection
Decision
team Analytics
Affiliate Management 1:1
Support individual performance, and the CFO becomes
Quality Compliance INCENTIVE COMPENSATION

increasingly focused on sales team ROI. Currently two SaaS vendors Xactly
– Centive and Xactly – are addressing this domain area with unique www.xactly.com
client approaches.

Workflow Improvement:
Xactly is building a suite of services on
Complex processes can define a workflow when linked by a dynamic set
top of its base sales compensation and
of related tasks. Sales pursuits, product development and compliance
performance management solution for
management are examples of resource-intensive activities that drive
mid to large-sized organizations. Some of
important results. For sales pursuits, customer information, product data,
these include approaches to help align the
competitive intelligence, configuration resources and pricing data all
sales department with the CIO, with better
converge into a proposal or quote. When developing a product, notes
territory management, and compliance
from contact center employees, customer forums, enterprise feedback
reporting.
management and cost data converge to craft a product roadmap. As
compliance is monitored, documents, financial data and business rules KEY METRIC:
converge to evaluate risk and identify issues. Because many SaaS solutions
have simplistic workflow engines, complex environments like these can Link sales and finance on a broader suite
be addressed by point solutions and integrated within an ecosystem. of functionality.


Addressing Vertical Markets:
Vertical markets are becoming a key point of competitive focus and differentiation
for many SaaS vendors. Annually, TripleTree spends hundreds of hours in briefings
with global firms regarding their SaaS strategies and other disruptive forces in the
market. Invariably these discussions center on key industry verticals as evidenced
by Salesforce.com’s recent introduction of its Wealth Management Edition. The
marketplace is now seeing a major SaaS vendor put a marketing focus behind a
CRM vertical solution. For this edition, Salesforce.com will likely tweak little of
its core technology, but instead leverage its AppExchange platform and partner
support to deploy at Merrill Lynch (its first announced Wealth Management
Edition client).

The Impact of Consumerism:
A number of household name consumer web-based firms (WebMD, eBay,
Amazon) have awakened to the reality that their consumer-based pricing
models (advertising, content, transaction) and user design constructs could be
successful if focused on a business solution. Not only are these consumer models
sustainable, but in verticals like Healthcare – where employers are taking control
of costs – they could be extremely effective, e.g. Yahoo! Health and Google Health.
Consumer business models are about trust, and considering the credibility that
Paypal and Verisign bring to a Web property, SaaS platforms will follow suit. A
good example of this is AmericanExpress, whose recent investment in Rearden
OUTSOURCED CUSTOMER
SERVICE Commerce proves that they “get it” and could potentially become a disruptive
competitor with customer-facing business applications like CRM. Another
Connextions
www.connextions.com
solution provider taking what they learned from selling to customers and applying
it to businesses is Connextions.

Maturing Ecosystems:
Connextions has revolutionized how To take advantage of these opportunities, many other consumer brands will likely
customer data is harvested and applied at evolve their platforms to enable Web-based business functionality and attract
every stage of the transaction lifecycle; partners. Consider Amazon.com with its Amazon Web Services platform. Via its
using every touchpoint as an opportunity aStore and Omakase functions, Amazon is building eCommerce capacity for SMBs
to drive revenue and brand loyalty. that want a simplified and proven way to link products, make recommendations
Connextions has applied its proprietary and track sales. As TripleTree maps how SaaS ecosystems are influencing markets,
expertise within the healthcare sector, we are aware that many emerging SaaS vendors are not sufficiently capable of
enabling plans and providers to make delivering a comprehensive solution without professional integration and support
the transition from commercial (B2B) to services. For these firms, a hybrid business model balancing custom pricing, project-
retail (B2C) distribution, addressing the oriented deployments, and a common definition of client relationships is the
rapid growth of consumer-driven decision norm. As shown in Figure 4 on page 9, there are eight foundational components
making and sales. TripleTree views as critical for an ecosystem to mature into a platform. These
components will offer ecosystem members a comprehensive ability to connect
KEY METRIC: suppliers, clients and communities – elements which can improve workflow as an
“extended organizational team” and foster collaboration. Not all of the market
Make customer data manageable and leaders listed in Figure 4 offer a CRM solution. However, key SaaS platform
actionable to increase sales and customer elements are maturing for these firms which could make them viable business
retention. relationship management providers.


Figure 4: Potential Business Relationship Management Platforms

Eight Core SaaS Components

Document
Compliance Security Billing
Management

Integration &
Workflow Administration Community
Partnering

Consumer Oriented Vertical / Business Enterprise
Tools/Portals Services Providers Application Vendors
• Adobe
• Amazon • ADP • Cisco
• AmEx •AON • IBM
• Apple •
•BankofAmerica • Intuit
• eBay •
•Fiserv • Microsoft
• Google •
•JP Morgan Chase • NetSuite
• WebMD •
•Wachovia • Oracle
• Yahoo! •
•UnitedHealth Group • Salesforce.com
• SAP

Platform-Ready Market Leaders (SaaS Capable)



COLLABORATION TOOLS ARE STREAMLINING WORKFLOWS

LOYALTY MARKETING The growth of collaboration and Web 2.0 is making an impact on the CRM
Vertical Response
sector. As knowledge workers seek others who share their energy and vision for a
www.verticalresponse.com given topic, collaboration tools are blurring the lines between how organizations,
departments, functions and roles are interacting. As these interactions occur,
harnessing ideas and best practices on a platform will be a logical link for CRM
Vertical Response has evolved as a workflows and collaboration technologies.
resource for its clients beyond plain
vanilla email marketing services. Using The Web 2.0 technologies that support collaboration (social networking, blogs,
simple Web 2.0 tools, their executive wikis, tagging and RSS) are mostly offered by point solution providers. But
team has built a fan-like following of users similar to the evolution of the micro-disciplines evolving in CRM, the move
who are regularly blogged with valuable toward a platform of linked functions is happening quickly. Cisco’s recent
insights on marketing best practices and acquisitions of FiveAcross (social networking) and more notably WebEx signify
links to useful sales enhancement tools.
that a market premium can be placed on content and collaboration tools, but also
Encouraging a two-way dialogue balances that large global players are beginning to enter the playing field. Not surprisingly,
this collaboration and creates a simple Adobe, IBM, Google, Microsoft, Oracle, and Salesforce.com are also among the
but powerful community where innovation, major software vendors building collaborative tools. TripleTree believes that
value and loyalty are exchanged. collaboration tools will mature into a key platform component as the metadata
resulting from client and partner interactions is captured, analyzed and put to
KEY METRIC: use. Depicted in Figure 5 and Table 1 on page 11, TripleTree has identified
approximately 50 micro-disciplines linking communications and business
Evolve to avoid becoming applications in the collaboration sector.
commodotized.

Figure 5:
TripleTree’s Sector-Q for Collaboration
eMarket RSS
Place Feeds Mash-ups Service 2.0 Folksonomies Support
E-Commerce Services
Web Meeting Complimentary
Application Systems Business
Desktop Sharing Web 2.0 Groupware
Data Sharing
Conferencing Social Software
Video
Conferencing Social Podcasts
VOIP
Telephony
Conferencing Wikis

Online Chat Blogs

Internet Forums
Online Office
Web Publishing Suites
Unified Messaging Web Analytics /
Instant Messaging Reporting
Dashboards
Email Communication Business Applications
eForm Management
Voicemail
Portals
Faxing Group
Calendaring
Presence Document
Management
Virus Protection Management Contact Lists
Virtual Team
Backup Management Mobility Space
Application
Patch Desktop Streaming
Contact Remote
Management Streaming
Center Support


Table 1: Where Collaboration Links the Extended Enterprise
Departments Linked to Sales, Marketing and Service

CRM Disciplines Finance Human Resources IT

Sales

Incentive • Visibility into quota attainment,
• Evolve to performance based • Up-sell and cross-sell forecasting and
Compensation performance metrics and
incentive and advancement. reporting.
Management commission payments.
• Development of an deal sales rep
Sales Knowledge and
profile. • Access to corporate knowledge databases,
Team Performance • Sales rep ROI
• Complex solution selling and competitive content and best practices.
Management
activity reporting.
• Mobile worker connectivity primarily
Mobile Technologies • Remotely monitor marketing impacts contact information, email and
• Foster collaboration
and Portals programs. chat; but service alerts and order status are
emerging applications.

Marketing

• Addressing organization alignment • Ensure users understand and work with
Customer Experience • Links financial performance to of how a customer experience customer facing systems.
Management customer satisfaction strategies. mindset would be adopted across • Design these systems with common UI and
and organization. interconnectivity across channels.
• Allows managers to make trade-off
Marketing Spend
decisions related to how campaigns
Management and • Optimized IT Spend Management
perform relative to planning and
Campaign ROI
budgeting.
Benchmarked • Clean prospect and customer data is a key
Marketing • Analyze and predict churn, driver to overall CRM success.
Performance, likelihood of next purchase, • Tied closely to Service technologies via
Predictive Analytics, effective targeting. contact center data collection and
Data Quality validation.

Service

• Knowledge management aids
• Define and lead standards around
client/agent/employee/ partner interaction.
Collaborative Service Extended Enterprise
• Can lead to integrated document sharing
communications.
and proactive service.
• Performance metrics help manager
Outsourced Contact • Optimized ROI for service • Lower cost, accelerated time to market,
and agent with reporting and
Center initiatives. simplified IT demands.
workflow improvements
• Unified quality monitoring,
Workforce
workforce management, e-learning
Optimization
and performance management.
• Survey driven feedback designed for a
Enterprise Feedback
centralized view of feedback across sales,
Management
marketing and service.

More Evidence from Salesforce.com:
Not surprisingly, Salesforce.com is educating the market and current Salesforce.com customers who will never invest
on the disruptive influence collaboration tools can have in EMC’s Documentum and who find Microsoft’s Sharepoint
within sales, marketing and service disciplines. The too complicated. Both of these initiatives were in some
Company’s Spring ’07 edition includes a platform called ways trumped by the announcement that the Company’s
AppSpace which is designed to allow users to share content Apex platform can now be subscribed to separately from its
and best practices on a collaborative portal. In addition, SFA service to build custom applications. This represents a
Salesforce.com recently acquired Koral, a document major step forward in the ecosystem capacity and platform
management firm that began as an AppExchange partner. aspirations of Salesforce.com.
The Koral functionality will likely be aimed at prospects


BENCHMARKING

SiriusDecisions Improving Customer Experience is Important:
www.siriusdecisions.com
Because every role in an enterprise cares about the customer experience, it’s likely
WHY THEY’RE INNOVATIVE: that collaboration tools will take a leading positioning in influencing how customer
retention programs are designed and implemented. Tempering this is the fact
SiriusDecisions is focused on getting
that many business workflows prohibit marketers from actually making an impact.
sales and marketing departments
Easier access to information for customers (the individuals who need the better
marching in lock step regarding best
experience) can be built by linking the feedback from customer forums, surveys,
practices collaboration. Proponents of
executive blogs and other communication mechanisms. This is technology that
“marketing SLAs,” SiriusDecisions is
exists today from many SaaS firms and will proliferate as marketing becomes a
helping executives leverage performance
mindset, not just a department.
objectives, to gain greater visibility into the
various roles that touch customers, macro
Inter-Departmental Accountability is Growing:
forces that influence like buying cycles, and
As workflows overlap, applying important performance objectives to the
in-the-trenches work like lead prospecting,
collaborative efforts of sales, marketing and service departments is benchmarked
scoring, marketing program ROI.
by firms like SiriusDecisions. Whenever marketing and sales departments
can establish performance objectives around customer communication and
KEY METRIC:
business development programs, the going-in expectations can be rationalized
against variables and actual results, building trust and encouraging continuous
Measure marketing’s effectiveness
improvement – all of which can be measured via SaaS tools.
for sales teams; modify; repeat.

One such area of customer communication is campaigns, which can be impacted
PORTAL MANAGEMENT by tools like those from iCentera, whose SaaS solution meshes traditional service
iCentera functions like web, phone and mobile with the Web 2.0 experience of targeted
www.icentera.com portal management. This allows customer communications to be captured,
analyzed, and acted upon in a format that is digestible for field sales and service
personnel.

iCentera has approached a marketplace
Customer Service as a Key Competitive Differentiator:
need for improved communication and
As shown in Figure 6, the micro disciples of service such as unified agent
information sharing between partners
through on-demand portals. The iCentera
Figure 6: Microdiscipline Cluster – Customer Communications Solutions
tool kit is simplistic and flexible; users can
be online and productive in minutes and Live
Customer Chat &
Voice
& Web Self-
Self-
Product & Service
Service
the document storage and refresh engine CSR Unified
Mgmt
VOIP
Desktop Remote Contact Center Agents
is powerful. This technology Sales AnalyticsAccount Management
is useful Reporting
&

Sales for large enterprises that need a more Customer Asst’d. Product Dev.
nimble solution to their corporate intranet;
Technical Support
and SMBs looking for an affordable and Management TripleTree, LLC
Sales Operations
Performance Source: Case Management
Negotiations & Contract Management
Service
powerful way to communicate more
Mobile Sales
effectively with customers.
Account Preparation Sales

Forecasting Performance Service Analytics
Customer Management
Channel Management Enterprise Feedback Management Internal Communication
Account Preparation Experience Management
Customer
Territory Management
KEY METRIC: Data Assessment Customer Data Hub
Data Assessment
Web Site Analytics
Lead Management
Product Management Planning and Strategy
Prospecting/Contact Management Get portal users productive quickly, with Product Engineering and Launch
Management Lead Management External Communication Marketing
minimal or no reliance on IT. Unstructured Data Analytics
Event Management PAGE 12 Q3 2007 CRM CONVERGENCE WWW.TRIPLE-TREE.COM
Alliance & Partner Relationship Management MINNEAPOLIS 952.253.5300 SAN DIEGO 858.792.3406
Web Marketing External Communication Advertising Planning and Strategy
Campaign Planning & Optimization Product Content Management
Ad Placement & SEO

Marketing
Loyalty Marketing
Marketing
Analytics Detection

desktops, mobile CRM, customer self-service, hosted contact centers and
supporting analytical applications are increasingly being delivered via SaaS and
bridging to workflows of other organizational roles. Web 2.0 and collaboration
can help organizations better address the balance of web, phone, self-service and Figure 7: Contributing to the Business
wireless technologies with human interactions while providing the most cost Relationship Management Evolution:
effective customer service experience. The Projected Revenue Growth of
SaaS-Based Collaboration Tools

Mobile technologies have evolved to be more process-centric. Thus, they are $4,500

tailor-made for capturing and routing customer-related communications in a
$4,000
$3,500

digestible and useful format to field sales and service professionals. $3,000
$2,500
$2,000
$1,500
While still a niche area, mobile technology has re-established itself in certain $1,000

industry verticals. In the transportation industry, employee productivity, $500
$0

collaboration, cost reduction, regulatory compliance and asset management 2007 2008 2009 2010

are driving this resurgence. In healthcare, improved data collection, patient
intervention and coaching are a few of the drivers creating the phenomenon of
“telemedicine” (for more details see TripleTree’s recently published Spotlight
Report Telemedicine 2.0: Connecting Medical Devices, Patients and Providers to
Improve Health). Interest in mobile sales solutions has also been renewed because
of a focus on business process improvements. Response times, reporting, alerts
and data capture have been enhanced by high-speed data networks and are now
CONTACT CENTER
bringing real value to sales and service personnel in terms of productivity, service AUTOMATION
quality and data usefulness.
Contactual
www.contactual.com
On-demand functionality has matured to some extent and for this study is
represented by two distinct and measurable advantages as a SaaS application: WHY THEY’RE INNOVATIVE:
an integrated view of the customer (offering a lower cost operation and higher
Contactual is focused on offering a simple
customer satisfaction) and enhanced job satisfaction for contact center agents.
and scalable contact center solution that
Thanks to solutions from SaaS vendors like Contactual, SaaS-based contact center
addresses inbound client communications
applications allow managers to remotely monitor agent productivity, support
and contributes to revenue acceleration.

flex-time schedules, and create convenience for a work-at-home employee. A
In addition, Contactual has a platform
few benefits for this are listed below:
that can address evolving needs around
helping facilitate sales orders, responding
• HR can use this flexibility as a lure when recruiting, hiring, training
to marketing campaigns, and offering
and promoting contact center agents;
customer education during an interaction.
With lessons learned from its former life
• Finance can view “mashed up” performance-based dashboards for
as White Pajama, Contactual understands
workers as evaluations are performed, budgets are allocated and hiring
that cost, flexibility and reliability are keys
and training is funded; and
to its SaaS solution.

• Service center agents can leverage collaboration tools to more
KEY METRIC:
effectively work with clients on issue resolution and be more proactive
in working with sales colleagues on up-sell and cross-sell opportunities.
Focus on key alliances to better
serve users.


IT – SHIFTING MARKETING FROM ART TO SCIENCE

A number of independent surveys support what is becoming increasingly apparent
in the marketplace: IT’s work direction (and even strategy) is being influenced
more by an organization’s business units. Marketing departments have historically
been the voice of companies, but have admittedly understood little about
leveraging data and analytics – keys to influencing strategic thinking. Many of
the CIOs who are believers in the transformative qualities of SaaS (cost savings,
ease of implementation, minimal technical support) are becoming advocates for
mainstreaming technologies that link critical customer data along the value-
Figure 8: Where IT Supports SaaS Across chain. TripleTree sees the role of IT as it relates to the growth of SaaS spanning
the CRM Sector-Q Disciplines
two areas – as a facilitator and as a collaborator with each role being fluid based
on how integrated the CIO is with the sales, marketing and service organizations,
Inbound
Communication
and the presence of SaaS in the CRM microdiscipline of the organization. While
it’s true that many marketing technologies (predictive analytics, search engine
Data
Assessment
Internal
Communication
optimization, social networking, folksonomies) are moving too fast for IT to keep
up with or support, a few initiatives are listed below which summarize how IT is
Planning &
Strategy
helping business units understand and deploy SaaS- based solutions.

Collaborator Customer Experience Management:
CIO As previously introduced, an organization’s focus on customer experience
Facilitator management is a cultural shift and should be considered a journey rather than a
destination. This mindset is necessary because traditional ways of servicing the
Account customer (which have been in place for years and sometimes decades) have well
Management
known limitations. Once an organization realizes that radical change is necessary
External
Communication
Performance
Management
for improvement, years of business processes and embedded systems need to be
re-evaluated and updated, making this “journey” a multi-year endeavor. Having
Lead
Management
clear objectives which define a quality customer experience and are founded on a
corporate strategy can help this cultural shift proliferate and come to life in more
durable programs supported by the CIO.

Sharing Client Information:
Because gathering client information is challenging (user reluctance to share
information in general, privacy concerns, etc.) Web-based tools must gather as
much customer information as possible whenever an interaction takes place.
Understanding the links between the likely behaviors of a prospect or customer when
they are tied to core IT systems (user login, past search inputs and past purchases,
etc.) represent critical data for sales, marketing, and finance to dissect and share.

Simplifying and Sharing Analytical Information:
For marketers, the IT department has become a key resource for defining, capturing
and assessing customer data. In order to develop and use a meaningful customer
database, overcoming past marketing practices that relied on separate data silos
is crucial. Figure 9 on page 15 illustrates that on-demand sales, marketing and
collaboration applications can now manage common data files and CIOs are
taking a role in normalizing these files into custom views.



Sales
Technical Support
Sales Operations
Negotiations & Contract Management Performance Management Case Management
Mobile Sales Case Resolution / Reporting
Channel Management Enterprise Feedback Management
Web Site Analytics
Product Management
Prospecting/Contact Management Product Engineering and Launch
Management Lead Management Unstructured Data Analytics
Figure 9: Microdiscipline Cluster – Customer Data Quality Marketing Planning and Calendars
Web Marketing External Communication Advertising Planning and Strategy SIMULATION-DRIVEN
Email Marketing
Media Intelligence and Monitoring
Product Content Management
SALES FORECASTS
Ad Placement & SEO

Marketing
Loyalty Marketing
Decision Data Marketing Product Messaging & Positioning
Marketing Support Quality Compliance Aha!
Analytics Detection
www.ahasoftware.com
Source: TripleTree, LLC Service
Inbound Communication WHY THEY’RE INNOVATIVE:
Sales
Performance Management
Aha! is tackling the age-old goal of CRM
Account Preparation
Data Assessment
systems; helping sales management gain
Lead Management better pipeline visibility. By leveraging
Planning and Strategy
simulations and analytical rigor, Aha! is
Marketing
gaining traction within the SugarCRM
ecosystem as an on-demand solution
that can help executives understand the
risks and upside of a sales pipeline and
forecast.

Customer and Product Analytics:
KEY METRIC:
With the reality that the Web has become a bona-fide business development
tool, econometric models examining marketing variables over time (such as the
Data-driven forecast modeling will improve
length of a service contract or the likelihood of an up-sell) or between different
decision making.
variables at a point in time (such as customer click-throughs on one ad versus
Live
Customer Chat &
Voice

another) Product & Service
& Web Self-
Self-
Service
– are gaining ground. This is a good example of where BI vendors are
CSR Unified
ent Desktop
VOIP
Mgmt
beginning to offerRemote Contact Center Agents
SaaS-based Center
Outsourced Contact
analytical dashboards that can be equally useful
to sales and marketing. Figure 10 shows micro-disciplines where the successful
vendors in this arena will find Order Processing the balance between analyzing a mountain of data
Contact Center

and finding out which metrics are most relevant.
Technical Support
agement Case Management


Figure 10: Microdiscipline Cluster – Analytics
Inbound Data Analytics
Customer Service
Enterprise Feedback Management


Data Assessment Customer Data Hub
Web Site Analytics
Partner Feedback Management
Product Management

Product Engineering and Launch
Competitive Market Analytics
Service An impressive leader in Analytics has
Unstructured Data Analytics
ing and Strategy Privacy Management
Sales
been Business Objects and its Crystal
Pricing Strategy Performance Management
Decisions on-demand solution. Business
Advertising Planning and Strategy
Account Preparation Objects is visible as a partner not only
Data Asssssment
duct Content Management within the AppExchange ecosystem, but
end Management Lead Management
ioning
Marketing Planning and Strategy as a WebEx Connect partner as well.
External Communication Marketing
TripleTree expects Cognos and other
traditional BI competitors to become
similarly visible with BI tools that extend
onto mobile devices, empower better
reporting and influence database quality.


MARKETING AUTOMATION — CAULK FOR
CUSTOMER FACING APPLICATIONS

Even though it has the fewest seats to deploy as measured in terms of a “typical”
CRM project rollout, TripleTree predicts that SaaS-based marketing automation
platforms will emerge as the logical hub for sales and service functionality and
expects them to continue on an accelerated growth curve. Historically, enterprise
application vendors have passed over the marketing automation component of
CRM as an insignificant revenue opportunity. However, the broad reach of the
marketing function has thrust it to the forefront as highly strategic. This reach
is growing because of two factors: first, marketers are evolving their traditional
role of planners to becoming more of a catalyst in facilitating action across the
extended enterprise; and secondly, linking IT resources, data vendors, agencies,
printers and other partners calls for enterprise-wide influence.

An example of how on-demand technology supports these roles is marketing
automation. Linking finance and IT is complex and needs a coordinator because
of the unique data requirements and accountability touching Web marketing,
campaign planning, marketing spend management, marketing compliance,
analytics and collaboration. In addition, marketing performance management
is of growing importance as companies prioritize on the financial impacts of
spend management, compliance, workflow management and marketing asset
management. In marketing, stand alone SaaS solutions won’t be enough to
MARKETING AUTOMATION satisfy market demand. Hybrid solutions where a SaaS tool is embedded into a
professional services contract are appearing in areas like marketing data services,
Vtrenz, Inc.
www.vtrenz.com compliance and spend management.

As noted above, marketing’s reach inside and outside of an organization is broad
Vtrenz recognized that the Internet has
and provides it with newfound leverage that is strategically relevant to the CEO
provided consumers new levels of control
and CFO in key disciplines of marketing, as depicted in Figure 11 on page 17.
at all stages of the purchase process,
requiring a closer alignment of sales
Spend Management (Finance):
and marketing. And, while push and pull
The role of marketing is expanding beyond creative services and product
marketing strategies are fluid processes,
management by embracing the myriad of analytics that measure program
competitive organizations are operating
effectiveness. Enterprise marketing expenditures are massive with some
“lean,” so automating many marketing
industry estimates pegging spending at one trillion dollars annually. The desire
functions is critical. Planning, execution
to account for this spending coupled with new marketing channels and data
and measurement are challenging
sources (like Google Ad Words) is driving a stampede toward better marketing
marketers in organizations of all sizes, and
spend management. Given the disparate spending in organizations to manage
with the advent of work-flow automation
promotions, channels, websites, call centers and other tools, a significant need
and optimization tools as a critical link,
for improved marketing spend management has evolved. An example of how
SaaS-based solutions like Vtrenz are
marketing spend management is gaining awareness is represented by platform-
increasingly relevant.
enabled mash-ups. Last year, Salesforce.com acquired AppExchange partner
Kieden, a SaaS firm whose application mash-up helped users better measure
KEY METRIC: their marketing expenditures on Google Ad Words. It followed with a recently
announced agreement with Google that takes the Kieden acquisition to a new
Leverage a holistic approach to marketing
level with Salesforce.com Group Edition, a more formal product partnership.
automation for maximum impact.


Compliance (Finance/IT):
The dual drivers of spend management and analytics are further linked by the
Customer
Live
interest of C-level executives to establishChat & & Web accountability with marketing
Voice

better Self- Product & Service
Self- Service Delivery Support
Service
beyond financial performance to include regulatory compliance. Remote Contact Center Agents
CSR Unified
Account Management Desktop
VOIP
Mgmt
TheOutsourced Contact Center
requirements
for Sarbanes-Oxley and “Do Not Call List” regulations underpin the Customer Asst’d. Product Dev. interest
Incentive Compensation Inbound Communication
of nearly all organizations to view marketing automation platforms as critical
Team Performance Dashboards
Order Processing
Contact Center
Sales Coaching & Training in their overall business development arsenal, and the extensibility of SaaS
tools
Technical Support
Sales Operations
gotiations & Contract Management
solutions have carved out a growing role. TripleTree’s research has found thatSolutions / Dispatch Case Management
Internal Communication Mobility

CMOs are becoming the key bridge between finance and sales on these Case Resolution / Reporting tasks
l & Quote Management Field Service Management
Mobile Sales
s Applications
ecasting Account Preparation many traditional marketing functions to be automated, analyzed Analytics
and is driving Customer Service
ement Enterprise Feedback Management
uit
and/or potentially outsourced. An on-demand firm leveraging its focus Customerdata Management on Experience
Data Assessment Customer Data Hub

compliance for the pharmaceuticals industry is Health Market Science. Web Site Analytics Partner Feedback Management
Product Management
Competitive Market Analytics
Lead Management Unstructured Data Analytics

Figure 11: Marketing Planning and Calendars
Pricing Strategy
Microdiscipline Cluster – Marketing Data Management Marketing Resource and Asset Management
External Communication Advertising Planning and Strategy
ion Product Content Management
ment & SEO

Marketing
Loyalty Marketing
Marketing
Analytics Detection
Service

Sales

Account Preparation MARKETING INFORMATION
Data Assessment
COMPLIANCE
Lead Management

Planning and Strategy Health Market Science
Marketing www.healthmarketscience.com
External Communications


Health Market Science (HMS) is an
information services company taking a
compliance-driven approach to healthcare
Marketing Metadata (IT):
data integration. HMS is focused on
A meaningful revenue opportunity exists for SaaS firms capable of adding value
helping clients be more effective with
to the huge volumes of metadata being generated by today’s legacy IT systems.
their market data acquisition, storage,
As marketing organizations process and analyze inbound customer inquiries,
matching, integration, and dissemination.

product information, brand collaboration, campaign analytics and Web
By embedding the HMS data search and
interactions, the data about the data (or metadata) becomes very important. The
compliance technology into the sales
complexities around extracting this information from data warehouses requires a
infrastructure of their clients, they’ve
good working relationship between the marketing department and IT. Business
become a mission critical resource.
performance, patterns and trends and decision support are the results of how
data can be queried, filtered, analyzed and displayed. SaaS tools for marketing
KEY METRIC:
metadata management are emerging, but as these tools and frameworks emerge
the collaborative nature of SaaS and Web 2.0 will have marketers playing a larger
Analytical rigor adds “trusted resource”
role in how this information is synthesized and where value can be recognized.
tag to SaaS platforms.


THE CHANGING ROLE
OF PROFESSIONAL SERVICES

PROFESSIONAL SERVICES The proliferation of SaaS applications in CRM has given birth to a new breed of
professional services firms. As the “family psychiatrist,” today’s small but nimble
BlueWolf Group
www.bluewolf.com professional services firms are being asked to understand the needs of sales,
marketing and service departments – and to make sure they get along with IT
when solving pressing technology issues. The talent profiles and staffing models
required to help organizations grow revenues and optimize customer satisfaction
The growing popularity of SaaS delivered
with both SaaS and licensed CRM solutions are considerable. Skillful CRM
applications has changed the game for
deployments are not simple, and complex domains like business intelligence and
professional services. Less and less,
compliance require deep subject matter knowledge. This knowledge needs to
consultants are asked to install, test,
be coupled with an understanding of the customer’s business, working templates
and tune software (tasks that once made
for rapid implementation and an effective training plan. Add in the nuances of
up 50% of any application deployment
SaaS, Web 2.0 and the need to consider the inputs from an extended enterprise
project). The focus is now on defining,
and the old school consulting mindset of the 1990s quickly fails. Two firms that
creating, customizing, and deploying
embody a new approach to professional services are BlueWolf Group and Appirio.
effective business processes through
the flexibility of on-demand applications.

As both of these firms know well, the economics of integrating a SaaS solution
Blue Wolf approaches SaaS with rapid
for clients who have historically invested in licensed software present some new
configurations and bite-sized deployments
realities. Project timelines, resource management needs, and hiring profiles are
top of mind. If success can’t be defined
shifting. In addition, non-traditional competition from BPO firms and digital
in 90 days (regardless of client size) then
agencies are creating new dynamics for pursuing business that may focus as much
success criterion is reassessed by either
on creative problem solving as they will on technical competence and cost savings.
desired function or targeted group.
A few other examples are listed below:
KEY METRIC:
• Overall project investments are lower: With SaaS, organizations are
now spending only a fraction of what they did five years ago when
Leverage analytics as a
deploying a licensed software solution.
differentiator.

• Reduced consulting fees: The reduced need for software
configuration and customization work calls for rapid proofs of concept
that quickly turn into full-blown deployments.

• Rapid project timelines: The well-publicized success of SaaS has
convinced buyers that a six to eight-week deployment timeline is the
norm. While this might be realistic in some cases, rapidly integrating a
SaaS solution (either sales, marketing or service) with order management,
reporting or other back office functions requires specialized skills and an
efficient project plan.

• Specialists: Mid-market clients want and need “utility infielder”
consulting talent: a project manager, BA, database analyst and trainer
– all rolled up in one. These clients also gravitate toward consultants
who actually have “field” experience as former sales, marketing or
service professionals. Even though the technical training curve for SaaS
consultancies are flatter than those of a licensed software integrators,
these “business-minded” profiles can still be challenging to find.


• An opportunity to develop IP: The lack of a high margin recurring
revenue model has long been an issue for value creation with professional
services firms. As SaaS-focused consulting firms work with clients, they
are many times the first to identify opportunities for bolt-on applications.
Depending on the talent level in a given firm, these applications can be sold
independently or through partner ecosystem portals to create an incremental
revenue stream and improved gross margins.

Outsourcing services is yet another area where SaaS-based solutions are
positioned to grow beyond traditional “labor-based” solutions. Embedded SaaS
technology is not only helping organizations continue to target cost reductions,
but also to cast the focus on growth, profitability and an improved customer
experience. BPO for sales, marketing and service is evident in many provider
solution bundles, but the solution benefits of flexibility, cost containment,
geographic leveraging and alleviating concerns over long term contracts
(vendor lock-in) and rigid workflow rules are still at the top of the list and may
tip executives to favor SaaS-enabled BPO. The most visible arena for a “data
services” model of outsourcing to proliferate will support marketing disciplines.
Live
Customer Chat &
Voice
& Web Self-
Self-
Product & Service
Service
• Data accuracy and opportunity scoring: With the amount of human CSR Unified
VOIP
Mgmt
Remote Contact Center Agents
and financial resources dedicated to marketing, analytical solutions Account Management Desktop

are being sought to help validate decision marking. BI vendors with Inbound Communication

Sales
Incentive Compensation Order Processing
Team Performance Dashboards MARKETING DATA
SaaS-based analytical solutions&can bridge the chasm of separate data
Human Capital Performance Management
SERVICES
Contact Center
silos and share contact &centerSales Operations call notes with Performance as shown in
Negotiations Contract Management
marketing Management Technical Support
Case Management

Figure 12. Configuration Management ReachForce Communication
Internal Mobility Solutions / Dispatch
Mobile Sales www.reachforce.com Field Service Management
Channel Management WHY THEY’RE INNOVATIVE: Enterprise Feedback Management
Figure 12: RFP Response and Pursuit
Microdiscipline Cluster – Successful Lead Conversions Customer Experience Management
Web Site Analytics
Lead Conversion Analytics ReachForce is unique because of their Partner Feedback Management
Prospecting/Contact Management
focus on the core of demand generation –
Product Management
Management Lead Management the data upon which an outreach program
Unstructured Data Analytics
Lead Development Outsourcing is built. ReachForce uses both SaaS and
Web to Lead Service Pricing Strategy
Trade Promotion professional services to build campaigns
Web Marketing External Communication
Sales s
that identify individuals based on roles, not
Advertising Planning and Strategy
Ad Placement & SEO
Performance Management Product Content Management
just titles. This dramatically increases the

Marketing
Loyalty Marketing
Preparation Data
Account Decision
Marketing Product Messaging & Positioning
Quality Compliance
quality of contacts delivered because titles
Marketing Support
Analytics Detection Data Assessment
typically identify a role only 1% of the time.

Lead Management Planning and Strategy This hybrid approach builds a more reliable
link between marketing and sales and as it
External Communication Marketing
optimizes lead quality.

KEY METRIC:

Align processes and technology for a
better business outcome.


• Executive education is required: Just as organizations have started to
de-silo, executives need to undergo the same transformation. The best
professional services firms are often viewed as “trusted advisors” to IT
departments. By working with sales, marketing and service executives
to leverage information to build better products and more effectively
manage the relationship between IT and the business units, they
will increase their influence and cement better relationships. Other
roles for SaaS professional services firms may include helping clients
understand broader issues and events in a marketplace and simply
educating the executive management at a prospect on the merits of
an on-demand deployment. The market is changing faster than ever
before and because professional services firms often have strong client
intimacy, they are being seen on some levels as business technology
advisors. Below is where TripleTree sees professional services firms
addressing the changing market over the next several quarters.

Figure 13: Professional Services and the Changing SaaS Market

“ Wait and See” On
Fallout From Vendor
Marketing
Consolidation
Automation Platforms

PROFESSIONAL SERVICES Internal Focus on Compliance
Focus on Customer Value
and Broader Analytical
Early Days of SaaS Analytics
Appirio Platforms
Vendor Focus

www.appirio.com Cost Cutting &
SaaS Clients Tasting
Client Retention
Vendor Independence


Appirio is disrupting the $600B worldwide Best-In Leverage Collaborative
Hunker Class SaaS
IT services market by approaching Down of Platforms
Solutions Validation
Convergence Emerge
enterprise class organizations with a Web
2.0, SaaS 2.0 and Services 2.0 mindset.

This mindset leverages the intersecting
2001 2003 2005 2007 2009
trends of rapid innovation, lower cost Source: TripleTree, LLC
structures and an early competitive
advantage of the business web. Nimble
professional services firms like Appirio who
collaborate with clients, align closely with
ecosystem partners and deploy solutions
quickly are best positioned for revenue and
client growth.

KEY METRIC:

Keep it simple and involve users early
and often.


CONCLUSIONS

TripleTree has long stated that SaaS is the most significant disruption to the
Technology sector in a generation. It represents a competitive threat to legacy
vendors unlike anything they have previously encountered because of its ability
to add massive scale and relevance to any global player – regardless of domain
or industry. An overarching question for CRM is which delivery model will
emerge as most relevant: SaaS, licensed software, outsourcing or a hybrid?

Cisco’s recent acquisition of WebEx represents a great example of where a
network infrastructure giant followed a quiet cadence of social networking
and content acquisitions with a bang. Now, Cisco has a tremendous content
engine to ride on its networks and WebEx has become a much more formidable
competitor for Microsoft. Last year’s investment by AmericanExpress in Rearden
Commerce is another example of the growing importance of SaaS. If a primary
goal of AmericanExpress is to help business customers manage mundane travel
expenditures (expenditures that will be paid for via credit card), then Rearden
represents the beginnings of a new platform. The list of examples is growing
monthly and proves that the ways to influence customer experience are being
redefined in real-time.

The reality for most SaaS firms is that being a discrete solution alone isn’t
enough to drive value and that a strategic exit might be possible through a non-
technology acquirer. Recent SaaS acquisitions by ADP (Employease) and Illinois
Tool Works (ClickCommerce) helped the acquirers gain immediate traction in
new markets. Associating a SaaS application to one or more ecosystems can
prove functionality for new markets and as a result, can become valuable to new
strategic suitors. Many domains and sectors are being completely reinvented as
pure-play SaaS solutions and organizations with hybrid delivery models (SaaS
and BPO) emerge. Below is a summary of other key points that were reviewed
throughout this report.

Ecosystems:
The need to provide specific business value will continue to drive the evolution
of SaaS ecosystems. Platforms will emerge from these ecosystems where vertical
industry expertise and critical business support functionality becomes embedded
in the underlying architecture of a vendor solution. CRM platform decisions
(both business and IT) will be driven by their ability to impact customer value.

Collaboration:
Collaboration toolsets have become the critical link to capturing the exchange
of information between organizations and their extended enterprise. Because
most SaaS collaboration vendors are still emerging and offer only discrete
functionality, the sector will consolidate quickly as point solutions won’t be
viewed as viable long term solutions.


IT:
As marketing moves from art to science, CIOs will increasingly take an active
role in supporting the ways in which sales, marketing and service professionals
access, share and analyze information to benefit the customer experience.
Collaboration, workflow and content management are three factors driving IT
into a resource/collaborator relationship with business units. SaaS vendors who
understand this relationship and exploit the notion that business units and IT
are enmeshed will be well served.

Marketing:
Marketing automation represents one of most intriguing SaaS categories of all
those tracked by TripleTree. Presently, there are only a few players delivering
comprehensive offerings in what is otherwise a sector starving for a leader, and
a buyer community that is accepting of on-demand delivery models. Spend
management, compliance and analytical applications are three areas where
SaaS vendors will make a meaningful impact.

Professional Services:
Hiring business-minded consultants who can quickly relate to, assess, and
recommend process and workflow changes for their clients will be in high
demand. In addition, a strong understanding of how analytical applications
can help CEOs make better decisions coupled with good relationships with key
ecosystem vendors will earmark the leading consultancies.

Unleashing Value:
The enterprise software sector will continue to consolidate for the near term and
SaaS delivery models will be rewarded with valuation premiums above licensed
software. However, the market is now seeing the beginnings of a squeeze on
SaaS valuations which represent multiples on EBITDA as well as multiples on
revenue. The more S-1 filings that get delayed or pulled and the more IPOs
that trade sideways or down will reinforce the fact that acquisition may be the
best path to liquidity for most SaaS vendors. As shown in Figure 14 on page
23, waiting even a couple of years to grow revenues may not necessarily bring a
higher valuation as TripleTree predicts M&A multiples will decline and begin
to resemble licensed software valuations.

Legacy industry leaders like SAP, Oracle, Microsoft and others are finally
responding to on-demand pressures in CRM by building or acquiring
competencies. In late 2005, these firms stopped refuting the success of the
on-demand CRM category and began a concerted effort to enter the fray.
TripleTree is convinced that CRM vendors who do not develop an on-
demand offering in sales, marketing or service risk becoming marginalized.
Finally, TripleTree believes organizations will soon acknowledge that Business
Relationship Management may be a better characterization for the workflows and


Figure 14: Potential Changes in SaaS Valuation Over Time

3-5x REVENUE Premium Valuation Metrics
(based on revenue multiples)

Software as a Service x SaaS 2.0
• Limited number of “pure” SaaS firms • Standard delivery model
• Average size $5-30M in revenue • $50M+ in revenue
• Typically operating at/near breakeven • 25%+ operating margins
• Discrete technologies; narrow focus • Steady growth (10-15%)
• Platform technologies; broad focus

Broad Buyer Landscape Limited Buyer Landscape
Traditional Valuation Metrics
(based on EBITDA multiples)

Today Tomorrow
Revenue $10 million $30 million
EBITDA $1 million $5 million
Metric 3-6x revenue 7-12x EBITDA
Valuation $30-$60 million $35-$60 million
x
7-12x EBITDA

Today 3+ Years
Source: TripleTree, LLC TripleTree, LLC is a research based
investment bank serving growth
companies, sophisticated investors and
supporting technologies that can improve a customer’s experience, power the global acquirers. TripleTree conducts
extended enterprise and stoke the fires of innovation.
proprietary industry research which
guides our work in M&A, growth
As an investment bank and strategic advisor, TripleTree is committed to
capital and financial advisory services.
helping emerging companies understand how to take advantage of trends like
those outlined in this report. We welcome the opportunity to learn more Our value-based approach benefits
about your business and how we can help your team climb to the next plateau technology-enabled businesses in sectors
of market leadership. like healthcare, where delivery models are
converging; or where CEOs and investors
are in search of creative ways to disrupt
markets and unleash value.

TripleTree’s unique personality is shaped
by the experience of our principals,
who as business thinkers and builders
collaborate to identify strategic solutions
that maximize value for our clients in a
dynamic marketplace.


APPENDIX - Chart 1: M&A Overview for CRM Vendors (partial list)
Price /
Date Target Target Buyer Buyer Description
Description Price Revenue
Multiple
Pitney Bowes is focusing on "high growth" sectors within the marketing and
May-07 Digital Cement Pitney Bowes mail. This acquisition will help Pitney better manage communications with
mail. This acquisition will help Pitney better manage communicatons
i $40.0 NA
their customers.
their customers.
This acquisition grows Business & Decision's international business and
May-07 Inforte Corp Business & Decision Group strengthens its US, UK, India and German presence and capabilities while
strengthens its US, UK, India and German presence and capabilities while $50.9 1.4x
helping to improve their ability to acquire, develop, and retain customers.
helping to improve their ability to acquire, develop, and retain customers.
KANA will expand its professional services portfolio to meet growing demand
for consulting and implementation services. eVergance Partners, LLC, a
May-07 eVergance Partners KANA Software management consulting and systems integration firm offering end-to-end NA NA
consulting services for CRM optimization, knowledge management, and
Web self-service deployments.
Web self - service deployments.
This acquisition by Acxiom will build upon their platform of personalization for
This acquisition by Acxiom will build upon their platform of personalization
Apr-07 Kefta Acxiom Corporation for sales, marketing customer service and will help Axciom to to better
sales, marketing andand customer service and will help Axciombetter target $9.0 2.6x
and dynamically deliver deliver relevant content to web users.
target and dynamically relevant content to web users.
This acquisition gives DealerTrack, a provider of on-demand software and
data solutions for the automotive retail industry, increased functionality to
data solutions for the automotive retail industry, increased functionality to
Apr-07 Arkona Inc. DealerTrack Holdings $58.9 4.6x
provide an on-demand dealer management systems for automotive
provide an on-demand dealer management systems for automotive
dealerships
dealerships.
This acquisition expands Nuance's existing product portfolio with aasolution
This acquisition expands Nuance's existing product portfolio with solution
Feb-07 BeVocal Inc. Nuance Communications set for mobile customer lifecycle management and a range of premium $139.7 NA
services for the mobile consumer.
services for the mobile consumer.
The acquisition will boost CDC's enterprise complaint and feedback
The acquisition will boost CDC's enterprise complaint and feedba k c
Feb-07 RESPOND Group CDC Corporation management solutions offering and provide inroads to the financial services NA NA
vertical.
services vertical.
This acquisition expands the Omniture Online Business Optimization
This acquisition expands the Omniture Online Business Optimization
Platform and positions Omniture for further growth by way of increased
Platform and positions Omniture for further growth by way of increased
Feb-07 Touch Clarity Omniture automation and optimization. The acquisition is expected to give Omniture $51.5
automation and optimization. The acquisition is expected to give Omniture NA
expanded market opportunities by providing new entry-point as well as cross-
sellcross-sell opportunities.
opportunities.
Gives Made2Manage a broadened, more powerful customer management
Gives Made2Manage a broadened, more powerful customer management
offering based on the individual strengths of the KNOVA and Onyx
offering based on the individual strengths of the KNOVA and Onyx
Consona Corporation applications. M2M plans to leverage KNOVA’s existing application
applications. M2M plans to leverage KNOVA’s existing application
Dec-06 KNOVA $47.0 1.4x
(Formerly Made2Manage) programming interfaces for CRM integration with Onyx’ss leading Service-
programming interfaces for CRM integration with Onyx’ leading Service-
Oriented Architecture as they believe they can be quickly integrated using
Web services.
Web services.
This acquisition will give Atlas a broaded advertising campaign management
broader
Dec-06 Accipiter Solutions Atlas solution that will provide online media planning, buying and ad serving to
solution that will provide online media planning, buying and ad serving to $30.3 NA
enterprises. It also provides integration and software development services.
enterprises. It also provides integration and software development services.
The acquisition brings leading edge technology and deep industry expertise
The acquisition brings leading edge technology and deep industry
to WebTrends. Now WebTrends can offer customers a leading online
to WebTrends. Now WebTrends can offer customers a leading online
Dec-06 ClickShift WebTrends marketing optimization solution. They now have aablend of deep online
marketing optimization solution. They now have blend of deep online NA NA
advertising expertise and innovative technology that solves fundamental
advertising expertise and innovative technology that solves fundamental
challenges facing marketers.
challenges facing marketers.
Skywire’s acquisition allows them to become one of the largest providers of
software and services targeted to specific vertical industries. The new entity
Dec-06 Docucorp International Skywire Software $127.0 1.4x
will work to further its global reach and expand upon its 1,600 company
will work to further its global reach and expand upon its 1,600 company
client base.
client base.
The addition of FNS gives Innovation Group a a strong foundation in North
The addition of FNS gives Innovation Group strong foundation in North
America. FNS uses a combination of call center outsourcing services and
America. FNS uses a combination of call center outsourcing services and
Nov-06 First Notice Systems Innovation Group plc $50.0 2.5x
rules-based web technology to successfully connect insurance carriers, third-
rules-based web technology to successfully connect insurance carriers,
party administrators and self-insureds with their customers.
party administrators and self -insureds with their customers.
The transaction will help build out a a stronger CRM offering that will include
The transaction will help build out stronger CRM offering that will include
Sep-07 Smart CRM Alliance Technologies Web-based sales force automation and customer relationship management
Web-based sales force automation and customer relationship management $2.3 1.1x
software solutions.
software solutions.
The acquisition of Onyx further solidifies Made2Manage’s enterprise
The acquisition of Onyx further solidifies Made2Manage’s enterprise
Consona Corporation software and services offering. The addition of Onyx also provides a second
software and services offering. The addition of Onyx also provides a second
Jun-06 Onyx Software $92.0 1.6x
(Formerly Made2Manage) platform for industry consolidation, and extends the geographic reach of our
direct distribution capabilities.
direct distribution capabilities.
Alterian seeks to meet aacritical marketing need: the integration of online and
Alterian seeks to meet critical marketing need: the integration of online and
May-06 Dynamics Direct Alterian plc database marketing through the acquisition of Dynamics Direct, an email
database marketing through the acquisition of Dynamics Direct, an email $4.3 3.3x
and online marketing technology innovator.
and online marketing technology innovator.
The acquisition will accelerate RightNow’s customer experience
The acquisition will accelerate RightNow’s customer experience
May-06 Salesnet RightNow Technologies management development efforts by combining RightNow’s patented
management development efforts by combining RightNow’s patented $9.0 NA
knowledge foundation with Salesnet’s workflow engine.
knowledge foundation with Salesnet’s workflow engine.
Infor continues its strategy to acquire and consolidate. This time it’s aamajor
Infor continues its strategy to acquire and consolidate. This time it’s major
May-06 SSA Global Technologies Infor Global competitor. With the acquisition, Infor becomes third-largest enterprise
competitor. With the acquisition, Infor becomes third-largest enterprise $1,610.0 2.2x
software firm in thethe industry.
software firm in industry.
Mar-06 Veridiem SAS Institute Increases the functionality of its customer intelligence platform.
Increases the functionality of its customer intelligence platform. NA NA
The acquisition bolsters Unica’s vision of becoming the first firm to deliver
The acquisition bolsters Unica’s vision of becoming the first firm to deliver
Mar-06 Sane Solutions Unica end-to-end, cross-channel marketing solutions. It also bolster’s its web
end-to-end, cross- channel marketing solutions. It also bolster’s its web $22.8 4.0x
analytics and internet marketing offerings.
analytics and internet marketing offerings.
The acquisition by Alliance Data System’s Epsilon Interactive will create one
The acquisition by Alliance Data System’s Epsilon Interactive will create
Feb-06 DoubleClick Email Solutions Epsilon Interactive $90.0 2.2x
of the largest e-mailmail service and marketing firms in its space.
one of the largest e service and marketing firms in its space.
-

Source: TripleTree, LLC Median $50.0 2.2x


APPENDIX - Chart 2: Venture Capital Investments and M&A Activity in CRM (Licensed and SaaS)

SALES
Includes CRM vendors offering solutions for: campaigns, email, delivery, data mining, warehousing, database,
analytics, real-time information, business intelligence and reporting.

50

45
Sales
40
35

30
Transactions

25
Mergers & Acquisitions
20

15 Venture Capital Investments
10
5

0
2001 2002 2003 2004 2005 2006 2007


MARKETING
Includes CRM vendors offering solutions for: leads, search tools, web forms, call scripting, scoring tools, proposals/
quote generation, presence detection, configuration, web conferencing, contract management, workflow and approval.

180
Marketing
160

140

120
Transactions

100

80
Mergers & Acquisitions
60

40
Venture Capital Investments
20

0
2001 2002 2003 2004 2005 2006 2007


SERVICE
Includes CRM vendors offering solutions for contact centers, support, service, collaboration, email response,
email service and customer care.

80
Service
70

60

50
Transactions

40

30 Mergers & Acquisitions
20

10 Venture Capital Investments
0
2001 2002 2003 2004 2005 2006 2007



THE TEAM

Kevin Green, Managing Partner
• Co-founded TripleTree, LLC
• 25+ years building and advising IT companies
• Senior executive roles in public and private IT companies; two as CEO
• Active with numerous industry associations, and Board of
Directors, including SIIA and Connextions
• BA and MBA, University of San Diego

David Henderson, Managing Partner
• Co-founded TripleTree, LLC
• 22+ years in venture capital, business development and as a
senior operating executive
• Seven years of public accounting experience at Arthur Andersen
• CEO of a $400 million asset bank holding company
• Active Board of Director on several public and private companies
• BA, Moorhead State University; Certified Public Accountant

Scott Tudor, Partner
• Joined TripleTree in 1998
• Specializes in IT Outsourcing & Managed Services and Healthcare IT
• Worked on more than 30 transactions with leading global companies
such as UnitedHealth Group and Hewlett Packard
• Served as TripleTree’s research chairman
• BA and JD, University of Illinois; MBA, Carlson School
of Management, University of Minnesota

Chris Hoffmann, Senior Principal/Research Director, Technology
• 19+ years of experience an operating executive, consultant, and analyst in
the technology industry
• Transaction activity focus in the areas of software and technology
• Former President of Tier1 Research; executive positions at Gartner,
GE Capital Consulting and IBM Global Services
• BA, University of Minnesota-Duluth; advanced studies through
the University of Minnesota and Michigan State University

Brian Klemenhagen, Senior Principal
• Joined TripleTree in 1999 with over ten years of combined investment
banking and Wall Street equity research experience
• Primary engagement manager across technology, software and
outsourcing sectors
• Principal contributor to TripleTree’s SaaS research
• Prior to joining TripleTree was with RBC Dain Rauscher
• BA, Gustavus Adolphus College; MBA, Carlson School of Management,
University of Minnesota


THE TEAM

Peter Erickson, Senior Principal
• Transaction focus on consumer health, human capital management
and business services
• Sell-side M&A and capital growth client representation across software
and services domains
• Prior to joining TripleTree, managed international development
programs through the National Forum Foundation in Washington, DC.
• BA, DePauw University; MBA, Carlson School of Management,
University of Minnesota

Scott Donahue, Principal
• 15+ years financial strategy analysis and business development consultation
including marketing, operations support, and technical product development
• Expertise in IT operations and services delivery approaches
• Wall Street experience
• Served in management roles at leading IT firms
• BA, University of California - Santa Barbara; MBA, University of Michigan

Scott Prentice, Associate
• Focus on M&A and private placement activity in the technology sector.
• Previously worked on M&A activity at Ingenix, a division of
UnitedHealth Group
• Prior experience included technology capital investment at Target
Corporation and as an IT consultant with Computer Science Corporation
• BA, Bethel College; MBA, Carlson School of Management, University
of Minnesota

Michael Boardman, Analyst
• Specializes in research and analysis of industry trends and investment
opportunities within Software and IT Services
• Prior experience includes an internship with Merrill Lynch
• Held a Cisco Certified Networking Associate Degree (CCNA)
• BA, Carlson School of Management, University of Minnesota

Jeff Kaplan, Senior Advisor
• Advises TripleTree’s technology team
• Founder and Managing Director of THINKstrategies
• Founder of the Software as a Service (SaaS) Showplace® and Managed
Service Showplace®
• Founding member of the SIIA SaaS Executive Council
• Frequent speaker at industry events and contributing columnist for
BusinessWeek, Mass High Tech Journal, Financial Times of London, and For a complete list and profiles of
Network World, among many other industry leading publications the TripleTree team, please visit our
website at www.triple-tree.com


About TripleTree

TripleTree, LLC is a research-based investment bank serving growth companies, investors

and global acquirers. TripleTree conducts proprietary research that guides our work in M&A,

growth capital and financial advisory services. Our value-based approach benefits technology-

enabled businesses in sectors like healthcare, where technology and services are converging

in new delivery models and in other industries where management and investors are in search

of creative ways to penetrate and dominate markets and build value.

TripleTree’s unique personality is shaped by the experience of our principals, who as former

business builders and transaction advisors create strategic outcomes that maximize value for

our clients.

For further information, visit our website at: www.triple-tree.com

Copyright © 2007 by TripleTree, LLC

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