If you walked away with one message it was perhaps Axel’s unconventional advice to start with sales not marketing if you have not yet kicked off with social media for your business.

If you are new to social media, see our 10 Tips for Resellers Just Starting Out in Social Media.

NewLeaseG2M is the exclusive Australia Partner of the Social Media Academy, and we provide social media training and implementation for business lead by our Certified Social Media Consultants. We also are also a reseller of the Xeesm social business tools, which accelerate your productivity in social media.

You can read more about the investments of Microsoft and EMC and others in some of the articles written by Walter Adamson, NewLeaseG2M’s CEO, on his blog:

Microsoft tops social media savvy companies - survey

Social media savvy Microsoft’s new competitive edge - culture change

EMC, its Communities, and social media

How with just 3 Asks EMC encourages staff to embrace Facebook for business

How Small Business uses Facebook for B2B

Are you just social media overhead, asks Cisco Non-believer

Walter is a Certified Social Media Consultant, is a Founding Council Member of Social Business One, and recently had post among the top 10 posts of the week on Customer Think a community focused on improving customer engagement.

Virtual Ark Executive CEO & President Marty Gauvin recently described Cloud Computing as the 3rd Generation of outsourcing, and it’s a useful way of looking at it.

Marty called the 1st generation “your mess for less” which is an apt description and pinpoints how service providers made their money.

The 2nd generation was “selective sourcing”, sometimes called “strategic sourcing” although it was anything but - more on this below.

And “cloud” is the 3rd generation, and it’s potential, in part, will be shaped by the previous generations of outsourcing and the previous generations of people on both sides of the deals.

Here’s my take on the big picture evolution of outsourcing.

1st Generation - Your mess for less

This is the period 1970 to 1990. Marty’s description exactly fits the perfect qualified opportunity for a service provider seeking a 1st generation outsourcing contract. The more complexity and the more mess the more the service provider can truly save, and hence better margins, and hence the desire for as long a contract as possible.

This was a golden era for both EDS and IBM in particular. IBM had a huge amount of government business and the Space Program, and EDS led in large-scale outsourcing for the commercial sector. Both had fabulous methodologies and top gun project directors and managers. In the US CSC was strong and DIGITAL had a strong core SI group with sound methodologies (later destroyed by Compaq), Accenture built a global presence around BPO, and ICL had some general outsourcing business in the UK (which formed the nucleus of Fujitsu’s later move into the sector), while current day players such as HP, Fujitsu, DiData had no material presence nor capability.

The successes were many, although the failures attracted the media attention because it has to be remembered that the Outsourcers were the enemy of the techos at all levels, from CIO down. The IT media wrote for the IT folk and stories about outsourcing failures caused a lot of glee in the IT sewing circles. The reality was that companies that had a mess got less of a mess for a lower price, they got better service levels, and in most cases benefited from economies of scale.

The failures were legend and well known, if not over-reported. The tenure of these reports was universally “IBM / EDS / CSC screwed up” whereas the truth is that the headlines should have universally read “Company managers fail to manage - again”, with one major exception which I will discuss. The fundamental issue in the failures was that companies abrogated their management responsibilities, they threw out the baby with the bathwater. Through poor judgement, lack of understanding, and an obsession with cost-reduction as the principle goal they willingly destroyed their own abilities in IT strategy, architecture, performance management and didn’t enhance their contracting and commercial skills.

Some outsourcing firms played up to this, to their discredit, with the full knowledge that the customer was destroying their ability to manage the contract and wanting to take advantage of this. I think that it is an unfortunate fact that EDS was worst in this regard, the UK Internal Revenue Service contract being their ultimate Waterloo.

Customers also often complained about lack of innovation from the outsourcers, but hey suck it up! If you understand anything about commercial reality then you can’t back people into a financial corner and expect spontaneous investment during the tail end of a contract cycle. It’s easy to build in an intelligent business innovation contract component, but you have to have an intelligent customer!

2nd Generation - Revenge of the geeks

This is the period 1990 to 2010, and here’s the setting of the time around 1990 - firstly bad news is bigger than good news and 1st generation outsourcing had a groundswell of bad news, and I won’t argue that there were lots of candidates, even though I assert it was overall a generally successful era for those clients that had competent management skills.

Secondly, outsourcing wasn’t going away, which in itself became even more threatening to the geek IT managers, and public service IT managers, and who then fueled the fire of the horror stories. Thirdly, the fatal flaw that many of the 1st generation deals were led by the clients’ CFOs or accountants who took an uninformed cost-cutting approach provided the platform for the revenge of the geeks.

That revenge was so-called “selective sourcing”. The geek CIOs and IT managers got control back, the 1st generation Fear Uncertainly and Doubt worked, without doubt! The financial guys lost their role in outsourcing precisely because most were out of their depth.

Having wrested control back the geek teams announced “selective sourcing”. Selective sourcing was simply bundling up slices of technology and getting bids from small guys as well as the large outsourcers and parceling things out in technical packages which the geeks understood. I’m talking about “the help desk” or “the servers” or “the network” etc. It has little bad press, because why would the IT press promote bad things about the geeks being in control?

It’s certainly generated huge growth for the smaller and mid-tier outsourcing firms - the reason being that it’s all commodity stuff and while the big guys should have been able to compete on scale often the geek terms and control conditions meant that the big guys just had too much overhead and high costs to be able to win the small commodity chunks of work. Smaller players were “more flexible” which was really just a feint for “I’ll replace your people with my cheaper people”.

This period is sometimes called “strategic sourcing” which is only a sick joke as it is anything but strategic. It is completely tactical, and mostly lacking in accountability and almost always lacking in any connection to business KPIs. The Pharmaceutical industry is an industry where outsourcing is widely practiced across many activities. They have global benchmarks which show that the top performing companies incur management costs of about 5% of an outsourcing contract’s value, and the poor performers about 25%. An IT group with multiple sourcing contracts incurs these overheads but in the IT world they are almost universally hidden, just one of the hidden secrets of the geeks revenge!

The post-2000 boom in commodity hosting services has been a positive outcome of the long journey of outsourcing, however overall I’d characterise this 2nd Generation as the lost generation for business in gaining the business benefits of outsourcing.

Note: there was a version of this 2nd Generation called “Out-Tasking” a term coined by John Chambers CEO of Cisco in about 2001. That was really a very business-based selective approach to a kind of BPO, and it had a lot of merit, and still has a lot of merit as an outsourcing option. Unfortunately in the big scheme of things it is rarely adopted.

3rd Generation - Cloud - Like the misty rain that falls softly, but floods the river

This is the period 2010 to potentially 2030! Without going into what cloud is and isn’t and whether it is the same old thing relabeled (which it isn’t!) this generation of outsourcing varies from the past in a few key ways. Before I note them I’ll just say that I am not talking about “private cloud” here, which besides being an oxymoron is just a sales ploy to capture the last retreat of the geek CIOs of 2nd generation outsourcing. That’s the subject of another post. I’m talking about cloud as access to resources that a customer does not own - what is sometimes called public cloud.

The three differentiators which I see, in contrast to previous models, are:

1. Technical and service agility - more rapid provisioning and less commitment to infrastructure;
2. Business agility - less constrained by contracts, by IT, and by capital;
3. Logistics agility - one manifestation being instant geographic coverage.

So in a nutshell cloud is much less in terms of contracts, constraints and capital, and much more in terms of speed, scale and service levels.

How does the past effect the future?

The 3rd Generation is going to ride on the back of a collapsing 2nd Generation, and in fact be propelled by it. In one of the great ironies the fact that the geek CIOs won control of the 2nd Generation will accelerate their undoing by the 3rd Generation.

There will be a last gasp Fear Uncertainty and Doubt FUD campaign, aided and abetted by the “private cloud” sales teams who will be desperate to make their last sales and will back the geek CIOs to the corporate hilt. However I predict that over the first 5 years of this potential 20 year 3rd Generation phase we will see a general collapse of these efforts. There are a number of reasons:

• Cloud economics are undeniable and unobtainable by 98% of inhouse operations;
• 2nd Generation “selective sourcing” has sliced and diced outsourcing into commodities which are easily compared to cloud pricing and service levels on that basis alone 2nd Generation cannot win;
• As cloud moves up the platform stack and interoperability, integration and migration options open up then it becomes even harder to resist;
• The competitive edge of firms who adopt cloud will expose those CIOs who are resisting, and in particular the fallacy of the “private cloud”.

What’s the greatest constraint to all this - the FUD of privacy and security. Always the first question and the greatest friend of the geek CIOs. It’s the same question that’s been around since the 1st Generation, and will take the same time, pain, and frustration to move through the issues with those customers who are worth the effort.

The 2nd Generation CIOs and IT Managers have trained their business owners to believe that they have to live with all the “enabling IT” and to put up with a host of cumbersome necessities. Cloud, over time, will wipe those fallacies away.

On our side are people, and the fact that the line between consumer and corporate IT is blurring, perhaps with lightening speed due to social media, but with perhaps a 5 year lag generally in terms of reshaping expectations of IT and IT management within firms. The private experience is universally dominated by cloud, take out Outlook, which means that in the end the FUD won’t work! The result will be that IT Governance will continue to evolve in a natural way to embrace specific cloud issues - it’s no drama!!

My conclusion is that while the 1st Generation captured a small business base, and the second a wider base albeit with fewer business benefits, the 3rd Generation is set to capture a massive business base and in the process will rewrite the IT Management/CIO world not to mention the channels and distribution world.

Gartner projected in March 2009 that sales of cloud computing services would almost triple over five years, from $56 billion in revenues in 2009 to $150 billion in revenues in 2013. I don’t know the exact number but that’s probably about 10% of the available market, and I can see it really taking off from about 2015.

Those business which get there first, and those ISVs and service providers which adopt the quickest will be the winners. This IS the biggest revolution in 20 years. As Dr Strangelove said, stop worrying and learn to love it!

http://xeesm.com/walter

Axel is not only a business leader in social media, but also has enormous depth of experience in the partner channel, being author of the book Channel Excellence and and a past chair of the SaaS Channel Committee of the US SIIA (Software and Information Industry Association).

NewLease is sponsoring a breakfast with Axel for partners and associates on July 26th, running a round table workshop for a select group of leading partners, and also meeting in-house with partners and prospects. We’ll also be conducting a workshop on how to use the XeeSM social navigation tool to accelerate your social business and lead generation efforts.

At the 26th July Breakfast Axel will give partners an update on the lastest ways in which business is using social media for profits, and the most productive ways to get started, and answer their questions on how it can work for them.  At NewLeaseG2M, we believe that when used effectively, respectfully and with purpose social media can help position your business and generate a buzz about what you do in your market. It can help you build new business with existing customers and start you in meaningful conversations with potential customers.

NewLeaseG2M has specific training to enable channel partners to build their business opportunities using social media, as part of our customer engagement consulting services. If you’d like to know more please contact Walter Adamson, CEO of NewLeaseG2M, walter.adamson@newleaseg2m.com or +61 403 345 632.

For more about Axel Scultze see here, and for the Partner Breakfast here, and here for our Channel Partner Enablement Training.

NewLeaseG2M is the exclusive Australia Partner of the Social Media Academy, and we provide social media training and implementation for business lead by our Certified Social Media Consultants.

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• Why Channel Partners should connect with vendors and current customers in social media (customerthink.com)
• Xeesm Company Introduction - Social Business Applications (slideshare.net)

In their report The path to successful new products McKinsey found that the businesses with the best product-development track records do three things better than their less-successful peers:

1. They create a clear sense of project goals early on;
2. They nurture a strong project culture in their workplace; and,
3. They maintain close contact with customers throughout a project’s duration.

Doing these things created real advantage - “The teams in our study that embraced these tactics were 17 times as likely as the laggards to have projects come in on time, five times as likely to be on budget, and twice as likely to meet their company’s return-on-investment targets“.

With respect to project goals, the main finding was that clarity of scope was the main differentiator between high and low performing companies. That hardly qualifies as an insight, but it obviously requires ongoing attention in every project.

With regard to scope, requirements, and communication Wendy Soucie has a really good presentation Project Management, Social Media, and Productivity and there is also The Social Media Project Manager. Social media can play a strong role here in making sure that everyone is on the same page, and that changes and variations are totally understood across the team, and thus help manage risk and cost.

Customer development

McKinsey reports that the successful innovators “kept in close contact with customers throughout the development process. More than 80 percent of the top performers said they periodically tested and validated customer preferences during the development process, compared with just 43 percent of bottom performers. They were also twice as likely as the laggards to research what, exactly, customers wanted“.

Social media not only plays a key role in this traditional sense of keeping in contact with customers, but also in two new dimensions. Firstly it speeds the customer development path compared to more traditional contact-feedback methods e.g. focus groups and “market research”. There are many examples such as IBM sMash and Starbucks and my own presentation From Innovation to Wealth Creation - Getting Closer to Customers Faster.

Secondly it more naturally enables the opportunity, oft promoted by Axel Scultze, to bring customers right into the product development process. Right in starting from the strategy, the clarity of goals, then the development cycle, the trials, and the promotion and launch.

Doing this requires some courage, but it’s success becomes a self-fulfilling prophecy as those customers become advocates. They are clearly in the process because they are potential users of the product/service, and they will therefore have their own influence and networks among similar clients. That’s where WOM comes in and builds upon the success of the lifecycle engagement of such customers in the product development.

And money can’t buy that, no matter how many focus groups and how much “market research” you do!!

How do you use social media to improve product development, and what’s the impact?

http://xeesm.com/walter

I don’t think I’ll be buying any more desktops going forward.  I don’t think I’ll even be buying any more laptops going forward. 

They’ve all been largely obsoleted (at least at my home) by a sleek $499 device that doesn’t really have any right to be called a “computer” in the traditional sense. 

Sure, there’s a handful of tasks that I still would prefer a real computer, but — amazingly — that list has now shrunk dramatically.  In less than a week.

The members of my family immediately gravitated to the new shiny thing — no prompting, no encouragement, no migration, etc.  They are drawn to it like a moth to flame.

I now have this strange love/hate relationship with Apple.  And I think it won’t be long before I’m forced to make another trip back to the Apple store.

via chucksblog.emc.com

Apple’s love/hate relationships are intriguing because they don’t seem to really care yet it is such a common discussion point among people. Great post by Chuck Hollis.

The Digital Sport Summit #dss10 in Melbourne yesterday was a sold-out event, and while I saw a few less satisfied twitters I thought that it was very constructive first-time event and it had a fair deal of “how” rather than just “why”. The “why” we are over, and I was impressed with how the clubs had really moved on to implementation and their lessons.

I didn’t take many notes, just a few jots on my iPhone now and then. Here are the main three impressions that stand out in my mind 24 hours later:

#1 Vision: Essendon Football Club’s Jonathan Simpson told how the Board of Directors nailed a vision 2 years ago for the club to commit more deeply to digital engagement with their fans, which by definition included social media. Impressively the Board said “hey we don’t know how to do this but we want you (the staff) to find out” and it is a 2 year strategy. It was a “virtual connection” strategy, analogous to the successful ”community connection” strategy already in place. It was 12 months ago that staff started on the social media “how to” of the journey, built their plans, presented their business case, and started implementing 6 months ago.

One of the fundamental tenets in building the engagement with fans is their “Content of Choice, Platform of Choice” decision, which was developed by the staff in their 6 month investigation period. This means that Essendon will engage with the fans where the fans are, in the fans social communities, and in with the content relevant to that community. This perhaps sounds obvious, but it is counter the thinking of most clubs who are obsessively concerned about driving traffic back to their club site.

Jonathan talked about the challenges in getting everyone else in the organisational side of the club on board, and of the conflicts and concerns about crossing organisational lines and responsibility. His answer was to get everyone together, to explain how “fan development” effected all other areas, and in particular to illustrate factually how it effected their KPIs. This helped align everyone.

All of this is a tough task, and getting all departments on board is always tough, so I give full credit to the Board for their vision as this is something we most often cry out for in making all successful projects work - the commitment of senior management, and above.

#2: Power of Spontaneity: I guess that the Phoenix SUNS fan engagement story is “well known” among those who “know” as it has won many awards, and it was great to have Jeramie McPeek as the opening speaker of the Summit. Amongst all the Suns neat work there was one item which really got me thinking - the Jared Dudley story.

 In the face of a varying degree of enthusiasm for “twittering” and lingering degrees of skepticism, fear and doubt, Jared Dudley suddenly took to the medium like a duck to water. His spontaneity changed the face of twittering and social media in the club, and among players, and his “natural” reporting skills and tendencies built a whole new level of fan engagement. Tweeting from the locker room, pics and videos from players homes, parties, social events, tweeting his own stats, all lit up the fan engagement and at no cost to the club. That’s contagious to everyone - in the club and outside.

Contrast that to the World Cup where the powers-that-be are more concerned to block and control then to allow spontaneity.

PS we have our own “Jared Dudley story” in Collingwood AFL Footballer Harry O’Brien, who is one of the first AFL players to embrace social media and gave a fabulous account of his enthusiasm at the Summit and has an active website.

#3 Business Acumen: Nick Marven told a great story about re-inventing the faltering business of the Perth Wildcats, and from being a disbeliever in social media as part of that to an advocate.  The Wildcats are now the most successful club in the Australian NBL and has experienced annual membership growth of 35% resulting in consecutive sell-out attendances for over 2 years. 

Nick gave a huge insight into the difference between a business customer and a sporting club customer, and the “sales funnel”, and what I also really liked was his use of social media in personnel management within the club. His presentation is on Slideshare.

So in summary I’d say Essendon’s vision is still rare, in any business, Suns’ embracing of spontaneity is rare, in any business still, and the Wildcats’ total business integration and alignment of social media is still rare, in any business. All great examples.

I had never realised that clubs see such value, and go to such effort, to engage their fans in how the club works, all the different departments, the people, the “organisation”, and how they encourage this transparency. The evolution of social media provides a wonderful platform for these efforts.

What are the best sporting club social media insights you know?

Have they started from grass roots or been Board-sponsored?

Who is your favourite social-media-engaged athlete?

http://xeesm.com/walter

I’m a bit late to the party and wasn’t really on top of exactly what “earned media” is - so I have to admit to dragging my heels. I’d read the Nielsen/Facebook report which showed that earned media significantly increased ad and brand awareness and intent to purchase. That was back in April.

Wikipedia gives a definition, although it is surprisingly sparse. And Brian Shin CEO of Invisible Measures gives a good account in “How ‘Earned Media’ is Providing Value to Brand Marketers” on Beet.tv.

So I had the gist. But it wasn’t until a read a June article in the McKinsey Quarterly that the penny dropped. I’m not really sure why as the article is quite light-weight. As a matter of fact it was because it was so light-weight that I stopped to read it again as I thought there must be something here, as an insight, that I’m missing!

So I concentrated again on the opening background, and I guess the second paragraph got me thinking about the “mind-set” of earned media:

More recently, we have adopted a new mind-set: we think of word of mouth generated on social networks as a distinct form of media. This idea is more than a semantic detail. When you think of word of mouth as media, it becomes a form of content, and businesses can apply tried-and-true content-management practices and metrics to it. In addition, word of mouth generated by social networks is a form of marketing that must be earned—unlike traditional advertising, which can be purchased. We therefore concluded that we could succeed only by being genuinely useful to the individuals who initiate or sustain virtual world-of-mouth conversations.

Somehow, when I read that slowly, it made “earned media” mean something more to me than in the past. I have no idea why but the “mind-set” idea clicked, and now I have a nice little compartment in my mind for “thinking of” earned media. I didn’t get much from the rest, but there you go, one good “click” makes the article worthwhile in any case.

Have you a clear way of thinking about earned media?

What’s the best article on earned media you have read?

Do you think the McKinsey article had other useful insights?

http://xeesm.com/walter

In the recent McKinsey article The basics of business-to-business sales success  the  B2B customers surveyed said “they care most about product and price, but what they really want is a great sales experience”.

And in particular they want sales reps with “adequate product knowledge” and “fewer, more meaningful interactions” (only 3 percent said they weren’t contacted enough).

McKinsey goes on to say:

“Striking the right balance between contacting customers too much and too little requires understanding their stated and actual needs. There should be a clear strategy for reaching out to customers based on needs and profit potential, with schedules dictating frequency. The best contact calendars center around events that create value for customers, such as semiannual business reviews…“

When it comes to specifics, McKinsey found customers were “more than happy to use self-serve or online tools and selectively tap specialist support for the most complex situations”.

What’s this mean for social media in B2B?

We already know that the buying cycle and the selling cycle have moved completely out of sync, and in particular that buyers not only inform themselves but that they now determine their own schedule for when they want to contact a selling organisation. They also trust recommendations from independent online sources, in particular forums, more highly than from any company source.

Therefore, the customer-contact recommendation above strikes me as quaintly old-fashioned, and even out of touch with McKinsey’s own assessment of the strategic role of social media for business. The recommendation is an internally-focused process with a schedule! This seems a country mile from the way customers want to be treated today, given their presence in the social media.

As an alternative I would recommend “reaching out to customers” has to be a very regular operational activity in the social media, following the usual rules of contribution and participation. The rate of contact will depend then only on the relationship building and value, and not a calendar.

Reaching out in this regular will provide many opportunities to direct customers and potential customers to online forums, and self-serve tools in a value-added way which is relevant to the moment, as indicated through the social media conversations.

McKinsey concludes their article by recommending that companies should examine exactly how they are performing by asking the following questions:

1. What are the most influential drivers of the sales experience?
2. What things are your sellers doing that could damage relationships?
3. How does the perception your customers have of your sales force compare to how they view your competitors?

I’d probably put it a little differently, bearing in mind the social media context and the misalignment of the buyer-seller process.

Firstly, I would ask how can continue to better use social media and digital engagement/assets to really understand the buyer’s buying process?

Secondly, what are the most effective things we are doing to facilitate the buyer’s buying process (and hence our relationship)?

Thirdly, what can we learn in the social media about how our customers and potential customers view their buying needs and interaction with us versus our competitors.

The exciting thing is that all this information, for many companies, is available today in the social media.

How would you advise a company to improve its B2B sales engagement using the social media?

What would be your three key review questions?

http://xeesm.com/walter