Two days in, September has been a busy month for contact managers. I haven't seen this much activity in years. On September 1, Sage announced its ACT! 2010 release and then Salesforce.com dropped a small bomb — as of today they're into the contact manager space too.

Contact management has been a poor cousin to sales force automation (SFA) for many years. Initially, there wasn't much difference between the two. Contact managers were sort of a subset of SFA which tracks deals, opportunities and leads as well as contacts. For many sales people, the choice — if the choice was theirs to make and not the company's — was largely one of work style. You could organize your work around the stair-step categories or just glom it all together in a contact manager through your own system of user defined fields and notes.

Real SFA also offers the important ability to connect to the broader CRM suite thus making the information collected by the sales person more useful and available to the rest of the company.

The year we have just started looks to be at least as strange as the one just completed. For me the big tip-off is that public companies have thrown their collective hands in the air and told the financial analysts that they can't even guess what their quarterly numbers might look like. Not being able to give guidance to Wall Street is certainly an eye-popping trend but, believe it or not, it has a bright side too.

The financial and economic events of late 2008 have set the proverbial bar at an incredibly low level, which could mean that it will be easy to exceed expectations. A word of caution though, exceeding very low expectations might not be enough to keep your boat afloat, so we all need to pull hard on the oars. Here are some thoughts on what it all might mean for CRM.

Cheap and Easy Does It

Everybody is going to be looking for a deal and why not. With budgets slashed or non-existent, customers are really going to mean it when they tell you to sharpen your pencil. One area where low cost has almost become a religion in the last decade is business software and a significant reason has been the success of on-demand computing.

...the economic conditions make people more willing to try unproven solutions simply because they have little to lose.

Harvard Business Publishing posted a very provocative blog entry by marketing guru John Quelch recently, you can read the whole thing here.

Quelch’s thesis is that the recession now upon us will accelerate consumer downsizing. That should raise alarms for vendors and for CRM vendors in particular as we continue to grapple with questions about what CRM ought to be in the future.

Perhaps it is only coincidental that the 77 million baby boomers are reaching points in their lives when simplification makes a great deal of sense and the recession will only serve as the tipping point. But the fact remains that the generation that reprised Thorsten Veblen’s ideas about conspicuous display of consumption is at a point in life when more “stuff” is not as valuable as more “experiences.”

Thus, Quelch tells us to watch for simplification in all things, for people of a certain age, who no longer need the big house (the kids have flown the coop) or the big SUV (not very green). Even the gourmet kitchen, once an everyday necessity, now stands unused many nights as people with discretionary cash opt for the experience of dining at the new Pakistani place down town.

The economic troubles we are all now experiencing will serve as a boon to the on-demand market. It makes good sense that as further pressure is exerted on company budgets and balance sheets that many will look to economize by reducing IT expenses, however, those economies will take time to work their way through any organization. Translation – it was smart to begin on-demand adoption a few years ago but there’s no time like the present.

As good as all this might be for on-demand vendors – and it is good – there will be new challenges for them as they attempt to deal with expanding volume, that’s inevitable. One place where the strain of success might be first noticed for on-demand vendors is in billing and payments processing.

Almost since its inception, the on-demand (OK, SaaS) market has dealt with a hybrid solution in which companies delivered software as a service, but invoiced and collected the old fashioned way. It’s not well documented but the back office operations of on-demand companies put a great deal of stress on conventional billing systems.

Apple has been held up as the poster child of ease of use and high value customer experience, but how did that all happen? My recent experience purchasing a Macintosh gave me a window into the answer.

I have always had trouble setting up a network involving wired and wireless computers, and when I was at the Apple Store, I asked an innocent question of the saleswoman, "Can you send someone to my house to set up the network?"

I expected her to give me some kind of description of Apple's services or perhaps introduce me to a partner. Instead, she gave me a blank look, as in, "Why would we ever need to do that?" It was sort of like the waiter in the high-end restaurant not blinking when you ask for the steak sauce. Her answer was a crisp, "No. You just plug it in, and it works."

The world is beginning to run up against significant resource constraints — the amount of arable land, available energy, peak oil, climate change and much more. What all these things have in common is the dawning realization that everyone can't have everything they want, or at least they can't own it. They may be able to rent it though and that's a major shift.

In prior eras such as the middle ages, there was a small upper class and a lot of very poor people. The upper classes owned all the property and all of the productive assets. Petty nobility held the land in the name of the monarch and peasants rented it for a percentage of the harvest. The same was true of infrastructure assets so for example, if you grew wheat and wanted to grind it into flour you paid your local lord (in flour of course) for the privilege.

Studying this phenomenon gave rise first to economics and later to communism as some analysts from the poorer side became aware of just how lopsided the distribution of resources was. David Ricardo developed a concept called “rent seeking” (a mildly pejorative term today) in which owners of assets did little more than collect rents on their lands to support their life styles. Meanwhile, Marx and Engels popularized the term “means of production” to reference economic assets like land, labor and money.

A long time ago, almost another lifetime it seems, I remember a customer describing his customers as the bottom of the food chain. That was well before CRM or anything like it existed. My customer's point, beyond the obvious, was that in our professional lives, we exist for the customer and that the customer is not, or at least should not be, something to exploit in some mercantile economic model. Somewhere in the hubbub of the roaring '90s and the backlash of the '00 (pronounced uh-oh) years, we might have forgotten that key element of analog customer management.

The focus on customer-centricity, through CRM, social networking, communities and other advanced technologies is, perhaps, a nod to that sometimes overlooked attitude toward customers. In a more dollars-and-cents view, customer-centricity might also be viewed as smart innovation. In my work, I have so far avoided speaking about customer-centricity, per se, and focused more on what amounts to the same thing: making your company easier to do business with. But the link between customer-centricity and innovation is strong, nonetheless.

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