CRS Asia, Vol.5 Week 23
by Michelle Brown mbrown@csr-asia.com
Enhancing the capacity of businesses, government offices and civil society to identify and build partnerships can help build more sustainable business practices in Vietnam. This was one of the recommendations that emerged from some recent research CSR Asia carried out on the enabling environment for sustainable business practices in Vietnam.*
Over the last 25 years, Vietnam has achieved remarkable growth. Between 1996 and 2006 the economy doubled in size while the general poverty rate fell from 58.1 percent in 1993 to 16 percent in 2006 according to World Bank calculations. Providing an environment for the private sector to grow has been fundamental to this change and this transformation. Unleashing entrepreneurialism has helped to create jobs as well as provide products and services. While there has been a steady increase in foreign investment over the last decade the current global financial crisis is no doubt have an impact. However, according to the Economist Intelligence Unit, prospects for long term growth remain strong.
While Vietnam has already achieved its target indicators for the Millennium Development Goals in terms of eradicating extreme poverty and eliminating gender inequality and is on target to achieve many of the other goals, challenges still remain. Pockets of severe poverty remain and nearly half of ethnic minority groups are believed to be living in poverty. The urban and rural income gap is thought to be rising with poverty concentrated in many remote mountainous areas. Rapid economic development has not come without its toll and the environment has suffered immensely. Vietnam is not likely to achieve its targets in relation to environmental sustainability.
In 2008, due to internal and external factors, inflation rose considerably in the middle of the year while there were also growing concerns over food shortages, and the potential for large numbers of people to slip back into poverty. The number of labour strikes or labour ‘stoppages’ rose in 2008 with more than 680 strikes reported in that year representing an increase of more than 30 percent. While there was an increase in the monthly minimum wage it did not curb unrest and workers protested that this was still not sufficient.
Much of the country has continued to be vulnerable to natural disasters and typhoons often wreak havoc on communities particularly given the vast coast line which is likely to intensify with climate change. In addition to typhoons other impacts of severe weather include salt water intrusion, unpredictable weather, droughts or floods although these will vary in different areas. Natural disasters, which are intensifying with climate change, continue to affect livelihoods– and particularly for some of the most poor and vulnerable communities. Various studies have concluded that Vietnam is one of the countries to be most affected by climate change. In 2008, research by Oxfam documented how communities in Quang Tri province and Ben Tre province were already experiencing the consequences of the climate changing. Nearly three quarters of the population in Vietnam lives in areas vulnerable to water related natural disasters.
Vietnam’s environment and unique ecological assets have suffered immensely due to the industrial and agricultural transformation. In mid 2008 there were reports emerging on the ‘death’ of a 12 km stretch of the Dong Nai River, due to persistent effluent dumping activities by Vedan, a manufacturer of MSG. The business laws in Vietnam have been through a process of ongoing revision to provide a more conducive environment for business. There appears to be a fairly comprehensive regulatory framework for environmental and social protection. However, the challenge is that what exists in policy is not always translated into practice and duplications and contradictions between rules and regulations complicate matters even more.
Vietnam passed its first Environmental Protection Law in 1993. In 2006 it amended it to include provisions for the adoption of “polluter pays” measures; for instance for waste discharge into water bodies and the disposal of hazardous wastes. In principle, with the new law, authorities are required to report to communities the names of polluting establishments, and people can demand either businesses or government agencies to provide information on polluting incidents. Each year ‘State of the Environment’ reports are supposed to be provided by authorities at various levels. Despite these changes, particularly with regard to industrial pollutants, there are concerns that matters appear to be getting worse and that this in turn is having serious consequences for farmers’ livelihoods. Amongst those companies that participate in the Manufacturing and Distribution working group of the Vietnam Business Forum, there is a strong perception that there is currently no likelihood of a manufacturing facility suffering any serious legal consequences if they ignore the pollution laws.
In relation to labour issues, in the past year and a half various new laws and decrees were enacted, including the “tripartite partnership” between MOLISA (Ministry of Labour, Invalids and Social Affairs, representing the government), VGCL (representing employees) and VCCI (Vietnam Chamber of Commerce & Industry, representing employers) to mediate labour disputes. Decision 1129 was passed in August by the Prime Minister, on “enhancing leadership, providing direction for the development of harmonious labour relations, improved investment environment, and social order”. In addition to raising minimum wages, the government issued Decree 11 in January 2008 which states that if a strike is deemed ‘unlawful’ by the courts, those workers involved are required to pay compensation to their employers. This later decree has been a cause of concern for many groups working on issues in a country where it is nearly impossible to have a ‘legal strike’ and labour activists face imprisonment or just ‘go missing’.
Furthermore, like elsewhere, the need for improved managerial capacity, human resource practices and upgraded production facilities all pose challenges for embedding sustainable business practices. According to 2006 ILO research in Vietnam, the challenges and lack of skills is more apparent in smaller enterprises and others that do not have exclusive relationships with multinational buyers. Factories with exclusive relationships receive more support for upgrading production and improving labour standards. Research by the Vietnam Business Links Initiative in 2007 noted that to change business practices, “mentality and culture at the base of organizations” is the greatest challenge. Changes in management systems require changes in how managers think but that “most of the enterprises think that it is a very challenging task and costly with very modest evidence of success and gains”. This is compounded by the low profit margins for garment and textile factories whereby employers look for any means possible to keep costs down.
Buyer orders are likely to be a major incentive for domestic manufacturers to operate more sustainably. Thus it appears that those companies – whether local or foreign-owned, private or state-owned – producing for image-conscious (foreign) brands tend to be more concerned with (or see a clearer business case for) acting responsibly. In particular, since 1997, many producers for large American and European customers have started to adopt SA 8000.
There are some multi-stakeholder initiatives in country. With regard to addressing issues in the supply chain, the IFC and ILO together with the government of Vietnam and some major brands is launching the ‘Better Work Programme’. Essentially, this appears to build on the ‘Better Factories Cambodia Programme’ and aims to reduce overlap and duplication in buyers’ efforts and improve the conditions for workers in Vietnamese factories.
In addition, in 2007, the Global Compact launched a Vietnam network but it is not clear what take-up there has been (if any) from local enterprises. Going forward, it is anticipated that there will be more activities and, although it must still address issues of impact, it helps to raise public awareness.
There are stories of other inspiring partnerships to address other social challenges with business that are beginning to take root. For example, companies producing fish sauce such as SEAPRODEX have developed a partnership with the National Institute of Nutrition and the Global Alliance for Nutrition to combat malnutrition through fortifying fish sauce – a key household ingredient in the country. Iron deficiency anaemia affects nearly half of the population with significant impacts on pregnant women and young children.
Another great example of a business approach to addressing an important issue came from the helmet manufacturer Protec. Protec is Vietnam’s largest manufacturer of safety helmets, making over 5,000 per day, with all profits going towards awareness raising campaigns and traffic safety education programmes. This company has helped to address road safety and filled a large gap in the country where motorcycle accidents where a major cause of death and disability. A recent law has been passed to now require helmets in both rural and urban areas. By providing a high quality, lightweight affordable product in tandem with a public awareness campaign Protec has had a very positive impact.
While there are some emerging stories of innovative approaches to bring both business and community benefits in the country, there is an opportunity to do more. While the government has tried to create incentives for business to invest in rural and remote areas through tax exemptions, it is largely unknown whether this generates any addition benefits. There is currently no tax exemption for business innovations towards poverty reduction. Like elsewhere, there is also a general (mis)perception that CSR is equal to philanthropy. As Vietnam seeks to achieve middle income status, there is an opportunity for the country to look to find ways to better engage business in achieving sustainable development.
*Please note that this research refers to consultant reports that CSR Asia prepared for the Asian Development Bank in 2009. Other reports referenced in this article include:
ILO (2006). Market Assessment: Factory-Level Management and Labour Service in Vietnam
(VBLI), V. B. L. I. (2007). The current status of Corporate Social Responsibility (CSR) in Vietnam
The notes and documentation from the 2008 mid-term Vietnam Consultative Group Meeting ■
Showing posts with label CSR. Show all posts
Showing posts with label CSR. Show all posts
08 January, 2009
CSR: So what did we learn in 2008 that we can use in 2009?
CSR: So what did we learn in 2008 that we can use in 2009?
Source: Ethical Corporation
Mallen Baker , 7 Jan 09
So I thought instead it would be interesting to reflect on what we actually learned from the events of last year - and particularly on whether those learnings would be of any use as we face the next year and ponder where next for corporate social responsibility.
First - most people, including the declared supporters of CSR, have not really bought the business case arguments that have been put out there by a range of organisations, research groups and others.
Early in the year the IBM study said that it proved that CSR helped companies to be more competitive. It was the latest in a long line.
But as recession bites, we see lots of people on the defensive. It's not that companies have come out to declare they no longer believe in CSR, but CSR budgets are being cut, plenty of CEOs are talking about focusing on core business, and other things are on hold.
This is not unique. The marketing budgets have been cut. The HR development programme is on hold. Hatches are battened down all over the place.
But if decision makers had really bought the argument that CSR made them more competitive, they would be talking about that as part of their way out of the crisis. If CSR budgets were being cut, they would be demonstrating how they aimed to do more with less - like they are with the marketing budget.
The fact is that the research reports didn't prove anything, and many of the key decision makers didn't believe for a moment that they did. No-one was going to call this except for the critics - because actually there are plenty of good reasons to do this stuff. The benefits may be unproven - like every marketing campaign is before it's actually been run - but that doesn't mean they don't exist.
There has been a whole industry based on this line in recent years. Trying to prove cause and effect - successful business = responsible business. It's time to move the argument on, because all of those attempts bought into one central assumption - that it is the primary role of business to maximise shareholder returns and therefore any CSR commitment needs to show that it delivers cash to the bottom line in a direct and predictable way. That is the biggest assumption whose future is questioned by recent events.
Second thing we learned (or re-learned) - the basics still matter. Even in this crazy faster-than-the-speed-of-thought internet universe. The banks got very innovative in creating financial instruments that buried the visibility of risk. The shining edifices of the investment banks' headquarters attested to the permanence and solidity of those institutions. But when some of them fell, they fell so rapidly it gave the lie to those perceptions.
If the rock-solid institutions of yesterday could blow away into the dust because they had no solid foundations - which other apparently rock solid pillars of our society do we suspect may have similar problems? What about the global food chain? What about the entire tourism industry? Or the insurance sector? Or the entire natural ecosystem? If we think any of those are 'too big to fail' then what is our strategy other than the blind faith that didn't work too well last year?
Third - the other side of the maximising shareholder value is that CEOs are attracted and retained by large financial rewards. And if those rewards can be aligned with the interests of shareholders, then businesses do well. If they become disconnected, then the CEOs may 'go native' and do things against the shareholders interests.
This way of thinking has led to the view that huge pay for CEOs is necessary to attract and retain great talent. There is some truth to this, in that if you pay peanuts you get monkeys. But likewise, if you make vast financial reward the key motivator for CEO success, then you attract the kind of people who value above all else vast financial reward.
What is wrong with aiming to motivate people to want to do a great job because it creates value, it provides a service, it gives people fulfilling and meaningful jobs, and it can help to solve some of society's problems. What sort of leaders would we attract if we could do that? We need Mandela-like leadership, not Attila the Hun style leadership for this next bit.
Because last year we saw again how important is leadership. Barack Obama captured the imagination of the world - all because people saw the possibilities now that they felt real leadership was in evidence again in one of the most powerful nations in the world. Forget the politics of the parties - this is just about vision and focus.
Did we see any leadership in the financial sector? Some, not much. Some companies refused to take part in the parlour games of the sector overall and kept their feet on the ground. They did not criticise their peers, and they have enjoyed not being part of the story of crisis.
Most, however, embraced the logic and did what they were asked to do. Some of the people that asked this of them are now the ones condemning them. But that's stakeholder expectations for you.
Finally - at the start of the year, everybody was talking about the rise of private equity. A number of the CEOs and other business leaders I dealt with at the time talked about their ambition to get into private equity, where the rewards were seen as huge and the irksome barriers seen as few. A brutal world, where stellar performance was expected, but stellar rewards were duly delivered as a result.
But it was all based on the leverage provided by cheap credit. A private equity firm could buy a poorly managed company having borrowed eighty percent of the cost, and putting in only twenty percent of the stake from its own funds. If it could then turn the company around and float it back onto the markets - say at 120 percent of the price paid, then the debt is repaid, and the company has doubled its money. The mathematics of this simple process made a number of individuals super-rich.
But what happens to the ethics of the portfolio companies that are in the process of being turned around? It's not that they are always thrown overboard - they aren't - but where was the hard-edged business case that would have played with the hardball players who just wanted a turnaround and a big return?
Now, of course, it has all changed. The credit flow has dried up. Don't expect to see any cheap credit again any time soon. And the stock values of companies have plummeted. Maybe it'll be awhile before the stellar returns are realised as well. Oh, and since companies are doing badly then some of the struggling badly managed companies are ... at best, struggling well managed companies.
Maybe that is all to the good. Suddenly, the owners of companies are going to have to behave like they might just own them for a bit longer than they expected, and wonder what they have to do to build long term value.
So - learnings at the end of all that?
1. We need a more robust discussion about the benefits to society and business of a different way of doing business. This needs to be quite radical - none of yesterday's assumptions are exempt from scrutiny. Why? Because the rules just changed. Even if you don't think that changes anything major, it would be as well to check.
2. Let's lose the sloppy thinking about CSR and bottom line benefits. Nobody believes that the equation is this simplistic. Any more than they would someone who 'proved' that companies that sell the most are the ones that spend the most on marketing.
3. The basics matter. But we, as a society, are prone to wishful thinking. The dot-com bubble. The credit crunch. How can we avoid this effect in the future - particularly over things that are genuinely too big to fail, and are now subject to a government bail-out if they do?
4. Is there a concept of a 'fair return' for shareholders to replace the 'maximum return' concept? Can we get more people to buy in to a sustainable future if it means that the smart or lucky ways to get unfeasibly large returns are no longer possible? Guess what - you have to work hard to get rich, not just get lucky?
5. Since pay for CEOs is one of the easiest targets for discontent when poor CEO performance is one of the big issues, we should expect to see this reined in. There's an opportunity there for some visionary CEOs to show leadership. And an opportunity for society to build a vision of what the job of a CEO is, and how they should be motivated. Pay peanuts, get monkeys. Pay obscene salaries, get obscenely greedy monkeys.
Learn from the best of the voluntary sector, and blend it with the best of the private sector.
6. Take the challenge to the private equity guys. The party's over. What are the real strengths of the private equity model we could learn from? What are the real downsides?
That's quite an agenda for the next twelve months!
Taken from Mallen's Business Respect e-newsletter with kind permission. For more, go to www.mallenbaker.net
Source: Ethical Corporation
Mallen Baker , 7 Jan 09
Let's lose the sloppy thinking about CSR and bottom line benefits to start with, argues Mallen Baker
I don't know about you, but I have had my fill of articles and blog entries which aim to review the year 2008, or make predictions for the year 2009.All the reviews start the same - what a year it was, and whoever would have thought it - and all the predictions are statements of the obvious - it's going to be a tough old year to come.So I thought instead it would be interesting to reflect on what we actually learned from the events of last year - and particularly on whether those learnings would be of any use as we face the next year and ponder where next for corporate social responsibility.
First - most people, including the declared supporters of CSR, have not really bought the business case arguments that have been put out there by a range of organisations, research groups and others.
Early in the year the IBM study said that it proved that CSR helped companies to be more competitive. It was the latest in a long line.
But as recession bites, we see lots of people on the defensive. It's not that companies have come out to declare they no longer believe in CSR, but CSR budgets are being cut, plenty of CEOs are talking about focusing on core business, and other things are on hold.
This is not unique. The marketing budgets have been cut. The HR development programme is on hold. Hatches are battened down all over the place.
But if decision makers had really bought the argument that CSR made them more competitive, they would be talking about that as part of their way out of the crisis. If CSR budgets were being cut, they would be demonstrating how they aimed to do more with less - like they are with the marketing budget.
The fact is that the research reports didn't prove anything, and many of the key decision makers didn't believe for a moment that they did. No-one was going to call this except for the critics - because actually there are plenty of good reasons to do this stuff. The benefits may be unproven - like every marketing campaign is before it's actually been run - but that doesn't mean they don't exist.
There has been a whole industry based on this line in recent years. Trying to prove cause and effect - successful business = responsible business. It's time to move the argument on, because all of those attempts bought into one central assumption - that it is the primary role of business to maximise shareholder returns and therefore any CSR commitment needs to show that it delivers cash to the bottom line in a direct and predictable way. That is the biggest assumption whose future is questioned by recent events.
Second thing we learned (or re-learned) - the basics still matter. Even in this crazy faster-than-the-speed-of-thought internet universe. The banks got very innovative in creating financial instruments that buried the visibility of risk. The shining edifices of the investment banks' headquarters attested to the permanence and solidity of those institutions. But when some of them fell, they fell so rapidly it gave the lie to those perceptions.
If the rock-solid institutions of yesterday could blow away into the dust because they had no solid foundations - which other apparently rock solid pillars of our society do we suspect may have similar problems? What about the global food chain? What about the entire tourism industry? Or the insurance sector? Or the entire natural ecosystem? If we think any of those are 'too big to fail' then what is our strategy other than the blind faith that didn't work too well last year?
Third - the other side of the maximising shareholder value is that CEOs are attracted and retained by large financial rewards. And if those rewards can be aligned with the interests of shareholders, then businesses do well. If they become disconnected, then the CEOs may 'go native' and do things against the shareholders interests.
This way of thinking has led to the view that huge pay for CEOs is necessary to attract and retain great talent. There is some truth to this, in that if you pay peanuts you get monkeys. But likewise, if you make vast financial reward the key motivator for CEO success, then you attract the kind of people who value above all else vast financial reward.
What is wrong with aiming to motivate people to want to do a great job because it creates value, it provides a service, it gives people fulfilling and meaningful jobs, and it can help to solve some of society's problems. What sort of leaders would we attract if we could do that? We need Mandela-like leadership, not Attila the Hun style leadership for this next bit.
Because last year we saw again how important is leadership. Barack Obama captured the imagination of the world - all because people saw the possibilities now that they felt real leadership was in evidence again in one of the most powerful nations in the world. Forget the politics of the parties - this is just about vision and focus.
Did we see any leadership in the financial sector? Some, not much. Some companies refused to take part in the parlour games of the sector overall and kept their feet on the ground. They did not criticise their peers, and they have enjoyed not being part of the story of crisis.
Most, however, embraced the logic and did what they were asked to do. Some of the people that asked this of them are now the ones condemning them. But that's stakeholder expectations for you.
Finally - at the start of the year, everybody was talking about the rise of private equity. A number of the CEOs and other business leaders I dealt with at the time talked about their ambition to get into private equity, where the rewards were seen as huge and the irksome barriers seen as few. A brutal world, where stellar performance was expected, but stellar rewards were duly delivered as a result.
But it was all based on the leverage provided by cheap credit. A private equity firm could buy a poorly managed company having borrowed eighty percent of the cost, and putting in only twenty percent of the stake from its own funds. If it could then turn the company around and float it back onto the markets - say at 120 percent of the price paid, then the debt is repaid, and the company has doubled its money. The mathematics of this simple process made a number of individuals super-rich.
But what happens to the ethics of the portfolio companies that are in the process of being turned around? It's not that they are always thrown overboard - they aren't - but where was the hard-edged business case that would have played with the hardball players who just wanted a turnaround and a big return?
Now, of course, it has all changed. The credit flow has dried up. Don't expect to see any cheap credit again any time soon. And the stock values of companies have plummeted. Maybe it'll be awhile before the stellar returns are realised as well. Oh, and since companies are doing badly then some of the struggling badly managed companies are ... at best, struggling well managed companies.
Maybe that is all to the good. Suddenly, the owners of companies are going to have to behave like they might just own them for a bit longer than they expected, and wonder what they have to do to build long term value.
So - learnings at the end of all that?
1. We need a more robust discussion about the benefits to society and business of a different way of doing business. This needs to be quite radical - none of yesterday's assumptions are exempt from scrutiny. Why? Because the rules just changed. Even if you don't think that changes anything major, it would be as well to check.
2. Let's lose the sloppy thinking about CSR and bottom line benefits. Nobody believes that the equation is this simplistic. Any more than they would someone who 'proved' that companies that sell the most are the ones that spend the most on marketing.
3. The basics matter. But we, as a society, are prone to wishful thinking. The dot-com bubble. The credit crunch. How can we avoid this effect in the future - particularly over things that are genuinely too big to fail, and are now subject to a government bail-out if they do?
4. Is there a concept of a 'fair return' for shareholders to replace the 'maximum return' concept? Can we get more people to buy in to a sustainable future if it means that the smart or lucky ways to get unfeasibly large returns are no longer possible? Guess what - you have to work hard to get rich, not just get lucky?
5. Since pay for CEOs is one of the easiest targets for discontent when poor CEO performance is one of the big issues, we should expect to see this reined in. There's an opportunity there for some visionary CEOs to show leadership. And an opportunity for society to build a vision of what the job of a CEO is, and how they should be motivated. Pay peanuts, get monkeys. Pay obscene salaries, get obscenely greedy monkeys.
Learn from the best of the voluntary sector, and blend it with the best of the private sector.
6. Take the challenge to the private equity guys. The party's over. What are the real strengths of the private equity model we could learn from? What are the real downsides?
That's quite an agenda for the next twelve months!
Taken from Mallen's Business Respect e-newsletter with kind permission. For more, go to www.mallenbaker.net
12 Technology Predictions for 2009
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In the cyclical Chinese calendar, 2009 is the Year of the Ox. Chinese horoscopes characterize those born within the year as determined, hard-working, stable, and persevering -- traits that happen to be in demand as we enter the second year of a recession. With the economy weighing heavily on the minds of decision-makers, fighting through the tide has never been more important for businesses, according to CMS Watch, a research firm focused on Web content management, enterprise portals, and enterprise search technology.
Tony Byrne, founder of CMS Watch, says the firm prides itself on keeping a finger on the pulse of the customer, so, when putting together a set of technology forecasts for 2009, CMS Watch looked to customers -- who else? -- for a sense of their purchasing plans and strategies for the upcoming year. Not surprisingly, one recurring theme among the predictions is an effort to prioritize cost savings and to get better mileage out of existing software purchases.
The 12 CMS Watch predictions for 2009 are as follows:
- Open-source enterprise content management will see more love from buyers. Byrne says that he has seen the industry increasingly pay attention to both open-source technology and software-as-a-service (SaaS) solutions over the last five years. The current economic conditions, however, will drive even more interest and adoption in open-source solutions. Byrne predicts a "significant uptake" in SaaS and open-source solutions due to the perception that the two technologies are cheaper than traditional software options -- a perception that may not be wholly accurate, he adds. "The reality is, once [buyers] get into it, they may discover that [SaaS and open-source solutions don't] have less [total cost of ownership] in the long run." In other words, something that appears "too good to be true" might really be just that. Byrne warns potential buyers to take a strong look at the software they already have before choosing something new to take on.
- The next release of Microsoft SharePoint will cause customers to reassess. Byrne says that he expects Microsoft to release a Beta version of Office 14 in 2009, which may include some updated SharePoint tools. Even though the 2007 edition of SharePoint is still very new to a lot of users, many have complained that they've been unable to fully comprehend certain functions -- and the new release is expected to address those concerns, Byrne says. This fervent hope, he adds, may lead to a re-evaluation of the product among current and prospective users.
- Metadata will send taxonomists into a frenzy. "The whole issue of metadata and tagging will continue to be one that's hotly debated," Byrne says. For those devoted to categorizing content, third-party data brings a whole new set of challenges. Metadata, categorized by social-tagging methods, does not fit the typical standards of enterprise data sets. For this reason, vendors are pushing data-cleansing and data-integration tools to unite on-premises data with social data in the cloud. Byrne recommends that organizations stringently evaluate the way they use -- or don't use -- metadata within their existing information systems before jumping into a new solution. Only after that assessment is complete can a company accurately see how sophisticated social insight could add value to the information systems.
- Vendors will spotlight regulatory compliance offerings. A tough economy often leads to an increase in litigation, which pushes regulatory compliance to the top of the agenda. Byrne says he wouldn't be surprised to see compliance regain some industry buzz, given the recent economic headlines.
- Proactive e-discovery will move to the forefront. With litigation comes e-discovery, so organizations are advised to prepare for "what if" scenarios as a precaution. "You can't just suddenly search within this massive content on your Web site and expect to give back to legal counsel simple and accurate results," says CMS Watch analyst Alan Pelz-Sharpe in a video presentation of the firm's predictions. "You have to be proactive to get your house in order."
- SaaS continues to appeal to users -- but now they will want more from providers in the cloud. As with the aforementioned view of open-source computing (see #1, above), buyers increasingly see SaaS as a viable, low-cost option. However, Byrne cautions organizations to closely examine their processes before adding another Web application. CMS Watch findings indicate that customers are now asking for more than just technical services from providers in the cloud. "Expect [SaaS] vendors to make more strategic partnerships with firms that can supplement their services," the report says.
- Oracle will fall behind with front-office productivity applications. Oracle had a huge year in 2008 -- the culmination of a three-year acquisition spree comprising about 50 companies. Acquisitions often lead to complications, Byrne says, citing reports of confusion caused by perceived overlaps between the toolsets offered by Oracle's multiple front-office applications, including Oracle WebCenter Suite and its new collaboration product, Beehive. "Beehive is fundamentally a development platform and it's oriented toward developing custom applications at a time [when] the market wants things out-of-the-box," Byrne says. "The bigger issue is, if you're an Oracle customer and interested in social computing, it's unclear what Oracle toolset to use." Byrne says he expects these issues to become more critical over the next year.
- Enterprise search now involves personalization, stickiness, and analytics. Pelz-Sharpe expands upon this notion: "At the end of 2008, buyers were starting to understand the limitations of search engines. Search is a complex area, and buying needs to reflect that." There will be new emphasis placed on application search -- and the idea that "you are what you search for" will become central to enterprise search.
- Social computing will continue to make inroads, while smaller niche players will sneak in with new offerings. "So much hype is cleared away and the reality is starting to come through," Pelz-Sharpe says. The report predicts that standardization is still a ways off -- probably 2010 at the earliest. Movement toward social computing will build, but it remains a young market.
- Web content management vendors will partner off, leading to consolidation in the marketplace. The analysts write, "We hope for your sake that any [merger and acquisition] activity falls more on the acquisitions side." The report states that when smaller companies merge, existing customers are often left in a tough place, as one tool or the other often falls by the wayside.
- Users will demand mobile and multimedia Web analytics. Who will step up? "We are again seeing Web analytics really…coming to the fore," Pelz-Sharpe says. "People are realizing they need to know what's going on at a granular level." Still unclear, though, is a sense of which vendors will take charge in providing analytics for mobile and multimedia activity -- a void that needs filling.
- Buyers will remain in the driver's seat: Prices will fluctuate based on pushy purchasers. "Buyers will not accept vendors' first offers," the report states. "Rather they will demand better pricing, more licenses, and better support levels." In other words: Don't be afraid to haggle.
News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.
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