However, despite the technical focus of the event, there were several key themes that have important implications for non-techies and small and medium businesses (or as SAP calls them–small and medium enterprises or SMEs). This makes sense, as SAP’s SME ambitions are core to the company’s growth strategy. Many of the partners I spoke to at the event provide sales, service and third-party development for SAP’s portfolio of SMB-centered applications, including Business One, Business by Design, Business All-in-One and Business Objects Edge. Undoubtedley not by accident, as SMB customers rely on these partners to translate the technology and solution innovations below into practical business results.

• HANA everywhere. As noted in fellow analyst Cindy Jutras’ post, HANA was by far the lead theme at TechEd–just take a look at the tweet stream at #sapteched. HANA is SAP’s innovative column-based, in-memory database, which enables applications to zip through calculations for millions of records in just fractions of a second. While this is relevant for large companies, why should SMBs care? According to SAP, HANA will be part of every solution that SAP offers. SAP applications, from Business One through the Business Suite, will be “powered by HANA,” providing these applications with a big performance boost. The good news here for SMBs is that while SAP Business Suite customers will pay extra for high-test HANA performance, customers using SAP’s SMB-centric solutions will get at least some of this added horsepower as part of the normal upgrade cycle, at no additional charge. However, at this stage, it’s still fuzzy as to exactly how SAP will embed and deliver HANA in its SMB portfolio, what will be included, and what will be priced separately.

• SAP Business by Design (ByD) as a platform. ByD will continue to fill the role of a cloud-based ERP suite, but ByD is evolving to become a cloud platform as well. SAP is providing partners and customers with an integrated SDK to build applications on top of the ByD platform, and plans to debut a ByD app store ala Salesforce.com AppExchange, where customers can buy, download and deploy both SAP and partner ByD apps. The ByD cloud platform should make it easier for partners to build their own applications and IP on top of ByD and expand their market opportunity. Partner-developed ByD services will be layered on the ByD foundation to deliver the common elements of ByD.  Providing and enhancing the partner opportunity is essential for SAP to groe its SMB footprint in the cloud space, especially as it plays catch up against early birds such as NetSuite and Salesforce.com. Partner applications and services will be essential to provide the diverse SMB market with the choice and richness in solutions they require.

• Mobile as the design center for solution development and delivery. Aided and abetted by its Sybase acquisition, SAP is putting the mobile experience front and center for application design and development. This means that SAP’s design point for new applications starts with the mobile device experience. Existing apps will get a mobile makeover–providing users with the mobile interfaces they are increasingly clamoring for and turning to over traditional desktop devices. For instance, SAP Business One presented Version 1.3.1 of it mobile app, which enables users to use Business One on an iPhone or iPad. The app provides things such as alerts and approvals, reports and interactive dashboards, and inventory management, and looks very easy to use and streamlined for the mobile experience that more and more SMBs are using in addition to or as a replacement for traditional desktop interfaces.

• Making business applications more engaging. Mary Poppins told us long ago that “For every job that must be done there is an element of fun, find the fun and snap, the job’s a game.” Jane McGonigal, SAP TechEd’s guest keynote speaker, presented the modern-day version of this with her talk on “gamification.” In a nutshell, gamification is making a non-game application more engaging by making it game-like. While I talked to several skeptics (or Puritans?) who don’t get the connection between work and games, I’ve always bought into the Mary Poppins philosophy. To me, it’s intuitive that people doing more fun and interesting work are naturally more engaged and productive. SAP put this theory into action at TechEd with Knowledge Quest, which attendees could play and earn points by answering questions, completing interactive challenges, acquiring codes, and taking on head-to-head challenges with other players. Players with the most points were awarded prizes such as iPads, Nintendo 3DS, and headphones. I don’t know how many people played, but the Knowledge Quest booth was pretty packed whenever I went by. Now this is a very big if, but if SAP successfully tackles the gamification challenge (maybe with a game?!) it can gain a big advantage. SMBs using SAP solutions will also come out ahead–via a more productive and engaged workforce–especially as more businesses are started and run by younger entrepreneurs and employees that have been raised in a video-gaming culture.

The bottom line is that while TechEd isn’t for everyone, SAP’s key themes are as relevant to business decision-makers as they are to technology decision-makers and solution builders.

However, SAP is competing against some great marketers–most notably Marc Benioff of Salesforce.com–who bring their own appetite for and vision of business software innovation to the market. In contrast, SAP, for all of its technical strengths, has not been a marketing powerhouse. While SAP has committed to making its technology innovations digestible for SMB customers, can it do the same with it’s marketing and messaging? Creating clear, crisp and compelling marketing for its diverse portfolio of solutions and its new technology directions may prove to be SAP’s toughest innovation challenge.

The Paint-by-Numbers Social Enterprise

Benioff laid out his newest work, the “social enterprise” last week in his keynote  at Dreamforce 2011. He made a convincing and compelling case that companies need to proactively listen to and engage with customers that are vocal and socially connected on a mobile, digital web–or they’ll be brought down in a “corporate spring” the way Egypt and other Arab countries have toppled in the “Arab spring.”

To that end, Salesforce has been acquiring and building the components that companies will need to become social enterprises (also known as social businesses, a term IBM coined a year or so ago). Although Salesforce.com’s Winter 2012 release contains over 150 new features, Benioff provided paint-by-number instructions for companies to become social enterprises in a few broad brush strokes:

1. Establish a database that maintains and updates social profiles for customers and prospects, in real-time. Paint this part of the picture with Database.com, which Benioff introduced as a social, mobile and open cloud based database, and Data.com, which builds Salesforce.com’s 2009 acquisition of Jigsaw, which uses crowd-sourcing to gather customer info, by integrating Dun & Bradstreet lists and data services. Together, this provides data storage, external data sources, data cleansing. On top of that, Salesforce plans to introduce a new Chatter service next year that will bring external conversations into the database as well.
2. Create a social network integrated with your business processes. Chatter is the color to use to integrate collaboration services with Salesforce.com and partner apps. Salesforce initially introduced Chatter in 2010 as an internal, employee social network, but is expanding it so that you can open it up to customers and partners and share files in Chatter streams. Chatter is also slated to get instant messaging, presence-awareness and screen sharing capabilities (by way of its Dimdim acquisition) so you do things such as have a video conference on the fly within Chatter.
3. Analyzing and acting on all the customer comments and data you now have. Once your listening ears are on, you need to do something with all that information. Radian6, which Salesforce acquired earlier this year, fills this piece in nicely, enabling you to view, slice and dice unstructured data and take action based on that data.
4. Get everything to work for any customer, on any device. To make sure that you can engage with your customers on any device they choose to use, Salesforce is launching Touch.salesforce.com. Based on HTML5, Touch.salesforce.com automatically renders the apps, data and customizations in Salesforce.com and partner apps built on Force.com on any mobile touch devices.

Can SMBs Afford the All You Can Eat Buffet Social Enterprise Buffet?

This vision is compelling for businesses of all sizes. But it sounds like a lot of stuff for a small or medium business to piece together and pay for. As I discussed in Prescription for Subscription Fatigue, there are only so many subscriptions you can tack on before people will start to complain about getting nickeled and dimed. So to make things more palatable, Salesforce is introducing a new Social Enterprise License Agreement, which provides full access to everything Salesforce sells for one all you can eat price.

The only problem is, Salesforce hasn’t told us how much it will cost for companies to become a social enterprise. When queried in media and analyst sessions about how pricing would work, Salesforce execs said that’s where the direct sales force comes in, and that basically, pricing would be determined on a case-by-case basis, in relation to the value that the total solution provides the customer.

This makes sense for Salesforce–it elevates them beyond CRM and into a more strategic platform discussion. And it makes sense for large companies that actually have dedicated Salesforce.com account reps, and enough seats and volume in the account to make the cost of one-off pricing work. But how will it work for SMBs that want to become social enterprises?

A Tough Fit for SMBs

When I followed up with a one-on-one question to Salesforce.com’s Clarence So and Alex Dayon, they assured me that SMBs are near and dear to Salesforce.com’s heart–and that they’ll figure out how to make this all you can eat feast feasible for SMBs. After all, as they said, democratization and leveling the playing field for smaller companies has been a core component of Salesforce.com’s strategy. But, they didn’t offer any specifics, and I suspect that Salesforce.com will need to figure this out as it goes along.

Clearly, Salesforce.com will continue to be pestered for answers in this area. Customers–especially SMBs–want transparency in pricing, and to date, Salesforce.com and most cloud vendors have provided them with that transparency. They’ve gravitated to the cloud model in part for the predictable pricing it affords, and are wary of vague or open-ended commitments that might be budget busters.

As important, its hard to see how Salesforce.com or even most of its partners could transact these one-off deals profitably with most SMBs. The time needed to account for the number of users, the technologies used, the value derived from those technologies, etc. might be quickly recouped in a large enterprise deal, but would be a very steep sales cost to absorb in SMB deals.

SMBs not only need affordable, predictable pricing, but many require a lot of hand holding and guidance to help them through the cultural and business process changes required to transform into social enterprises. How will Salesforce.com and its partners help them with this transformation? As of now, there are no clear answers.

Can SMBs Keep Up with Salesforce.com as it Grows Up?  

At Dreamforce 2011, Benioff underscored his vision for the Social Enterprise with great testimonials from big companies such as Coca Cola, NBC Universal and Disney, which are using Salesforce.com solutions to recreate their businesses as social enterprises. But these big companies are used to one-off enterprise-wide license negotiations, have the undivided attention of Salesforce.com sales reps, and can afford to bring in Accenture or Deloitte to help them as needed.

Clearly, Salesforce.com has grown up and evolved into a multi-faceted company with a rich portfolio of technologies and solutions that extend well beyond its CRM roots. But with this kind of growth comes complexity. In Salesforce.com’s case, it looks like they are doing a great job of shielding customers from a lot of the technical complexity that underpins these quantum leaps. But can it figure out how to take the business complexity out of the equation for SMBs? And will it want to devote the time to do this as demands from its large customers rise?

More often than not, other vendors, faced with a similar dilemma, have been unable to find a formula that allows them to live comfortably in both worlds. But Benioff and team seem to relish Rubik cube-like challenges–and it will be interesting to watch them try.

Traveling in the Way Back Machine

In a galaxy long ago and far away, I was an analyst at the former Summit Strategies when the first cloud seeds were being planted in 1997. NetLedger (now NetSuite) and Employease (now part of ADP) were among the first to visit and brief us in Boston, followed soon after, of course, by Marc Benioff and Salesforce.com.

These vendors were among the early pioneers of what was first called the internet business service provider (IBSP) model. They built their solutions as multi-tenant software-as-a-service solutions, designing them  business from the ground up to be delivered as a single instance, to thousands of customers, in a subscription-based pricing model.

In the early going, these pioneers survived the confusion wreaked by the traditional software vendors, who put their traditional packaged apps–never designed for a services model–up on servers in the application service provider (ASP) hosting model. Then, they persevered through the onslaught of the software establishment at the time–from Siebel to Microsoft to SAP–who insisted SaaS was just a passing fad. They forged on even as multitudes of IBSP wannabes–from Agillion to Red Gorilla to vJungle–crashed and burned when the Internet bubble burst. They even survived the problems they created for themselves as they kept renaming themselves, from IBSP, online services vendor, software-as-a-service (SaaS) and then to the “cloud” label that would finally stick.

Evolutionary Vs. Revolutionary

From the start, analysts such as myself and counterparts, such as the luminary Phil Wainwright, thought that IBSP/SaaS/cloud was a great alternative to the packaged software model–and that it would catch on much more quickly than it has. But, though cloud computing has grown over the last 13 years or so, it’s growth has been more evolutionary than revolutionary. In the beginning, many of the technologies necessary to enable widespread cloud adoption, such as ubiquitous high-speed Internet access, just weren’t there. As important, IT people were often reluctant to go to the model because they were afraid it might put them out of a job, and decision-makers in some companies didn’t feel a compelling need to change the status quo.

In contrast, adoption of mobile and social technologies has been truly revolutionary. Not only were the right technologies were in the right place, at the right time, but individuals–not IT people or business decision-makers–called the shots. Employees are also consumers, and are spending their own money to BYOD (bring your own device) instead of using a company-issued brick. They started questioning why it was easier to keep track of friends on Facebook than keep track of contacts in CRM.  Armed with iPhones, iPads, Facebook and Twitter, as Benioff so rightly pointed out, individuals are now empowered not only bring about the “Arab spring” that has toppled dictators, but also stir up a “corporate spring” for companies that don’t listen to customers and employees.

Now the Cloud Can Ride the Waves

As a result, the pecking order of the IT universe is being radically altered. Apple is worth more than HP, Google is more powerful than Microsoft, and Facebook has changed the world–and what we expect from software–forever.

Though cloud computing has been on a slower trajectory than social and mobile technologies, cloud is increasingly the critical enabler for both mobile and social solutions. It provides the economies of scale and skill that developers and companies need to create, reiterate, and reinvent. It provides the customer feedback loop and data aggregation necessary to see where the puck is going and get there first. It provides the collaborative environment required to accelerate new ideas and new ways of solving problems. But it is very complicated for individual companies to piece together all the components that they need on their own.

As this perfect storm of social and mobile rapidly forms, how much time do the software vendors such as Microsoft, Oracle, Sage and SAP, have to straddle the fence and ride out the storm? You can bet that I and a lot of other storm chasers will be watching closely as the waves build.

The Sage North America Branding Challenge

Over the years, Sage North America has added a myriad of SMB-oriented accounting, ERP, CRM, HR, payments and industry-specific solutions to it’s portfolio. In most cases, these solutions brought large groups of loyal customers with them. Sage has undergone many identity-building initiatives in the past, including co-branding all of it’s individual solutions with the Sage master brand in 2009, developing capabilities to seamlessly integrate Sage CRM, ERP, HR and other applications, and a concerted corporate-wide initiative to make customer experience it’s top priority. But, for the most part, Sage customers have continued to identify more with their individual brands, ala Abra or MAS, instead of the Sage moniker.

This has not only hampered Sage’s traditional cross-selling efforts, but it also threatens Sage’s Connected Services strategy, which provides Sage customers with online, connected services (both from Sage and Sage partners) that integrate with on-premise Sage solutions to provide additional functionality.

Clearly, for Connected Services to achieve it’s goals, Sage needs to make sure that, for instance, Sage Integrated Payments Solutions are the first stop for Peachtree or ACCPAC customers looking for payments solutions that integrate with their accounting software.  In addition, without a strong corporate brand, Sage is at a disadvantage when going up against competitors such as Intuit, Microsoft or SAP.

Tackling the Branding Dilemma Head-On

Houillon wasted no time addressing the elephant in the room. At the opening keynote of the partner session, his first announcement was that Sage NA would embark on a phased approach to drop individual product brand names (again, think ACT!, MAS, Peachtree, etc.) in favor of the Sage brand. So for instance, Sage Peachtree Pro, Complete, Premium and Quantum would become Sage 50 Pro, Complete, Premium and Quantum.

Note the word “phased.” This re-branding won’t happen overnight, but take place over the next 12 to 18 months. Sage has lots of products and in many cases, product overlaps. It will most likely start with entry-level solutions, such as Peachtree and ACT!, and those products that have a well-defined space within the Sage line-up.

As important, along with the re-branding, Sage will ramp up existing efforts to create a more consistent user interface and experience among its products, and make it easier to integrate them. For instance, Sage will be incorporating Sage Advisor (first available in Peachtree), which provides in-product assistance to help guide users through tasks, resolve error messages and find functionality as needed, into more of its products.

Needless to say, all of this re-branding talk caused quite a stir among partners, press and analysts. In many cases, partners have invested a lot of passion in an individual brand–in many cases, partners had been selling the individual brand long before Sage acquired it. They have legitimate concerns about making the brand switch, and the new investments they’ll have to make in marketing collateral, web sites, etc. However, in subsequent sessions, Tom Miller, Sage NA’s channel chief, noted several programs already underway at Sage to help ease partners through the transition.

We (press and analysts) also raised a lot of questions about the risk of eroding brand equity that they’ve built up over the years for the individual brands. Several analysts also worried about the blandness of using a numbering system for product names (as noted in both Denis Pombriant’s and Paul Greenberg’s posts on the topic)–which I’m not crazy about either. And of course, there’s the problem that some products overlap with others–such MAS and ACCPAC.

But, after listening to the Q&As and debates, querying Sage execs one-on-one, and talking to Sage customers (most of whom told me they had no problem with rebranding), I think Houillon has made the right decision.

Short-term Pain, Long Term Gain

No doubt that Houillon’s decision will produce some short-term pain, probably most acutely felt by channel partners. But what’s the alternative? Former CEO Sue Swenson stepped in to stop the bleeding, but major surgery is still necessary for Sage to make a full recovery. In the long run, Sage needs to reset, refocus and re-energize the company for growth–something it hasn’t seen much of recently, for these key reasons:

1. Although all Sage execs appear on board with the change, I’m sure that there are at least a few that have resisted the corporate call. This is just human nature–either inertia, the fact that an individual brand is doing fine as is, or that some people like to run their own little empire without a lot of corporate oversight. The rebranding and what’s underneath it–common look, feel and experience–should help shake out execs that are idling, and foster a more innovative and collaborative environment.  Ultimately, this should yield more value for customers and partners.
2. A strong corporate brand is key to the success of Sage Connected Services.  Connected Services enable existing Sage customer to easily tap into add-on online services that give them additional functionality. Sage has about 50 connected services already available and coming soon, spanning HR, payments, payroll, tax, sales and marketing functions. For example, Sage offers a dozen Sage Payments Solutions as connected services to Sage ERP and accounting solutions, and several sales and marketing connected services for Sage CRM solutions, such an e-marketing service, as well as business information services via Hoover’s. But, if customers don’t self-identify as Sage customers, they may not even look at Sage Connected Services when needs arise.
3. Sage needs a strong corporate brand to help its cloud offerings take off. Sage already offers SageCRM.com, ACCPAC Online, SalesLogix Cloud, Sage Payments Solutions and Sage Intergy on Demand (for healthcare) and Sage Billing Boss as cloud solutions, and several more are on the way. As more companies look to the cloud to deploy new solutions, on demand offerings will increasingly erode the sales of packaged software. Sage needs a strong brand to compete in this space and capture new customers as they turn to the cloud.

Or, as Benjamin Franklin said, “When you’re finished changing, you’re finished.”

What Sage Must Do to Pull It Off

That said, Sage will face many challenges along the way. Here’s my take on what Sage must do to increase the odds that it will be successful:

1. Facilitate the branding change for partners. The biggest concern I heard partners voice was about the money and time they would need to spend to accomplish re-branding. Sage needs to make it fast, easy and low- or no-cost for partners to re-brand their web sites, marketing collateral, etc. at every step of the re-branding process. Given Sage’s history of providing partners with innovative tools and programs, I’m confident that it will be able to develop and roll out do the same here.
   
2. Put more emphasis and resources to make sure that changes beyond product name changes are achieved. Develop and provide Sage employees, partners, customers, press and analysts with a clear vision and solid plan for what the Sage portfolio of the future will look like. Sage has already made good inroads on integration across product lines, and needs to continue investing here. But other areas are fuzzy. For instance, when and how will it bring a common interface to different solutions?  What’s the roadmap to roll out Sage Advisor technology into different solutions? In cases where there is product overlap, how will it rationalize this?
   
3. Make the Sage brand stand for something and stand out. Simply using the Sage name to brand all of its products won’t be enough to get new customers in the door. What can the Sage brand represent? IMHO, Sage should piggyback on the Firm of the Future education it’s offering partners. This workshop helps partners analyze their existing business models, understand and navigate change, and build a plan to create a new business model to succeed in a changing world.  Why not take this a step further and help its SMB customers become Firms of the Future? In almost every industry, SMBs are grappling with changes wrought by a global economy, increasing volatility and new technology. Everyone sees the change coming, but few even know where to start to get ahead of the curve and position to capitalize on it.

No one ever said change is easy. But change is inevitable and for Sage, essential if it is to thrive and grow. Sage has taken a big first step is in the right direction, now it just needs to keep moving ahead.

–by Sanjeev Aggarwal and Laurie McCabe, SMB Group

At its annual Metamorphosis conference earlier this month, Pervasive announced Pervasive Galaxy, which merges an online integration marketplace and community into a single, streamlined platform. Pervasive has designed Galaxy to remove boundaries between buyers and sellers and make it easier for end-user customers to understand options, review vendors, figure out what’s best for their needs, and shop for/purchase integration solutions. Galaxy’s built-in community capabilities help vendors connect with customers to gain input, gather feedback, exchange ideas and help crowdsource new solutions.

As we noted in our SMB Group Top Ten 2011 SMB Predictions, better, faster integration is becoming a critical business solutions differentiator. Cloud computing has made business solutions more accessible and affordable for a wider swath of companies, but integrating them can break the bank. This is especially the case for SMBs, who usually don’t have the money or appetite for complex or time-consuming integrations.

This reality drove Pervasive, a long-time leader in the integration space, to send Galaxy into orbit on the heels of some very big players making significant acquisitions in the integration space; IBM’s purchase of Cast Iron earlier this year, and Dell’s recent deal for Boomi.

Here’s a quick synopsis of the announcement, and our take on what it means for the integration market and the stakeholders in it.

The Integration Challenge

Integration is one of the biggest and costliest hurdles for companies that need to adopt new applications. Companies need to integrate applications and data sources to maximize productivity, reduce redundancy and inaccuracies, and streamline workflows. Yet integration between and among external cloud and on-premise applications, different data sources and existing business workflows can be costly and complicated. This is particularly true for SMBs, who lack IT staff that can develop integration between applications, or the budgets for solutions that require time and labor services.

How Galaxy Addresses the Integration Challenge

With Galaxy, Pervasive is creating a place where customers can easily identify and access affordable and capable integration solutions and vendors, and also provide vendors with feedback about their integration requirements. Galaxy will offer data integration products, solutions, connectors, plug-ins and templates, and serve as a community platform for customers, developers, integrators and other relevant vendors. Pervasive’s intent is that this convergence will nurture a strong ecosystem which will facilitate more rapid, innovative and accessible integration solutions.

Vendors on Galaxy will offer customers both integration components and turnkey cloud integration services. For instance, integration components available in Galaxy include engines, workflows, connectors, agents and rich data services that can support a range of needs, such as data loading, data matching, profiling, transformation and business analytics. Galaxy will also offer ready to run solutions for point-to-point solution integration in a subscription-based SaaS model.

How Galaxy Works for Customers

Galaxy enables community participants to build, preview, test and buy integration solutions. These might include pre-built data integration solutions, connectors, plug-ins or templates that enable faster integration solution development.

Instead of starting with a Google search, or contacting a VAR or consultant and trying to figure out if there is an existing integration solution that’s right for their needs, customers can go to Galaxy and see if there’s an existing solution that fits the bill. They can also use Galaxy to locate a partner than can customize an available integration to their individual needs, or build a custom solution from scratch.

Building an integration community is Galaxy’s other primary focal point. End users will not only be able to shop for ready-made solutions on Galaxy, but will also be able to view and rate templates, connectors, plug-ins and solutions. They can also use Galaxy to inform developers and integrators about their needs, request new integrations, and link to others with similar needs to share the costs of getting a new integration developed. End-users who build integrations themselves can, if they want, also sell them to others via the Galaxy platform.

How Galaxy Works for Partners

Pervasive Galaxy offers developer and system integrator (SI) partners an integration marketplace platform, development tools, store, community collaboration and revenue sharing–basically everything they need to build and sell their solutions. There is no charge to build integrations. Once partners build the solution and start selling it on Galaxy, they keep 70% of the sale and the other 30% goes to Pervasive. Partners retain their intellectual property, and can offer documentation and the required technical support (possibly for an additional fee).

Galaxy should help developers get their integrations to market more quickly, and make their offerings more accessible to a broader constituency. For instance, Galaxy’s “try and buy” program gives developers a way to demonstrate ROI before they commit to a purchase–giving skittish and/or cash-strapped SMBs a risk-free way to try the integration and see if it pays off before they have to spend money for it.

In addition, partners can take advantage of Galaxy’s community to tap into integration requirements across a range of businesses. This should enable them to tune their integration solutions more closely to actual requirements, to explore potential new markets for their products and meet customer needs in a more repeatable and profitable manner.

What Does Galaxy Do for Pervasive?

Galaxy gives Pervasive a centralized mechanism to market and provide access to its growing array of development and testing tools–including Pervasive Data Integrator, Pervasive DataCloud, Pervasive Data Profiler in a more streamlined way to developers and integrators–and build a new revenue stream based on the sales of the integrations that partners build and sell.

Pervasive has initiated, built and will maintain and manage the Galaxy marketplace platform. As the Galaxy community grows, Pervasive should also be able to extract a lot of insight about customer and partner integration requirements and demands across different horizontal, vertical and geographic markets, which it can use in its own product planning efforts. Pervasive and its community members will jointly develop and participate in demand generation and building visibility for the Galaxy market, vendors and community.

At some point, Galaxy could serve as a launch pad for integration testing and certification, conducted either by Pervasive or by the community, helping to reinforce the company’s position as a leader in the integration space.

Quick Take

The integration challenge is becoming increasingly more complex because of trends such as cloud computing, mobile solutions, social media and the exponential growth of data. These trends will continue to drive the need for companies to integrate more applications and data from an increasingly dizzying array of sources.

These trends are also driving Pervasive and its integration competitors to tear down some of the barriers that have made integration so difficult in the past (see Dell and Boomi: Doubling Down on Integration, for our view on Dell’s approach to this challenge).

With Galaxy, Pervasive has built a streamlined, in-context ecosystem for customers to search for, identify, evaluate and purchase integration solutions. As important, Galaxy gives users a place where they can voice their integration experiences, concerns and requirements. Meanwhile, Galaxy should help partners market their solutions, and gain insight on integration gaps and requirements from a much broader audience, and amortize the costs of developing their integrations over a larger number of customers. The ecosystem approach puts vendors and customers on the same page and fosters the collaboration that should result in a win/win for all involved.

However, while Pervasive has built Galaxy, the question remains whether enough users and partners will come to make it a true integration destination point. To fuel customer interest, Galaxy needs a strong cadre of actively engaged developers, SIs and integrations in the Galaxy ecosystem. Conversely, to attract partners, it needs a lot of customers that partners can sell their services to. Pervasive will need to double down on its social media, marketing, partner engagement and other related activities to ensure Galaxy reaches its goals–especially as it faces strong competition from the big guys–in our opinion, particularly from Dell-Boomi, which appears to be thriving under the Dell umbrella.

But, Pervasive’s smaller, independent status can also play in its favor, as noted in Top Takeaways from Pervasive’s 2010 IntegratioNext Conference. The company can keep a laser-like focus on the integration needs of customers and the business development needs of partners. And its independent status may appeal to prospective partners that may having differing agendas than or encounter red-tape challenges when working with Pervasive’s larger rivals. If Pervasive can use this agility and focus to its full advantage, and rev up marketing and social media engagements, Galaxy should succeed in it mission to create a vibrant integration marketplace.

How far along the social media curve is your business compared to your peers? We’ve picked some key data points from our recent joint SMB Group-CRM Essentials “2011 Small and Medium Business Social Business Study” to put together a quick quiz to help you benchmark your social media prowess.

Take the Quiz

1. Which of the following best describes your company’s use and/or planned use of social media to engage with your customers or prospects?  (Check one)

a.    We currently use social media in a strategic and structured way to interact with customers and/or prospects: 4 points

b.    We currently use social media in an ad hoc, informal way to interact with customers and/or prospects: 2 points

c.     We don’t currently use social media to interact with customers and/or prospects, but plan to do so within the next 12 months: 1 points

d.    We do not currently use social media and have no plans do so in the next 12 months: 0 points

Although social media is a relatively recent phenomena, 44% of small businesses are using social media, and about 31% are planning to use it. Among those currently using social media, 24% say they’re using it in a structured and strategic way, while 20% are using it in an informal, ad hoc manner. Give yourself extra points for being a strategic user, because the study also reveals that small businesses that take a more formal and structured social media approach are 2 to 3 times more likely to be satisfied or very satisfied with outcomes from their efforts than those using it in an informal, ad hoc way.

Figure 1: Small Business Use/Plans for Social Media

2. Which of the following ways are you using or planning to use social media for your business?  (Check all that apply)

a.    Sales and marketing related activities: generate new leads, improve market awareness, generate more web site traffic, enhance company reputation, etc: 3 points

b.    Market and competitive research activities: get input for product development, analyze market trends, gather competitive intelligence, etc: 3 points

c.     Customer service activities: improved service/support, create more/better customer interactions, etc: 3 points

d.    Internal activities: improve internal collaboration, aid new employee recruitment, etc: 3 points

Today, most small businesses use social media primarily to help market their businesses. 22% use it to generate new leads, and 21% use it to boost market awareness for the company. In comparison, just 10% use it to gather competitive intelligence, and 7% use it to get new ideas for product development. But, small businesses often find that they get more value from social media for these kinds of “listening functions” than for the megaphone-type marketing activities.

3. Which of the following social media channels does your company proactively use or plan to use to help you engage and interact with customers and prospects?  

Score 1 point for each of these that your business uses: a) Company Facebook page; b) post content to others’ relevant Facebook groups; c) social bookmarking sites; d) LinkedIn, e) YouTube; f) industry-specific communities; g) user review sites; h) geo location services; i) coupon services; j) company blog; k)posting on relevant blogs and forums.

Facebook accounts for the lion’s share of current SMB social media use. 26% of small businesses have a Facebook page, and 20% engage in and/or post content to relevant Facebook groups. In contrast, 9% use YouTube, 9% have a company blog, and 5% use coupon services such as Groupon or LivingSocial. However, small businesses are often more satisfied with the results they achieve from some of these less-utilized social media channels than from Facebook.

4. Does your company use or plan to use any free and/or paid tools to monitor and manage social media?

a.    Currently use either free and/or paid tools: 6 points

b.    Plan to use in the next 12 months: 2 points

c.      No plans to use: 0 points

Only a very tiny minority of small businesses use free tools to monitor and manage social media—and an even smaller group use paid tools. Without the ability to monitor and measure the results of your social media efforts, you risk wasting time engaging in activities that are not creating advantages for your business, or worse yet, doing things that could actually be damaging it.

Figure 2: Small Businesses’ Use of Free and Paid Tools to Monitor and Manage Social Media

How Did You Score?

28-33 points: Social Media Black Diamond: Congratulations, you are in the elite group of small businesses that are pushing the social media envelope. You’re eager to explore new ways to create value for your business with social media, and understand the value of social media as a 2-way communication channel. Through diligent listening and social media monitoring, you continuously recalibrate your efforts to optimize results.

20-27 points: Social Media Intermediate: Your knowledge of and comfort level for social media are growing. You’re likely to already have a plan. By putting more thought into the results you want to get, formulating metrics for success, and implementing more effective social media monitoring, you can expand your use of social media in a way that will produce significant results. Team up with partners, relevant industry groups and other simpatico organizations to help echo and reinforce each other.

13-20 points: Social Media Novice: You’re using social media, but in a fairly limited way, and you may not be sure it’s worth the effort. Remember that social media is a two-way street, and to listen to customers, prospects and others in your community, and not just trumpet your own messages. Take time to learn more about the different ways you can use social media in your business, how to use different social media channels for different types of business activities and start developing a strategy to use social media to help your business in one or two very specific ways.

0-12: Social Media Bunny: Everyone has to start somewhere, so congratulations even if you are just beginning to think about whether or not social media is for you. You don’t have to jump in with a company Facebook page of your own. Try starting by listening to and then joining relevant conversations, groups and forums that others have started to get a better feel for the dialogue and how people are responding to it. By listening and participating before you go all out establishing company blogs, YouTube channels, Facebook pages, etc. you can avoid many of the traps–such as shameless self-promotion–that a bunny might ordinarily fall into.

However, times changed, and Dell started to look like a one-trick pony. As Michael Dell himself acknowledged at last week’s Dell’s 2011 Virtual Era Analyst Event, which I’m paraphrasing here, “Dell had a winning formula that worked for a long time…but then it didn’t work so well anymore. Technology changed, as did customers’ expectation of technology, and Dell had to reinvent itself.” After re-taking the helm in 2007, Michael Dell began charting a new  course for Dell–one designed to help it capitalize on market demand for better, more cost-effective and easier to use IT solutions.

At last week’s event, Dell provided us with an update on its strategy to help companies in the anytime, anywhere virtual era by providing customers with “open, capable, affordable solutions.” For Dell, this means building solutions on open, industry standards; providing customers with choice; virtually (instead of vertically) integrated solutions; and ensuring that solutions can scale as required.

By leveraging cloud computing and remote services, and delivering the right blend of hardware, service and software offerings as more complete solutions–instead of as commodity piece parts–Dell’s aim is to solve customers’ IT problems instead of creating new ones.

How Dell’s Strategy Plays in the SMB Market

At this year’s event, Dell put SMBs in the spotlight. Steve Felice, president of Dell’s Consumer, Small and Medium Business unit, took center stage in the line-up of keynote presentations, mapping out Dell’s SMB vision. Dell’s other executive presenters and panelists–up to and including Michael Dell–underscored Dell’s commitment to delivering products, services and solutions tailored to the needs of SMB customers as well. (This contrasted with last year’s event, at which Dell mentioned that it would use mid-market businesses as its design point, but then quickly veered into large enterprise territory for the bulk of the event).

More importantly, Dell is putting meat on the messaging bones at both ends of the SMB spectrum. For example:

• Dell’s focal point for the Virtual Era is the mid-market. Dell defines the mid-market as companies with 500 to a few thousand employees. It believes that by starting with mid-market requirements, Dell believes it can more readily scale up or down and make the economics of IT work better for businesses of all sizes, because mid-market companies have complex IT needs, but scarce IT resources–and can’t afford a lot of expensive labor or IT tools. They need more complete, automated, fixed price IT solutions and services. Recent Dell acquisitions such as Dell KACE, which Dell acquired KACE, which helps simplify systems management and deployment with appliance and cloud-based solutions, and Boomi, which supplies cloud integration services to help companies affordably integrate cloud and on-premise applications,  focus on mid-market problems. Dell’s results to date illustrate how this approach is shaping up: KACE sales are up 400%, and Boomi (see Dell and Boomi: Doubling Down on Integration) sales are on track to double by year-end.  At Dell’s Take Your Own Path SMB event in December 2010, I met several Dell SMB customers, (see SMB Group video interviews with Chitale Dairy and Pixomondo) that are using these and other Dell solutions to help move their businesses ahead of the competition. 

• Capitalizing on the consumerization trend. IT innovation used to move mostly downstream, from large enterprises to the consumer. These days, the direction has reversed. Consumers are buying brighter, shinier and often more capable devices than they get at work–and bringing them into the office. Entrepreneurs are starting their own businesses, and don’t want to sacrifice the looks, power, capability and ease of use of consumer devices for stodgy and unwieldy business products. In a nutshell, consumer IT is raising the bar for business IT. Dell is taking advantage of its position as one of only two major vendors with an end-to-end portfolio that spans client devices from consumers through large business. Dell’s consumer products provide it with a great access point to small businesses. Since the introduction of its small business Vostro line in 2007, Dell has continued to make refine and expand its offerings to help small businesses bridge the gap from consumer to prosumer and up with a portfolio of PCs, notebooks, tablets and smartphones geared to different needs across this spectrum, along with services to help with device manageability, security and control. In particular, Dell has been aggressively expanding its mobile offerings with a comprehensive line-up of Android and Windows 7 devices to capitalize on the transformational shift to mobile computing.

• Taking a more channel-friendly but not a channel-only approach. Dell has moved from being a poster child for the direct model to a company that recognizes the value of the channel and the role it plays in the SMB market. Several of its recent acquisitions, including Compellent, EquaLogic and KACE brought strong reseller channels that Dell is building on. However, Dell also recognizes that while many SMBs continue to rely on the channel, SMBs are increasingly purchasing at least some of their IT solutions directly, as indicated in SMB Group’s 2010 SMB Routes to Market Study.  Unlike its major competitors, Dell’s first priority is to bring greater IT efficiency to the market–not on maintaining an IT channel that doesn’t add value. This should increase the odds that the channel partners that work with Dell are actually adding value instead of just serving as middlemen.

• Becoming a bona fide software and services provider.  Dell and others have talked about “productizing” services and automating technology solutions to make them more affordable and provide better business value. Dell’s recent string of software acquisitions and its purchase of Perot Systems indicate Dell’s intent to become a serious force in this realm. Dell’s investments to date to build cloud infrastructure and services foreshadow its future intent to offer an expanded range of public, private and hybrid cloud solutions for SMBs. In addition, Dell’s Managed Services footprint is growing, with 9000 team members in 39 countries who provide an array of services, from application services to break/fix. Dell’s focus on using cloud and other technologies to help provide remote, automated services should make these services more affordable for SMBs.

Quick Take

Dell’s strategy for the Virtual Era and mid-market design point bode well for SMBs. Unlike the many technology vendors that speak in jargon-riddled tongues that can make your head spin, Dell execs are also able to tell the story in a way that mere mortals can understand. As important, Dell has found the silver lining in the Dell Hell support crisis of a few years back, building extensive social media capabilities so that it can listen to what customers want, and map to these requirements. Finally, Dell is walking the walk–investing in and building the software and services capabilities it will need to deliver its vision to SMB customers.

Dell contrasts its perspective with that of its traditional major competitors–HP and IBM, which it contends skew towards a large enterprise design point. While I think Dell may be overstating this, Dell’s SMB strategy and solutions seem to be more deeply entwined with the fabric of the corporate vision as a whole.

Of course, I’d like to see Dell go even further with its SMB agenda. Some top of mind ideas:

• Provide a less expensive but just as inviting alternative to the Mac. Many entrepreneurs and small business owners are defecting from Windows PCs to Macs not because of hardware issues but because they’ve had too many experiences where the Windows slows down and gets funky. I’d love to see Dell put more focus into raising the profile of its non-Windows PC and desktop alternatives.

• Offer a turnkey social media service for SMBs. Dell really gets social media, and in my opinion, is ahead of the field in understanding how to use it effectively. It would be great if Dell created a streamlined, turnkey offering to help SMBs use, monitor and manage social media. As we learned in the SMB Group’s 2011 SMB Social Business Study, and as highlighted in this post, Is There a Method to Social Media Madness, only about a quarter of SMBs are using social media in a strategic way, and few are using tools to manage and ensure that they’re getting return on their social media investments.

• Solve the SMB dilemma of having to buy and pay for multiple mobile service contracts for different devices. How about using a little muscle with AT&T (Dell also needs to offer its mobile devices through Verizon) to enable–instead of prohibiting–SMBs to tether their notebooks with their smartphones (instead of banning this) via a bundled service package. The SMB Group’s 2010 SMB Mobile Solutions Study showed that expensive data plans for mobile services are the biggest inhibitor to SMBs adopting mobile solutions, as discussed here.

Dell’s commitment to the SMB market is coming through loud and clear. If it can stay focused and be bold, it has the opportunity to do some big things for SMBs that should really pay off for both Dell and for its SMB customers.

When big companies gobble up smaller ones, you always wonder whether the acquired company will get swallowed up into the belly of the beast, derailed or morphed into something unrecognizable.

In November, Dell acquired Boomi, which provides AtomSphere®, a cloud integration service that promises to help companies more efficiently and affordably integrate cloud and on-premise applications.  Boomi’s integration cloud helps Dell solve the problem of integrating applications across different locations, networks, clouds and companies (Figure 1). The Boomi acquisition also underscored Dell’s broader strategy (and a string of acquisitions) to create a cloud computing portfolio to help customers maximize the benefits of cloud computing in what Dell calls the “Virtual Era.”

Fortunately, it looks as if Dell is helping Boomi stay the integration course, as we learned in a recent update on the progress of the Dell-Boomi acquisition. In this brief, we provide a brief overview of what Boomi is and what it does, highlights of its new Spring 2011 release, and our perspective on how the Dell-Boomi acquisition is shaping up.

Figure 1: Boomi’s Integration Cloud

What is Boomi and How Does it Work?

Boomi gives companies of all sizes a one-stop shop where they can integrate any combination of SaaS and on-premise applications, and third-party trading partners via Boomi’s AtomSphere integration cloud.

The secret sauce that enables Boomi AtomSphere to deploy these integrations as a service is the lightweight, distributed runtime engines that Boomi calls “atoms” (Figure 2). Boomi’s patent-pending atoms contain the components needed to execute an integration process—including connectors, transformation rules, decision handling and processing logic. With Boomi, customers and partners can:

• Sign up for an account and begin building integrations immediately for free. Boomi provides a free Trial via the Web, and users can develop the integration without paying a fee.  Once they deploy the integration, users pay for it with monthly subscription pricing.

• Create integrations without programmers. Based on user feedback, Boomi has redesigned the user interface a couple of times over the years to make it user-friendly for the likes of systems analysts, advanced CRM administrators, or those with report-writing and business intelligence skills.

• Choose where they want to run their Boomi integrations. Users can have Boomi run their self-contained, autonomous “Boomi atom” integrations in a public cloud, or in a private cloud or on-premise behind their own firewalls. But, while users choose where they run their Boomi atoms, these atoms always connect back to Boomi’s data center for centralized management, updates, etc. via the AtomSphere cloud.

• Build and/or use pre-built integration widgets. Boomi and its partners also provide pre-packaged integrations in ready-to-run wizards that business users can deploy.  ISV partners typically build these widgets and bundle them with their applications. The widgets contain the application connectors plus the data mappings and transformation logic, and feature wizards to walk end-users through the integration in a step-by-step fashion. For example, Taleo has built Boomi a widget for Workday to ADP integrations.

• Use the Boomi dashboard to monitor the status and health of all of their integrations, and provide an audit trail.

Figure 2: How Boomi Works

As important, Boomi doesn’t impose any additional security concerns for users. When customers deploy the atom behind their firewall no data passes through AtomSphere. AtomSphere only monitors the health and status of the atom—the data only flows directly between the applications being integrated.

­­

Community is another significant part of Boomi’s value-add. The Boomi dashboard features a green feedback button, and Boomi implements at least 25% of the top-vote getters each quarter. In addition, Boomi Suggest aggregates integration maps (over 15,000 live maps to date) from users. When another user has a similar integration requirement, Boomi Suggest generates automated mapping guidance that typically provides about 80% of the data mapping required—cutting time and cost from the most time-consuming part of creating an integration.

The Boomi ecosystem also houses public and private connector communities, so that once someone builds a connector, they can share it. Boomi provides a revenue share arrangement for companies that build public connectors and widgets.

Boomi’s Spring 2011 Release

Boomi’s Spring release centers on four key areas:

1.     Providing additional connectivity to legacy middleware, such as IBM MQSeries, Tibco, webMethods, Progress, etc. to make it easier for companies to connect Boomi integrations with their on-premise integration services, enabling them to more easily connect existing integrations and applications to SaaS and cloud applications.

2.     Supporting simpler, faster processing for large data sets. This enhancement simplifies data migration, and includes automatic support for Salesforce.com’s bulk API, designed for organizations that need to load large amounts of data into Salesforce.com. Instead of dealing with Salesforce.com’s complex API directly, Boomi users simply check a box, and the tool calculates the optimal batch size for loading.

3.     Anywhere integration monitoring. With the advent of cloud computing, applications and data are increasingly distributed across many different locations, networks and corporate boundaries. Boomi atoms enable users to distribute integration capabilities to these disparate data sources, without sacrificing centralized monitoring and management across integrations. Boomi has also added a new API so that users can connect Boomi to third-party monitoring, such as Dell OpenManage.

4.     New partner support programs. Boomi has introduced a 4-day hands-on boot camp for integration practitioners, as well as a new 3-level partner certification program to promote consistent service quality across the partner ecosystem.

While some of these enhancements focus on large companies, they also make it easier for ISVs and SIs to develop, monitor and manage widgets and integration services for their SMB customers.

Why Should SMBs Care?

As noted in the SMB Group’s 2011 SMB Top Ten Technology Trends, cloud computing and software-as-a-service (SaaS) have taken IT cost and complexity out of deploying business solutions, making it easier for SMBs to deploy applications to help run their businesses more effectively.

While some vendors provide integrated business suites, most companies run a mix of on-premise and cloud applications from different vendors. For instance, they may use Intuit QuickBooks, a Sage or Microsoft solution for back-office accounting and ERP needs, Salesforce.com for CRM, and other cloud applications for marketing or HR.  But they often lack the time, money or appetite to integrate these applications. When applications don’t “talk to each other” businesses waste a lot of time re-entering redundant data and reconciling inconsistent and inaccurate information across key workflows, such as order to cash. At the same time, the volume of data that SMBs must manage is growing exponentially–adding to the integration challenge.

Simple, clean and affordable integration options help SMBs decrease the time it takes to integrate applications, and derive maximum value from the business solution investments, by:

• Streamlining connectivity between internal applications and with third-party applications and processes.
• Reducing the time, errors and business costs associated with inaccurate data entry.
• Providing a consistent, real-time view of information across integrated applications.

When ISVs or integrators offer SMBs a short cut to integrate applications with those of relevant partners, they help remove adoption barriers and enable SMBs to get more value out of their business applications with less hassle.

How the Dell-Boomi Acquisition Is Shaping Up

Hosted by Dell’s SMB Group (and also working closely with Dell’s Services team), Boomi has retained its offices and independence in Philadelphia and San Francisco. Dell has put a corporate integration executive in place to help smooth the transition, and is investing to double Boomi’s staff by the end of 2011.

However, Boomi continues to gear its offerings for enterprises of all sizes, with revenues evenly split between large enterprise and SMBs. For instance, Mindjet, which has about 250 employees, wanted to standardize its business application integrations to minimize ongoing technical support requirements, and support Sarbanes-Oxley compliance. The company was able to create its first integration in 5 weeks, without using any internal IT resources, is using Boomi’s centralized management and data auditing capabilities to comply with Sarbanes-Oxley, and is adding additional integrations.

About 75% of Boomi’s are channel influenced. Boomi has grown its ISV and SI partner roster to 70+ companies. As discussed earlier, partners can build widgets and deliver them to customers as a packaged integration. Boomi estimates that about ½ of its ISV partners build widgets, and each typically creates about 3 to 5 of them. In addition, there are about 15, 000 live data maps in Boomi Suggest and about 200 connectors in Boomi communities.

SMB Group Summary and Perspective

The integration challenge has always been complex, and continues to become more multifaceted. More applications need to be integrated both in the cloud and on-premise. In addition, adoption of new mobile and social media solutions is on the rise.

Six months into the acquisition, Dell’s approach appears to be on target. Boomi has stayed focused on its mission of helping companies overcome one of the major hurdles to adopting new cloud-based solutions—without having the burdens of raising capital or fielding questions about financial viability.

As a result, Boomi’s growth curve is accelerating. Although some of the Spring 2011 enhancements seem most appropriate for larger customers, they should also help ISVs ease integration issues for SMBs in a more scalable manner. In many cases, SMBs often lack the skills or resources for do-it-yourself integrations, and pre-built connectors and widgets from ISVs are a much better fit.

Looking ahead, while Dell and Boomi indicate they will continue to nurture this channel-friendly, community-centric strategy, Dell is starting to train its own sales, services and specialist teams on Boomi. Although the Dell-Boomi offering faces strong competition in the integration arena from the likes of IBM-Cast Iron, Informatica and Pervasive, Dell teams should provide Boomi with a strong sales boost among both end-users and partners, especially if Dell can leverage Boomi out to its worldwide teams to take advantage of global opportunities.

Overall, Boomi’s cloud integration solution is a good fit with Dell’s expanding cloud computing strategy. As important, Dell’s corporate integration approach appears to be off to a good start to providing the combination of nurturing and autonomy that will help Boomi thrive and optimize the value it can deliver to Dell, its partners and customers.

Under the terms of the deal, Intuit will resell a pre-integrated version of the Salesforce CRM application via Intuit’s App Center (as well as Intuit channel partners). Data will be automatically synchronized across QuickBooks and Salesforce, giving customers a real-time, unified view of the data, regardless of which application the customer is working in.

Intuit and Salesforce indicated that the integration should be completed this summer.

Above the Surface

Clearly, the deal provides Salesforce with a great entrée to Intuit’s 4.5 million QuickBooks users, gives Intuit a marquee CRM partner in the App Center.

This is also a very big deal for customers. While the small business CRM market is fragmented, Salesforce is a top CRM vendor in small business. Demand for integration between QuickBooks and Salesforce is evidenced by the fact that so many integration vendors—Dell-Boomi, Pervasive, Informatica, IBM-Cast Iron and others—offer this integration, which is typically priced at about $50 to $75 per month. With a direct QuickBooks-Salesforce integration, small businesses get a seamless way to synchronize data between QuickBooks and Salesforce.com without having to buy an additional integration service or solution. (Although pricing has yet to be announced, I’ve been told that it will be more economical than using third-party integration tools).

Below the Surface

The partnership also provides Intuit with substantial validation for the approach it has taken with the Intuit Partner Platform  (Intuit Partner Platform: Changing the Rules of Cloud Platforms with Federated Applications). Intuit’s “federated applications” approach means that instead of having to rewrite applications from scratch, partners that have built their applications on other cloud platforms can use basic XML integration to configure or “federate” their solutions with key integration points, including the user interface, billing, account management and permissions, data and single sign-on to ensure that their solutions integrate with QuickBooks and other solutions on the Intuit Workplace.

This approach removes a lot of development and partnering barriers—in fact, it seems that it removed enough barriers for Salesforce that it is, for the first time, providing its solutions via a partner’s platform, rather than requiring the partner to develop on Force.com.

Salesforce also gains a new venue for Chatter (free with all of its CRM offerings, including the small business editions noted above). As I’ve said many times, collaboration is the only activity that every employee in every company engages in everyday. In addition to getting another on ramp for CRM, Salesforce can also make new market inroads for Chatter and its collaboration strategy ( Salesforce’s Dimdim Acquisition–Adding to a String of Collaboration Pearls).

Quick Take

Many analysts and pundits have been asking (and arguing about) whether this is a bigger win for Salesforce.com or for Intuit. At first blush, my take was that Salesforce would potentially have more to gain because Intuit would be promoting and selling Salesforce CRM and Chatter to its installed base.

Giving it a little more thought, I’m thinking it’s a pretty balanced deal. Having a high-profile partner such as Salesforce should help Intuit attract more end-user customers to its App Center, and pull in more developers as well—in line with its goal to establish the App Center as “the” app store for small businesses.

Small businesses win big too. Integrating business solutions shouldn’t cost more than the business solutions themselves, and this partnership should make integration and the benefits it provides more attainable for more small businesses.

Furthermore, there’s nothing exclusive about the deal for either party. Salesforce, will, of course, continue to partner up with FinancialForce, Intacct and countless other financials vendors, and Intuit can do the same with CRM and collaboration vendors.  Which is a good thing—because small business is anything but a one-size-fits-all market, and neither vendor should presume that this is the best accounting-CRM pairing for all of their small business customers.

What HubSpot Does and What Makes it Different

HubSpot’s online (aka cloud-based) solutions help SMBs manage their web sites and social media activities so they can increase inbound marketing leads, track those leads and optimize lead conversion to sales. HubSpot pricing ranges from $250/month to $1,500/month. The company has been on a roll, with a current annual run rate of $25 million annually, up from $10 million a year ago, and about 4,000 paying customers.

In addition to these fee-based services, HubSpot offers a slew of great free services to help SMBs optimize their content, including Twitter Grader,  Press Release Grader, Facebook Grader, and Website Grader (all fairly self-explanatory)—and one of my favorites, Gobbledygook grader, which checks your content for gobbledygook, hype, jargon, other meaningless words. As you’ve probably guessed, HubSpot uses these clever and helpful sites to drive its own inbound marketing engine—with fantastic results.  For instance, Website Grader has over 3 million users.

Although some people put HubSpot in the same category as marketing automation vendors such as Eloqua and Marketo, HubSpot has been the poster child when it comes to building the inbound marketing pipeline. I think that HubSpot invented the term “inbound marketing” (founders Brian Halligan and Dharmesh Shah literally wrote the book on how to get found online, Inbound Marketing: Get Found Using Google, Social Media, and Blogs in 2009).  While competitors have tended to focus on helping companies nurture the leads they already have,  HubSpot has blazed the trail in helping companies make the pipeline bigger.

Quick Take

This latest investment round adds momentum to HubSpot’s already solid growth trajectory. It should give current and prospective HubSpot customers a new infusion of confidence, and help HubSpot accelerate innovation.  HubSpot will undoubtedly use a good chunk of the funding to educate and move more SMBs up the curve and into this new era of marketing. After all, HubSpot’s 4,000 customers who are already “get it” are the very early adopters, and only a fraction of the vast SMB universe.

Some of the other areas I’ll be keeping my eye on include:

• Possibilities with Salesforce.com and Chatter. HubSpot had been working on opening up it’s APIs already, and it’s not hard to envision using Chatter to integrate sales and marketing in a more collaborative, intuitive way. The bonus here is that HubSpot is a heavy Salesforce.com user, giving it a ready-made test-bed.

• Serving up HubSpot via the Google Apps Marketplace. HubSpot’s all-in-one solution is great, but it can be a bit daunting for smaller companies to take on all at once. It would be great if HubSpot could package some of the key functions in smaller, bite-size pieces, which would then integrate with each other in Lego-like fashion.  That way, smaller companies could take baby steps but move into a full stride as they grow.

• International expansion. 95%-plus of HubSpot’s customers are in the U.S. The investment should help HubSpot accelerate global sales and marketing. HubSpot can potentially take advantage of Google and Salesforce international data centers, translation capabilities, etc. as well.

While we’ll have to wait for HubSpot to reveal its plans, one thing is evident. HubSpot has plenty of opportunities to put it’s newly minted investment money and relationships with two technology powerhouses to work to change the rules of the digital marketing game in a very substantial way.