In these harsh economic times, CIOs will be looking to add value that is very visible on the spend side of the business if they are to justify their budgets. One way to do this is to work directly with sales and use technology to discover more and better sales leads that are there for the taking.
According to the CSO Insights' 2008 Sales Performance Optimisation Report, 56 per cent of chief sales officers cited -‘increased sales effectiveness' as one of their top objectives for next 12 months, second only to ‘increased revenues' (targeted by 61 per cent). And what better way to get a foot in the door of a hot prospect than to be introduced to a senior manager by someone in your company who has him or her on the friends list of their social network? Web 2.0's focus on social networking and informal news creation through blogs can produce a valuable seam of contacts to be mined for sales leads.
Sales 2.0, as Web 2.0 fuelled sales has been dubbed, is attracting vendors from all kinds of markets alongside the traditional CRM players, including US information giant Dow Jones. It describes its Business Relationship and Intelligence (BRI) line as social graphing and relationship mapping tools that will unlock the "who you know" within the enterprise and externally.
Darr Aley, (pictured) a Dow Jones vice president, says that the rapid growth of business networking sites has already made an impact in enterprise sales. "The advent and popularity of B2C networking sites like LinkedIn, Jigsaw, Spoke, and Plaxo have permeated sales organisations of all sizes over the last two years," he says.
However, he warns that organisations need to get a grip on social networking if it is to bring long-term sales benefits.
"The rapid growth and adoption among enterprise sales organisations has created the demand for more targeted solutions that offer proprietary private networks which leverage an entire organisation's eco-system of sales people, management, board members and customers," he argues, adding that the mass-market sites offer little in terms of competitive advantage.
"Relying on any single social network website alone for research will not add much real value as competitors will have access to exactly the same information. In some cases, sales organisations at very large companies forbid use of these sites for that reason."
Dow Jones' BRI crawls 75 million websites, 25,000 media sources, and three million blogs daily to create databases on companies, executives, news, events, and social networks. Users can link this information to relationship maps through work, personal, board and school affiliations, plus integrated Outlook, LinkedIn and other contact systems, showing the user and their organisation how they connect to other companies and people.
While Sales 2.0 companies and relationship mapping solutions are still new to the market, with a wide range of innovators, there has been significant interest among large traditional information, data, and application providers to buy into Sales 2.0 innovations over the past 12 months. Aley highlights Dow Jones' acquisition of Generate, D&B's purchase of Visible Path, Comcast buying Plaxo and LexisNexis's acquisition of Contact Networks.
Paul Honey, now managing director of Sales 2.0 company Strange, spent most of his career in senior IT management, which provided him with a unique insight into what the CIO can bring to sales.
"Linking traditional infrastructure into these more exotic interfaces is absolutely within IT," he claims.
"IT has the knowledge of process to be able to wrap it up into a bulletproof, production-ready facility. The ability to work the data into formats that can feed other systems is absolutely essential. You really need to know what you are doing with data cleansing; it is quite a skilled job."
One look at the sales contacts database is often enough to sell the need for a collaboration between CIOs and sales leaders. Nexidia, a customer of the Jigsaw online collaborative business directory, found that 100 per cent of its records were incomplete, 23.5 per cent of records were dead and 1.1 per cent duplicated - expensive mistakes for sales reps using this wrong information.
Jigsaw has set up an online business directory contributed to by 700,000 sales people who have helped assemble over 11 million company records. All the basic data is open source and may be downloaded free into a company's internal sales system. Sales people earn points by completing records, which they can spend on accessing other records. But Jigsaw CEO Jim Fowler points out that the real value of the system lies in keeping the downloaded data up to date.
"They might move downloaded data into their own system and the CIO would be very concerned with that - the data needs to be moved and managed," he says.
"The value in the data is the changes and the challenge for the CIO is that it has been a pain in the rear end to keep data up to date. No incomplete records are allowed and people get points for cleaning the data where it is incorrect."
Ben Booth, chief technology officer at Ipsos Mori, is treading carefully through the Sales 2.0 minefield.
"I think we're beginning to understand this perception of Web 2.0 and Facebook [as sales-lead generation tools]," he says. "In fact, Ipsos has just bought a company called Livra in Argentina, which specialises in using those sorts of techniques for market research and recruiting analysts. I think that if you're using this sort of thing as a sales tool, you have to be very careful that the people who you're targeting want to be sold to."
Trampoline Systems analyses social networks internally and externally, extracting key data from emails, blogs and wikis, and building a visual picture of that network that highlights the topics and people that are being discussed. The system automatically builds a social networking-style portfolio for each employee, and employees are able to use the network to mine others' profiles and communications for the information they want.
Will Edward, head of sales at Trampoline, says CIOs are taking very different approaches to the issues of employee privacy and data sharing.
"It can be seen as Big Brother and can put the cat among the pigeons," he warns. "What we are seeing is two different experiences. US and global corporations take the view that email, for example, is a corporate asset subject to compliance and stringent controls, whereas in Europe there is seen to be a need for employees to opt in and be part of that process. Most of our customers don't go down that route."
Traditional CRM vendors are paddling furiously to catch the Sales 2.0 wave. Stephen Fearon, vice president of Oracle CRM, says CIOs will have a part to play in creating the next generation of hybrid systems. "In the current climate there has to be increased productivity of reps and speed is all-important, putting pressure on CIOs to turn around systems delivery."
Oracle provides its CRM software optionally as a service with a monthly fee and is expanding the social media elements of its solution.
"The next generation it's ERM (employee relationship management) in an SFA (sales force automation) context with Web 2.0 and social networking together. Reps will have contacts in the corporate system and will be able to make mashups of leads from social networking sites within the SFA," says Fearon.
"In the past, the sales VP has done their own thing and the CIO has not been invited. The older, bigger CRM systems took a long time to install and then it seemed you could bypass IT with software as a service. Now, buddying is key, and the CIO is becoming a partner and adviser."
CIOs need to breathe new life into what they already have, according to Fearon, as systems become more complex. "What we have is a hybrid model and we can work with SAP and Salesforce.com and make different mashup applications, synching data and business processes."
However, Gary Slater, head of business systems at Business & Enterprise North East and an Oracle user, believes that vendors have yet to deliver on Sales 2.0.
"We are still waiting for Oracle to deliver on social CRM," he says. "What we have at the moment is an aspiration and a vision for social CRM to deliver real business benefits. The key is to engage the customer so that you never have to find leads and run marketing campaigns again.
"I am hoping the next generation of CRM delivers. If you look at the behaviour of the 21st-century customer, they are not listening to traditional sales and marketing approaches."
He advises big vendors to meet CIO needs by engaging with best-of-breed suppliers to fill the gaps in their portfolio.
"There is a gap for online communities; we are looking at the conversations customers are having between themselves about the company. As a service-based company, we spend an absolute fortune on focus groups.
"BMW stick their prototypes up at a very early stage and let their customers comment on them, and have better cars as a result. There is no reason we can't do that with our customer-facing services. We are going to implement a service oriented architecture to expedite the transfer between the business systems and whatever online portals we have," says Slater.
CIOs have an important role in strategy and procurement of Sales 2.0, says Forrester analyst Oliver Young. "It is definitely an immature market space from a vendor point of view and it is quite complex as lots of vendors can offer partial solutions.
"Software as a service could be a value proposition but there is a big issue of customisation and control if the company decides to turn the solution into something more full featured and it needs to be integrated seamlessly with internal systems. Very few are able to provide top-notch solutions it is very difficult to get right and have all the features."
Mining for customer contacts, no matter how rich the seam, is missing the point of Sales 2.0, in Young's view. "There are better ways of reaching customers. If people are put onto a list, no matter how they get there, there is only so much you can do to sell to them.
"Web 2.0 changes things. Instead of being a numbers game it becomes a collaborative engagement between a company and its customers.
"A ‘friend of a friend' relationship is very attractive but leaves a lot of value on the table. You are still not looking at sales and marketing in a different way, so we need a completely different approach. This is a retrofitting of social networking to the traditional sales model of pushing as many people as possible through the funnel."
He adds, "I do believe there is a strong role for the CIO on the technical front; it is a great place to be involved."
Other watchers like Bob Pearson, vice president of Conversations and Communities at Dell, says this is just the beginning of a new trend. "What has happened is Chapter One of getting into the game and using social media blogs and wikis, forums and Facebook," he says.
"Chapter Two, where we are focused now, is where social media is part of the infrastructure of a company and that is where it is going to get interesting for the CIO. Dell has seen real revenue benefits in finding sales leads through Web 2.0 - its Twitter accounts, each targeting a different community ranging from support to community to deals, have generated over $1m (£690,000) in revenue. Customers have also contributed over 11,000 product ideas to the company wiki, Ideastorm.
"I work with the IT team most of the day, every day. It is a very close relationship; software architects are so critical to the success of social networking within the company. IT is a business partner at the table, customising and figuring out how to move to platform neutrality, which should happen at some point. If we are using SharePoint or Salesforce.com we need to be able to aggregate that information in a way that is platform-neutral, and the only ones that can do that are IT."
Dell's Pearson urges CIOs to take a pro-active role. "Our CIO is a champion. When we moved to the Salesforce.com platform he started off interest in it, said it was an interesting product, and he was an advocate for it. An open mind is the best tool."
CIO involvement in the nitty gritty of sales leads can bring deeper understanding of the challenges faced by the sales side. Strange MD Paul Honey says, "Moving into where I am now on the profit side of the equation is an incredible journey. I wish, if I could rewind history, that if I could have done this kind of work maybe 15 years ago it would have made me a much better IT professional. When you have that experience of the profit side of the business it just gives you the whole perspective."
So is it time for CIOs to set up a sweet store and to let their sales leaders loose among a carefully selected pick ‘n' mix of all the different Web 2.0 possibilities for generating more and better sales leads?
"I would recommend that you find a few more of the forward-thinking folks within IT and within the business as well and create a lab," says Honey. "Put people into a room, give them some objectives, do some research on some of the tools around and see what they come up with."