September 2003

In this issue...

Quote for today
"The only value of economic forecasting is to make astrology look respectable." -John Kenneth Galbraith

Feature Article: The Webinar Experience

In issue #6 of this e-zine, just over three years ago, I wrote about Cambashi's experiences attending online conferences and company announcements. At that time, we had participated in crisp, effective webcast and webconference sessions; we had also experienced the frustrations of sessions dogged by technical problems.

My verdict ("vendors, please keep trying") was addressed to the IT vendors experimenting with this channel as an addition to their range of communication formats, and was intended to be positive. Compared to a telephone conference, the addition of illustrations helped most speakers convey more information in a shorter time. The various choices for handling Q&A could all be made to work. Of course, if we wanted the 'inside story', we still preferred to meet face to face; but, in many cases, the online version of announcements saved us time.

Since then, technology has moved on, and, for Cambashi, online events have become routine, with our people taking both 'delegate' and 'presenter' roles. Broadband rollout means many more companies have internet connections that can support audio and perhaps video. Webcasting systems, especially those designed for education, may contain some sort of interactive capability, for example, voting buttons, or the ability to open up multi-way conversations. Greater consistency of network performance more or less guarantees that in a combined telephone/web presentation, the illustrations will be synchronised with the voice. Software systems and systems administrators are more likely to be able to solve the problems created by network firewalls.

That's not to say technology issues have gone away. My experience of voice-over-IP in these sessions, using the Internet for the voice channel, reminds me of air traffic control conversations ("charlie-zero-three on long finals over"). But of course this is not a problem of voip, which is successfully and routinely used without this effect in other environments. But, for me, this is the usual result, with the voice software and the rest of the conferencing software all connected to the required multi-point distribution system, which is being managed from a server that may be on the other side of the world. Curiously, it's not always a bad thing! The switchover delays between speakers are not important when, as in most webinars, a presenter is speaking for some time before handing over to the next speaker. Even in Q&A, there are times when I have felt that this constraint actually helps create a kind of intensity of concentration, as realisation dawns amongst participants that they cannot afford to be casual about speaking and listening.

For an IT vendor thinking about their marketing communications, the opportunity is to extend the reach of 'soft-touch' presentations, useful in relation to image, visibility, announcements and maintaining communities. By eliminating the need for potential delegates to travel to an event, attendance can be increased. The cost of telephone calls and web hosting charges can replace the cost of venues. Sales reps will still be able to use the existence of the event as a reason first to contact, and then to follow up with, known prospects, even if the economy-of-scale of getting multiple prospects in a room at one time is lost.

For these purposes, the "Webinar" must use technology that just works from the point of view of the prospective delegate. So, even downloading a browser plugin may be a step too far. Some systems administrators will have banned their users saying 'Yes' to any download; worse still, the success of attracting several hundred delegates can be ruined when they all try this download in the 30 seconds before the start of the event.

So, the simplest technologies seem to have some advantages right now. For example, one of the most straightforward and reliable approaches is a managed telephone conference call synchronised with display of illustrations from a web page. It is worth noting that distributing charts as an independent file before the event can be counter productive. While this is not a problem with "committed" delegates, waverers may well glance through the file, and decide they've received 80% of the value, and skip the online session.

For many people in the user community, these events still have a novelty value. Requiring delegates to have access to a phone and an online PC is not a barrier. So, with equivalent pre-event marketing, an online webinar seems to get more delegates to sign-up. However, it is probably not surprising that fall-out rates can be even higher than for events at a physical venue.

One question for the marketeer is designing a scheme to gain engagement. The less commitment required, the higher the attendance will be. Even named registrations cause some prospective delegates to turn away. So one choice is to aim for maximum attendance by allowing 'anonymous' participation. Then, to wring more value out of the event it is desirable to make contact with some of the anonymous delegates. In this case, the event needs hooks and reasons that tempt delegates to establish contact in some way - the offer of the written version of the materials in return for an email address is a typical formula.

It is important to remember that IT user delegates may be considerably - even dramatically - less experienced in the use of telephone conferences than the typical organisers. Marketing specialists in a global IT vendor company have probably, for many years, been part of global teams using conference calls as a primary co-ordination mechanism. Therefore, they may easily, and incorrectly, expect widespread participation by IT user delegates in an interactive telephone based Q&A session. This doesn't happen - user delegates stay quiet! This is in stark contrast to, for example, a webinar aimed at the analyst community, for whom conference calls are a way of life, and competition for air time during Q&A can be intense. I suspect, but have no evidence, that at the present time, running Q&A through keyed in questions would gain more involvement from an IT oriented audience.

For vendors and users alike, webinars are developing into a low cost communication channel. The pioneers are exploring many alternatives, from which there will be a pipeline of improvements in the user experience. The successful marketeer will handover technology issues to reliable hosting organisations, be they in-house or third-party. This will enable focus on the key issue of designing the event to fulfil marketing objectives, for example, putting in the effort to include schemes to gain engagement as part of the event.

Peter Thorne

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Hot Topic: Enterprise Applications Market Review

After the tough year that they suffered in 2002, driven by the downturn in the economy, Enterprise Applications vendors were hoping for an upturn in the economy in 2003 to spur a revival in their fortunes. If current trends continue, our short-term forecasts suggest that Q3 and Q4 2003 will both show a decline year-on-year.

In 2002, the Enterprise Applications market saw a decline in vendor revenues of 2.5%, with a more serious decline of 15% in license revenues. Given the uncertainty in the economy, with fears over global terrorism and impending war in Iraq, these results were perhaps unsurprising.

The trends continued into the first half of 2003. Revenues were down 5% over the revenues in the first half of 2002. License revenues for the first half of 2003 were down 19% over the same period in 2002. This compares to similar drops of 6% for revenues and 21% for licenses in the first half of 2002. When we extrapolate these trends and apply seasonality, we get gloomy predictions for the second half of 2003, with the calendar year vendor revenues down almost 4% and license revenues down almost 11%.

Merrill Lynch's August 2003 survey of US CIOs shows that ERP is a top priority for half of them, but that 60% expect spending to be flat and only 13% expect an increase of >10%. We agree with Merrill Lynch's analyst team that the usual "Q4 budget flush" will happen and that 2004 is likely to show stronger software spending. In the last week of September, we will see guidance confirmed or profit warnings from a number of vendors and we will firm up our Q3 expectations and revise our Q4 estimates based on consensus forecasts.

But there are reasons for optimism. There has been a plethora of mergers and acquisitions over the last 12 months, which is likely to lead to postponement of projects, while prospective buyers wait to see what happens. When this involves a number of the biggest vendors, it can have a significant effect on the whole market. One notable absentee from the M&A circus has been SAP. In the first half of 2003, SAP has significantly outperformed the market, with a license revenue growth of 7%, compared to the market decline of 19%. In other words, it is possible to increase revenues even when the market is declining. See figure 1 by following the link to the Cambashi website.

Figure 1 - SAP quarterly revenue growth compared to market growth (Dotted line is a forecast). Note: world vendor revenue includes SAP revenue.

SAP's performance is particularly impressive, given that Europe - its homeland - is having such a hard time. Fluctuations in the currency rates have rather masked the real performance in Europe. If you choose to look in US dollars, vendor revenues in Europe grew nearly 3% in 2002 and look set to grow 3% in 2003. Not bad when compared to the world situation.

True demand in Europe, though, is measured in euros. When you look at the results in euros, they are not so encouraging. In euros, vendor revenues from Europe in 2002 declined 3%, and look set to decline as much as 13% in 2003. See figure 2 by following the link to the Cambashi website.

Figure 2 - Vendor revenue in Europe growth, euros compared to US dollars.

Longer term we are much more optimistic. In 2004, we expect Enterprise Applications revenues to show modest growth and that 2005 will be even better. Our longer term forecasts are driven by econometrics, rather than trends. PricewaterhouseCoopers European economic forecasts for 2004 look encouraging - investment in the Big 4 countries (France, Germany, Italy and UK) is forecast to increase between 2% and 3.5%, while GDP in Western Europe is forecast to increase by 2.25%.

When compared to forecasts for 2003 - investment growth in the Big 4 countries between -1% and +2%, with Western European GDP growth at only 1.25% - 2004 looks like being better than 2003. We think this is again consistent with Merrill Lynch's analyst conclusions based on their survey that 2004 will be a better software year.

2004 is likely to be a year of getting back to business as the dust settles on the proposed Oracle / PeopleSoft takeover and the PeopleSoft / J.D. Edwards merger. As these vendors get focussed back on business, we expect results to improve.
The big message for Enterprise Applications vendors is that sales execution, and particularly getting sales and marketing initiatives synchronised, is critical. As SAP has shown, regardless of whether the market is going up or down, there is always potential for growth.

Dan Roberts

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Book Review: Marketing Moves, by Philip Kotler, Dipak C. Jain, Suvit Maesincee, ISBN 1-57851-600-5, Harvard Business School Press.

Marketing Moves presents a new framework for conducting marketing strategy and operations developed in the context of corporate strategy. It aims to help companies:

• Identify new value opportunities for renewing their markets;
• Efficiently create more promising new value offerings;
• Use their capabilities and infrastructure to deliver the new value offerings efficiently.

The book's main thesis is that marketing needs to change to cope with the overcapacity found in a range of manufacturing industries. Customers are scarce, leading to hypercompetition. Previously the company had been the hunter searching for customers, now the consumer has become the hunter. Markets, and marketing media such as the Internet, are changing faster than marketing methods.

The book is organised into two parts. The first considers the digital economy, positions marketing as a driver for innovation and suggests a series of ideas based on the digital economy that would renew marketing strategies.

The second part is a systematic framework to implement what the authors term holistic marketing in the digital age. This begins with the identification of market opportunities; the design of market offerings; understanding the business models to provide these profitably; the business infrastructure required to execute; the design of marketing and operational activity plans and finally the need to re-iterate the whole process to remain competitive.

Despite a clear structure and positive examples I found this book disappointing. Though published in 2002, it had clearly been written in the euphoria of the dot.com boom. I was distracted by the continual implication that the Internet and information technology solutions would solve every difficulty. For me, the technology is the easy part. It's changing the people's mind set that is the hard bit.

The idea that marketing needs to change from support of selling products to become the identification of customer needs for organisations to devise solutions to satisfy is attractive and well argued. The authors bring into a coherent framework a number of practical ideas to develop a sales and marketing strategy.

However, I can't recommend this book. It was not an easy read. The examples don't deal with the implementation issues. They read like propaganda or "spin". There is no balance. It reads like a checklist and might serve that purpose in a marketeers' library.

Mike Evans

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Noticeboard

Smart Labels Europe 2003
Europe's largest conference on smart labels including RFID, smart packaging and beyond is being held from 29 - 30 September 2003 with Optional Workshops on 1 - 2 October. Further details from their website www.smartlabelseurope.com
or email: t.henry@idtechex.com or telephone +44 (0)1223 813 703 ask for Corinne Jennings.

CIMdata European PLM User Forum 2003 will be held 8th – 9th October, 2003 at Messe Stuttgart, in Stuttgart, Germany. The theme for the PLM User Forum is “Enabling innovation through the application of PLM". The CIMdata User Forum will be held within the same timeframe as CAT.PRO (7th–10th October) in a separate but conveniently adjacent location. CAT.PRO, the leading engineering show in Central Europe, is embracing PLM as a primary area of focus, and views the CIMdata event as a major contributor towards achieving this goal. Registration and additional details are available at http://www.cimdata.com/index.htm.

ETRE: European Technology Roundtable Exhibition
October 15-18, 2003 in Berlin, Germany. For over 12 years, ETRE has been instrumental in bringing together 800 of the brightest minds in the IT industry, and remains the perennial rendezvous for international leaders from more than 30 countries to converge and prepare for the future.

PLM Road Map 2003
D.H. Brown Associates, Inc. (DHBA) is holding its conference, Product Lifecycle Management Road Map 2003, from October 28 & 29 at The Dearborn Inn, Dearborn, Michigan. The conference theme covers Operational Innovation for Cross-Functional Collaboration.
Keynote speakers opening the conference include Chris Couch, Toyota North America's Manager of Operations Strategy, who will address Cross-Functional Business-Process Kaizen. John Waraniak, Director of DHBA's Automotive/Aerospace Advisory Board, will discuss Design for Supply: Accelerating Bill-of-Material Reuse.

Closing the conference, Lorie Buckingham, Visteon Corporation's VP and CIO, will present on Visteon's program for Aligning IT and Engineering for Transformational Change. Richard Cedar, a Manager at GE Aircraft Engines, will address The Master Model for Achieving Cross Functional Design. Andrew Brown, Delphi Corporation's Executive Director of Engineering Competency DTI/Research Labs and President of Delphi Technologies, Inc., will discuss Driving Innovation with Structured Design Methodologies.

COFES
The Congress on the Future of Engineering Software will be held from April 1 - 4, 2004, in Scottsdale, Arizona. "COFES brings together some of the best minds in mechanical/manufacturing and AEC/GIS industries to discuss the future of technology for engineers, architects and consumers." said Brad Holz, President and CEO of Cyon Research Corporation. "COFES has been carefully crafted to be the ideal place for analysts, press, vendors and users to co-operate in a framework that invites intense, productive discussions on industry issues."

A full list of industry events can be found at IT industry events on the Cambashi website

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