Salesforce.com’s Mark Benioff asserts that the future of business will be the social enterprise. Before that happens, we’ll see a seismic shift in business infrastructure. If Marc Benioff is right that we’re on the cusp of a sea change, it won’t be the first time he’s called it correctly.
In pointing out that becoming a social enterprise is something companies must do because they have little choice but to replace outdated ways of finding, serving and communicating with their customers and prospects, he implies that an underlying and parallel change in business infrastructure will also be required. That’s because whatever the mature social enterprise turns out to look like, companies exist to make profits. As social enterprises, they must remain in position to do that, but they will almost certainly find that the way that they conduct commerce will fundamentally change.
The social enterprise paradox
By definition, the social enterprise facilitates highly personalized communications. But at the same time it also facilitates communications across the entire community as well within and across sub communities. Ironically, this increases the personalization that each party expects. The outcome is that businesses must treat customers individually within the context of the whole, because if they don’t, a competitor will.
Why is this both important and problematic? For one reason, it means “pricing for the masses” or non-personalized pricing is dead, certainly for B2B if not B2C. In many service industries the mass application of pricing points is akin to driving customers and partners like so many numbers. Beyond tailored pricing for specific customers, tailored aggregate pricing for arbitrary groups within the community must also be supported.
If this seems farfetched, it shouldn’t because these concepts have been here for years. Consider a multinational corporate customer that purchases a wide range of services at different price points in different currencies yet demands different invoice formats and billing cycles for each region while at the same time seeking a volume discount for their entire book of business.
Going forward these groups will go well beyond multinationals and will not likely fit into classical market or demographic segmentation models on which mass pricing has typically been based. They will be defined and managed by the community themselves. Essentially they will become dynamic affinity groups that will seek tailored services and financial incentives based on their collective purchasing power. Is there any vote within a business context that’s more important than with one’s wallet?
While responding to the individual and collective demands of the community, the social enterprise must also promote its own business interests. For example, it should seek financial or unit-based commitments over monthly, quarterly or annual time periods for customers or groups within the community seeking discounts. Perhaps more importantly, the right pricing, bundling and compensation schemes to drive profitable consumption patterns and sticky services must be put in place. Anyone who has ever put a sales compensation plan in place understands how important and subtle getting it right is. Going forward, there will be more services, more suppliers and more channels, which will make today’s direct sales plan look simple.
Of course, all of this must be accurate, auditable and transparent.
Relationships are the currency of the social enterprise
Relationships, the currency of the social enterprise, must be monetized. The monetary glue between all the parties − the social enterprise, its customers, its channels and its suppliers − is a series of personalized agreements that describe business terms. This means that to monetize the new world of commerce, fixed, hard-coded IT assets designed to support what Benioff rightly recognizes as increasingly outdated businesses models are, for many, about to become a real problem.
This is not to say billing systems can’t be cash cowed or can’t continue to monetize those parts of a business where the traditional approach is likely to remain in place for some time. But as the transition to the social enterprise takes root, legacy billing systems are unlikely to be flexible enough to accommodate individualized agreements let alone the web of interrelated billing and compensation agreements that next-generation commerce demands.
Agreements-based billing will monetize what Benioff suggests comes next. This approach to social enterprise monetization is founded on recognition that business models are relationship-driven and characterized by fluid, individualized and interrelated agreements. This requires a platform that is open and configurable, enabling multiple billing and compensation models to be supported and continually evolved. An agreements-based monetization approach for the social enterprise means being able to:
- Win competitive deals and anchor partnerships where flexibility and differentiation are critical
- Increase agility in response to emerging markets and new technologies
- Bill and collect additional revenues without disruption
- Compensate suppliers and channels
- Fulfill the needs of marketing, community and strategic imperatives – quickly
With such a monetization platform in place, the social enterprise can respond to the dynamic, relationship-driven needs of its marketplace with faster time-to-revenue, lower cost and greater independence from vendor roadmaps or customized services. In the social enterprise world, IT has to become the enabler of, rather than the barrier to, meeting each customer’s unique needs.
Scott Swartz is CEO of MetraTech. Prior to founding MetraTech in 1998, he was Director of Product Marketing and Business Development at NetCentric, a provider of carrier-class Internet fax systems. As an early developer at NetCentric, he created the first SGML/XML billing protocol and produced an award-winning Internet fax application. Previously, Scott was a Director at Cambridge Technology Partners. He led the deployment of a complex customer care, billing, and logistics solution for Air Products, selected by InfoWorld as a top 50 client/server implementation. He was named a Technology Pioneer by the World Economic Forum and is a Director of the Massachusetts Network Communications Council.