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Anyone who follows salesforce.com is used to surprises, but over the last couple of months the company has come up with some that go beyond the usual. It rebranded the recent user conference in London as a customer company event. This follows from changing its messaging to urge every company to become a customer company not a social company. The event itself was everything we have come to expect, using an array of customer case studies to show how salesforce.com’s products help companies innovate and be successful, and a large partner and product showcase to prove how many products and partners salesforce now has. The real surprises were tucked away in meetings arranged for the many analysts present.

Two messages struck major chords with me. The first was the repeated claim that “salesforce.com is not a product company with a development platform; it is a company with a development platform that has products.” Its history is of course the complete opposite: The products started with CRM in the cloud and evolved to marketing and sales services in the cloud, with an array of other services never called software. It achieved this status by a combination of product development and acquisitions, all of which developed on top of  Force.com, which has been renamed and expanded into the salesforce.com development platform. This shift places salesforce.com in a position where it can “own” customers, persuading them to standardize on products built on the development platform, whether they are salesforce products, in-house developed products or third-party products available through the AppExchange. The message includes the extensive integration capabilities that help companies integrate these with other internal systems and other third-party products on-premises or in the cloud. The goal is to tie companies to salesforce for the long term.

The other surprise was how extensively salesforce is getting into mobile apps. A little while back I wrote that the use of mobile devices is growing and that consumers are gradually adopting mobile apps as a form of self-service. That change is continuing, but salesforce.com seems to want to take it further. As part of the developer platform, it now has tools dedicated to helping companies build mobile apps, and so it joins the growing number of companies with such tools. However the message is about taking a different approach, which it proposes is needed to match users’ changing life and work styles. Salesforce presents this as enabling work on the move and doing “things” as apparent one-off tasks; for example, you look up someone’s details, make an appointment, open an opportunity, write up a meeting and place an order. The idea is to have an app for each of these and build systems that join them in end-to-end processes. I am not sure the market is ready for this yet, but then again no one predicted the impact social media would have on customer engagement.

Throughout the sessions there were mentions of the Marketing Cloud and how it supports companies as they move into social marketing, which is very different from traditional approaches. Against that background it was a major surprise when salesforce announced the acquisition of ExactTarget, a cloud-based digital marketing company, which takes a more conventional approach founded on email marketing. “Where does this fit in the grand strategy for Marketing Cloud?,” someone asked. “Where does this leave salesforce customers that have worked with other marketing products?,” asked another. I deduced from an analyst briefing from John Tascheck, Senior Vice President Strategy that ExactTarget has a large customer base that salesforce.com will sell into and that over time there will be rationalization of the products; so for now it is about market share and business as usual but clearly Salesforce is getting serious about meeting marketing needs by making acquisitions.

To cap all the surprises came the news that salesforce.com has signed a definitive partnering agreement with Oracle, which comes along with Oracle’s new partnering agreement with Microsoft. This one is hard to read given the contentious history between Marc Benioff and Larry Ellison, although it should be remembered that a lot of the salesforce,com products already use Oracle technology. The terms of the deal seem straightforward: salesforce standardizes on some Oracle development tools, and the Oracle HCM and financial cloud are integrated into salesforce’s; both leaders said it is important for customers to have better integration between their cloud applications. These deals could be about Oracle getting its cloud act together. It was late in moving to the cloud, so maybe these partnerships give it access to the expertise it needs to develop its cloud strategy. But if that is the case, why would salesforce and Microsoft give away their advantage? Is it plain and simply about gaining market share? If so, from whom – IBM? SAP? Only time will tell, but as many other commentators have remarked, it is a strange world we live in.

Regards,

Richard J. Snow

VP & Research Director

Salesforce.com launched more than 12 years ago as the founding CRM vendor in the cloud. Today it has grown to be the kitchen-sink vendor in the cloud. It seems every month it announces some new cloud service, and its services now cover almost the entire enterprise: sales, marketing, service, HR, finance and a list of supporting services that make it hard to determine just what the company now has to offer. Two things remain clear, however: Salesforce.com has established cloud computing as a credible way to source software applications, and all applications need to be socially enabled to keep up with new user and consumer preferences.

At a recent UK analyst event, I saw the company change its marketing direction and seek to establish Salesforce.com as the development and operations platform of choice. Indeed, the three Salesforce.com speakers, Peter Coffee, John Taschek and Allyson Fryhoff, left the assembled analysts in no doubt that the future is all about Salesforce as a platform, and the company bought along three customers to back up the speakers.

Coffee set the scene with a proposition that I wholeheartedly agree with, which is that it all begins with data. Over the years that I have been covering all things customer-related it has become clear to me that organizations have real issues with their customer data: It is stored in multiple systems, many of these are not synchronized or especially up-to-date, the data varies in quality and completeness, it is not shared across the enterprise, its large volumes are always getting bigger, and increasingly it is in multiple formats – both structured and unstructured. The net result is that organizations lack a single source of the truth about customers, which makes it hard to run focused marketing, sales, service or contact centers that between them deliver a high-quality, consistent customer experience across all touch points.

The foundation of the Salesforce platform is Database.com, which is the single source of customer data upon which all the other applications are built. It is available in the cloud, built on open standards, conforms with all the Salesforce security and reliability standards, and is of course socially enabled. It is the base for all Salesforce services, such as Sales Cloud and Service Cloud, and using it along with Force.com lets companies develop their own customizations or independent applications. Social enablement comes through Chatter, which has been described as “Facebook for the enterprise,” but Chatter goes beyond this to allow users to share data and to collaborate on tasks such as resolving customer issues.

The Salesforce platform consists of four other major components: Heruko, Site.com, Touch and Identity. Heruko provides an alternative to hardware servers as the platform on which customers can run their applications. One of the users at the analyst event was especially impressed that by using a simple slider he could scale his operating environment to match changing business requirements. Site.com provides the capabilities to build and deploy websites using drag-and-drop techniques, and to build once and deploy the sites at several locations – corporate, social and mobile. Touch Platform provides the capabilities for developers to build mobile applications and deploy them to any device, taking advantage of all the built-in capabilities of most mobile devices. Identity allows organizations to assign a single identifier to each employee, and lets employees securely sign in to every application they are authorized to use – something that is becoming increasing important in a world where users need access to many applications.

This combination of services, coupled with an increasing number of integration capabilities to both business applications and social media, make up the Salesforce platform, and are complemented by the AppExchange application repository. With these offerings, Salesforce is increasingly proposing it is the only environment companies need to support all their application requirements. Two of the users present agreed; working for relatively small organizations with little legacy, they had embraced Salesforce as their platform of choice. The other user had reservations, mainly because his company ran a considerable number of legacy systems that he felt it would never entirely replace. Having lived through eras where the mainframe died and client-server technology died, I suspect that very little in the IT world fully goes away, so I tend to agree with the latter view. I have also been somewhat skeptical of the “social enterprise,” but as I sit with more heads of contact centers and customer service, I see social beginning to have more impact, and social-enabled apps becoming more important moving forward.

The future of IT and the traditional IT department became the subject of quite a lively debate at the event. My research into the adoption of cloud-based contact centers shows that more companies are now prepared to adopt cloud-based systems, and several believe adopting a cloud-based contact center will help them address key issues such as supporting multiple channels of communication, supporting employees working in more locations and distributing interactions across the enterprise. Going this route requires less involvement from IT from both a development and operational perspective. Opinion was divided on what the likely future scenario will be, but it is safe to say that organizations need to adapt to the new business environment we all now operate in, and IT probably has to change its role and become more integrated into the overall business organization.

What impact are cloud-based systems having on your organizations? Could adopting platforms such as Salesforce.com change your whole approach to sourcing IT? Please share your thoughts with me.

Regards,

Richard J. Snow

VP & Research Director

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