Chatting (Not Chattering) About Salesforce - Part I

Summary:(NOTE BEFORE I START: This is one really long post. So rather than post it in all its glory in a single file or post it here over two days, I'm trying something new.

(NOTE BEFORE I START: This is one really long post. So rather than post it in all its glory in a single file or post it here over two days, I'm trying something new. I'm posting the first half here. And the second half on PGreenblog.  Let's see how that works.)

I'd like you to think about something. The Big 4 of CRM are considered the following:

  1. Oracle
  2. SAP
  3. Microsoft
  4. Salesforce.com

Salesforce has at best 1/15th the revenue of the smallest revenue of the other three.  At best.

By no standard imaginable - except one - does salesforce.com belong in this list - especially IF size matters.

But that one factor is the combination of their continuing ability to at least be the leading market edge when it comes to recognizing trends and at best be the innovator and the creator of those trends.  Plus the incredible energy and charisma of Marc Benioff doesn't hurt either.  'Cuz if it were sheer numbers that determined the leadership - not just the shareholder value - there is only a big three - and little slightly more than a billion dollar salesforce.com wouldn't be on that list.

But larger than (business) life they are - as Yoda told me just the other day.

So where are they with the release of what Marc called the "4th Cloud"  Salesforce Chatter yesterday along with the other three - SalesCloud 2, ServiceCloud 2 and CustomCloud?

I'd say, at least if choosing my body of options, they aren't creating the trends or innovating here. What they are doing is nailing what the trends are and being on the leading edge of those trends.  That's going to be the suit they wear in the post-Dreamforce 2009 world that we will all be inhabiting after this week.

Marc and salesforce.com have always had an uncanny ability to see the business world in its sexy glory. Marc put it well several times when he said that creating the company and the initial sales app/service were inspired by Amazon and the current incarnation of salesforce with its products etc was inspired by Facebook, Twitter and what pretty much amounts to the social web.

My take has always been that consumer thinking has penetrated the enterprise - been saying this since I was a young whippersnapper back in 2003. But salesforce.com has had a vision for years and been following through on that vision with an extraordinary rigor.

What is that vision, you ask? Well hop onto the Wayback Machine, Sherman and let's go to 2003.

The scene is a hotel restaurant in Shanghai with men and women of mystery eating their breakfasts, talking to "someone", murmuring under their breathes about important things.  I'm sitting at a table with Tien Tzuo, the then CMO of salesforce.com, now CEO of the very successful SaaS billing and payment systems vendor Zuora.  Know what he's telling me?

(This is a paraphrase. Read the 3rd edition of CRM at the Speed of Light for the literal): "We want to be the place that all business people come to run all their business applications. We want to be the  Business Web. We're not just a CRM company."

Guess what folks, while this may be an ambitious goal and one that they've tempered with the message that Marc peppered his two days of keynotes with at the conference that (again paraphrased) "we realize that companies will be running other systems," this is precisely what they are continuing to drive for -  with force.com and cloud computing.  Have they succeeded? No, not yet, there is a long way to go, but they are walking on the same road - even trotting on it - that they were walking back in 2003. To those who say that force.com takes them away from their "core competency." Knaves, you are wrong. Force.com is their core competency. (Boom. Fade to black).

Now, lets get on with it.  For the rest of this post, I'm going to discuss their so-called 4 clouds.  Service Cloud 2, Sales Cloud 2, Custom Cloud 2 and of course, Chatter, their 4th cloud.  At PGreenblog, I'm going to do a piece on the back stories of the conference - like the analysts who were there in droves, the conference management, the meetings I had, and maybe even some of the parties.  We'll see. That'll be out before Thanksgiving.

First, Is All This Social CRM? The 4th Cloud?

The answer - which will be qualified by the end of this piece - is "Yes" "No" and "who cares?" But I do want to start this by telling you that calling Service Cloud 2, Sales Cloud 2, Custom Cloud 2 and Chatter the 4 "clouds" are not clouds. They are either cloud services (Chatter), cloud applications (Service Cloud 2 or Sales Cloud 2), or platform as a service (force.com a.k.a. Custom Cloud).  I don't particularly like marketing like this because it just confuses a market with customers and prospects who are trying hard to understand what the cloud is.  This isn't the cloud. Not clouds. Niet wolken. No nubes.Keine wolken. ניט קלאָודס.  没有云彩

That's my multi-lingual declarative and I'm sticking to it.  Take me on if you want with some comments, but I won't fold. Ironically, I did a webinar on the cloud for salesforce.com about a month or two ago that you can access here (registration is necessary).  Listen and then tell me that those 4 things are "clouds."

The Big Picture

While touted as game-changing, earth-shaking, revolutionary, and transformative, I didn't see that. Other than the "apps are talking to me" I didn't see anything that I hadn't seen implemented somewhere else - and better elsewhere n some cases (I'll discuss that later).  But what I did see and was beyond impressed with was a fully integrated framework and architecture for social computing that integrates social CRM, and could easily enough deliver social ERP and social "supply chain" and social "anything you damn well want." We saw that with the extraordinary - and I do mean extraordinary demo by Vetrazzo CEO, James Shepard.

Were they perfect and seamless?  No.  But after all the conferences I've attended this year of all the vendors, this was the most developed and integrated execution of an end to end contemporary platform I've seen to date. That said, it still was a demo with what seems to be a February through indeterminate 2010 release date.  So how complete it ends up, remains to be seen.  By way of comparison, Oracle Fusion, talked about for 3 years, which could be the competitive platform to this someday, is still in the "wait and see" stage  with a demo of Fusion Apps for the first time at Open World 2009.  For now, end of 2009 and into 2010, force.com, even with the problem of Apex as a proprietary development language, is going to be the platform to beat. (if anyone dares excerpt this in part, w/o the caveat, I'll kick your butt.).

Also, the claims that were being made sounded a bit much at times, though not always by salesforce. One that particularly stood out was that Frost and Sullivan in a May 2009 report said that salesforce.com had 55 percent of the revenue from North American SaaS deployments of customer service. I'd love to see that Frost and Sullivan report and hear they came to that.  I literally don't believe that number - even if Frost and Sullivan "proved" it.  Sorry.

So how does this all shake out ? Let's break (dance) it out.

The Health of salesforce.com - Left Brain

The numbers speak for themselves. If you're a fan of run rates they are at a run rate of $1.3 billion annually as of now. My run rate is about 4.5 mph.  So you know where they and I stand in this.  That's all fun but a bad month can kill a run rate. But their actual numbers are pretty healthy too. Revenue for the 3rd Quarter was $330.5 million up 20%, beating financial analyst expectations by a little (I had no expectations - which is why I'm not a financial analyst)  They now have 67,900 customers with 4700 new customers. They were slightly more profitable.  All in all not a bad showing, which of course is why their stock price declined on the news of their improvement - nothing like Wall Street to ruin a party - except the ones they throw using their newly restored bonuses. (PG Safe Harbor: The previous sentence is a populist commentary, not an expert analysis. Thank you).

Service Cloud 2

When salesforce originally announced Service Cloud a year plus ago, I thought it was a good thing because they were filling out the portfolio for CRM at least with something that has been notoriously poor in CRM suites though it was offered, and for them it at least filled a major hole. Though I was, after an initial rush, somewhat underwhelmed by the first offering.   with Service Cloud 2 they've filled gigantic gaps from the 1.0 version and they've added some integrated social features.  They have the requisite Twitter integration, which is a perfectly adequate integration though frankly, the current stellar enterprise Twitter customer service integration  belongs to SAP with the use of Business Objects Insight to provide a sophisticated sentiment analysis capability and business rules/workflow/alarms/triggers etc. Salesforce.com, of course, integrated Chatter functionality around things like case resolution for example (e.g. have a "service conversation" with not only the customer but with the managers and so that the triggers and alerts are visible as a  subscribed feed. Again, you'll understand what in god's name I'm talking about a little later.)

They've also gone the "complete solution" route by allying with Cisco to provide a pre-fab contact center for small and medium businesses which is a very wise move on salesforce's part as they continue to move upstream. This way they don't lose the market that made them what they are - small and medium business.

One area that they've done extremely well in this release is built around customer knowledge. One of the reasons that customers are turning away from the companies and more toward peers when it comes to solving problems with products and services is that they don't trust the companies to give them the right answer nor do the companies have the knowledge captured that they need to really help the customer. Plus the search capabilities for many of these knowledge bases is awful.

But rather than simply try to improve the quality of the knowledge presented to the customer from some internal source, salesforce has taken the most intelligent route possible by embracing this new paradigm and using the "wisdom of the crowds" (god. If James Surowiecki gets a royalty for every time that phrase is used, he will be richer than Ellison soon enough) rather than fearing it or trying to compete with it.

What they've done is create Salesforce Answers which essentially lies along the "engage customers through communities to help solve problems" spectrum. While this model in more specific ways has certainly become popular in 2009, Salesforce Answers is a relatively flexible option that is highly configurable to the customer service needs of the customer. Combined with Salesforce Knowledge their "multitenant" knowledgebase and their so-so Twitter integration, there is a lot of customer service value being provided, particularly around customer service engagement and self-service.  Service Cloud 2's concept is responsiveness, information and engagement.

My rating: A bloop single because of the improvements from the original Service Cloud, not because of its strength relative to other packages. Its only a hard line drive but caught there. (for non-baseball left-brainers 3.00 of 5.00; for non-baseball right brainers "not bad."

Sales Cloud 2

Now we're talking! This is actually more exciting to me than Chatter, and given my proclivities toward (oh-be-have) social "stuff", that's saying a lot.

Salesforce was always a leader in sales force automation.  No doubt about that. They have had solid functionality,  a tolerable interface as the tab pioneers and strong traditional SFA functionality. Of course, that meant that the functionality was geared toward sales management more than directed toward providing features that would be valued by sales persons.  However, not only have they strengthened the management features, but they added features that were without a doubt aimed at providing what the sales person actually needs to do his or her job.

Are they the first to do this?  No. Oddly Oracle was back in 2004 when they added a quote generating engine for their Oracle CRM (pre-Siebel, pre-PeopleSoft CRM).  I wrote about it in the 3rd edition of CRM at the Speed of Light in fact.

But salesforce has done a major league job by improving on other quote engines by providing a real time quote engine. They model it, according to them, on the power seller paradigm that eBay uses.  Meaning a few clicks and there is a quote based on the current pricing and configuration.  Easy peasy, lemon squeezy as the Geico gecko says.

One major feature that I think is a vast improvement over past editions is the Cloud Scheduler. What makes it more than a personal information manager feature is that it allows scheduling with outside partners and customers pretty much using drag and drop.  If your partners and customers - and of course - other staff are connected (opted in) then you can do what Outlook does with the "find best available time for all concerned" automatically.

Of course, they have the requisite Twitter integration, though aside from me not being particularly impressed by their Twitter integration in general, what its doing in a sales application beyond a monitoring tool, I have no idea.  Even in their official press releases they talk about converting "Twitter conversations into customers" which is honestly, a crock. It isn't an integration that converts a Twitter conversation into a customer.  I'm glad you can integrate Twitter conversations of customers into the sales record but beyond that, so what?

Any salesforce Content Library document is available on mobile devices with this release which is a huge plus for those on the road all the time - which includes, what else - salespeople. All in all a smart feature.

That said, let's take a brief look at the social integration of the Content Library.  Salesforce claims that rather than just getting a presentation from a repository, you can now take a look at the content, see what others have said about it, find out which deals it was used on, solicit feedback on the value of the presentation or document given the opportunity and also collaborate on changes. While this is fine, it sounds like a somewhat less robust and thus almost dead ringer for Oracle Sales Library.  So I don't think this was inspired by Twitter and Facebook.  Sounds more like it was inspired by Oracle.  But, its still a good addition to the library.

Sales Cloud 2 actually is a significant step forward for this company formerly-known-as-CRM's CRM SFA application.

My rating: A line drive triple into the gap, driving in at least a couple of runs. (for non baseball left-brainers 4.00 of 5.00; for non-baseball right brainers - really quite cool)

(Okay, now continue on to PGreenblog for Part II - the remainder of this analysis which covers Custom Cloud and Chatter and some other notes on the conference.)

Topics: Social Enterprise, Enterprise Software

About

In addition to being the author of the best-selling CRM at the Speed of Light: Social CRM Strategies, Tools, and Techniques for Engaging Your Customers Paul Greenberg is President of The 56 Group, LLC, a customer strategy consulting firm, focused on cutting edge CRM strategic services and a founding partner of the CRM training company, BP... Full Bio

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