Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Salesforce.com: Gauging the chatter about Chatter

By | August 18, 2010, 3:30am PDT

Summary: Salesforce.com will roll out its second quarter results and inevitably talk a lot about Chatter, its social enterprise effort. However, analysts are doubtful that Chatter is driving a lot of new licenses.

Salesforce.com on Thursday will roll out its second quarter results and inevitably talk a lot about Chatter, its social enterprise effort. However, analysts are doubtful that Chatter is driving a lot of new licenses.

The on-demand CRM software provider is expected to report earnings of 27 cents a share on revenue of $384.7 million and analysts will be closely watching bookings. Demand in Europe will also be closely watched.

However, the big debate around Salesforce.com revolves around Chatter. Will Chatter drive future business.

Jefferies analyst Ross MacMillan said in a research note:

We conducted 15 conversations with Salesforce.com customers that have deployed chatter. Only 1 customer in our sample planned to roll out Chatter specific licenses to non existing users. In addition 1 customer decided to switch Chatter off as they felt it was being used for non work-related conversations and was not adding to productivity. Overall we view Chatter as an interesting collaboration concept that may in time drive additional usage. But for now, we think SFA (salesforce automation), Service and Platform seats will continue to drive the majority of usage.

If you recall, Chatter is a free feature for existing customers. But Chatter will cost you $15 a month if you’re not already a Salesforce.com customer. Salesforce.com executives say that Chatter can bring in more people to the ecosystem, but analysts seem to dispute that notion. It may be too early to gauge Chatter’s ultimate impact, but the commentary ahead of Salesforce.com’s quarter is notable.

Salesforce’s Chatter available, aims to bring in new enterprise customers

Screenshots: Salesforce.com’s Chatter: A walkthrough

William Blair analyst Laura Lederman concludes that it’s too early to tell whether Chatter will help Salesforce.com’s quarter. Lederman said in a research note that Chatter’s real impact may be as a conversation starter. She said:

There is also real interest in Chatter. One systems integrator (SI) said that the interest has been higher than expected. We have also heard that Chatter is driving discussions for enterprise license agreements.

Wedbush analyst Michael Nemeroff argues the same point. He sees Chatter helping sales growth because Salesforce.com salespeople have something to talk about and can cross sell.

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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: Salesforce.com: Gauging the chatter about Chatter
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Salesforce.com and its forward thinking management, employees and partners whose efforts have sparked the revolution that is happening NOW; even as I type this response, should be lauded for its accomplishments. ?However, while having a 'great' idea; one that resonates with all of us and becomes just plain common sense should be celebrated, its the execution on that idea that is the true measure of a game changing technological, financial and sociological success that is the shift that benefits us all. That is the true accomplishment salesforce.com can beat its chest about - execution.

In order to reinforce that momentum and truly democratize the availability and use of powerful enterprise class SaaS, studentforce endeavors to place the platform in the hands of those who truly know how it can be used - students. ?Delivering on Don Tapscott's 1998 prognostication "? ?that the most revolutionary force for change is the students themselves. Give children [students] the tools they need and they will be the single most important source of guidance on how to make the schools relevant and effective? is a tall order made possible by the force.com platform; and, more recently, the introduction of Chatter - a secure medium by which students collaborate with one another; faculty do the same; and, each group shares with one another. ?Student Chatter + Faculty Chatter creates a dimension of conversation and collaboration never before available. ?

Recently published studies report that faculty (80%) use social medium; and, a growing number (30%) use collaboration tools, available as a service to communicate with their students incorporated into lesson plans. ?We already know that students (and others) have already enthusiastically embraced social medium and its growth is accelerating throughout the world. ?But there still exists a disconnect between faculty, students and staff on campus. ?As the further 'commercialization' (by no means a bad thing) of collaboration platforms evolve it seems to be at the expense of PRIVACY. ?That will inhibit the execution of a great idea. ?Ironically, security and privacy must be intact so that collaboration and sharing can occur. ?Think about it - strange; right?

With Chatter layered within the force.com architecture, we now have a platform that is secure; private where necessary; and, holds the promise of exponentially increasing the transfer of ideas ?. so the execution of those ideas can occur. ?Chatter also " ? brings the data alive" by automating the notification of important events as they occur and delivering them specifically relevant to the tasks they are associated with. ?And its MOBILE; available on my Blackberry, iPhone, iPad and yeah - future mobile devices.

What better audience is there to take a wonderful idea (SaaS + Collaboration + Mobile); effectively executed for businesses, non profits and individuals than those who have grown up using these tools? ?And, by giving students ?" ? the tools they need" a generation of productive, knowledge seeking students will be able to execute on the ideas that have not yet been thought of as they become citizens participating in business, teaching and life long learning.
The Chatter using audience can now expand even more with the new free offering released just recently by InvisibleCRM. It's Chatter provider for Oulook Social Connector that is build on Microsoft open platform by InvisibleCRM (http://www.invisiblecrm.com/outlookchatter/) that allows Salesforce.com users to get corporate events updates right in Outlook.
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