I first met Mr Rangaswami several years ago when he was Chief Scientist at British Telecom. And I’ve been an avid reader for many years of his blog confused of calcutta where you can find insights into the nature of enterprise technologies, food, copyright, and music in equal measures.
When he joined Salesforce in late 2010 I wrote that the company had made an important and astute hire.
I asked why he joined Salesforce?
“Salesforce’s Chatter is what convinced me that the company understood what is going on in the enterprise, this was the biggest attraction for me. I saw that Salesforce understands social.”
Chatter is sometimes described as Twitter for the enterprise and it competes against Tibco's Tibber, and Yammer. The effects of social media on business has long been a prime focus for Mr Rangaswami.
At British Telecom (BT) he was responsible for many initiatives and strategies that helped the organization transform into a telecom platform, hosting many innovative services. The Salesforce platform and its large business ecosystem is a very similar and familiar environment. And like BT, it's an acquisitive organization, with 14 deals within the past two years.
A key acquisition for Mr Rangaswami when he was at BT was Ribbit, a fast growing Silicon Valley startup that had huge ambitions to disrupt the Telco industry, describing itself as “Silicon Valley’s first phone company.”
It was acquired by BT for $108 million in July 2008. Mr Rangaswami said, “It was a good deal for BT and it would have been even better if it had a mobile business. It’s still a very good business for BT.”
These days his attention is on something much larger than the disruption of the telcos, large as that opportunity is, there’s one much larger. As Chief Scientist at Salesforce he is focused on figuring out how to deal with an incredibly disruptive trend, one that will rewrite fundamental rules of business itself — social media and the creation of social business.
I firmly believe that the drive to create social businesses will become the largest business reengineering project ever undertaken in our short capitalist history. It will disrupt many companies, most to the point of failure.
Transforming one of today’s large corporations into a social business will be hard, nearly impossible in many cases. Only some will be able to make the transition leaving room for a new generation of winners, what I call “new rules enterprises,” for which I have ten rules for success. But it’s the first rule that’s the most important: It's new. In a new business there's no legacy culture and processes to hinder growth.
Salesforce sees massive revenue opportunities in this transformation of companies into social businesses. In November 2009, I was in a meeting with Parker Harris, Salesforce co-founder, along with ZDNet colleagues Dennis Howlett, Mike Krigsman, Dion Hinchcliffe, and Vinnie Mirchandani. He spoke about a problem facing Salesforce, how to move from $1 billion in annual revenues to $10 billion? The CRM market wasn't large enough to meet those ambitious revenue targets.
Salesforce made a big bet more than two years ago that the answer to its problem was 'social': that the tip of the arrow for new business would be in providing the myriad number of business services required by social business, or as Salesforce calls it: the social enterprise.
Shortly after Mr Parker's revelation of Salesforce's ambitions, it raised $500 million in a private debt placement that helped it make 14 acquisitions, compared with just five previously, laying the foundation for its future $10 billion revenue business. The most recent acquisition was Rypple, a management app using social software to motivate teams of workers.
Helping companies become a social business is a big business and also a tough business because of the considerable education that needs to take place. Mr Rangaswami said he spends 80% of his time traveling, talking with customers, especially European companies.
Educating businesses about the need to become social businesses is easier if it's done by someone with direct experience in social media and business. Which is what Mr Rangaswami has, and one that he continues with, blogging regularly and with as much enthusiasm as in his early days.
I’m a firm believer that to really understand something new you have to experience it, you have to be in it to know it — reading about social media doesn’t work if you aren't involved in it, consistently and continually, because (like all culture) -- it changes constantly.
Marc Benioff, CEO of Salesforce understands this important distinction and has consistently hired people with deep social media experience, such as my former colleague Steve Gillmor, and many others.
(Mr Benioff is extremely media savvy. I’m always amazed that he hires a PR firm because he has no trouble getting attention whenever he needs it. On Twitter he’s @Benioff.)
Mr Rangaswami believes that the future of enterprise software will be defined by four functions: publishing, search, fulfillment, and conversation.
I totally agree, especially about the “publishing” function. For many years I’ve pointed out that every company is a media company. Even if they make diapers, they need to publish to many different audiences, and now with the evolution of the Internet into a two-way Internet, they need to listen and analyze what those audiences are publishing back to them.
Which is why I would add a fifth function of enterprise software: real-time analytics.
Every company is a media company ... but most aren’t good at it. Most are terrible at it. Which is why there’s lots of money in helping companies become better at being media companies.
For example, Salesforce just launched Site.com, a cloud-based service for quickly creating web sites for desktop and mobile users, and integrating social media streams. This, and other services such social media analytics from Salesforce’s Radian6 acquisition, are the types of business utilities that every social business needs.
It’s easy to see why Mr Rangaswami, with his deep interest in social media and its transformative effects on business and society, would be attracted to Salesforce. The company has a plan, a focused leadership, and the means to make a significant global impact in the development of a radically new business model for the enterprise.
Although it’s tough convincing businesses that they need to change it’s made easier if you can articulate it well. That’s why the recruitment of Mr Rangaswami, and others such as Kevin Marks, also from BT, shows that Salesforce understands what’s needed to make the most of the opportunities ahead.
Social business is also where Salesforce can break free of its CRM past, and its "cloud versus enterprise apps" pigeon hole. The cloud won, what's next?
The next big enterprise market is in creating the many different types of services needed by a social business. This will be great for startups because it'll be a very creative and innovative space.
I asked Mr Rangaswami if he would consider moving to the Silicon Valley area, since he has spent so much time here in recent years. He said he wouldn’t. “I’ve got too much work to do in Europe, talking with European companies.”
European businesses are nearly always slower in adopting new types of enterprise technologies than their US counterparts. Mr Rangaswami will need all of his powers as a communicator to convey an important message, that in regard to social business, prompt action is the best strategy.
The danger facing nearly every company is from a competitor that has managed to transform itself into a social business before them. The speed of transformation will become the measure of competitiveness.