Having attended Oracle Open World not long ago in the very same Moscone Center that Salesforce.com held this year’s Dreamforce, I was consistently struck by the ongoing focus on business value and how Salesforce.com’s “UnSoftware” addresses business issues for sales and marketing people in companies of all sizes. To be sure, there was plenty of the its-all-about-the-cloud evangelism and chest thumping in evidence. But where Oracle was almost all about the database, middleware and other technologies, and where the vast majority of people were from their company’s IT department (unless you squeezed into the Intercontinental to see the Hyperion and other business-themed software sessions) there was almost no connection between technology and solving business problems – including IT’s business problems. Open World’s weakness (though in a more narrow sense its strength) is that it’s IT for IT’s sake.
My use of “UnSoftware” is a play on the old Seven-Up “uncola” pitch. It’s also inspired by another industry analyst’s insistence during a Dreamforce analyst session that the company actually was using software and therefore the ‘no software’ motto was nonsense. His point was a bit puzzling to me: since when did technology buzzwords have to be accurate or even sensible (ERP doesn’t plan, “client-server” means more than just network architecture, etc.). No-software software? No problem – almost everyone knows what the company means.
Over the last 18 months Salesforce.com has been transitioning from its early days of claiming it was the new game in town to actually being the real deal. In the beginning, Salesforce.com’s value proposition was about fulfilling on the basic needs of sales force automation flexibly and inexpensively. This sounds simple but it was a need that went unfulfilled for two decades.
When the first successful SFA desktop apps like ACT! appeared in the late 1980s, it was mobile only to the extent that you loaded it onto your 28 pound (13kg) Compaq luggable PC, which with some diligence could be connected to the office with a 300 baud (that’s a zero-dot-three bit rate) modem. These desktop apps did a good enough job of organizing contacts, meetings and the other basics. But they were an imposition on the sales process and difficult for field sales people to use because of the limits of the technology (not to mention the weight of the machine that made it work).
In a client-server environment, SFA applications became more valuable to sales management in automating sales administration but they became even more of a burden to sales reps. Moreover, Siebel’s all-singing all-dancing toolkit approach made implementing even a straightforward sales management/SFA solution ponderous and expensive. Putting the standard SFA application capabilities “in the cloud” in a dedicated application was an important first step to making SFA more useful because the bulk of the people using the system were doing so when they were out of the office on the far side of the firewall. The architecture of the application is consistent with the structure of the business process. It was so well suited that it propelled Salesforce.com quickly into a major UnSoftware company. If the company had decided that its mission was accomplished or if it had not started to make its initial claims real, it would be in plateau mode by now or at least in the near future. That’s not the case.
Beyond the shortcomings of the client-server or desktop architecture, there was a fundamental flaw in the design of all 20th century SFA systems, These first apps (and especially early enterprise programs like Brock Control Systems and Saratoga Systems) addressed the needs of sales managers first and the salespeople second (often a very distant second). Getting salespeople to fully use SFA systems was a tough sell because they took time and effort from the salespeople that they could be using to sell (or play golf) without giving much back. This was a longstanding issue. Virtual Selling (Tom Siebel’s manifesto that launched the “CRM” TLA) touched on this problem but his software didn’t really address it well, especially as it was configured in most companies.
It may be a bit premature to declare that Salesforce.com has fully addressed the issue of the SFA system giving sales people more value than the effort they perceive they are expending for the benefit of sales managers. However, it’s likely that in its latest incarnation, with the addition of Salesforce Chatter and my colleague’s analysis (See: “Salesforce Chatter Brings Social Collaboration and Media into Business“) as well as deeper sets of capabilities such as the content manager, the company has crossed this important line for many sales organizations, especially ones that want to use its capabilities to the fullest.
A SFA system works best when it extracts the information that sales management needs (such as administrative details on opportunities, pipeline state, contacts made and so on) incidentally to making the sales rep more productive. An application that can present a sales person (for example) with a list of initial and follow up calls listed in order of their ability to help them meet quota or maximize their revenue and then makes recording the nature and outcome of the call to enable them to follow up and manage their future workload most efficiently (not to say lucratively), is one that will get the most traction. If the application is properly architected and constructed, the events and data in the system automatically can provide sales managers with the information they need, too. Chatter adds to this in many obvious and subtle ways. The social design and the ability to connect people in an unstructured, asynchronous and persistent fashion is far less intrusive than filling in a “Comments” field of some form and yet (properly filtered) capable of providing sales managers with a much richer and up-to-date view of what’s happening in the field. To boot, all of the data fields needed to generate administrative reports can be prepared quickly (even automatically) and delivered anywhere in any format.
So much for sales. As to service, other than some very early stage proof points (or proof claims) there was nothing substantially new at Dreamforce with respect to the Service Cloud since we commented on it after the San Francisco launch in September.
The force.com platform pitch reminds me of the original Windows value proposition. Few probably recall that writing desktop applications in the DOS days involved messing with a great deal of plumbing issues. In fact, Brøderbund Software (remember them?) spent about 35%-40% of its development dollars on its best-selling “Print Shop” application just making sure that it worked with all the latest printer drivers. When Windows appeared, ISVs no longer had to worry about this and many other development tasks that were incidental to their expertise. That’s what force.com is selling.
For many companies, we expect that the IT department will be able to cut the cost (and time spent) on some noticeable percentage of maintaining its existing custom development applications by using the force.com platform. This is an important component of shifting from a “keep-the-lights-on” IT organization to one that is actually can be responsive to addressing new business needs. (Better management techniques and the right software to support it are also important ingredients, as I’ve noted previously). On the other hand, a more efficient platform also can make it easier for IT departments to create second rate software. One of the showcased companies pointed to a travel and entertainment expense application it had created. Given how cheap SaaS-based T&E software is these days, it’s just dumb to waste development cycles to reinvent a square wheel simply because you can, regardless of whether it’s cheaper than doing it on a standard development platform.
However, it’s important to note that selling the force.com platform is an important step in the evolution of Salesforce.com’s long-term strategy. It is a way of encouraging broader use of the company’s UnSoftware across an entire company. It’s clear that this is supposed to lead – in the short and medium-term - to selling more enterprise licenses and therefore generating more revenues. However, over the longer run, I have to think that there’s an expectation that by connecting so many people to the UnSoftware, Metcalf’s Law (the value of the network increases with the square of the people on that network) will make Salesforce.com as much of an irreplaceable and highly lucrative component of a company’s business computing environment as Microsoft Office and Oracle’s Database.
Let me know your thoughts or come and collaborate with me on Facebook, LinkedIn and Twitter.
Robert D. Kugel - SVP Research