Flying Through the Cloud: Dreamforce Takeaways at 50,000 Feet

A couple of weeks ago, I attended Salesforce.com’s Dreamforce event–along with about 19,000 other people. Having had a chance to digest the proceedings (as well as Thanksgiving dinner), here’s my commentary on what stood out as the top takeaways from the conference in terms of where Salesforce is headed and what it means for the software industry and market.

  • Super-charged energy levels. Ever the master of marketing, Marc Benioff did not disappoint. As he continues to thrust Salesforce beyond its CRM roots into ever-widening orbits, Benioff’s passion and enthusiasm remain high—and contagious, as evidenced by  the strong turnout, constant tweeting and feedback I heard in many 1-1 partner and customer conversations. (Not to mention that people were lined up to have their pictures taken with Salesforce mascots Saasy and Chatty…scary!). More to the point, the energy level at Dreamforce was off the charts in comparison to most recent industry events. While it’s easy to be cynical about people drinking the Kool-Aid, it seems the substance is there to sustain Salesforce’s energy. Competitors will need to dig deep to inspire the same intensity of purpose as Benioff breaks new ground in quest to develop Salesforce.com’s next billion dollar market.
  • May the Force be with you. Force.com, Salesforce.com’s cloud computing platform-as-a-service (PaaS), is fueling a lot of this energy. Force.com enables people to build multi-tenant software-as-a-service (SaaS) applications that are hosted on Salesforce.com’s servers. A long line of customers and partners testified to the power of the Force–which is basically that it gives them a fast, easy, low risk way to build applications.  According to Salesforce, 200,000 people are now developing on the platform, and 100,000 custom applications have already been built for it. More important, Force.com is racking up wins across many segments, including small end-user customers, such as Ball In Air, to larger corporate customers, such as Kelly Services. On the commercial development side, Salesforce has reeled in an impressive roster of partners large and small, young and established. Here’s a sampler: Xactly launched a new sales performance solution for small and medium businesses (SMBs); FinancialForce, which Salesforce invested in with Coda to to deliver business critical financials solutions on the platform; BMC is partnering with Salesforce to bring Service Desk Express to the Force.com platform in 2010; and CA and Salesforce are teaming up to deliver agile development management via the Force.com platform.  As Force.com development momentum accelerates, it leaves less time and money for companies to invest with  traditional platform powerhouses such as Microsoft and IBM.
  • Unveiling Chatter. The biggest news was about Chatter, Salesforce’s strategy to aggregate social media streams into a single place. According to Salesforce, Chatter will both a collaboration application and a platform for building social cloud-computing apps, and will be available sometime in 2010. To me  “chatter” is one of those words that can get very annoying when overused—and Benioff must have used the word “Chatter” about 80 gazillion times in the keynote alone, leading me to imagine that he will have the Rolling Stones rewrite Shattered to Chattered as a marketing gimmick. But with adoption of social media skyrocketing, Salesforce is likely envisioning Chatter as a good bet for it’s next billion in revenues. After all, collaboration is the one thing every employee does, every day, regardless of role. Naturally, Salesforce has set its sights on the collaboration gorillas,  IBM Lotus and Microsoft SharePoint. Of course, this is unchartered territory for Salesforce, which hasn’t really ventured here before, and it will have to navigate a lot of new turf in areas such as corporate governanc, which bigger rivals have had years of experience with. At the same time, Salesforce will also need to deal with newer, more nimble Davids–such as CloudProfile, which lets small businesses manage both outgoing and incoming social media in one place.
  • No longer David, not yet Goliath. Salesforce has clearly left the David stage of development, but is not yet a Goliath. At the analyst luncheon, a very astute analyst (apologies that I did not get his name) asked Benioff how Salesforce will position itself and operate now that it’s a billion dollar company, with a very large appetite for a bigger chunk of the software pie. Benioff assured us that Salesforce still wants to do good in the world and put customers first, etc. (I’m paraphrasing of course). However, a new crop of Davids, such as Zoho, are nipping at Salesforce’s heels, with effective guerilla marketing, strong viral adoption and no/low cost offerings. As a tweener, Salesforce must navigate and position amidst the competition from both above and below. Just as important, it will need to rethink its “co-opetition” agenda. For instance, Benioff repeatedly cast IBM Lotus as old-school collaboration, apparently unaware (or unwilling to acknowledge) that Lotus has reinvented itself for the world of Web 2.0 and social media with offerings such as Connections, LotusLive, Sametime, Quickr—just to name a few. In fact, the vision for Chatter looks a lot like Lotus Connections.

Apart from feeling a bit too chattered, my overall take is that Salesforce will continue to rearrange the competitive landscape as it moves into new areas. While it’s not always the first to innovate, Salesforce is among the best when it comes to helping customers “get it” in terms of  using new technologies and tools to solve business problems. Competitors who underestimate its ability to reframe the market—whether the market is development platforms, collaboration or character mascots—risk ending up on the short end of the stick.

Top Takeaways from IBM’s General Business Influencer Summit

Last week, I attended IBM’s General Business (GB) Influencer Summit for analysts covering the mid-market (companies with 100 to 1000 employees and larger enterprises that are not currently spending a lot with IBM, sometimes termed “white space” accounts). I’ve attended this event since IBM began holding them a few years back. IBM recently split GB into two groups, creating separate sales and marketing arms for the mid-market and white space large enterprise accounts to better tune its resources and initiatives to the very different needs of these two sectors. While Big Blue is a natural to grow market share in the large enterprise space (especially as the ranks of Sun defectors grow), the mid-market is an area that IBM is still figuring out. It’s also the area that I cover, so focused most of my attention on how IBM is evolving strategy and execution in this area. Here are a few key takeaways that bubbled to the top for me, and that underscore some of the ways IBM is shifting gears to better reach and serve the mid-market.

  • Telling a more aspirational, transformative story. IBM is making its corporate Smarter Planet (which centers on the message that the world is rapidly becoming more intelligent, instrumented and interconnected—in other words, smarter) more relevant to mid-market customers by engaging them in deeper, more industry-specific conversations, such as “What does it mean to be a smarter retailer?” and providing solutions that will help them to achieve better business outcomes from their IT investments. In addition to the industry-specific approach, IBM has themes that run across industries, such as Dynamic Infrastructure, New Intelligence, and Green IT. While it may be difficult for IBM to condense the Smarter Planet story in sound bites, if IBM can clearly articulate the vision in a targeted way (by industry and/or horizontal requirements), it should resonate as the economic recovery gets underway and mid-market companies re-focus towards growth.
  • Continuing to shift from commodities to solutions and bottom line business benefits. Mid-market customers prefer to buy solutions, not piece parts. To that end, IBM continues to push its revenue mix further towards software and services. The vendor is introducing more integrated, cross brand offerings that zero in on top mid-market issues such as improving efficiency, reducing costs, getting new customers, increasing productivity, improving customer service and managing risk. The goal is to make it easier for mid-market customers to deploy solutions for specific workloads, and speed time to value from them. For example, IBM has introduced solutions building blocks that offer customers pre-configured, pretested building blocks that combine IBM hardware, services and financing. IBM packages the components in a loose bundle that customers can order and assemble quickly. Comprehensive Data Protection and Cognos Express are some of the first out of the gate, with more scheduled for 2010. Then there’s IBM’s Linux based smart appliances, which include the SmartCube and Lotus Foundations (see What is a Business Applications Appliance and Why Should You Care? for background), as well as a growing portfolio of cloud-based services (see below). IBM’s new integrated solutions story is kind of a back to the future experience—ala the AS/400—that IBM has had great success with in the past. This time, however, IBM is offering customers many more solution paths, which is good for choice, but also makes the story more confusing. IBM will need to clearly position and delineate benefits and outcomes to avoid getting in its own way.
  • Shaping its cloud strategy and portfolio. Like most legacy hardware and software vendors, IBM has been somewhat ambivalent about the cloud. However, it seems to be moving past this ambivalence with a more decisive strategy that includes both public and private cloud offerings. IBM will significantly expand its Smart Business Services offerings, which are standardized services that run on IBM’s cloud, such as LotusLive, which IBM currently offers, and a slew of planned solutions for  analytics, development and testing, desktop and devices, infrastructure and storage, and business services. Smart Business Services also includes IBM’s private cloud services, in which IBM builds and runs a private cloud behind the customer’s firewall. In addition, IBM is developing Smart Business Systems, an integrated platform to deliver and manage cloud solutions. While the vendor still has a lot of work to do to clearly position and market these solutions, and is still searching for the right formula for creating value with SaaS developer partners, it seems to have a more substantive and cohesive strategy than its had in the past.
  • Ramping up and revamping partner programs. In addition to significant investments in global partner recruitment and enablement, IBM is restructuring incentives to help partners weather the recession. The vendor has moved from a cumulative type ladder approach to a simplified incentive program that pays partners in a more linear approach from step one. IBM is also trying make it easier for partners to do business with it, with new PartnerWorld communities and concierge service designed to remove administrative costs and hassles. Being the behemoth that it is, IBM may never be able to make the partnering process friction-free. But, I’ll give it points for pushing the needle forward, and more points for helping cash-strapped partners stay the course in difficult times, and its efforts to remix its channel to better align with evolving mid-market customer requirements.
  • Increasing investment in demand generation. Partners have told IBM to focus more on demand generation, and less on lead passing. So IBM is scaling up resources for high air cover marketing. All told, IBM conducted 835 marketing events, drawing more than 63.000 mid-market customers, in the past year. For instance, the vendor is conducting what it terms “Grand Formaggio”sessions around the world to personally engage mid-market CEOs with senior IBM executives, and also has a series of events aimed at CFOs. IBM also recently launched InfoBOOM, a social network for U.S. mid-market businesses, in partnership with CIO Magazine. IBM sponsors the site, but content is designed around mid-market themes and issues so that IBM can better understand and share with the community. IBM intends to launch this in other countries soon. Successful demand generation will be critical to raising IBM’s profile and heightening awareness about what IBM can offer mid-market customers—and keeping the channel happy.
  • Reconfiguring operations for growth markets. IBM has invested in building two management systems, one for established markets, and one for emerging growth markets. This enables IBM to tune in to the different requirements, approaches and government investments that different regions afford, and accelerate expansion in emerging growth markets. For instance, IBM has added more than 50 new offices in growth markets, and investing in leadership and talent development by moving seasoned IBMers from developed markets to emerging ones, and bringing fresh new faces to more established territories to learn the ropes. Big Blue has built new innovation centers in countries such as Vietnam, South Africa, Poland, Brazil and Hungary, and a global innovation center in China.
  • Better financing programs for the mid-market. IBM’s 30 year-old Global Financing arm (IGF) is strong, healthy and proactive—in fact, financing accounts for 9% of IBM’s pretax income. The vendor offers solution financing for hardware, software and services with at least 20% IBM content, and has simplified rate structures and contracts to help streamline the financing process. IGF has also introduced some “recession busters”, such as a Q4 deferral program and 0% financing for Software Group financing for 12 months. IGF also runs a huge asset recovery program (processing about 40,000 pieces of hardware a week) and $1.5 billion dollar used equipment business, which offers cash-strapped companies value based alternatives as well. IGF is also ramping up partner programs and education to help partners better engage mid-market CFOs in the IT purchase conversation. In the current economy, IGF is clearly one of IBM’s most powerful marketing weapons, helping companies to invest now to jump start growth as the economy turns around.
  • Continuing investments in asset-oriented acquisitions that can scale to the broad market. IBM has been on a shopping spree, acquiring companies such as Internet Security Systems (ISS), Cognos, Outblaze and SPSS, among others. IBM can use its global distribution capabilities to expand the footprint for these solutions, and as necessary, make them more relevant for mid-market customers.

As it nears its 100th anniversary (in 2011), IBM is putting a more shape and substance into its mid-market strategy and execution capabilities than it has ever done. However, in a market where brands such as Microsoft, Dell and HP dominate, and Google and other “born on the Web” vendors are ascending, IBM’s job isn’t easy.

The IBM brand is already well-respected in the mid-market, but IBM will need to continue to step up its efforts to become more relevant. Unlike many of its competitors, IBM doesn’t have a consumer or even a small business presence to leverage in the mid-market. Big Blue will need to wow the mid-market to move customers out of their current comfort zones.

One of IBM’s strengths is that it has a very rich portfolio of offerings and solutions, but this is also a double-edged sword. IBM will need to articulate and position overlapping solutions to help guide both customers and partners through the clutter to best-fit solutions. IBM will also face challenges on the channels front. How will it make the economics of the channel and the economics of lower-cost, volume based solutions work? And how will it fold high-growth SaaS vendors into a value-added and profitable business model?

To succeed in its mid-market quest, IBM will have to fire on all cylinders over the long haul, continue to sharpen its mid-market focus, and ensure that its offerings stack up well not only against the Microsoft-centric status quo, but against the increasing array of newer solutions available.

Small Business Has a Big Appetite for Digital and Social Media Marketing

Small business adoption of technology-based solutions rarely keeps pace with the expectations of vendors, analysts and pundits. When it comes adoption of digital marketing and social media tools, however, small business adoption is fast and furious.

Recently, we (Hurwitz & Associates) conducted a survey sponsored by email marketing vendor Campaigner. The survey investigates how North American small businesses with 1-20 employees are adapting their marketing plans and budgets to compete more effectively in the future. While we uncovered many interesting trends in the first report in a two-part series, Small Business Marketing Health Check (available here), one of the most eye-opening findings is that small businesses are rapidly shifting their marketing initiatives from traditional media to digital marketing media tools, including social media, such as blogs, forums, Twitter, Facebook, etc., email marketing, search engine marketing and webinars and podcasts (Figure 1). While traditional media, such as direct mail, tradeshows and newspaper advertising still have a part in many small businesses’ marketing playbook, they are being overshadowed by digital and social marketing alternatives.

Figure 1. Small Business Use of Marketing Tools

Hurwitz & Associates Survey


Why are small businesses, who usually take a long time to shift gears, so fast out of the gate in this case? In a nutshell, it’s because digital and social marketing solutions deliver on the cheaper, faster, easier and better promise that so many other technology-based solutions don’t deliver on. These marketing tools are often less expensive to use than such traditional marketing options as print advertising and direct mail—a small investment can help companies significantly boost marketing reach and return. Digital and social media marketing tools give small businesses more immediate visibility into whether they’re reaching their target audiences, and easier ways to track and measure payback on the time and money they’re investing than traditional media. You can also rapidly adjust and refine campaigns and outreach as needed.

So, with their appetite whetted, what will leading-edge small businesses be looking for next to take their digital and social media marketing game to the next level? Here are some of the areas that I think hold great opportunity for growth as small businesses appetite in this area increases:

  • More targeted search optimization and management. Services that are tailored to help specific kinds of small businesses achieve very specific results from their search engine marketing campaigns. For instance, Lotusjump provides a service to help small businesses optimize organic search results for hundreds or thousands of keywords to generate more qualified leads. The automated service automates the process of building more qualified leads based on more specific “longtail” search terms. Yodle, meanwhile, focuses on SMBs with local services business harness existing demand, by helping them to create a Web site, develop an effective SEO campaign across the Web, and help make the phone ring when the business is found through a Web search.
  • Solutions that help local businesses integrate online marketing and advertising campaigns across different outlets. Own a hair salon or a tree service business? If you do, everything is local, and services that help to reach the local market are what you care about. WebVisible,  for instance, buys advertising space from multiple media providers and ad networks, and provides many types of online marketing solutions, including fully managed search advertising, banner/display advertising, call tracking solutions, custom landing pages, promotional URLs and more. Using the WebVisible platform, small businesses can target local advertising more effectively.
  • Tools that enable you to manage all of your social networking profiles through one client. HootSuite offers a service today that lets you manage all of your Twitter profiles simultaneously, but I don’t think I’ve seen something would let you do manage across multiple sites, such as Facebook, LinkedIn, Twitter, etc.
  • Services that help integrate more structured digital marketing tools (Web sites, email and search engine optimization and marketing) with more ad hoc social media initiatives. Ideally, this integration could significantly boost the value of both types of activities. I haven’t spotted a  good example of this yet, so let me know if you know of one.
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