Is Salesforce.com Outgrowing SMBs?

Salesforce.com’s Marc Benioff is a great visionary with a big appetite for change. From packaged software to the cloud, from CRM to platform-as-a-service, he’s painted a color by number picture for businesses to emulate. But does his latest work, “the social enterprise” come with an easy enough guide for small businesses to paint it?

The Paint-by-Numbers Social Enterprise

Benioff laid out his newest work, the “social enterprise” last week in his keynote  at Dreamforce 2011. He made a convincing and compelling case that companies need to proactively listen to and engage with customers that are vocal and socially connected on a mobile, digital web–or they’ll be brought down in a “corporate spring” the way Egypt and other Arab countries have toppled in the “Arab spring.”

To that end, Salesforce has been acquiring and building the components that companies will need to become social enterprises (also known as social businesses, a term IBM coined a year or so ago). Although Salesforce.com’s Winter 2012 release contains over 150 new features, Benioff provided paint-by-number instructions for companies to become social enterprises in a few broad brush strokes:

  1. Establish a database that maintains and updates social profiles for customers and prospects, in real-time. Paint this part of the picture with Database.com, which Benioff introduced as a social, mobile and open cloud based database, and Data.com, which builds Salesforce.com’s 2009 acquisition of Jigsaw, which uses crowd-sourcing to gather customer info, by integrating Dun & Bradstreet lists and data services. Together, this provides data storage, external data sources, data cleansing. On top of that, Salesforce plans to introduce a new Chatter service next year that will bring external conversations into the database as well.
  2. Create a social network integrated with your business processes. Chatter is the color to use to integrate collaboration services with Salesforce.com and partner apps. Salesforce initially introduced Chatter in 2010 as an internal, employee social network, but is expanding it so that you can open it up to customers and partners and share files in Chatter streams. Chatter is also slated to get instant messaging, presence-awareness and screen sharing capabilities (by way of its Dimdim acquisition) so you do things such as have a video conference on the fly within Chatter.
  3. Analyzing and acting on all the customer comments and data you now have. Once your listening ears are on, you need to do something with all that information. Radian6, which Salesforce acquired earlier this year, fills this piece in nicely, enabling you to view, slice and dice unstructured data and take action based on that data.
  4. Get everything to work for any customer, on any device. To make sure that you can engage with your customers on any device they choose to use, Salesforce is launching Touch.salesforce.com. Based on HTML5, Touch.salesforce.com automatically renders the apps, data and customizations in Salesforce.com and partner apps built on Force.com on any mobile touch devices.

Can SMBs Afford the All You Can Eat Buffet Social Enterprise Buffet?

This vision is compelling for businesses of all sizes. But it sounds like a lot of stuff for a small or medium business to piece together and pay for. As I discussed in Prescription for Subscription Fatigue, there are only so many subscriptions you can tack on before people will start to complain about getting nickeled and dimed. So to make things more palatable, Salesforce is introducing a new Social Enterprise License Agreement, which provides full access to everything Salesforce sells for one all you can eat price.

The only problem is, Salesforce hasn’t told us how much it will cost for companies to become a social enterprise. When queried in media and analyst sessions about how pricing would work, Salesforce execs said that’s where the direct sales force comes in, and that basically, pricing would be determined on a case-by-case basis, in relation to the value that the total solution provides the customer.

This makes sense for Salesforce–it elevates them beyond CRM and into a more strategic platform discussion. And it makes sense for large companies that actually have dedicated Salesforce.com account reps, and enough seats and volume in the account to make the cost of one-off pricing work. But how will it work for SMBs that want to become social enterprises?

A Tough Fit for SMBs

When I followed up with a one-on-one question to Salesforce.com’s Clarence So and Alex Dayon, they assured me that SMBs are near and dear to Salesforce.com’s heart–and that they’ll figure out how to make this all you can eat feast feasible for SMBs. After all, as they said, democratization and leveling the playing field for smaller companies has been a core component of Salesforce.com’s strategy. But, they didn’t offer any specifics, and I suspect that Salesforce.com will need to figure this out as it goes along.

Clearly, Salesforce.com will continue to be pestered for answers in this area. Customers–especially SMBs–want transparency in pricing, and to date, Salesforce.com and most cloud vendors have provided them with that transparency. They’ve gravitated to the cloud model in part for the predictable pricing it affords, and are wary of vague or open-ended commitments that might be budget busters.

As important, its hard to see how Salesforce.com or even most of its partners could transact these one-off deals profitably with most SMBs. The time needed to account for the number of users, the technologies used, the value derived from those technologies, etc. might be quickly recouped in a large enterprise deal, but would be a very steep sales cost to absorb in SMB deals.

SMBs not only need affordable, predictable pricing, but many require a lot of hand holding and guidance to help them through the cultural and business process changes required to transform into social enterprises. How will Salesforce.com and its partners help them with this transformation? As of now, there are no clear answers.

Can SMBs Keep Up with Salesforce.com as it Grows Up?  

At Dreamforce 2011, Benioff underscored his vision for the Social Enterprise with great testimonials from big companies such as Coca Cola, NBC Universal and Disney, which are using Salesforce.com solutions to recreate their businesses as social enterprises. But these big companies are used to one-off enterprise-wide license negotiations, have the undivided attention of Salesforce.com sales reps, and can afford to bring in Accenture or Deloitte to help them as needed.

Clearly, Salesforce.com has grown up and evolved into a multi-faceted company with a rich portfolio of technologies and solutions that extend well beyond its CRM roots. But with this kind of growth comes complexity. In Salesforce.com’s case, it looks like they are doing a great job of shielding customers from a lot of the technical complexity that underpins these quantum leaps. But can it figure out how to take the business complexity out of the equation for SMBs? And will it want to devote the time to do this as demands from its large customers rise?

More often than not, other vendors, faced with a similar dilemma, have been unable to find a formula that allows them to live comfortably in both worlds. But Benioff and team seem to relish Rubik cube-like challenges–and it will be interesting to watch them try.

2 Responses

  1. Laurie,

    Your post is timely and on target. American corporations are sitting on record piles of cash and profits are at all time highs while small businesses continue to struggle. Small businesses want the same benefits big business have achieved through leveraging enterprise productivity products without the associated costs and complexities. The problem is that if an SMB company wants to use all the great Apps in the Salesforce App Store they need to pay $125 per user per month. If they want to access the new Data.com Dunn/Bradstreet info to populate their business records it’s $100 per user per month. Radian 6 is a great Enterprise Social Listening platform but do most business need or even can manage a Enterprise Listening tool? This does not sound like a good fit for the SMB market.

    Enterprise companies have never been good at dealing with the Small business market. One of the biggest impediments is their sales team and infrastructure costs. Enterprise sales reps need to sell at high prices cause they are expensive people. Salesforce has over 10,000 sales people who make $100k to $300K per year. I’ve worked in sales at enterprise tech companies before. Enterprise sales reps will always thwart attempts to sell more affordable solutions because it cuts into their commission check.

    Imagine if Salesforce actually built a platform that enabled SMB’s to Listen/Engage, Communicate/Collaborate, Capture leads, Nurture marketing and manage deals for an affordable price? All of their customers would buy it. That would kill their revenue and stock price.

    Mark’s words about the need for businesses to Listen/Engage and Communicate/Collaborate are certainly important ideas for business today. They are very familiar to me as I’ve been expounding those very same words for two years while taking my own money and pouring it into creating a Social Business platform that is designed and priced for the SMB market.

    The SMB market is crying out for a Social Business solution that fits them. A company that understand and loves them.

    I know of a Nimble little company that is aiming to be just that.

    Thanks for asking great questions on an important topic.

    Best,

    Jon

    Jon Ferrara   
    CEO | Nimble – Social Relationships, Made Easy.
    http://www.nimble.com

    • Hi Jon,

      Thank you for your thoughtful reply. I just posted a poll question for SMBs to get their input on this topic as well.
      Need to get an update briefing from Nimble soon!

      Best,
      Laurie

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