California Dreaming? Salesforce’s Dreamforce SMB Story  

This is part one of a two-part blog series discussing Salesforce.com’s strategy to help SMBs better capitalize on technology. This first post provides perspectives from several Salesforce SMB customers on how they are rethinking their business models and using technology to get ahead. The second post, Salesforce’s Strategy to Bring Game Changing Technologies to SMBs, provides a detailed glimpse into Salesforce.com’s approach in the SMB market.


dreamforce2014
Each year, the festivities at Dreamforce, Salesforce.com’s annual user event, intensify. At Dreamforce 2014, the entertainment ranged from musicians as diverse as Bruno Mars and the Beach Boys; politicians as similar as Hillary Clinton and Al Gore; Hawaiian blessings and hula dancers; and Salesforce’s erstwhile mascots, Chatty and SaaSy. Beanbag chairs, giant chessboards, free pedicabs, and lots of liquor-fueled parties added to the carnival-like atmosphere.

But there were also many Salesforce-related keynotes, led by CEO Marc Benioff, and hundreds of Salesforce sessions. Of course, I was most interested in the SMB keynote, led by

The Technology Trifecta

Salesforce sees SMBs as being uniquely suited to use cloud, mobile and social technologies to create new business models and to win customers over from larger, but often slower-moving businesses.

As discussed in SMB Group’s Guiding Stars: Vendor Strategies to Bring Game-Changing Technology Trends to SMBs report, Salesforce is in violent agreement with other technology vendors. The nine major vendors we interviewed for the report (including Salesforce) all view cloud, mobile and social as providing SMBs enormous opportunities to gain business advantages. With customers and prospects racing into the digital future at breakneck speed, SMBs that use technology to stay ahead of their customers will thrive, while those that don’t face extinction.

Though many technology vendors offer SMBs solutions to capitalize on these trends, Salesforce’s SVP of SMB, Tony Rodoni, and Desk.com VP, Layla Sekla of course touted Salesforce as best positioned to help SMBs harness technology to:

  • Scale their businesses with one integrated system
  • Gain better visibility into data
  • Engage customers in new ways

The Salesforce worldview (and that of the customers that joined to tell their stories) skew heavily toward what they described as a “typical silicon valley startup.” These are companies that want to conquer a large market using disruptive technology–ones that will launch and soon face a “tidal wave of demand.”

In reality, this segment represents only a tiny fraction of the SMB universe. But, from my perspective, they zeroed in on how businesses of all kinds can think about and apply technology to improve business outcomes.

Differentiate With Great Customer Service

The heat is on for all companies to provide a great customer experience for obvious reasons. Unhappy customers are likely to stop buying and share their dissatisfaction, costing your business money. Happy ones are likely to come back for more and recommend your business to friends and family. Social media of course, amplifies the influence of customer experience.

muncheryWith this in mind, Munchery is bringing new meaning to meals on wheels. Munchery provides meal delivery of “wholesome prepared dinners, handmade by top local chefs using only the best ingredients, for same-day delivery to your home or office.” In 6 months, its revenues have grown by 400%. Munchery credits its success to using providing customer support “that’s as good as the meals.” The company uses Desk.com to:

  • See what social networks their customers are using, and what they’re saying. Are there trends in what foods people want, such as kale or quinoa (they are in San Francisco!)? Once Munchery spots these trends it integrates them into marketing and meals.
  • Intake cases from Munchery’ mobile app to adjust orders on the fly and respond to them. Munchery can provide great service, and happy customers can also add an extra tip if they’d like. This responsiveness is helping Munchery turn customer problems into opportunities, and create evangelists.
  • Streamline internal communications. The company’s 100 drivers use Desk.com to communicate back to headquarters to help optimize routes and deliveries.

Outsmart The Competition By Re-thinking the Problem 

Accessing, analyzing and acting on data can give SMBs a big advantage over the competition. But building and managing infrastructure to do this takes a lot of time, money and expertise–all scarce resources for SMBs.

zenpayrollAccording to ZenPayroll’s CEO, one-third of SMBs get fined for inaccurate payroll. The three-year old start-up the entered the payroll market, which is dominated by big players such as ADP and Paychex, with a strategy to differentiate by giving users “delightful modern payroll” that works right on day one. While competitors position payroll as a chore, Zen thinks of payroll as employees getting paid and employers showing appreciation. It provides SMBs with a paperless, cloud-based, mobile-first solution in 97% of the U.S. Its 60 employees use Desk.com to solve support issues once, and then take proactive measures to ensure they aren’t repeated. Zen also uses Pardot to automate marketing, sales and nurturing and grow its business, which now processes more than $1 billion in payroll annually. Reeves’ advice to other business owners is to rethink the problem you’re tackling.

Personally Engage Customers

Getting the right message at the right time to customers at the right time is essential in today’s multi-channel world. In addition, the more personal the message, the less likely it is to end up in the spam filter. Salesforce introduced both a B2B and B2C customer to illustrate the importance of personalized engagement.

firstmileFirst Mile told the B2B story. When it launched 2 years ago, U.K-based First Mile saw the recycling market as overcharged and underserved. Its mission is to displace entrenched, inefficient competitors by making recycling easy and responsive. First Mile sees customer engagement as its key to its strategy, and uses innovative business practices and technology to power it. For instance, established competitors require long contracts, so First Mile requires no contracts. While competitors never call their customer except when its renewal time, First Mile makes 100 calls a day to get feedback. The company uses the Salesforce platform and apps to get and analyze recycling stats and help minimize attrition. First Mile’s field sales people also recently began using iPads and Salesforce to directly enter leads into Salesforce, “quadrupling the return on investment from field sales,” over the former double-entry paper and pen to Salesforce method. First Mile’s advice to other SMBs? There are lots of free or low-cost cloud solutions out there. Try the ones you think will help you to find out which ones will give you the return you need.
georgestreetOn the B2C side, George Street is putting a new twist on wedding photos and videos by connecting photographers to brides in 50 cities across North America. George Street handles everything but taking the photos or videos. For brides, George Street creates a personalized experience to ensure they have a great wedding photography experience. The company uses several Salesforce and AppExchange solutions, including Pardot, Salesforce and Chatter lead generation, sales and contracts, photographer and shot selection, notifications and sharing photos. George Street has also created a community for brides to talk about everything from cakes to dresses. It helps facilitated last-minute requests, such as a new shot request, with Chatter. Before they used Salesforce, they did a lot of this manually, but by developing a Salesforce app to automate the process, they’ve sped up the process and can provide a better experience. For instance, it used to take 7 days from a bride’s initial appointment with George Street to close a contract, now the average close time is 24 hours. Automation has helped them scale, increasing the number of weddings they handle by 250%. And, they’ve reduced case incidents by 200%. George Street’s guidance for other SMBs is to focus on delivering an exceptional experience. Automate back-end so your people can spend more time with clients, make them happy and generate boost referrals. Finally, if you’re using Salesforce, find a good developer to help you make the most of it.

Perspective

The writing is on the wall for any business: With customers and prospects racing into the digital, mobile, and social future at breakneck speed, SMBs must proactively deploy technology to improve both business processes and the customer experience. SMBs that figure out how to use technology to stay ahead of their customers’ demands will thrive, while those that don’t will face extinction.

But there are lots of vendors and solutions out there ready to help you on your journey. Is Salesforce right for you? Read Part 2 of this blog series, Salesforce’s Strategy to Bring Game Changing Technologies to SMBs, to help you decide.

Disclosure: Salesforce paid for most of my travel expenses to attend Dreamforce.

Salesforce’s Strategy to Bring Game Changing Technologies to SMBs

This is part two of a two-part blog series discussing Salesforce.com’s strategy to help SMBs better capitalize on technology. Part One, California Dreaming? Salesforce’s Dreamforce SMB Story, provides perspectives from several Salesforce SMB customers. This second post, which is excerpted from SMB Group’s April 2014 Guiding Stars: Vendor Strategies to Bring Game-Changing Technology Trends to SMBs report, provides a more detailed glimpse into Salesforce.com’s approach.

The writing is on the wall for any business: With customers and prospects racing into the digital, mobile, and social future at breakneck speed, SMBs must proactively deploy technology to improve both business processes and the customer experience. SMBs that figure out how to use technology to stay ahead of their customers’ demands will thrive, while those that don’t will face extinction.

But there are lots of vendors and solutions out there ready to help you on your journey, and one-size-fit all doesn’t apply in SMB. Is Salesforce right for you? Read on for information and insights to help you decide.

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Top Technology Game Changers for SMB

Fifteen years ago, Marc Benioff founded Salesforce with the belief that multi-tenant, cloud computing applications democratize information by delivering immediate benefits while reducing risks and costs.

So it’s not surprising that while the cloud isn’t new, it continues its reign as Salesforce’s top game-changing trend. Salesforce sees cloud as removing the technology and cost barriers so that SMBs can:

  • Bring best practices and automation into their businesses so they grow, do more with less and do it better.
  • Gain real-time visibility into their businesses to improve decision-making.
  • Centralize information, making it easy for everyone to collaborate, no matter where they are, and providing a built-in way to retain knowledge as employees come and go.
  • Take advantage of enterprise class security and reliability trusted by thousands of enterprises at an affordable cost that scales with their business.

Salesforce views the cloud as the foundation and springboard for SMBs to benefit from other game-changing trends, namely mobile and social solutions. Salesforce believes that mobile is becoming the “new normal” user experience. People are already running their personal lives on mobile devices, and increasingly want to click into apps, dashboards and info on mobile devices for work. To that end, the vendor’s Salesforce1 initiative puts mobile first by making 100% of Salesforce functionality and information available to users in a relevant interface on any device.

Social collaboration is also key, not only in terms of marketing, but to help SMBs deliver more responsive service that customers increasingly expect. Social tools and analytics let SMBs increase context about customer and prospect interactions so they personalize how they engage and support them. For instance, Salesforce Chatter can run across everything in Salesforce and some of its partners’ apps, allowing everyone—from the CEO to the receptionist—to get on the same page whether to more readily spot new opportunities or to head off potential problems.

Together, these trends make things more transparent. It’s easier for people to collaborate to get the job done, instead of operating in silos. Salesforce introduced its Communities solution, which its customers can use to manage external relationships with customers and partners in a protected or non-protected way, furthering extending social collaboration capabilities from within Salesforce.

Changes in SMB Technology Expectations and Behavior

As SMBs get more familiar with cloud, social and mobile solutions, Salesforce sees several key shifts underway:

  • Rising expectations for centralized, single sign-on access to apps and data, with everything needed to get work done pulled together from different apps for a complete view.
  • Demand for solutions with built-in collaboration capabilities. Business owners see that collaboration helps the business to deliver better customer and employee experiences, because information flows both ways and provides better visibility to make decisions.
  • Customer service as the “new wave of marketing.” Better visibility and engagement with customers has raised awareness about the importance of servicing and engaging with customers throughout the whole life cycle to drive business, leading service people to take more ownership of the brand.
  • “Try before you buy” is the new normal. SMBs now expect to try—without having talk to rep—solutions before buying them. Salesforce cited one customer who wanted to get Desk.com, Salesforce’s small business help desk service, up and running by himself while watching the Super Bowl.
  • Friction-free technology. SMBs increasingly look for a frictionless technology experience. They have less patience for solutions that can potentially take too much time or cost too much money. They want vendors to demonstrate ease of use upfront, and provide transparent pay as you go pricing.

Although the cloud isn’t new in the industry, Salesforce believes that the concept of being able to gain advantages from enterprise-class software without having to worry about infrastructure is still something many SMBs are just starting to understand. Salesforce’s view is that while the cloud is more common today, some things aren’t “true Cloud” and SMBs are still learning about the nuances of the cloud value proposition. To that end, Salesforce is expanding its educational commitment to SMBs around business best practices. The vendor:

  • Doubled the amount of SMB content at its annual Dreamforce event last year over the prior year, with over 150 SMB breakout sessions, a dedicated networking and expert interaction area, ask the ask experts panels, a dedicated keynote as well as inclusion in other keynotes with SMBs alongside big companies.
  • Will move from one SMB message to differentiated messaging for different types of SMBs and decision-makers, to make it more relevant for different segments and roles.
  • Has recently introduced new SMB resources, including small business blogs, a customer success community.

Perspective: Salesforce as SMB Technology Catalyst

salesforcelogoAs one of the first true cloud computing pioneers, Salesforce seized on the fact that cloud computing removes the barriers for small businesses to gain the same business benefits from technology solutions as larger companies.

Salesforce—via its vision and strong customer proof points—has painted a vivid picture of how SMBs can use cloud, mobile and social solutions offerings for a more user-friendly, streamlined way to run their businesses.

At the low end of the market, many Salesforce customers move directly from Excel or from pencil and paper to Salesforce, underscoring both ease of use and the resulting business value of having real-time information access, anywhere from any device. And, even as it’s grown its star-studded Fortune 500 customer roster, Salesforce has kept SMBs in the spotlight, investing to educate the broader market about how they can use and benefit from these technologies.

Over the years, of course, Salesforce has also broadened its vision and developed and assembled many more components to enable this vision. For instance, there are now 4 editions of Sales Cloud, 3 of Service Cloud and 4 of Marketing Cloud.

At the upper end of SMB, companies may have enough staff, expertise and time to sort through Salesforce’s expanded portfolio, and figure out what’s right for them. But, Salesforce’s story may be getting confusing for smaller SMBs. While entry-level pricing is low, how many small businesses can jump from Group Edition ($25/user/month) to Professional ($65/user/month). While Professional Edition offers a lot more functionality (including pipeline forecast, campaign management, contract storage and quote delivery, custom reporting and dashboards, and a complete view of the customer across sales and service, the price differential is tough for many SMBs to absorb. Alternatively Salesforce does offer desk.com at $29/user/month to customers that have customer service requirements. Again, however, it can be challenging for SMBs to figure out which approach will work best and be most cost-effective.

However, Salesforce plans to increase investments to engage SMBs both locally and online. Not only will this help Salesforce educate more SMBs about the power of technology in business, but also it should give Salesforce a wider lens through which it can get a better pulse on SMB requirements. In turn, this should help Salesforce simplify and streamline solution packaging and positioning. All of which bodes well for its potential to help more SMBs understand and use technology as a game-changer.

Want to know more about how Salesforce’s SMB customers use Salesforce? Read Part 1 of this blog series, California Dreaming? Salesforce’s Dreamforce SMB Story, for perspectives from several Salesforce SMB customers on how they are rethinking their business models and using technology in their businesses.

Disclosure: Salesforce paid for most of my travel expenses to attend Dreamforce.

 

Salesforce’s SMB Story: Great Vision, But a Complicated Plot Line

“Why can’t business software be as easy to use as buying a book on Amazon?” At the Dreamforce 2012 SMB keynote, Hilary Koplow-McAdams, President of Salesforce.com’s Commercial Division, told the crowd that this was the question that Marc Benioff, Salesforce CEO, originally set out to answer when he founded the company. When you think about it, this question was particularly prescient in 1999, when Salesforce was in start-up mode and conversations about the “consumerization of IT” were scarce. This perspective also provided a welcome breath of fresh air for small businesses, which were Salesforce’s chief target market at the time, and were in dire need of technology vendors that could keep things simple. Fast forward to 2012 Dreamforce. As I discussed in my first post about the event, Drinking From the Dreamforce Fire Hose: Part 1, The Big Picture, Benioff showcased several large enterprise customers, a slew of new directions and offerings, and a compelling case for enterprises to buy into its version of the social enterprise. 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. Even if Salesforce can make products Amazon-easy, can it tell the story so that SMBs “get it?” In addition, as combinations of products and pricing options multiply, will SMBs be able to wade through, figure out their best options, and be able to afford them?

“A” for a Compelling Vision for SMBs

Which leads to this, my second post. How and how clearly is Salesforce making its case to SMBs? For starters, this year’s event featured the first SMB track ever at Dreamforce–certainly a big step in the right direction. In the SMB keynote, Koplow-McAdams discussed how the cloud model helps democratize and level the playing field for smaller companies, and reaffirmed the company’s commitment to them. According to Koplow-McAdams, SMBs are also racking up good returns on their investment: Salesforce studies show that their SMB customers have boosted win rates by 25+%, increased sales productivity by 34% and increased revenues by 30%. While it’s not surprising that Salesforce has been transformative for the SMB customers that shared this stage with Hilary Koplow-McAdams, their stories were as interesting–and maybe a little more fun–as the large enterprise customers featured in Benioff’s keynote. They discussed how, despite limited IT staffs and budgets, they’ve used Salesforce to grow their businesses. For instance:

  • PlayerLayer, which sells performance athletic apparel, had customer data in Excel, and “had all the customer data, but no way to look at it.” It wanted a solution to help “interrogate” the data so that the company could expand into new countries without a big ad budget. Salesforce and Chatter have helped PlayerLayer gain a better understanding of its customers, collaborate on products more efficiently, and “compete with giants in industry.”
  • Yelp, the now well-known search and review site for local businesses, has grown from 2 employees in 1994 to over 1,000 employees today. When Yelp hired its first full-time sales rep for its original San Francisco site, it deployed Salesforce. Geoff Donaker, Yelp COO described how as Yelp branched out into new markets, it was “easy to expand with Salesforce.” Now in 18 countries and 90 cities, Yelp has 800 Salesforce users.
  • Square, the mobile payments vendor, has grown to process $8 billion in payments/year, and 400 employees over the past few years. According to Sarah Friar, Square, CFO, “selling is a team sport” at Square, which uses Salesforce Sales Cloud, Chatter, and Desk.com for support. Square shared a demo of how Desk.com automatically brings tweets, Facebook posts, email and phone conversations into Desk.com to help it provide more responsive customer service.
  • Leviev Diamonds, with 25 employees and 5 showrooms around the globe, was founded in 2006. An offshoot of a successful wholesale diamond business, Leviev wanted to start a retail channel to market very high quality diamonds. As the company CEO, said, “the most important part of the business is schmoozing, which you call CRM.” Leviev decided to use Salesforce because it did what they needed it to do and fit the budget. No Leviev has its entire inventory in Salesforce, and when potential clients open mobile alerts, they are redirected to Salesforce for more information. According to Leviev, “I love Salesforce. It changed everything for us.”
  • Carlo’s Bakery, made famous by the TLC reality show Cake Boss, featuring owner Buddy Valastro, served up the final story. Once Cake Boss started airing, “all hell broke loose.” The problem was, although the bakery starting getting millions of hits a day on their website, it wasn’t able to turn them into sales because Carlo’s Bakery was still a pencil and paper business and according to Valastro, “a lot of people have to interact to make a cake.” In about 8 weeks, the bakery switched from pencil and paper to Salesforce and Radian6 to convert more of its millions of Facebook fans and Twitter followers into customers, and get better visibility into its sales funnel. Carlo’s Bakery can take orders on iPads and mobile phones, and the orders come together in one system, which enables everyone to collaborate. The bakery now does $20 million worth of sales from its Hoboken store, has increased productivity by 60%, and improved customer experience.

Collectively, Salesforce and its customers did a great job of summing up how cloud offerings–and Salesforce in particular–can give SMBs a faster, more user-friendly, and streamlined way to run their businesses. In some cases, these customers moved directly from Excel or from pencil and paper to Salesforce, illuminating both the ease and value of having real-time information access, anywhere from any device. So I’ll give Salesforce an “A” for telling the story.

“C” for an SMB Friendly Social Enterprise Plot Line

But, I’m experiencing some cognitive dissonance when I look at the plot line. Sure, Benioff’s big picture social enterprise vision is compelling for businesses of any size. But as I asked in my 2011 post, Is Salesforce.com Outgrowing SMBs?, can the average small or medium business put the piece parts together? Thankfully, the company does seem to have put a simple naming convention in place (and renamed several acquisitions accordingly), but I’ve lost count of how many solutions Salesforce provides…along with what’s included in what. For instance, Salesforce Touch is included as part of Force.com. But do most SMBs even buy Force.com? And if they don’t, can third-party development partners somehow pass relevant Salesforce Touch capabilities through? Likewise, the question of how much it will cost for SMBs to become a social enterprise ala the Salesforce model is also cloudy. Fortunately, Chatter is included in all Sales Cloud editions. But how many small businesses can jump from Group Edition ($15/user/month) to Professional ($65/user/month) to get some fairly basic marketing functionality such as email marketing, campaigns and analytics snapshots. And what about Salesforce Marketing Cloud, which starts at $5,000 per month? When it comes to software (on premise or in the cloud!) SMBs don’t want mystery. They want solution clarity, and transparent, predictable pricing. At the upper end of SMB, companies may have enough staff, expertise and time to sort through and figure this out–or the budget to hire a consultant to do it for them. But, many smaller businesses won’t have these resources. So I need to give Salesforce a “C“ when it comes to making it easy for SMBs to identify, assess, configure and price the best mix of Salesforce solutions to turn the social enterprise vision into reality. And, while Salesforce will likely rely on its partners to help SMBs navigate these areas, it seems difficult to see how partners can profitably provide the services SMBs need to evaluate, select and deploy the right formula of Salesforce solutions. How will Salesforce.com grow and remain true to its small business roots? Most software vendors have found it very difficult to succeed in both large enterprise and small business worlds. Can Salesforce succeed where others have failed? I’ll be looking forward to Dreamforce 2013 to see if the details are as clear as the vision by then.

Drinking From the Dreamforce Fire Hose: Part 1, The Big Picture

Dreamforce, like Salesforce.com’s ambitions, just keeps getting bigger. This year’s event in San Francisco claimed 90,000 registered attendees and 250 media, analysts and bloggers. The pageantry surrounding the event—from MC Hammer to the Red Hot Chili Peppers, and from Tony Robbins to Colin Powell—is also on the rise, seemingly in direct proportion to Salesforce’s enterprise ambitions. Anyway, with so much erupting from Mt. Salesforce, I need to write a two-part blog post. This first post covers the Salesforce.com’s vision and announcements, and my perspective on them. The second post, which will be up in a few days, will cover how Salesforce’s ever-expanding ambitions translate and apply to small and medium businesses (SMBs).

The Big Picture

CEO Marc Benioff’s keynote featured the success stories from marquee customers, including Activision, Burberry, Coca Cola, Commonwealth Bank, GE, Virgin Atlantic and Rossignol. Through these customer vignettes, announcements, demos and, interestingly, IBM’s 2012 CMO Study, Salesforce made its case for enterprises to buy into its version of the social enterprise. While Salesforce isn’t the first vendor to come up with any of the ideas put forward, Benioff and team continue to aggressively extend the Salesforce footprint along cloud, social, and platform themes, and its push beyond CRM into other functional areas. A drink from the fire hose includes a slew of new directions and offerings. A few are available now, but most are slated for general availability later in 2012 or in 2013. They include:

  • Added social selling capabilities. Salesforce Touch and Data.com Social Keyadd new social and mobile oomph for sales people. Salesforce Touch puts Salesforce on any mobile device, giving reps anytime, anywhere mobile capabilities. Salesforce Data.com Social Key integrates data from social networks with company data to provide companies with a more comprehensive view of their customers.
  • Social marketing. Salesforce Marketing Cloud brings social listening, content, engagement, advertising, workflow, automation and measurement into one place through the combined technologies of (recent acquisitions) Buddy Media and Radian6.
  • Platform Push. Salesforce announced Salesforce Identity, touting it as the “Facebook for the Enterprise.” It will provide a single, social, trusted identity service to manage multiple apps and includes single sign-on across apps; social identity to enable Chatter to push information from multiple apps to a user in one feed; and centralized identity and access management to make it easier for administrators to provision and manage users across applications.
  • Work.com: Rypple is now Work.com, and Salesforce is positioning it as a social performance platform to manage performance reviews and provide recognition, rewards and feedback to employees.

As important, in just a few years, Salesforce AppExchange has grown to become a mature ecosystem for developers. Over 350 partners attended Dreamforce 2012, and Force.com development partners such as FinancialForce, BMC Remedyforce and Xactly Express are enjoying a great growth ramp on Salesforce’s coattails. In the analyst Q&A, Benioff explained that Salesforce is trying hard to move from geek speak to talk and walk like the new breed of IT customer, the CMO. In both the keynote and the Q&A, he reiterated that IT spending will increasingly shift from IT to CMOs. He also underscored that Facebook has become the most popular app on the planet because it is so intuitive, and his belief that all business apps will eventually need a Facebook-like activity stream because that is the interface users know and will demand.

Perspective

Really, what could play better into Salesforce’s hands as it tries to expand its enterprise footprint against stalwart ERP vendors? Larger enterprises have pretty much taken care of business in the back office. And smaller companies top priorities most often center on revenue growth and customer acquisition. With a CMO-centric view of the world, Benioff & co. can position Salesforce as chief mentor and leader in the next wave of IT innovation—in the front office, collaboration and user interface arenas. For example, I think that Benioff is spot on with his statement that all business apps will need a Facebook-style feed interface to take the friction out of using them and facilitate user adoption. Meanwhile, compelling customer success stories and strong partner growth underscore that Salesforce is ready to take its game to the next level. Unlike some of its competitors, Salesforce also has social in its DNA from the top down, which should prove to be an enormous advantage. However, rivals are not going to yield turf easily. In fact, it’s ironic that, in addition to helping to fuel Benioff’s agenda with its CMO research, IBM already walking much of the Salesforce talk. IBM coined the “social business” term before Benioff coined “social enterprise,” and many of the solutions that are in the works at Salesforce bear a close resemblance to IBM solutions such as IBM Connections, Smarter Commerce and SmartCloud—all of which are available now. Meanwhile, many of Salesforce’s newly announced offerings won’t be ready for several months or more–and are somewhat lightweight compared to comparable offerings from the competition. But sometimes, lightweight is better. Some apps are so clogged with feature bloat that they actually hinder getting work done instead of enabling it. And, I’ve said many times, Benioff is a marketing genius. He has an uncanny knack for winning by articulating a new value proposition better than anyone else in the industry. While he may need to play catch up in terms of getting his solutions to market, it’s likely that his messages will be the first to come through loud and clear in many corporate boardrooms.

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.

Reflections on Dreamforce 2011: Now the Cloud Can Ride the Waves

This year, Salesforce.com’s Dreamforce event–with a record-setting 45,000 attendees–got me thinking about the early days before the cloud was the cloud, how far its come, and how perfectly poised it is to ride the waves now driving technology adoption–mobile and social solutions.

Traveling in the Way Back Machine

In a galaxy long ago and far away, I was an analyst at the former Summit Strategies when the first cloud seeds were being planted in 1997. NetLedger (now NetSuite) and Employease (now part of ADP) were among the first to visit and brief us in Boston, followed soon after, of course, by Marc Benioff and Salesforce.com.

These vendors were among the early pioneers of what was first called the internet business service provider (IBSP) model. They built their solutions as multi-tenant software-as-a-service solutions, designing them  business from the ground up to be delivered as a single instance, to thousands of customers, in a subscription-based pricing model.

In the early going, these pioneers survived the confusion wreaked by the traditional software vendors, who put their traditional packaged apps–never designed for a services model–up on servers in the application service provider (ASP) hosting model. Then, they persevered through the onslaught of the software establishment at the time–from Siebel to Microsoft to SAP–who insisted SaaS was just a passing fad. They forged on even as multitudes of IBSP wannabes–from Agillion to Red Gorilla to vJungle–crashed and burned when the Internet bubble burst. They even survived the problems they created for themselves as they kept renaming themselves, from IBSP, online services vendor, software-as-a-service (SaaS) and then to the “cloud” label that would finally stick.

Evolutionary Vs. Revolutionary

From the start, analysts such as myself and counterparts, such as the luminary Phil Wainwright, thought that IBSP/SaaS/cloud was a great alternative to the packaged software model–and that it would catch on much more quickly than it has. But, though cloud computing has grown over the last 13 years or so, it’s growth has been more evolutionary than revolutionary. In the beginning, many of the technologies necessary to enable widespread cloud adoption, such as ubiquitous high-speed Internet access, just weren’t there. As important, IT people were often reluctant to go to the model because they were afraid it might put them out of a job, and decision-makers in some companies didn’t feel a compelling need to change the status quo.

In contrast, adoption of mobile and social technologies has been truly revolutionary. Not only were the right technologies were in the right place, at the right time, but individuals–not IT people or business decision-makers–called the shots. Employees are also consumers, and are spending their own money to BYOD (bring your own device) instead of using a company-issued brick. They started questioning why it was easier to keep track of friends on Facebook than keep track of contacts in CRM.  Armed with iPhones, iPads, Facebook and Twitter, as Benioff so rightly pointed out, individuals are now empowered not only bring about the “Arab spring” that has toppled dictators, but also stir up a “corporate spring” for companies that don’t listen to customers and employees.

Now the Cloud Can Ride the Waves

As a result, the pecking order of the IT universe is being radically altered. Apple is worth more than HP, Google is more powerful than Microsoft, and Facebook has changed the world–and what we expect from software–forever.

Though cloud computing has been on a slower trajectory than social and mobile technologies, cloud is increasingly the critical enabler for both mobile and social solutions. It provides the economies of scale and skill that developers and companies need to create, reiterate, and reinvent. It provides the customer feedback loop and data aggregation necessary to see where the puck is going and get there first. It provides the collaborative environment required to accelerate new ideas and new ways of solving problems. But it is very complicated for individual companies to piece together all the components that they need on their own.

As this perfect storm of social and mobile rapidly forms, how much time do the software vendors such as Microsoft, Oracle, Sage and SAP, have to straddle the fence and ride out the storm? You can bet that I and a lot of other storm chasers will be watching closely as the waves build.

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.

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