The Blog

  • October 1, 2015
  • A Dreamforce takeaway

    91LvbZ02_400x400I’m always looking for emerging trends at Dreamforce, the kinds of things that are hiding in plain sight. They might never amount to much but it’s more likely, given Dreamforce, that many of them will bloom. A case in point is the emergence of vertical market CRM. I think its time is here because application development tools have become so good and because customers need ways to limit their exposure to expensive and interminably long deployments.

    But also, the business processes of say, banking and healthcare, are different enough to require customization by either the institution or a system integrator. Interestingly, high integration costs was one of the things that cratered on-premise CRM. Back when Siebel was the biggest dog in the hunt, it wasn’t unusual for integration and implementation costs to reach 2 or 3 times the software costs.

    This requires a little unpacking.

    There are many high quality front office applications available today on the AppExchange but for the most part they amount to horizontal products aimed at a generic market. That’s not a bad thing either because there are lots of areas where Salesforce either doesn’t field products or where there’s so much opportunity multiple vendors can succeed. Also, some application areas are easily served by broad products. So, for instance, there’s plenty of running room for CPQ, compensation management, field service, and a variety of analytics and marketing products and they are all or significantly horizontal.

    But vertical market application suites are another story. Veeva pioneered the idea with its pharmaceutical industry application a few years ago and significantly no one followed their lead in part because it’s hard to make apps that focus on a single vertical. But Veeva built a profitable public company with an investment in the single digit millions of dollars. Try doing that again.

    Part of Veeva’s success, in my book, is that pharmaceutical sales are highly regulated and vendors have to keep good records of meetings, content provided and representations made as well as any samples provided. This is all highly dependent on process. A pharmaceutical company’s customer facing business processes are tightly circumscribed and require software to track process flows much more than a more generic SFA approach. Pharmaceuticals is only one example and I think Vlocity is taking a similar approach in its chosen markets for similar reasons.

    Vlocity is close to the Veeva model and for good reasons. Many of the founders of Veeva started at Siebel where they worked on vertical market solutions. They migrated to Vlocity whose business model is Veeva+1. Actually it’s already Veeva+4 (verticals) and the model is set to expand. If founder and CEO David Schmaier has his way, the number will be about 24 which is the number of verticals whose development he supervised at Siebel.

    Between Siebel days and the present a lot has changed though. For one thing, the original Siebel product was a transaction system and today’s market is all about social, mobile, analytics—and most of all process. So redoing the Siebel success won’t be an exercise in taking the rusty paperclip off the playbook. Still, the vertical market need is all too present. Businesses need process support and their choice until now has been self-development or hiring an integrator to customize the more generic salesforce applications.

    Vlocity appears to offer a third approach of providing best practices from the beginning. Unlike Siebel, Vlocity has a bigger toolbox to work with in Salesforce1. They’ve built their own vertical market CRM objects on top of Salesforce1 and because the platform provides the all important application stack, Salesforce partners can focus on making applications rather than dealing with revisions of databases, operating systems, installation and maintenance schedules and more.

    Vlocity is going on 2 years old and in that time they’ve spun up 4 verticals—communications and media, health insurance, insurance, and public sector. They also just raised $43 million, most of it from Salesforce Ventures. Will this idea of vertical market CRM succeed? It’s never a good idea to tempt the fates by guaranteeing something like this. But if the combined experience of the Vlocity team and their ability to raise money is any clue, then there are many, many worse bets a body could make.

    Published: 2 years ago


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