Salesforce and Tableau in merger
Salesforce is buying analytics powerhouse Tableau in an all-stock deal in which it pays 1.103 of its shares for one Tableau share. The deal is expected to finalize by the end of October, about a month before Dreamforce.
A number of questions arise from this deal. For instance, why do this deal at all? Why keep the companies separate or what will the relationship be like between them? What’s Salesforce’s end game?
Why do it?
Salesforce has always had an appetite for expanding its footprint and often did its initial building in-house. At some point, though, the effort swells and it becomes clear that buying a company with built-out technology is the best way to a timely solution. I think that thinking went into this acquisition. Salesforce has been into the analytics game for several years now and perhaps progress was not as quick as it wished or maybe market conditions accelerated certain demands.
Salesforce Einstein was supposed to be its analytics answer but it appears now that the company’s appetite for insights goes deeper than what Einstein supports. Today’s press release seems to position Einstein as a sales and marketing solution and Tableau as a more general purpose one.
Also, Salesforce has begun using digital disruption terminology more seeming to indicate this arrow has a great deal of wood behind it. Digital disruption is about more than analytics in sales and marketing and even about more than coming up with a snappy answer to a customer inquiry.
Digital disruption is about managing by data rather than gut and it applies to all sorts of situations and conditions not associated with an in the moment interaction with a customer. So perhaps Salesforce is flashing a signal that it wants to be the trusted advisor to boardroom decision-making and that will require more horses than Einstein.
Why keep the companies separate?
The announcement noted that the two entities would retain their independent natures. In part this is because Tableau has 86,000 customers, some of whom are not Salesforce customers so it makes some sense to keep the entities at arms-length to signal to customers that while they may purchase Salesforce at any time, they won’t have to.
Another reason might be that despite the acquisition, this is still going to be a trial relationship. Keeping the entities more or less separate is a way to make a possible future split more feasible. Lastly, there’s good cultural overlap between the two parties but Seattle culture is different enough from San Francisco culture to maintain some respectable distance.
Salesforce’s end game
It’s hard to say what the end game is since that script is still being written. If the world continues its voracious appetite for information culled from existing data, it makes all the sense in the world to marshal as many resources as possible and Salesforce is doing this. But there’s also a sizeable backlash against data, analytics, and algorithms in the culture as well, driven by avaricious incompetence at Facebook and other social media players as well as international bad actors. Having best-in-class analytics may become a necessary tool for ferreting out and suppressing bad actors.
Salesforce has a big interest in being the vendor that can help its customers to imagine a different future driven by information. One of the areas it has been effective at is helping businesses see the difference between systems of record and systems of engagement. That’s the essence of digital disruption, upgrading systems of record to become systems of engagement and that takes a lot of information to pull off. So, acquiring Tableau may be nothing more than a way to sharpen the engagement discussion.
One final idea. Analytics is critical to identifying fraud and intrusion. Oracle has done a lot to add its own analytics to its Autonomous Database to foster better security. Salesforce is an Oracle customer and perhaps its largest customer. But Salesforce is not exclusively an Oracle shop and it might need the analytics to support an independent security regimen portable to other databases to ensure uniformity throughout its platform.
My two bits
All of this speculation is not exclusive, meaning there are likely multiple good reasons for the acquisition and we’ll see them evolve.
It’s always hard to see the value of an acquisition like this because we don’t have access to the imagination of the parties putting the deal together. Press releases don’t often help much because they’re full of platitudes aimed at investors who want to know how a deal will affect their stock in 90 days. It’s a terrible way of investing but it’s also what we have.
For the time being we have something that more or less makes sense and new tools for imagining a better future. Dreamforce will be full of deeper explanations for this and other recent announcements like Blockchain. It almost makes you wish summer was already over…nah.
Trailhead, Salesforce’s not-so-secret weapon
Salesforce has used its Trailhead learning system to teach developers how to program on the Salesforce platform, Lightning, for over five years. Last week it completed its fourth highly successful TrailheaDX conference in San Francisco which attracted 14,000 people to the Moscone Center.
There are plenty of good reasons for Salesforce to be in the software-coding-education game. Not long ago, research organization IDC published a commissioned study that forecasted that by 2022 the Salesforce Economy could generate as many as 3.3 million new jobs among Salesforce and its ecosystem of customers and partners and as much as $859 billion in new business revenues worldwide. That’s billion with a B and in a global economy that generated combined Gross Domestic Product of $80.7 trillion in 2018, according to a World Economic Forum report, that ain’t nothing. The same report lists US GDP at $19.39T leading all other countries.
If you’re Salesforce, its understood that your business is increasingly about selling seats that access your platform and, while the traditional CRM product still commands the largest part of that revenue stream, the number of developers using the platform is an important engine of the future.
The Salesforce AppExchange is another important revenue contributor with its more than 3,000 distinct applications based on the platform produced by partners developing those apps using Salesforce tools. Salesforce saw all this a long time ago and some of its most prolific developers can boast about histories going well over a dozen years.
Women in tech
At the same time that Salesforce has been promoting its platform and development opportunities, it has also maintained a steadfast commitment to equality within the company ranks and beyond, something that has put the company and its co-Founder, co-CEO and Chairman, Marc Benioff at odds with some prevalent societal movements.
When Salesforce talks about equality, it’s not just about gender equality though the company has gone to great lengths to support it. Salesforce’s commitment encompasses equal rights, pay, education and opportunity. Twice in the last five years, for example, the company audited itself to identify and rectify unexplained pay disparity for equal work across gender lines. And twice it has spent in the neighborhood of $3 million to rectify the pay inequalities it discovered. On the occasion of the second adjustment the company made the point that pay inequality is insidious and requires constant vigilance. In a blog post, Cindy Robbins EVP, Global Employee Success wrote,
“The need for another adjustment underscores the nature of pay equity—it is a moving target, especially for growing companies in competitive industries. It must be consistently monitored and addressed. Salesforce will continue to focus on equality, diversity and inclusion at all levels, and we plan to review employee compensation on an ongoing basis.
The company and its CEO have been noticed in other areas of equal rights as well including a dustup with then Indiana Governor Mike Pence over 2016 legislation Pence signed into law that could allow discrimination against LGBTQ people within the state. Salesforce has a big investment in the state due to its 2013 acquisition of ExactTarget for $2.5 billion and at the time it employed between 2,000 and 3,000 people. Upon the law’s passage (The Religious Freedom Restoration Act) Salesforce moved its marketing summit, Connections, out of Indianapolis taking millions in local revenues with it. The 2019 edition of Connections will convene in Chicago in a few weeks. Of his decision Benioff said,
“We can’t bring our customers or our employees into a situation where they might be discriminated against. We have a large number of employees and customers who would be impacted dramatically by this legislation. … I’m really just advocating on their behalf.”
Trailhead
The just completed TrailheaDX conference shows a less confrontational but more than effective approach to rectifying biases while also expanding the number of Salesforce users capable of using the platform. From systems administrators to system architects, Trailhead is bringing along the next generation of people who will advance cloud computing.
Through Trailhead Salesforce hopes to open up software development to a more diverse audience. According to a recent article in the New York Times, the number of women in the software world has remained stubbornly low over decades. But changes in society and a new generations of both technology and potential coders might be changing that.
What’s exciting about Trailhead is that it doesn’t seek to advantage any group competing for jobs in the Salesforce ecosystem. It simply provides training and certification so that anyone can prove competency and compete for employment. This includes people from historically disadvantaged groups but also often overlooked people in need of a career change or some who might not have college degrees which can be a roadblock for bright people who, for whatever reasons, don’t have degrees.
Trailhead’s self-paced curriculum, certification and a gamified environment that awards badges and points to students, turns out to be ideal for many people who have a day job whether that job is managing a Salesforce instance or something else. That could be just about anyone. Interestingly, many women and others who may have felt they were outside of the technology mainstream have found that through Trailhead, they can learn, build skills and take on projects. And project work can take place at one’s place of employment or through volunteering at a nonprofit that has a free license to the software but needs help building apps.
The degree of support and its influence on women in technology was on display at the recent TrailheaDX conference. There are several independent organizations in the ecosystem that help women to climb the ranks on the platform to become Certified Technical Architects and several flavors of certification below that pinnacle that also include Certified Application Architect and Certified System Architect along with many other specializations.
Within this structure women have been doing well thanks to women-organized groups that offer assistance to learners trying to solve thorny issues in their Salesforce education paths. One organization RAD Women Rock (Radical Apex Developers), started in 2015 and supports women working their way through learning programming on the Lightning platform. Experts from the ecosystem volunteer as mentors and provide the encouragement and assistance many need at critical junctures in the learning journey. In this way people outside of the mainstream are able to enter it
My two bits
The point is that Salesforce has developed a learning package that has become a central part of its outreach. It helps people of all descriptions and backgrounds to increase and improve their skills and those skills are easily documented and in high demand in the industry. This grew out of a basic belief in human nature and a desire by the company to improve opportunities for its employees and its customers.
In an age that sees much of the world as a zero-sum competition in which one wins while another loses, Salesforce has demonstrated through Trailhead and its business practices that it is possible to increase opportunity for all without diminishing the prospects for any individual or group.
Women and minorities of all types are underrepresented in application development and in many other phases of the technology market. Often these people are excluded from the highest paying jobs and the lifestyle that such pay makes possible. Salesforce’s efforts are a shrewd attempt to find hidden talent pools and put them to work in its ecosystem that is simultaneously doing societal good. The result is an expanding market for Salesforce products and services at a time when competition for talent is high and turnover is unpredictable.
DevOps for Salesforce Lightning
The tools you work with have a lot of impact on what you can accomplish and the more sophisticated the tools the better, especially in software. Beagle Research just completed a study into using a DevOps strategy with the Salesforce Lightning Platform. You can get a copy of it here. The work was sponsored by Copado a DevOps solutions provider. DevOps is a strategy for building, changing and deploying enterprise software that can also be used with a Scrum or Agile methodology as well as others. More than concentrating on code and coding, DevOps is more holistic looking at culture and infrastructure in its broadest manifestation.
Even if you’ve never built systems you can surmise that planning, developing, assessing, testing and deploying software are all critical milestones and they’re often spread across technical departments of IT like development and operations, hence the name.
It can be challenging to compare enterprise software strategies. For instance, using an on-premise hardware and software stack has been common for decades but with the development of cloud computing, users find they can eliminate having to care about a good deal of their development environments leaving it all to the cloud vendor. How do you compare overhead and costs between cloud and on-premise? What are the effects on speed to market, reliability, security? To control for some variables and enable us to make an apples-to-apples comparison, we chose to research only companies developing and maintaining systems using Salesforce Lightning and a DevOps strategy.
Companies ranged in size from fewer than 100 employees to more than 10,000. There were similar measures for number of salesforce users and number of developers as well as the number of production orgs. Two-thirds or 67 percent said they run between 2 and 7 production orgs. Most of the respondents were C-level executives (48 percent) or upper management (40 percent).
We found that DevOps is delivering value for most of its users though the larger organizations have greater challenges, more on that in a moment; 17 percent claim over $5 million in benefits from using a DevOps strategy. These people have a good understanding that software flexibility drives business agility and impressively, 54 percent say their lead time for making changes to their Salesforce orgs is between one day and one week. Compare that to a more traditional process that takes weeks or months.
But we also identified an elite group that operates even faster–21 percent say their lead time for making changes is less than a day, and 8 percent say it takes less than an hour. Taken together 83 percent can make changes in a week or less.
In other recent research I’ve been involved in, delivering running, tested and deployable code was much slower. Clearly, if a business depends on its ability to quickly change to meet changing market demands this is where you want to be.
On the other hand
As you might expect though, the benefits of a DevOps strategy were not evenly distributed across all users. Generally, smaller businesses with smaller development groups did better overall at establishing DevOps programs and at excelling within them.
The most successful businesses using DevOps are those that use a well-integrated set of tools to move through development and deployment. Many organizations, especially smaller ones, use a combination of in-house developed and opensource management tools. At best the great variety of tool choices suggested to me that some best practices are still being worked out.
Even with Salesforce Lightning and a DevOps approach you can still have issues and almost everyone had the experience of deploying a release to a production org and having a service degradation. A plurality of respondents, 43 percent, said a problem occurred up to 15 percent of the time and the vast majority or 86 percent said service degradations happen less than half of the time. This is an important snapshot of the state of the industry. Speed of delivery slightly exceeds stability of releases indicating a need to bring the two metrics more in alignment.
Some best practices considerations
- A strong majority (60 percent) say each developer in the business has a private development environment.
- Also, 77 percent say they use version control to store code and click-based Salesforce customizations.
- Most synchronize their development environments with the latest changes from other teams with 41 percent doing this on-demand or at most once per day and 42 percent saying they do this between once per day and once a week.
- 75 percent say changes made in version control trigger automation tests.
- 87 percent have confidence that when automated tests pass the software is ready for release. However, meta-analysis of the data strongly suggests that the greater a team’s confidence in their tests, the higher their change failure rate. Skeptics who were neutral on this question experienced a 40% lower change fail rate than those who expressed strong confidence in their tests.
It’s good to be skeptical.
Some analysis
Part of the allure of the digital disruption is having the capacity to change a business process to take advantage of changing market conditions and many businesses are already having that experience. Big data and analytics tell us what needs attention but then we still need to change our systems’ behaviors. Flexible software contributes to a business’ agility and that’s good. But that speed and flexibility need to be balanced by security and what I can only call the bulletproof-ness of the new or changed code.
The businesses most able to reap the rewards of DevOps tend to be smaller though large enterprises have their bragging points. While larger businesses already see benefits from a DevOps strategy, they are the ones with the greatest potential to do more. What’s holding them back?
In any organization size breeds complexity which causes business friction. We don’t have all the data to say so unequivocally, but it seems that bigger organizations have more walls to break down.
It looks to me like the development tools are pretty good. Not enough businesses have well integrated management suites to handle the complexity and it also seems like culture forms stovepipes which causes less stellar performance. If that’s so there’s still some cultural work to be done enhancing communications within and between developer groups and the business. DevOps tools can be a big part of that help but as with the psychiatrist trying to change a lightbulb, the bulb still has to want to change.
Oracle Autonomous Database is changing business practice
Drop Tank is a small company in footprint–it started with only 22 people–but with an outsized mission to provide loyalty and discount programs to thousands of gasoline retailers. It has been decades since gas stations offered incentives to purchase their products. Last time, in the 1960s, retailers would routinely offer silverware, glassware, and china for fill ups. Alternatively, some would offer Green Stamps–collectable coupons redeemable for merchandise. That was the state of the art for loyalty programs.
All of these arrangements were relatively easy to administer and there was no back-end data to massage. A customer made a purchase and got a reward on the spot. Those were the days! Today’s loyalty programs often capture metadata from the transaction that credits points to a customer’s account and the customer can determine how best to spend them.
Drop Tank started out providing single-use, cents per gallon discount cards to customersin 2012. Today it offers the same fuel discounting scheme but also gift cards and combined offers for gasoline plus consumer packaged goods sold in convenience stores that also sell gas.
Less than five years ago (2016), Drop Tank began designing a back-office system to ride herd on customer gas purchases and the points they accumulated. Any customer could join by adding a phone number which could then be used at the pump to identify the purchaser. The system has been through several iterations in its short life, each time becoming simpler and more efficient and thus better able to support an expanding mission.
Black box
When Drop Tank started out, it produced a small black box device that connected to the pumps capturing customer data and purchases for later upload and processing. The device was needed because 65 percent of retailers are independent and have the ability to choose their POS (point of sale) system. This resulted in integration challenges best met by hardware. But less than ten years later, the black box is gone and the latest iteration leverages the Oracle Autonomous Database which enables several important improvements for Drop Tank and its customers.
Drop Tank’s principal partner is Marathon Oil, a vertically integrated petroleum company that leads in oil refining in the US and runs a large distribution network located primarily in the Eastern half of the US, though recent acquisitions have spread the footprint into the West.
Although the original black box solution was good for its time, installing those boxes at more than 3,500 retail locations was time consuming and expensive, requiring a visit to each retailer.
Tim Miller vice president of technology for Drop Tank, was a co-founder of the company and he has run IT since founding so each iteration of the system was his responsibility to develop, deploy, and maintain–all the incentive he’d need to support continuous improvement.
Over time, Miller has been able to replace the black boxes with server-side software for all of the POS systems popular with his customers, the retailers. Importantly, the evolution of technology in the dealer network mimicked and supported the evolution of increasingly sophisticated services provided by Drop Tank to the retailer and, recently to CPG companies. Consider these milestones,
Stage 1, 2012
Initially, Drop Tank functioned as a promotional products company with cards and codes that dropped the price at the pump. Customers didn’t need to enroll in a program to enjoy savings, but Drop Tank had limited ability to leverage data to engage with them.
Stage 2, 2016
The original cents off system was built on Rackspace and was adequate for the need. But by 2016 Miller and a small team designed an improvement that would take the black boxes out of the equation letting the retailer simply connect a POS system to Drop Tank’s headquarters using Oracle Cloud Infrastructure. It made sense because it reduced the time and expense associated with deploying hardware from four hours per site to 30 minutes. Now all of the integration and conversion could be handled by software. It also appealed to retailers who wanted fewer devices behind the counter connecting to other systems and printers. So, simplification was good for all parties.
The dealer network reacted, and Drop Tank’s new retailer signups doubled..
Stage 3, 2018
With its system built and in place and connected directly to the POS systems Miller and his team discovered they could gather additional point of sales data that other systems either were not capturing or, because there were so many disparate systems in use, no one could easily aggregate. This was in stark contrast to the way other retailers could capture data and provide it to CPG companies. For example, supermarkets can routinely report to CPG vendors not only what sold but what other items made up the transaction.
Enabling business analysis with Oracle Autonomous Data Warehouse
Drop Tank discovered that it could collect data that CPG vendors needed and also provide more information to a growing set of CPG vendors. But the company needed a data warehouse that could handle the load while enabling the company to retain its small size, now a 22 people business. So, finding the right amount of automation was critical. That’s when they turned to Oracle.
While Drop Tank captures a great deal of data in its data warehouse, there are always times when CPG companies might want specialized information that’s not easily available as the system was set up.
It’s a common problem. For years data warehouse users have tried to build a perfect warehouse containing every kind of data and every possible analysis, but that’s not real. So, Miller took the company in a different direction. Today he says, “Don’t try to build a data warehouse that’s perfect, instead, leverage the power of the Autonomous Database,” which he does.
When a CPG customer makes a special request, Miller says that, thanks to the Oracle Autonomous Data Warehouse, Drop Tank can simply spin up a new database automatically in about an hour without the traditional overhead of building, tuning, and maintaining it. “Spinning up a traditional database and tuning it can take days or weeks. Within an hour I can have the database running, within 4 hours we can load data and then within another hour we can have answers. That’s as difference-maker.”
Topping off
Oracle technology has enabled Drop Tank to grow in several ways. Oracle PaaS and IaaS have enabled the company to run its IT in the cloud using a service-oriented architecture (SOA) that helps the company reduce overhead and save headcount. Oracle Autonomous Database enabled the company to branch into providing information services to CPG companies from its starting point as a loyalty program provider. And, Oracle automation has enabled this small company to remain small in headcount but to continue to grow its services while significantly increasing productivity.
New CRM research shows awareness gap
CRM guru, Esteban Kolsky, and I did some primary research paid for by Zoho earlier this year. We wanted to better understand what buyers of CRM systems today were most interested in and to discover their highest priorities. Our survey population comprised more than 200 highly qualified executives and managers (47 percent C-level) in companies with at least 500 employees and ranging to several thousand. All respondents indicated a need to make a CRM purchase decision in the months (not years) ahead. So, we felt our data represented a good measure of current need.
Our findings were what you might expect from such a group though some data points puzzled us. For example, few executives seemed to understand the need for platform technology to support their ambitions. Those aims included taking on the digital disruption and leading their organizations to be more agile, things that platform-based CRM is ideally positioned for. So that seemed like a big disconnect.
CRM all in
After most of two decades where CRM was seen in some circles as a technology suite to keep an eye on but not necessarily purchase, our data clearly showed that most people surveyed see a CRM solution as a necessary additive to business strategy. Most, said they wanted greater technology flexibility (80 percent), increased ability to take on new opportunities (63 percent), and better information sharing among the groups in the front office (60 percent).
Since all of the members of our study had purchased CRM before, the great yearning for technology flexibility speaks to some of the limitations of earlier CRM systems. It also suggests to us pent up demand that could result in a new adoption wave.
These findings are also in line with other research that points to majority CRM purchasers today seeking opportunities for greater differentiation in their markets. You can’t blame them. With CRM well distributed in many markets, the dividend from installing first or even second-generation CRM systems has evaporated. Today, users with systems that only capture and store customer data (systems of record) are being out-competed by businesses that can perform some amount of data analysis and make relevant recommendations about what to do next, integrate other systems easily, and offer support for social media.
The latter systems are often referred to as systems of engagement. In other research I’ve documented an important chain of cause and effect this way. Engagement drives loyalty which drives profits. No wonder there’s so much interest in modernizing CRM. A note of caution though, your notion of engagement might not be the thing that motivates customers to engage.
Best of breed?
Over time I’ve seen the number of disparate best of breed applications in organizations steadily climb from a low of several dozen when I started tracking to many hundreds now. Part of this finding simply reflects the success of cloud computing. As the number of cloud vendors has steadily increased so has the number of apps available. And the cloud technology and business models make it easy to add a new app.
But at some point, which I am confident we’ve passed, the sheer number of different apps capturing and trying to share data produces its own limitations. With hundreds of apps needing to integrate to a CRM suite it becomes more than a full-time job to keep all of the apps synched and the integrations in good repair, even with modern cloud technology.
There are two keys to success in this scenario: 1) limit the number of apps the organization will take in or 2) invent better ways to integrate systems. Good luck with the first idea, departments are now fully capable of bringing cloud-based IT solutions into their workflows without seeking permission. Too often IT only discovers a new app when it is asked to fix something.
The second approach calls for platform technology from a CRM vendor. With platforms a third party builds to the specifications of the platform and the user has a much easier time bringing apps onboard. So it was a great surprise to us that less than ten percent of the executives surveyed had an inkling of the centrality of platform technology to their search.
Another surprise
When I started in this business implementing a CRM system in an enterprise could easily take a year given the complexity of deploying CRM for the very first time. The rule of thumb for a full CRM deployment was that the cost of the effort would easily be two or three times the cost of software thanks to the need for an army of SI specialists. Software costs have been reduced considerably thanks to competition and cloud computing, but the time involved has barely budged though it has been refactored.
In our study 63 percent expected to complete the selection process in 4 to 6 months though a smaller cohort expected it to take upwards of a year. With selection complete 43 percent think purchase to rollout should take 2 to 4 months while an additional 33 percent expect the process to take 4 to 6 months. When everything is laid out and accounted for, the executives still think the process will last a year between purchase and first ROI proof.
Perhaps this can be partly explained by the additional need for setting up AI rules and algorithms and training machine learning systems. Also, some explanation may rest in the need to customize by adding vertical market expertise.
My two bits
We might be in the early stage of a new CRM deployment wave. The situation in the industry and between vendors has changed a lot since cloud computing came to dominate and AI and machine learning made appearances. To a degree platform orientation within a CRM product set could significantly alleviate the need for substantial rip and replace efforts. With a good platform it’s far more likely that a vendor could update customers with new technology in-line with the maintenance process. Yet another reason to pay attention to platforms.
