Salesforce Radian6 Deal Analysis
Salesforce had a busy week first buying Radian6 for a king’s ransom ($326 large) and then announcing a partnership with Intuit to resell its CRM pre-integrated with QuickBooks. As I write this there is at least one more interesting announcement in the wings but I am under NDA and not sure when that announcement will be made. Watch this space.
For me the Radian6 deal is the big news. I go back to Marc Benioff’s discussion with analysts last month at Cloudforce in New York. At the time, Marc made the point that the front office represents a great deal of opportunity in the form of new application niches that are still waiting to be discovered and developed. The Radian6 deal certainly fits into this thinking.
Salesforce has been an important pioneer in applying social concepts to business, especially the idea of crowd sourcing. Rather than making an attempt to simply layer social technologies onto the CRM suite, Salesforce has, more than most, tried to adapt and incorporate. The results have been two very different clouds and a third collaborative application called Chatter.
The Sales Cloud incorporates aspects of the wisdom of crowds to understand the dynamics of the sales team. That’s very different from using Facebook, Twitter and other tools in the Service Cloud. The Service Cloud is effective at applying wisdom of crowds approaches in completely different ways to enable customer communities to support each other. Chatter applies Crowd Wisdom to the internal workings of a company. The common theme is crowd wisdom but it gets applied differently in each case. And I’d add that each generates intellectual property for a company. The addition of Radian6 extends, in my mind, this IP generating capability.
It’s still very early to see exactly how Salesforce will incorporate Radian6 into its product line but I have a suggestion. If you look at what’s been done with other clouds, you see that the hole in the offering was in capturing crowd wisdom from customers outside of a specific transaction, like service. What do customers think generally as well as what do they think about you and your products and services when they’re not necessarily in need of something specific? Being able to ask and answer this kind of question is increasingly important for companies and taking a community based approach is critical to helping a company develop its products, services and even its messaging.
Salesforce could do several things with Radian6 and I hope one of them is to launch a services arm that focuses on improving a company’s business processes through listening to customers. That’s very different from a services arm that implements technology. With the community orientation that Radian6 brings, Salesforce can legitimately claim leadership in all phases of social networking applied to CRM and it should use this to disseminate its thought leadership.
On the other hand, it’s important to remember that this is all in front of us, it’s all potential. In other words, it’s Salesforce’s deal to mess up. If all goes well it should benefit many parties. Customers should be the biggest beneficiaries — you don’t do something like this without focusing on the customer because any benefit to the company starts with providing benefit to the customer.
So customers should benefit from having a well thought out and new approach to a dynamic marketplace. Early adopters among them will benefit most. As far as the competition is concerned, if this doesn’t work out they’ll relatively benefit. But they’ll also benefit as fast followers if Salesforce shows a clear path to a new revenue producing opportunity. It would not be the first time that’s happened.
Finally, there should be nothing stopping a Microsoft for example from integrating Radian6 if customers want that. Last time I spoke with Brad Wilson, he said that they’d work with Chatter if that’s what customers wanted as long as Chatter offered industry standard APIs and I expect that this reaction to Radian6 will be similar from other vendors.
This deal helps to further legitimize social ideas for business. It shows how social morphs from a personal tool for managing relationships to a business tool and as I’ve tried to make clear, the transition is not a straight line. I think this might also, in retrospect, be seen as the beginning of the end of SocialCRM as an entity. By that I mean, social ideas are becoming mainstream and we might sooner or later drop the social designation and go back to plain CRM though it will be a solution set that’s vastly different from what we had ten years ago.
Social is becoming mainstream and losing its emergent status, much like cloud computing has become mainstream and has ceased to be a risky thing. This also points out that social is not an option anymore; it’s how we do business in the 21st century.
We haven’t talked about how this applies to mobile. But mobile is our next big thing and having intelligent devices in our pockets and satchels is going to open up more niches for this kind of social approach. For instance, applying social concepts in a B2C retail situation mediated through mobile devices is one potentially exciting area. We see Oracle doing this and they’re calling it clientelling (sp? clientele-ing?). Adding social to mobile with the implied contribution of analytics should be very exciting.