Salesforce

  • February 19, 2019
  • I’ve recently been writing a lot about platforms. Not any one in particular but about the importance of platform to the future of what we all do in CRM and beyond. Platform provides a level of abstraction between machines and humans who must get useful work out of them. Inventing the platform was like inventing the power loom or the printing press. It was a way to separate the creative effort from rote production. I’ve gone so far as to say that the platform-based CRM system has become a big demonstration project for the platform. If it can support this, what can’t it do?

    On a more prosaic level, one of the things that platform is proving to be very good at is providing an engagement layer on top of older and more rigid systems of record. Older systems are really good at storing data but not necessarily at telling us what the data means, its information content. We still talk too much about data, about the orange when what we crave is the juice.

    At the engagement level Salesforce has been taking big steps to add CRM values to healthcare through its Health Cloud. At the HIMSS 2019 conference in Orlando this week, one of the big health information systems conferences of the year, Salesforce unveiled new capabilities that borrow directly from CRM to support healthcare.

    In the process, they are helping to change the model of healthcare in this country from a break-fix model that’s been around for more than a century, to a wellness paradigm that seeks to prevent illness. W. Edwards Deming would be proud. New Salesforce offerings include,

    Social Determinants of Health. I’m not completely sure how this works but it looks like a way of capturing a broader data set on patients like economic status, ability to drive or access transportation, and ability to read and understand treatment instructions we all go home with these days. Those are things not typically captured in the conventional medical record but without them, it will be hard to raise the bar on treatment success rates.

    Mobile-First In-Home Care Collaboration. This looks much like an application of field service management to patients and it uses Field Service Lightning for Health Cloud to do the job. As any CRM people know, successful field service is all about bringing resources to bear at a remote location. But that means much more than having a well-stocked truck or toolbox. It means being able to access others to deliver service. This collaboration product enables dispatchers to bring together specialists by ability and location to support traveling care givers.

    Personalized Patient Journeys. As you might expect, this one brings in the Salesforce Marketing Cloud to apply journey mapping and execution. Simply put, any treatment situation from recovering from surgery to managing diabetes has a predictable trajectory but individuals might not always stay on their trajectories. A wound might get infected, someone’s blood sugar might be hard to stabilize, but even those exceptions can be built into a journey map along with standardized care regimens. More likely a provider might want to keep a stream of information going to patients managing similar issues such as all Type 2 diabetes patients between 50 and 60.

    All of this brings into sharp relief the issue of containing healthcare costs. Unlike almost any other industry you can name other than education, which has a lot in common with healthcare, costs have remained stubbornly high and have continued to escalate. This shouldn’t surprise anyone. Anything that can be manufactured can eventually achieve benefits from economies of scale, but healthcare and education are not manufactured.

    Every hot appendix has to be removed by a highly skilled and trained surgeon; every diabetic needs to be diagnosed and monitored. There are few economies of scale but we can do a lot to improve prevention and when that’s not enough, we can bring systems of engagement to bear so that we waste as little resource as possible. CRM principles like systems of engagement are changing the healthcare equation by capturing more data and moving information around to inform care decisions at every level.

    My two bits

    Applying CRM to healthcare is a big deal but let’s be careful what we mean by that. The stove-piped CRM of a decade ago wouldn’t be helpful here. It’s only since the addition of social networking ideas, analytics, and machine learning that we’ve been able to see ahead of the customer and now the patient. We know where they are in a journey based on probabilities derived from thousands of past actions and we know logical next steps for the same reasons.

    Healthcare also has an important bias working in its favor—people want to be well and to get better in the vast majority of cases. You can’t say that about customers in a purchase situation because the motivators are more nebulous. You can’t even say that all students want education. It’s nice to think they do but how many do their homework regularly?

    We might have entered a golden age of CRM with all the platform additions of the last decade beginning with social networking. But it’s disappointing to see the fear and disappointment emanating from scandals about misuse of social networking and the fear of AI, and machine learning eliminating jobs. I guess that’s what you get in a maturing market. Nonetheless, there’s a lot of good being done by CRM platforms and healthcare is a good example that will have far-reaching effects.

    Published: 1 day ago


    I’ve been writing a forecast column every year at least since W was president. Nothing’s wrong with that, lots of people do. But I often find that my forecast is more of a wish list than a true prognostication so this time I’ll dispense with the fiction of analytical rigor and just say what I think needs to happen.

    Platforms and leaders

    First, the industry is consolidating. The big and successful companies are competing on a different plane than the smaller ones. The smaller guys are working harder than ever and some are realizing they need niches, that they’re not going to be able to cover the whole CRM landscape.

    This is mostly a good thing because it clarifies the mission and lowers the costs of being in the market. I can also mean better and more verticalized software. But there are two basic kinds of these companies—those that have credible platforms and those that don’t. Among those that do I’d list several including Oracle, Salesforce and Zoho.

    Oracle and Salesforce should not surprise but Zoho might. They’ve spent decades building a global solution and platform. There is only some overlap between the two with Salesforce attacking the really big enterprises and offering a huge ecosystem. But Zoho is a powerful solution for the small to mid-enterprise. It also has a good ecosystem. One of the big differentiators is how much ERP functionality you’re likely to need and where you plan to get it. Salesforce integrates well and has ERP partners like Financial Force. But Zoho offers good back office apps as a part of their service as well as having that ecosystem.

    Another vendor in the mix is NetSuite which has been setting sales records since Oracle bought and significantly invested in them. NetSuite’s idea of CRM is eCommerce though, so customers will self-select.

    So on the flip side, there are small-ish vendors still working on their own platforms and whose development teams are measured in the hundreds. The market leaders have thousands of developers in contrast, which is why it’s time for these vendors to find a niche and try to excel. With that comes a decision point about their platforms.

    Integration

    Next, we’ve had years of AI and social media, and even years of integration. I think it’s time for a year of integration on major pharmaceuticals. We need better networking and this needs to be led by the biggest names. A consortium including Microsoft, SAP and Adobe announced the Common Data Initiative (CDI) last year which I still think is not only too little, its major purpose is more aimed at slowing the advances of Oracle and Salesforce. Oracle’s autonomous database and enhanced security present a major challenge to other DB vendors. Salesforce is drafting behind the Oracle RDBMS on this one and has that advantage.

    CDI focuses on building a common CRM data model and that sounds good, but it has too many moving parts as in potentially every vendor in the industry. Smarter people have said the better approach to making everything talk is to facilitate the communication at the API level. I agree. No surprise, some of the vendors conspicuously left off the Microsoft, SAP, Adobe invitation list, are pursuing the API approach, like Salesforce, and I think 2019 will be a banner year for more API centric networking.

    We need that approach too, not just in CRM but throughout the tech world as we continue to build what will be a true information utility in the not too distant future.

    Taking social seriously

    Social media has deep roots in CRM—recall the year(s) of social CRM—and because it does, I think there’s subtle pressure in Silicon Valley for the likes of Facebook, Twitter, and all the rest, to clean up their acts and mature their business models and security plans.

    Recent reporting shows that virtually every social network has either been compromised or willingly gave access to private information to entities that shouldn’t have had it. You can’t do CRM if customers get worried about how their data is being used. CRM is an unwilling victim of social shenanigans and they don’t want to be seen as willing partners, so the pressure is on.

    Foolish social leaders will think they can wait out the federal government on regulation but that approach could backfire when the feds deliver a set of regulations that don’t work. Remember, many of the people who would pass this legislation are in their 70’s and have an archaic understanding of tech. Smart leaders will see this and volunteer to define what’s possible.

    My two bits

    I’m looking forward to 2019. I don’t think it will be a time of runaway growth and major innovation in CRM though I would be pleased to be proved wrong. In a consolidating world, there will be some losers too so be prepared.

    I think the year ahead will impress by showing unprecedented innovation, of people and companies doing some unexpected things that make a lot of sense. I’m looking for the second or third tier of companies to be more aggressive in the mergers and acquisition arena in a bid to become more competitive. After a lot of years in this seat, I’m still having fun and I appreciate you letting me share my views.

     

    Published: 1 day ago


    I was on vacation when the news hit that Keith Block would become co-CEO of Salesforce with Marc Benioff and that Parker Harris would join the board of directors. I’ve already written about Block and for some reason always assumed that Harris was already a board member so the news came as a surprise and a gratifying one at that.

    Parker Harris is a real Renaissance man with a background in the humanities (BA, English Literature, Middlebury College) as well as the chops needed to develop multi-tenant computing way back when Salesforce was emerging. That’s an important distinction and you could dwell on it for a bit.

    It’s my observation that at the beginning of a disruptive innovation there are no experts in a field just talented “amateurs” to fill the need. Go as far back as you like and you see a stable pattern. Bill Gates dropped out of Harvard as did Mark Zuckerberg. Steve Jobs did just a year at Reed College. Wilbur and Orville were bicycle mechanics and spent a whopping $2k from their business on their experiments to invent heavier than air flying machines. Henry Ford? He was largely self-taught learning about steam engines on the job while taking a few bookkeeping courses. Finally, there’s Edison. This self-educated inventor and business man might be the greatest of all time with 1093 patents to his name. He took a few courses.

    If you’re interested in learning more about how invention and discovery favor the talented amateurs, I suggest “The Structure of Scientific Revolutions” by Thomas Kuhn. He’ll take you even further back throughout history to see even more of the pattern.

    But for now, congrats to Parker Harris, one of the great ones.

     

     

    Published: 6 months ago


    The end of the second quarter ended the first wave of vendor customer events. Still to come are Salesforce Dreamforce and Oracle OpenWorld—and others—in the fall but mercifully, we have the summer to digest all the information absorbed this spring and re-synch with our native time zones. Here are some things I learned during show season but as you read this know that no person goes to all the events and other people like Paul Greenberg, Esteban Kolsky, and Brent Leary are well worth reading on the subject. So are Jon Reed and Phil Wainwright.

    CRM is big, big, big. Still.

    CRM doesn’t appear to be slowing down. As an industry it’s rated at about $35 billion in revenues up three-fold over where it was at the beginning of the century when I was a tenderfoot. One reason for the growth is the constant diversification led in no small part by Salesforce’s innovative culture. Big vendors like SAP have rededicated to CRM and I wish them well though I have a nagging feeling that’s an uphill path. Still many enterprise vendors seem to have entered CRM as a defensive move to secure their legacy customers. That’s not a recipe for sustained excellence. But what do I know? I’m just an analyst.

    Salesforce isn’t going to bail out your business plan

    Some vendors got into the market on Salesforce’s coattails without realizing they still have to perform. You can be in the AppExchange and flounder if you’re waiting for a Salesforce sales rep to call you up with a deal. Also, Salesforce isn’t likely to buy your business. They might buy a lot of companies but there are even more to choose from.

    The next wave might involve formation of an Information utility

    I’d say we’re in the latter half of this wave, a time of automation, consolidation, efficiency, and effectiveness, in other words commoditization is happening. That’s what the digital disruption is about in my humble opinion. Right around the corner is formation of an information utility which is already ongoing and gaining altitude. No one calls it that but major vendors are building cloud data centers galore—Microsoft even sank one off the coast of Denmark as an experiment in cooling to save money. At any rate the big guys need to get together to set utility standards for APIs, metadata, and interoperability in much the same fashion others did about 50 years ago to breathe life into the relational database and SQL. This will necessarily add to commoditization but it will also open new areas for competition.

    Business models proliferate and get complex. Being SaaS is now table stakes.

    We’ve begun winding down the on-premise business model, though it will likely be with us on the edges for most of the next century. But for practical, enterprise computing the cloud and subscriptions have come into their own. The folks at Zuora are still evaluating the subscription side of the model and its offshoots and will likely have interesting things to tell us down the road. Clearly, subscriptions haven’t taken over the world yet but we’re all trained subscribers at this point and that fact drives CRM. I look for more ideas surfacing to articulate a new model of labor as a service. Whatever we call it the more we engage in the gig economy the more we find we need an organizing principle and I think it will borrow heavily from XaaS.

    Social media has jumped the shark

    The Facebook revelations of the last quarter from Cambridge Analytica to feeding data to hardware makers put Facebook under a cloud and cause some people to re-evaluate their allegiances. Can social survive or has it been exposed as a show, like “Seinfeld,” about nothing? My instinct is that social has to morph into a data utility sitting on top of the information utility and it has to become regulated to prevent the worst abuses else it falls into irrelevance. Translation: billions of users is not enough, they have to be the right users.

    There’s a new book by Jaron Lanier, “Ten Arguments for Deleting Your Social Media Accounts Right Now.” It’s an industry insider calling in an airstrike on his own position. We have to destroy this village in order to save it. But it softens mid-way into something more like we can’t use social until it gets fixed. Fair enough. But most of the social concepts complained about in the book are not typically what CRM vendors engage in. So there’s hope. But we still need to fix social. Pronto.

    CRM is maturing

    This means there are few, if any, niches left for upstarts with a better mousetrap in any of the traditional stovepipes. Those bases are covered. Nevertheless, new opportunities open all the time. Some are crazy and scary amalgams of AI, machine learning, selling and marketing with a little Tai Chi added for good measure. They won’t all survive but that’s not news. The big players are only getting bigger. Salesforce is well beyond the $10 billion mark and Oracle grows its cloud presence every quarter. The majors have so much money to direct at R&D and marketing that a new company can’t expect to go head to head.

    The middle office might be a thing

    I learned this at Apttus’ event. Though I think the name needs work the idea is sound. It lines up with the coming information utility. More importantly it acknowledges the reality that back office data drives some front office processes and vice versa, too. The middle office comes on strong in the IoT and semi-automated world of eCommerce which is only growing.

    Chicago is a thing

    Chicago used to be the city tech users flocked to for conferences but then San Francisco cornered the market. The tide is turning though. Chicago has a few months of spectacular weather, but year-round it has great food, friendly people, a can-do spirit, and art and architectural gems. I went to two conferences at the McCormick Center this quarter. They were well attended and the McCormick is plush and spacious. Give it to Chicago, they know how to do architecture. So I look for more conferences to migrate to the middle of the country, to places like Chicago, Dallas, and New Orleans. It’s a shorter flight and these cities have more real-life amenities than say, Las Vegas. Don’t look for Dreamforce or OpenWorld to move but each company is now using Chicago for smaller events.

    Last word

    Despite the money spent on shows, some CRM vendors seem to be pulling back on marketing, which is a mistake. The vendors I see who are doing well have a balance of shows, automated outreach, and in your face marketing for good reason. Others rely too much on top of funnel marketing and don’t get the conversions they want. People buy from people and there are too many warm leads for salespeople to chase right now. They can’t spend their time upgrading the leads because their primary job is closing deals. So more live marketing might be in order; chatbots are fine but talking to real marketing people, doing webinars etc. haven’t gone out of fashion.

     

     

     

    Published: 7 months ago


    Salesforce’s just announced Q1 FY 2019 results beating analyst estimates and causing the stock to rise 3.9 percent. The company had been advising investors that it expected to grow to $12 billion and in the fiscal year and the Q1 results of $3.01 billion keep it on track. That’s a 25 percent increase year-over-year with first quarter operating cashflow of $1.47 billion up 19 percent.

    The company adopted an alphabet soup of new regulations in the quarter including ASC 606 which deals with how subscription companies recognize revenue. From the press release:

    Unearned revenue, representing ASC 606 deferred revenue less the cumulative timing differences of recognized revenue from ASC 606 adoption, on the balance sheet as of April 30, 2018 was $6.20 billion, an increase of 25% year-over-year, and 23% in constant currency.

    That’s an important measure, before ASC 606 subscription companies had various approaches to recognizing booked revenues that had been held in reserve to pay future subscription fees. This points out the power of the subscription model. In contrast to conventional revenues that start at zero each fiscal year, subscription customers commit to purchases well into the future making it easier for a company to hit its growth targets.

    The rise of subscriptions had caused some inconsistencies in revenue booking across the industry and ASC 606 and other regulations will help regularize that process. Look for other companies like Oracle to go through a similar adjustment as their cloud strategy takes hold.

    Published: 9 months ago