Twelve quarters
A couple of weeks ago at Salesforce.com’s ServiceCloud announcement in New York, something Marc Benioff said stuck in my mind. In the afternoon session for financial analysts, he spoke about management style and how his company operates as if each month was a quarter. In other words the same discipline of selling and forecasting that most companies put into 13 weeks is compressed into just four.
As a practice and in a business where your customers can leave you each month it makes a good deal of sense. Attrition is so much easier in a SaaS business than in a conventional software model so you have to be vigilant. It’s not enough to work for new business you have to protect what you have and that translates into some remarkable customer attention.
Good for them, I thought, it seems to be working. More interestingly, though, the idea of managing like each month is a quarter, takes me back to earlier recessions. They were different times, without the same emphasis on SaaS but astute managers still took up the discipline of managing the month like a quarter.
You do something like this when you simply don’t have the visibility to see 90 days into the future, like right now. It’s good discipline and, truth be told, it’s the way Salesforce has been managed for a long time, even in good times. The lesson for the rest of us is that in these extraordinary times greater attention to the details of pipeline management might be good practice.
More to the point, in a business where your customers can leave at a moment’s notice this kind of attention to detail is becoming essential. The on-demand nature of so many markets today makes the idea of monthly management almost essential. We might not have a clear idea of the sales pipeline but it might look positively predictable compared to the attrition pipeline that exists but that most of us never understand until it’s too late.
Until the recession begins to look like it has bottomed out, monthly quarters might not be a bad thing. For certain it will enable companies to budget better and be more responsive to the turns in the economy.
Analysis: Salesforce Announces Service Cloud
Salesforce.com hosted an event in New York on Monday designed to create some separation between itself and the rest of the on-demand world. Lately Salesforce’s competitors have gone on the attack in an attempt to me-too their way into SaaS prominence by effectively commoditizing some of the more successful aspects of on-demand computing. CEO Marc Benioff would not sit still and watch and has instead expanded the definition in the last year.
Cloud computing is now the hot idea and it takes into account more than simply delivering an application to include interoperating with many other Internet based applications.
The commoditization aspect is a neat trick and not unexpected. Some of the gains of on-demand computing such as browser based applications and stateless computing make it easy to build applications that run on the Internet as well as behind the firewall. Retrofitting conventional client server applications in this way gives vendors the ability to deliver some of the advantages, especially lower costs, to customers. It also enables them to offer a choice of deployment options that range from conventional behind the firewall applications to traditional facilities management options and standard on-demand.
In that light there is a lot to like especially if your organization does not want to jump into cloud computing just yet. Maybe you don’t have an ATM card yet either, but I digress.
The New York CloudForce event was designed to say that there is a lot more to this than using the Internet as the networking medium for enterprise business applications. The program started by pointing out some of the accepted benefits of multi-tenant computing such as such as all of the technology acquisition and management services built into cloud computing. We know what they are and they include up time, security, skilled labor and a lot more.
To those table stakes, you can add what I have called WebNecessary applications. By that I mean, applications or combinations of applications that support innovative business processes that either can’t be done at all, or only with great effort, through conventional computing.
Last fall, Salesforce made a big deal about its integration with Facebook to improve the sales process. This time, the company turned its attention to the service process and announced integration with twitter, the fastest growing social application on the Web.
As I look at it the integration of these products makes great sense in a service environment. The basic idea is that when people need something they are increasingly motivated to ask their circle of friends and acquaintances for advice. Twitter is a good bit of functionality for broadcasting your need and as the network continues expanding the likelihood that someone will see your plea and send help only grows. But to me that’s not the important part.
Salesforce has implemented technology that captures the help stream when it gets generated and presents it back to the vendor or manufacturer as a mini-service bulletin or candidate for inclusion in a knowledgebase. If the solution works the vendor can make it part of the standard support offering.
The idea of customers helping each other with advice like this is not new. Other service and knowledgebase vendors offer similar capabilities but they tend to be tedious exercises in a more formal writing and approval process.
The twitter process leaves some things to be desired because it is limited to 140 characters so people who want to help with more involved support issues will need to resort to forwarding links to longer advice. But that shouldn’t blur the importance of domesticating an easy to use and very popular social application for the needs of business. It’s a good idea, a 1.0 idea, and we’ll see where it takes us.
Back to New York, for sure.
I got a lot out of the afternoon session I attended — a presentation to the financial analysts (which I am not) about the company and its business prospects. Like the morning’s review of cloud computing, there was a bit of review but I doubt anyone minded. Revenues are over a billion bucks, there’s almost that much in the bank, subscribers and customer numbers continue what looks like an inexorable northward march. It was just the kind of thing to warm the heart of a financial analyst who has covered the Wall Street equivalent of Napoleon’s retreat from Moscow this winter.
Listening to the discussions you get a sense of the scale of this company’s ambition. CRM is a big market but enterprise business software is an order of magnitude or two greater. Moreover, many of the enterprise business applications that will make up that market have not been designed yet or are operating in clumsy spreadsheets.
Perhaps a natural concern on the minds of many analysts (and competitors) is how one company using a multi-tenant architecture can expect to serve this growing market. Doesn’t scale become a limiting factor at some point?
Salesforce anticipated the question and for the first time opened up its kimono enough to provide some insight into its architecture. Surprisingly, fewer than 50 servers spread across three datacenters runs the whole shebang right now. And a modest number of (it has to be said) very large database tables — about 20 — holds all the data. Smart algorithms take care of ensuring your data is delivered in an average of 300 milliseconds with three 9’s reliability.
Salesforce is still a young company despite its billions and its place in the market and I got a sense of that as I listened to a discussion about its finances. Benioff said that it can take upwards of eighteen months for an investment in sales talent to provide a return. And like any company today Salesforce tries to be appropriate in its spending— increasing it when the market is accommodating and reducing it in times like this.
All in all the day gave me the impression that CRM is and will continue to be important to Salesforce.com. Its recent efforts to include social media in the business processes it serves to customers is proof of that. The company continues to grow and has its eye on larger markets that dovetail into front office computing. If companies like IBM, Oracle, SAP and Microsoft each represent milestone moments in the history of enterprise computing, and they do, then certainly Salesforce.com is rising to that iconic status. Its place will be secured if it can continue to convince a decreasingly skeptical audience of the value of cloud computing.
Salesforce and the Service Cloud
Last week Salesforce.com introduced its new support concept dubbed “The Service Cloud”. I have to say it makes a lot of sense both as a product direction and as a business decision.
The announcement is in line with many of the business initiatives that the company has made over the last decade in that it is a leap-frog event. The service and support niche is pretty well populated with traditional companies that deliver major league call centers as well as smaller companies that provide most call center functionality over the Web and some that do both. Whatever the case, but especially at the enterprise level, introducing another vanilla call center solution would not have generated the excitement or revenue that Salesforce needs.
You could say with a lot of justification that the call center market is mature. However, this is not to say that it is in decline or that there is no real money to be made there any longer. Maturity in this circumstance simply means that adding another vendor would be like bringing coals to Newcastle. The major vendors have the territory pretty well carved up and what they don’t want forms the basis of a very nice market in the under 200-seat on-demand space. So what was Salesforce to do?
I believe the word is innovate and how better to innovate than by bringing together several of the technologies that the company is so enamored with at the moment. I am, of course, speaking about social networking.
The conventional call center market is based on a hierarchical premise: people need and want to talk to the vendor and to a degree this is true. We want to speak with a live person when we have an in-depth problem that cannot be solved through manipulating the options in a web site or when there is confidential information to be exchanged. But there are a lot of times when a hierarchical solution is inappropriate and a networked solution can deliver the goods.
Service Cloud that Salesforce introduced last week is innovative precisely because it leverages a network paradigm for service. A network has more elements or people with the right expertise to help someone solve a problem and more elements can handle more issues and hence reduce waiting or accelerate learning. Take your pick.
Of course, you have to be careful that the network paradigm that you are leveraging offers real solutions and not simply crowd wisdom, which can be wrong because it is often nothing more than an accumulation of opinion, which rolls up both good information and things that are just wrong. The best comic example of this in my view is Monty Python’s Medieval skit that determines whether or not a woman is a witch.
The new paradigm leverages written contributions from people who are expert in the solution to a specific problem. In principal nothing is new here. Various support vendors like RightNow, Parature and Lithium can proudly point to their knowledge bases and search technologies. What makes Salesforce’s approach different is that it also incorporated its new Sites technology and its integration with social networking products such as Facebook.
The benefit is that rather than having a solution stay in a single knowledge base, it is syndicated through a social web and, at least in the demo, the knowledge can find its way to disparate places including vendor and partner sites as well as topic sites and the ubiquitous search engine sphere where it might become immortalized.
All this is good but my one quibble might be in the naming. By using service rather than support I think something is implied that doesn’t exist but could come along at some point. My idea of service is customer service and it encompasses more than answers to how-to questions; it provides the customer with things that only the vendor can supply. Customer service is dealing with account balances or warranty issues and the like. The network paradigm is ideal for people helping people to get the most out of their investment in a product or service and is properly considered support.
In my mind the Service Cloud is an automated support group; it is a loose form of community in that it focuses on a kind of feedback. I suspect that smart vendors will also be able to use the Service Cloud for discovery too. Just hook up an analytics engine and note the type, quantity and quality of issues that customers encounter and you will have some very valuable and unique input to your product development efforts.
So as a business decision, Salesforce has proven its service and support chops in a unique way and this will help it elbow its way further into that market. As a product it is a great idea both because it leverages social media and the company’s platform technology. As a strategy it further opens up a new business process channel that is self-reliant (and therefore resilient) and low cost. All things we can especially use right now.
