I’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.
What a difference a decade makes. Ten years ago, the booths on the Dreamforce show floor were little more than outposts for widget-makers but fast-forward to Dreamforce 2015 and one is struck by the number, variety, and size of the partner community. But that’s only part of the story, often out of sight is the sizeable display of talent that has consolidated around Salesforce from other industry sources.
A little more than ten years ago Salesforce was a precocious upstart vendor of SaaS computing and Siebel was the top dog—the first billion-dollar CRM company—and it held a large proportion of the available CRM talent. But at this year’s Dreamforce there were numerous Siebel alumni all drinking the Salesforce1 Kool-Aid.
Former Siebel EVP, David Schmaier, after a sabbatical from the industry, started Vlocity, a company dedicated to making vertical market apps for healthcare, financial services, and insurance. Vlocity takes a page from Veeva, a highly successful company in the pharmaceutical space started by Siebel alumnus Matt Wallach and Peter Gassner (Salesforce, PeopleSoft).
Anthony Lye, (Siebel, Oracle and others) now CEO of HotSchedules a cloud service application for the restaurant industry, was prowling the floor. Kevin Nix and Narina Sippy ex-Siebel stars are spinning up Stellar Loyalty. Steve Mankoff is now a general partner with TDF Ventures and was keeping tabs on some of his investments. And Bruce Cleveland, former GM of Siebel and now general partner with InterWest Partners was not seen but his presence was felt in companies as diverse as Aria and Vlocity.
The presence of so many old CRM hands concentrated as they are around Salesforce will likely help further accelerate the company’s growth—certainly the potential is there. The partner keynote delivered by EVP Tyler Prince, revealed a $135 billion revenue opportunity calculated by Salesforce over the next 5 years. Even if you discount that by a large factor you will still be left with a lot of billions. That’s one reason so many industry veterans are attracted to Dreamforce.
The companies in attendance have dramatically grown in stature over the last decade and the show floor included many public companies or future IPO outfits including in no order, Xactly, FinancialForce, Zuora, Vlocity, Apttus, Full Circle Insights and about 390 others. Many of this group rented storefronts around the Moscone Center to provide meeting space and hospitality to their customers and prospects. Most also sponsored big parties and scheduled user events coinciding with Dreamforce to further induce customers to attend. Apttus raffled off a Tesla, FinancialForce sponsored a scotch tasting (full disclosure: I tasted the scotch but did not win the Tesla).
At the same time, Salesforce was trying to get a few messages out so there was plenty of discussion of the new Lightning UI for desktops and laptops. Significantly, the UI was announced last year but only for mobile devices—a demonstration of the importance of developing for the small screen first these days. The company also announced SalesforceIQ a rebranded absorption of RelateIQ for SMBs and the enterprise. The IQ product is designed to capture inferential data and turn it into useful things like new meeting appointments and follow up actions without requiring the rep to manually enter the data.
To go with Lightning, Salesforce introduced an IoT cloud powered by Thunder, the company’s initiative to corral the billions of devices that will need cloud connections by 2020. There were also specific keynotes for every cloud in the company’s kit and those announcements were way too numerous for this piece. Fortunately they are all preserved on YouTube.
But the biggest bang comes whenever Salesforce assembles a gang of smart people to talk about the future. They don’t do it every year and perhaps that’s wise since major change of the type they like to discuss follows more of a punctuated course, like an EKG.
This time they had a lively discussion about what happens when Moore’s Law and Metcalf’s Law collide with business in a big way. That intersection is best explored at length in The Second Machine Age and Race Against the Machine both by Brynjolfsson and McAfee of MIT’s Sloan School and their ideas were referenced more than once. You may have read those names here a few times prior to this. The questions they ask, which we are still searching for answers to, are of the type, what happens when machine intelligence becomes good enough to begin replacing humans at knowledge work.
We’ve all seen automation replace rote manual activities in business thus boosting productivity. The standard explanation is that the human resources are liberated to pursue higher-level value-add. But the rise of the service economy with its lower wages and hard to find jobs suggests that the future might not be as rosy. What happens when “there’s an app for that” means a pink slip?
Happy outcomes don’t automatically happen but the track record since the Industrial Revolution suggests that not only do new jobs spring up but also new kinds of jobs; an easy example is the software industry analyst. No one I know went to school to become an analyst—I certainly didn’t. There is no room for complacency though. Machines are now capable of writing reports in reasonably good English (though doubtless without the same panache as yours truly). It’s different this time; replacing manual labor is one thing but replacing thinking is much different. It will be a very different ballgame as Jeremy Rifkin writes in The Zero Marginal Cost Society when everyone has a computer and a 3D printer. That’s something the Salesforce brains trust didn’t get to this time.
Deep futures aside, it’s inescapable that the next shift in the front office and the enterprise will be adopting many of the platform technologies displayed on the show floor in order to support more automated processes which are rapidly replacing the transactions we’ve grown to accept in many vendor-customer interactions. Process isn’t exactly a new watchword yet but vendors like Salesforce and others are delivering increasingly capable suites that will make a shift to process rapid once it officially starts. (It has started, you might now see it but you also don’t want to be the last adopter.)
Also, kudos to founders Parker Harris and Marc Benioff for putting themselves on the spot and taking on some tough issues like sponsoring a Women’s Leadership Summit. They sat down for some interesting dialog and hard questions from Kara Swisher, Co-Executive Editor, Re/code about how to provide better opportunities for women in the tech industry. It was not an easy discussion because if you watch the video, you can see everyone trying to puzzle it all out. But Benioff and Harris didn’t shrink from it and expressed a commitment to put the issue at the top of their agenda (heck the summit was their idea). Though more needs to be done, you can’t put Salesforce, even today, in the same category of many older tech firms and the presence of women in the conference was notable. Still we need more.
So to net this out, Dreamforce had its requisite cornucopia of products, announcements, and invention. But it also held out some provocative insights into the future of work and our society, two things that will drive demand for its products and services long after this year’s new wiz bangs are history. To me that’s why you go to Dreamforce.
Beagle Research Group today announced the winners of the company’s annual WizKids award for innovation in front office technology. The 2014 winners include many conventional software vendors as well as companies that developed innovative cloud-based business applications and only later spun off their solutions for the general market. This year’s WizKids include:
BasicGov, provider of cloud based solutions for local and regional governments; Evariant, woth a solution that knits together healthcare providers, institutions, and patients to encourage wellness; GreatVines, offering sales solutions for the multi-tier beverage industry; Kenandy, a cloud-based ERP company; Orchestrate, provider of a process management system for handling complex financial business processes; Smarsh, provider of recordkeeping, compliance, and e-discovery solutions for corporate email archives; TD Ameritrade Institutional, which produces a management system for independent registered investment advisors (RIA’s); and Veeva, a provider of cloud-based solutions for life-sciences.
“All of the companies honored build important business applications based on Salesforce1, the application development platform from Salesforce.com and sell them through the AppExchange,” said managing principal Denis Pombriant. “But the significance of these awards is really that all of these solutions were developed at least in part through, and are deployed on a single multi-tenant platform from a single vendor, Salesforce.com,” he said. “In a way, Salesforce is the ultimate WizKid, because they made all of this possible,” he concluded.
The Award winning applications and their developers share the distinction that they have developed ground-breaking information management solutions for a disparate set of business processes. An eBook describing the award-winning applications is available HERE.
About Beagle Research Group
Beagle Research Group, LLC is an analyst, consulting and market research firm focused on emerging front office software companies. Beagle Research investigates market trends and provides analysis and insight to vendors and buyers of front office computing solutions. Our content is presented in articles, blogs posts and free downloadable reports at multiple locations across the Internet. WizKids is a trademark of Beagle Research Group, LLC.