August, 2011

  • August 31, 2011
  • Salesforce has been hammering the social enterprise message all day and will continue to do so for a long time.  It’s a good message and it dovetails with the subscription economy as the one-two punch for new fangled company organization.  That means everyone, not just new companies, but all companies will be attracted to social enterprise concepts like gravity pulls down a rock.

    But one thing I haven’t seen in this discussion is a direct discussion of B2B social enterprises.  Salesforce has done a lot around B2C and I suspect that B2B needs to follow on to B2C.  If you think about it, there’s a certain logic to it.  Companies buy into social ideas as ways to improve employee productivity.  Next they’ll extend the productivity boost to partners and customers.

    Salesforce introduced the social as something to be used inside to enterprise over the last two years.  Today they targeted the end customer.  Nonetheless there’s more work to do to link up vendors and customers in B2B situations and I think that’s an issue for the next couple of years.  Some of the B2B solution will involve VoIP and chat.  Salesforce started talking about chat today and that’s just an example of some of the things needed for B2B collaboration or social.

    The thing about Dreamforce is that it ends up asking as many questions as it answers and truth be told it probably asks more.  In those questions we see the makings of the next Dreamforce.  Development in conjunction with experience will drive that next level of development.  That’s what I know for now.

    Published: 12 years ago is riding the crest of wave after wave of good news as it starts Dreamforce, its annual convocation for customers, prospects, the press and analyst communities.  Forty thousand people are expected in San Francisco for the event at some point in the week.

    In a sign of how big this event has become, last night I saw work crews closing down Howard Street by the Moscone Center.  They were erecting what looked like a structure on the street to turn it into some kind of pedestrian area.  Only Oracle, one of Salesforce’s biggest competitors (and curiously Salesforce is among Oracle’s largest database customers) ever does this when they attract similarly sized crowds to their annual meeting, Oracle OpenWorld.  If you need symbolism for how large Dreamforce has become, you can’t do better than that.

    But back to Salesforce.

    The company is riding high after reporting strong revenue numbers and that it is on track to generate well over two billion dollars in business in its current fiscal year.  The company has raised its guidance to financial analysts.

    Salesforce CEO, Marc Benioff, is on the cover of Forbes magazine, which announces a cover story on the “Fifty Best Companies Of Tomorrow”.  Salesforce has the number one spot and the ranking was done by none other than Clayton Christensen, the Harvard Business School professor, who coined the term “innovator’s dilemma” in a series of books by that title.

    Forbes is the same magazine that once ran a cover story on Tom Siebel with the headline “The Man Who Can See Around Corners”.  It was about how Siebel and his customers, using analytics software, were able to spot a slowdown in the economy and adjust their businesses well ahead of their competition.

    But Benioff took a page from Christensen’s book and completely disrupted Siebel and he is well on the way to disrupting the whole software industry and beyond.  Salesforce is in the process of doing nothing less than introducing a new paradigm for the way that companies do business, deal with customers and fit into the world.

    Remarkably Salesforce’s competition is comparatively stuck in the mud trying to figure out how to move beyond traditional enterprise computing with its high costs and long delivery cycles.  Salesforce has forced them to take a fresh look at computing and customers and they have largely responded with bandages for their legacy products.  They’ve adopted what is easiest about software as a service (SaaS) and borrowed the term “cloud computing” to lend it the cache of relevance.  But while that might be enough to continue making money on legacy software, it’s a dead end and other CEOs — notably Tien Tzuo of Zuora, a billing and payments solution for subscription economy companies — are making bold predictions.  For example, earlier this week Tzuo predicted the death of conventional ERP software.  Tzuo had a single digit employee number at Salesforce before he started Zuora, by the way.

    So if you are Salesforce and Benioff, what better day is there for Cornell University to come out with a new study on creativity — “The bias against creativity: Why people desire but reject creative ideas.”

    According to Jack Goncalo, assistant professor of organizational behavior at the Cornell University ILR School and the co-author of the research, which will be published in an upcoming issue of the journal Psychological Science people love creative ideas but they reject them because we all have a bias for certainty and creative ideas raise uncertainty.

    That is in microcosm what the software industry has been going through for the last decade.  Many of the people who sell and buy legacy software might be afraid of change for the disruption it may cause.  But if you read Christensen you understand that disruption is the key to innovation and profits.  It’s an idea Benioff and his tribe have no trouble dealing with and they have no trouble dealing with the rewards either.

    Over the last decade you could have discovered what the Cornell researchers discovered just by watching Salesforce.  Today you can read the Cornell study or just buy a copy of Forbes.


    Published: 12 years ago

    Is CRM far behind?

    There was brisk business in associated user group meetings in San Francisco before Dreamforce.  For some reason I don’t understand Dreamforce starts in the middle of the week this year which is fortunate for two reasons.  Huricane Irene clobbered travel operations up and down the east coast over the weekend and given the number of users coming from the east, it was fortunate.  Many people were able to reachedule flights though some inevitably missed being at Dreamforce this year.

    Salesforce is predicting forty thousand people will be in attendance and many Salesforce partners have taken advantage of the fact that their mutual customers are in town.  I’ve been to user meetings with , Cloud9 and Zuora (more in a moment) and Marketo and WorkDay are also hosting events.  Alas there is only so much time and this week it seems like there is much greater demand than can be accommodated.

    Cloud9 introduced new functionality for its sales forecasting system and Zuora told its customers about its product roadmap for the next year.  Zuora seems like CEO Tien Tzuo is trying to out pace alma mater Salesforce in his growth rate.  He announced enhancements to ZBilling and ZPayments as well as ZForce their integration platform.  Most importantly, Tzuo told his audience two things. First he’s out to provide a complete end to end functionality for revenue and finance so that customers can manage all their revenue and profits from his product.

    Second, and definitely most controversial, Tzuo told his audience that ERP was, if not dead, then dying.  His logic makes a lot of sense.  Zuora is not about simply building another billing system.  It’s a company focused on supporting the Subscription Economy.  By Zuora’s definition, the economy is rapidly moving from a twentieth century manufacturing paradigm to one where we all sell services in one form or another.

    Now, ERP is the billing and accounting model for the manufacturing paradigm.  That paradigm requires a billing and revenue recognition automation suite that supports one time sales of products.  That model gets creamed in the subscription world where vendors have to be prepared to change configurations and one time deliverables with every invoice.  Most subscription vendors long ago figured out that old ERP would do the job for them and either built their own systems or bought into Zuora or one of its competitors.  So the prediction that ERP is dead refers to the idea that as we transition from manufacturing to subscriptions ERP will have a decreasing workload.

    I am generally in agreement.

    ERP might not be the only thing to go away due to the subscription economy.  Much of the ERP argument can be applied with variation to CRM.  It’s not subscriptions per se that are causing CRM to change but what supports subscriptions, the Internet.  More specifically the social revolution that started on the net.

    In San Francisco this week Salesforce is pushing hard on its newest idea, the social enterprise which dovetails nicely with the social customer.  Social has changed CRM beyond recognition over what it was like just ten years ago.  Subscription CRM also gave us the first valuable mashups, SaaS, open APIs and a lot more.  All of this innovation is having a cumulative effect on CRM.

    CRM first got started as a way for vendors to bring together front office applications for sales and service because they were big and hard to integrate.  That’s all done and the availability of good, fast and cheap ways to bring applications together has given us a plethora of CRM specializations that customers are able to pull together themselves — without IT help.

    So, as I think I see it, CRM will not go away but it has already morphed so much that it really is becoming something else.  Social? Yes.  The idea that organizations and customers are adapting and adopting says a lot and we probably need a new moniker, not for the sake of having something new but to better describe what it does.  I am not sure that SocialCRM does it.  Social as a descriptor was important, but I am not sure it is any more.

    If you look at what Salesforce is talking about it’s collaboration — not just inside the organization but also to better support the dialog between the vendor and the customer.  Perhaps the last silos to be broken down are the two labeled Customer and Vendor.  Once that’s done I think we need to look for a new moniker.  Just sayn.

    Published: 12 years ago

    There were numerous user group meetings as Salesforce Partners took advantage of their customers attendance at Dreamforce to host these meetings. I saw events scheduled by Zuora (here) Cloud9, Work Day and Marketo.

    Turnouts were good despite the hurricane which delayed some east coast attendees.  None the less, the Zuora event was vastly oversubscribed — more than five hundred people attended though as of the Friday before, about three hundred had registered — a lot more than the hoped for 250.

    In these videos, I lead a panel discussion with
    >>Darren Cunningham, VP Marketing, Informatica Cloud
    >>Heidi Hollenbeck, VP Billing, Open Range
    >>Anne Driscoll, VP Marketing and Business operations, Ning
    Users from Dell, AAA, discuss their use of Zuora.

    Published: 12 years ago

    I am going to curate this story during my week in San Francisco to cover Dreamforce 2011 as well as the first Zuora User Group Meeting and the Cloud 9 User Meeting.

    Sunday August 28

    Weather is a factor for Dreamforce 2011.  Lots of us are coming from the east coast and there is a hurricane heading up the coast.  I WAS flying out on Sunday morning but changed my flight to Saturday at 6 am to try to miss the big winds.

    Dreamforce is the biggie but there’s other stuff happening in part because other Salesforce partners are piggybacking on Dreamforce to hold their own customer meetings.  It’s a great thing for them and for customers — two birds with one stone and all that.
    Previewing Dreamforce

    People keep calling me to ask what Salesforce is going to announce and Dreamforce. My standard answer is, how would I know? I get briefings like a lot of analysts but in a situation like this you usually have to promise to hold the news until the company makes its announcements.
    Monday is Zuora’s User Group meeting.  I expect they’ll talk about the subscription economy and their part in it.  I’ll be moderating a panel and trying to grab some video.  I’ll also write up my thoughts.
    The Subscription Imperative Revisited

    As often happens in evolutionary systems, availability precedes demand. That’s a complicated way to say that we build products then figure out what they’re good for. It’s not that innovators develop things willy-nilly, but no matter how well thought out an innovation is, the marketplace has the last word on its utility.
    Tuesday is Cloud 9 User Day.  They’re holding a daylong user meeting at the W Hotel.  I am looking forward to attending and to hearing their ideas on revenue performance management (RPM) and sales forecasting.  I’ll have more after the event.
    So this is Sunday.  Got here Saturday just ahead of Irene hitting the Boston area.  I’ve been around the city especially Moscone and this is a short video of what I’ve seen.
    Monday August 29Last year at Dreamforce Microsoft made a big deal of introducing new pricing for their Dynamics CRM that made the dollars and cents competition with Salesforce look better.  I think it worked out to $39/user/month.  They are at it again.In a press release that came out this morning, the company announced an offer aimed at converting not just Salesforce but Oracle and SAP customers to Dynamics CRM.  The release said, “Microsoft is extending $150 (U.S.) cash per user seat for up to 500 user seats for each eligible customer.” I am not sure what extending means — Is it a discount? Cash back?  Why not just say so? Important link for some details

    There”s nothing wrong with a price war or offering a discount. I just find it strange that Microsoft — which has a good product in Dynamics CRM — leads with discounts.  How do you make money that way?
    I would love to see — and I don”t think this has ever happened — vendors try to compete on functionality, fitness for a purpose or something other than price for once.  Leading with discounts needlessly cheapens your product and is akin to firing your last
    bullet into the sky rather than taking aim.

    Interestingly, I have not seen any posters or billboards with non-Salesforce messaging.  Last year, Microsoft and Oracle both
    had signs on the walls of buildings.  So far it looks like Salesforce has bought up all the real estate.

    Crude, but effective.

    Published: 12 years ago