The media is abuzz about a Google-Salesforce partnership. (Personally, I’m more concerned about whether Paris Hilton will spend any time in the pokey.) The real question: Who will buy salesforce.com?
At salesforce.com’s recent developer conference (May 21 in Santa Clara, California), the company announced “Salesforce SOA,” an on-demand service designed to make it easier to integrate Service Oriented Architecture applications. A nice capability that extends salesforce’s Apex programming language, but the announcement was upstaged that morning by a Wall Street Journal report that a potential alliance is brewing with Google.
In his keynote remarks, Salesforce.com founder/CEO Marc Benioff managed to keep the speculation churning, as only he could do it, by refusing to comment on the news. (And don’t forget to read that Safe Harbor statement.)
Sure, salesforce.com could provide Gmail access to its users, or use Google to search salesforce.com data. Is this worth getting excited about? I don’t think so. It would be far more interesting if salesforce.com became part of Google’s growing arsenal of office productivity tools.
Benioff pooh-poohed the idea of Google getting into business apps, when I posed this question to him more than a year ago. As he rightly pointed out, there’s a world of difference between selling ads and selling business applications to corporations.
Bits is Bits
However, most content (bits) is freely available on the Web, supported by advertising and not paid reader subscriptions. Why not software (bits with logic)?
Google already provides a nice free web analytics solution that works fine for small web sites, and even some not-so-small sites (like this one). There are many other players in this fast-growing space (see Web 2.0 Powers Up People), but they’ve moved up-market to provide more sophisticated reporting and, in some cases, multi-channel capabilities.
After denying it would compete with Microsoft, Google now offers Google Apps, which includes a web-based alternative to Microsoft Office along with Gmail. You can rent it for just $50/user/year if you want a custom domain and 10GB of space per user. Gmail is great, but Google has a long way to go to displace Microsoft for office productivity tools.
Is it too much of a stretch, though, to see Google’s apps push continue into other business applications, like, oh I don’t know, sales force automation? I’ll bet a lot of small businesses would put up with ads to get a free sales automation solution. And maybe some big ones, too.
Web 2.0 Platform Wars
While salesforce.com is a goofy name for a development platform, it doesn’t seem to matter to the 50K developers who have, so far, contributed 595 solutions to AppExchange. No doubt many hope to achieve the success of CRMfusion, a Toronto-based software firm specializing in boring-but-necessary “data quality” solutions that, among other things, handles duplicate record problems in contact databases.
Largely by leveraging AppExchange to reach salesforce.com customers, CRMfusion founder Glenn Wilson claims he’s booking over $2M per year with just six people. Impressive even if Canadian dollars.
I could argue that Oracle and RightNow offer more robust end-to-end front office functionality than salesforce.com. Or that NetSuite offers a full on-demand business suite that includes ERP. That doesn’t matter, either, because salesforce.com is now playing a different game under Web 2.0 rules.
Like Tom Siebel in the last incarnation of the CRM industry, Benioff used SFA as the entry point to build a large customer base as rapidly as possible. In the past year, however, he shifted salesforce.com’s course to a platform strategy, and now claims market leadership in “on-demand business services.”
Salesforce.com has built an impressive developer community and seems hell bent to deliver tools to make it easier to develop applications (Apex) and integrate with other internal and external web services (Salesforce SOA). The company has adopted Web 2.0 thinking far in advance of its conventional software rivals. A shining example is the IdeaExchange, where “salesforce.com customers can suggest new product concepts, promote favorite enhancements, interact with product managers and other customers, and preview what we are planning to deliver.”
Salesforce.com’s value increases with the size of its developer and customer network, even if it doesn’t yet offer, and maybe never will, a “complete” CRM solution with marketing and service automation on a par with its SFA capabilities. These limitations actually create opportunities for third-party developers.
Salesforce.com Buyers: Line Forms to the Right
Where this is heading this year, I believe, is salesforce.com becoming acquisition fodder, what I previously predicted would happen. My money is still on Oracle, because Larry Ellison won’t want to go down in history as missing the Web 2.0 opportunity.
However, Google has deep pockets and boundless ambition. The pending salesforce.com partnership could be just a first date that leads to a hasty marriage, before other suitors come calling with open checkbooks in hand. Corsage optional. Salesforce.com may not want to be acquired, but as a public company, if the price is right the deal will happen.
The wild card could be Cisco, which earlier this year snapped up WebEx, a leader in web collaboration services (web conferencing, intranets and the like), picking up 28,000 customers and over 2 million registered users. With salesforce.com added to the mix (and Cisco is a huge user), imagine the possibilities of going toe-to-toe with Microsoft.
Other buyers could include Microsoft and Yahoo!, both no doubt tired of losing ground to Google. Farther out on the speculative limb, you could make a case for Intuit to expand its solution set to SMB customers already fans of TurboTax and QuickBooks. And finally, let’s not rule out SAP, although without a dramatic change in strategy, it seems unlikely that the Germany company will make an acquisition of this size, not to mention crossing a Grand Canyon-sized cultural chasm.
Who do you think will buy salesforce.com? Please take our online poll to share your opinion. You can also add your comments below.
salesforce.com is a sales automation system that is being retro-fitted/jury-rigged/band-aided to attempt to get it to morph into something more. It’s certainly not a seamless Customer Relationship Management System. For instance, a critical aspect in Customer Relationship Mangement would be the ability for an account manager, in an SaaS setting to pull up an account and review the history of products and services sold (how much and when). So we started hunting for a way to integrate salesforce.com with our accounting system – pushing sales history from the accounting system to populate salesforce.com fields. We wanted a system that could go the other way as well – order entry from the account managers that could be pushed into our accounting system. Of course, our salesforce.com sales rep knew absolutely nothing about any 3rd party applications. So we went shopping on the APPexchange and narrowed the search to two of the most promising vendors. We spent a lot of time studying the systems, sitting through demonstrations etc – but because salesforce.com was designed as a salesforce automation system, the complexity and the number of steps involved by both the accounting people (for data going into salesforce.com) and our Account Managers ( to enter sales orders in the correct way) was so unbelievably cumbersome, we thought it would be a horrific burden for our staff/managers. They wouldn’t be spending any time managing accounts – they would be spending all their time trying to get salesforce.com to talk to our accounting system.
So, if you’re looking for a sales automation system off the shelf to track the sales process – salesforce.com is for you. If you want a Customer Relationship Management System that is robust and actually integrates into your company systems – then run fast.
I think a company (Oracle? google?) should acquire salesforce.com to capture their customers, then start from scratch and build a true Customer Relationship Management platform on an open source language. OH- and this acquirer should be sure that it actually manages relationships (instead of just selling product as fast as they can).
I haven’t personally dealt with Salesforce.com, but I’ve worked with people who have had experiences similar to those of Bill Sand’s. My thought is that there is too much information being collected, not all of which is relevant. Jim Collins in Good to Great makes the following statement regarding great companies, and their use of information:
“..The key, then, lies not in better information, but in turning information into information that cannot be ignored”
Why capture everything, when all it seems to do is create more of a headache, and usually more cost? CRM, SFA and Sales Management companies need to take a small step back and focus on easy collection of key, core client data.