This week Salesforce.com kicked off the annual Dreamforce event in San Francisco. Gleanster is in the thick of things the entire week in dozens of briefings with the 300+ sponsors at the event. This year, Salesforce is touting a record 120,000 registered attendees both at the event and online. (Although we should note that the online registrations allow SFDC some considerable fudging to demonstrate consistent YoY growth at the event.)
On Monday Salesforce announced Salesforce 1, a move that will position the “customer company” as the backbone of the digitally connected world. According to the company Salesforce 1 will become a foundational element for managing the customer engagement across the ever expanding “internet of things”- a move that will also future proof the company as a suite of solutions that power customer interaction for the enterprise. Back in October I wrote a blog post titled “The Internet of Things Becomes the Future of Things” after attending the Oracle Open World event. There’s absolutely no denying the shift in connectivity and mobility in the way our global economy connects and consumes information. Companies like Oracle and Salesforce.com should be gravitating toward solving the challenges associated with identifying, connecting, and optimizing customer relationships on the “internet of things.”
The question is, what does that really look like? And as compelling as the story might seem, is this a story that 100,000+ Salesforce customers are ready to solve through a single platform? Scratch that: can it be solved from a single platform?
What Is Salesforce 1?
Salesforce 1 is designed to enhance relationships with customers by integrating customer interactions with devices, service engagement, sales engagement, and marketing interactions using Salesforce.com as the foundational platform for capturing data and transforming the data into better customer experiences. Salesforce 1 will include a series of new APIs that connect customer data across a variety of functions to allow organizations to leverage customer data to interact more intimately with customers using personalized data. Salesforce clients can buy the entire stack or modules of the stack.
Figure 1: Salesforce 1 Platform via Salesforce.com
A few observations on the reality of the vision:
- Yes, Salesforce customers are trying to solve the multi-channel customer data challenge. According to the Q3 Digital Marketing Survey (n=734) from Gleanster Research, 86% of organizations indicated the fragmented nature of customer data impedes personalization in 2013, a challenge that is sparking a 19% planned YoY increase in customer data investments in 2014.
- The internet of things is potentially a nightmare of things. If we accept that devices that are capable of capturing personally identifiable information will continue to expand, we cannot assume that all devices will actually be personally identifiable or that consumers actually want to be identified through these devices. For example, I personally have an Android phone, an iPad, two laptops, an internet connected TV, and an internet connected camera. But my wife and friends regularly use all of them to shop, surf, and interact. Between Apple, PC, Droid, his and hers, I’m a bit of a paradox wrapped in an enigma to the average company I do business with. At present, no solution can solve for this challenge. In fact, companies struggle with this because it demands best-of-breed solutions that rarely integrate. Plus, it’s not like Salesforce.com has all of these best-of-breed solutions in the portfolio. But to the extent Salesforce 1 can become an engine for centralizing customer preferences across channels and devices, I think there’s a compelling story here; empower customers through preferences, not inferences based on data.
- Solving the fragmentation of customer data is a huge opportunity. Salesforce 1 could conceivably address a huge challenge for enterprise customers. Open APIs across all customer facing solutions could unlock some very powerful data and align it with a single customer record. That eliminates the need for separate databases and places Salesforce 1 as a central platform for capturing and acting on customer data. That’s quite compelling, but I see too much focus on mobile from Salesforce positioning. It’s an offline and online customer data challenge. Salesforce.com is unlikely to capture every facet of customer data even for customers using the entire stack. Salesforce 1 will have to integrate with third-party databases to pull data from agencies, point-of-service platforms, and other outlets into the platform for alignment with some form of a unique customer identifier to be really appealing.
- Salesforce 1 is a very compelling marketing story that justifies buying the entire Salesforce stack, but very few companies are actually using the entire Salesforce stack. Divesting of legacy sources of customer data in favor of an integrated platform play isn’t exactly a no-brainer. It is a huge, costly effort, and inevitably what we see from even the biggest brands that Salesforce.com showcases during keynote speeches (Burberry, Facebook, GE, Dunkin Brands) is that Salesforce.com is actually empowering a tiny subset of the Salesforce 1 stack for these customers. So while Salesforce 1 is quite compelling for customers in general, making the move is no walk in the park, and it’s a pretty hefty price tag when you start to layer on the cost of seats, data calls, modules, etc. I do agree that Salesforce 1 is a more compelling vehicle for justifying a more strategic relationship with Salesforce.com, but I’m skeptical that more than a dozen or so enterprise customers are really in a position to kick the tires on the future potential within the next 3-5 years.
- Most large enterprise clients want to brand internal solutions. My understanding is the first generation of Salesforce 1 can only be Salesforce branded (thought branding is coming in Spring of next year). In most cases, large enterprise clients that will see the most value out of Salesforce 1 integration/capabilities would desire custom branded apps for easier assimilation into the company culture. The absence of custom branding will likely lead many companies to continue developing custom applications outside of Salesforce 1 capabilities.
Salesforce.com has been impressively successful at building a portfolio of products that continue to support its monumental growth targets year after year. Today, Salesforce executives realize they need to build a story around the acquisitions to drive adoption of acquired solutions (ExactTarget, Buddy Media, Radian6, Heroku, Instranet, etc.). If they have a beachhead with Salesforce Automation or Force.com, there’s a bigger picture to consider, and Salesforce 1 allows them to build a vision with clients. That said, I feel like Salesforce 1 is more like a fully baked marketing ploy and a half-baked execution. Salesforce 1 is compelling, and does solve challenges for enterprise class customer companies, which is clearly the focus. But the vision is grand, and the real meat behind the vision still seems pretty sparse. New interfaces, access to data, and a new mobile app engine. Those are the whats, but where is the why? And how do you make the transition as painless as possible? It seems like Salesforce 1 is well positioned to solve the challenges of future growth in mobile devices. But there are more pressing challenges to deal with today (not that connecting via mobile isn’t already a challenge):
- Customer data alignment, cleansing, and integration
- User adoption & training
- Online and offline customer segmentation and profitability analysis
- Offer optimization and behavior based marketing triggers
- Multi-channel customer preference engines and channel specific offers
- Expanded sales and service capabilities
- Data analytics: even if Salesforce 1 is successful at connecting customer data, Salesforce.com doesn’t have a robust business intelligence tool in the portfolio
I welcome an opportunity to connect with one or more executives to clarify the above. I was told by Analyst Relations that Salesforce.com was not conducting 1:1 interviews with analysts (who also happen to be customers) and executives during the event, so maybe I can clarify the above in the coming weeks…