Revolutions come with a high ticket price as Salesforce.com has found with its Social Enterprise vision.
This week the Cloud firm reported a 36% quarterly revenue increase year on year – taking it to a credible possibility of a $3 billion annual run-rate. But a $21 million profit for the same quarter last year turned into a $3.8 million loss this year, a drop fuelled in part by high marketing costs.
While the market reacted with a bit of a grumble – a 6% drop in the share price in late trading – the reality is that this is entirely consistent with long term Salesforce.com strategy which is to prioritise growth over profit and capture mind and market share. It’s worked in the SFA and CRM space; now it’s being put into practice to evangelise the Social Enterprise, the topic du jour at the company.
Evangelist-in-chief Marc Benioff argues that spend on marketing and investment in distribution capacity is vital:
“Without an army, you're not going to win a war in enterprise software, and a lot of this is hand-to-hand battle. You just aren't going to win unless you've got the feet on the street, and you're ready to jump in the foxhole and really battle it out the competition because we have to communicate something. ”
Part of this communication is also about definition, he adds:
“We are working with literally thousands of our customers around the world that are defining what social enterprise means to them. When we look at social enterprise, we see what is the customer social profile, what does it look like from a cooperation platform, how are they building and deploying the Sales Cloud, the Service Cloud, custom applications, social applications which is kind of what we see with Heroku, social monitoring like with Radian6. And then we start to build product social network. ”
That definition is evolving:
“Social Enterprise is not something that anybody buys. It's not a product. It's not on our price list. The reality is most customers come in with a specific business need that we're looking to fulfil and then give them a vision in their mind of where they can go beyond that. When I work with customers and I help them to define what is their social enterprise for the future, I think a lot about where is their employee social network today? Where is their customer social network today? Where is there product social network? And how can we elevate their consciousness about the ability to deploy more of that? ”
He cites as an example of how the Social Enterprise concept is evolving, the recent addition of customer groups to Chatter:
“You can create a group not only of employees but you can now create a group and you can bring in employee customers. So every Chatter user can go out and create a group and then bring outside customers into that group to collaborate and create a portal and share information within that group. We've just never seen technology like that. Salesforce's technology has primarily been myopic. It's been within the enterprise. That's an exciting next step in enterprise software. I think it's an accelerator for customers on the social enterprise. ”
Customers have featured in the Social Enterprise pitch of course in the customer service focused elements. Benioff states:
“Nowhere is the Social Enterprise message as critical as it is in customer service. A great example is Electronic Arts, who wanted to create a next-generation customer service centre before the release of their highly-anticipated video game, Battlefield 3. Electronic Arts was able to deploy an employee social network with 1,200 agents in just 6 weeks, allowing them to manage dozens of portals serving up over 20 million site page views and handling 150,000 cases in the first week alone, a really great win for Salesforce.com against Oracle. ”
From the sales perspective, an example cited was Avaya, which plans to deploy more than 17,000 subscribers of Chatter and the Sales Cloud:
“Avaya will be rolling out an employee social network to improve collaboration and boost productivity. They also plan to replace their legacy content management systems with a next-generation social portal built on our application development and deployment platform, Force.com. And GE signed up for 20,000 subscribers of Chatter. In just 3 weeks, GE created a private customer social network called GE Edge, where their customers can collaborate with peers and get access to experts in research. ”
But a new area of Social Enterprise interest is coming from the marketing community – another nudge in the direction of a Marketing Cloud perhaps? Benioff admits:
“ What we see really is the main interest of our customers today is in social marketing. Traditionally, customers have really looked at what is campaign management or what is my ad spend there in the quarter? But I think it's really moved to what are my customers saying about me? How do I deeply integrate my website and my Facebook presence and my Twitter presence? And how is that related back to my sales and service capability? We really look at the evolution of we've been calling the Marketing Cloud. I call it the Social Marketing Cloud internally because when I look at the social marketing cloud, what I see is really the opportunity for customers to use products like Radian6 for social monitoring, Heroku for building interactive applications and Facebook. ”
Salesforce.com’s latest investment in fleshing out its Social Enterprise vision is the acquisition announced this week of Model Metrics which had previously been a partner of the firm. Benioff explains:
“As the social enterprise has gotten more and more momentum this year, what we've seen is a gap in our ability to rapidly deploy to our customers certain key aspects regarding the strategic services around the social enterprise. One of the partners that we saw do an outstanding job in a very strategic area, which is mobile applications and in social networks is Model Metrics. We specifically saw that when we signed Toyota. What we saw was the ability to rapidly start to build and deploy an application for them. Many of our partners were not able to deliver on the mobility piece we saw Model be able to jump in. We made a strategic decision to do something that we have not had the need to do before, which is to pick up a relatively small professional services organization that's an expert in social, mobile and Cloud. I think it makes us a much stronger organisation in being able to close and accelerate these social enterprise transactions. ”
Extra strength is going to come in handy as that ‘hand to hand’ battle gets rougher. Given Benioff’s now notorious spat with Oracle CEO Larry Ellison at Oracle OpenWorld and Oracle’s directly competitive threat through its acquisition of RightNow to flesh out its own Public Cloud, fighting is about to get a lot fiercer. But Benioff is inevitably phlegmatic:
“One of the strengths of Salesforce is that we haven't acquired hodgepodge, all these other little companies in every little thing like Oracle has. We've been delivering really from the ground up. We have what it takes to win those transactions, to go head-to-head against Oracle and to beat them consistently. That's why they continue to draw straws, buy different companies, but nothing is going to be able to go up against a deeply integrated platform like we have. ”
tags for Benioff's 'hand-to-hand' battle for the Social Enterprise
