Just before Christmas, Salesforce.com made a move that was either very surprising or totally predictable, depending on your interpretation of events.
The move in question was the decision to acquire Toronto-based HCM firm Rypple. This was a surprise to the extent that Salesforce.com CEO Marc Benioff had previously been resolute in his intent to ‘stick to the knitting’ of Salesforce.com’s core markets of customer management and sales force automation and not venture into becoming a back end ERP firm, preferring to partner instead with the likes of Workday.
It was totally predictable though, suggest other voices, given that only days earlier arch-enemy SAP had taken the market by surprise by snapping up SuccessFactors – another firm with which Salesforce.com has enjoyed a somewhat turbulent relationship. A hangover of that tension can perhaps be seen in the somewhat cheeky decision to rename Rypple as SuccessForce.
Whatever worldview you subscribe to, the reality is that Salesforce.com, the Cloud CRM champion, now has skin in the Cloud HCM market – which is looking increasingly competitive with SAP, Oracle and Workday also making a serious push to offer ‘next generation’ alternatives to ageing PeopleSoft installations. Nonetheless it’s an interesting adjustment to corporate strategy, as Thomas Otter of research firm Gartner notes:
“Salesforce.com has had a two-prong strategy: to be a leader in customer relationship management (CRM) applications; and to develop an ecosystem, leveraging its platform as a service (PaaS) solution Force.com to build non-CRM applications and value-added CRM applications for its Sales Cloud and Service Cloud. Rypple provides employee performance management applications that leverage game mechanics (for example, awarding badges) to engage workers to provide feedback and recognition to others and to collaborate on creating goals. It can also integrate those goals and feedback into a formal performance appraisal. Salesforce.com does not plan to redevelop Rypple on Force.com. Thus, this acquisition marks Salesforce.com's official move beyond CRM in the application market, not a bid to extend the use of Force.com.”
In many respects it’s an extension of Salesforce.com’s Social Enterprise vision – Rypple’s social capabilities are as appealing to Salesforce.com in this acquisition as its HCM ones. Indeed the HCM aspect may not the priority. Yvette Cameron of analyst firm Next Gen Insights suggests:
“This acquisition does not address the core elements of HCM such as basic employee information management, payroll, benefits and rewards; these are not areas of immediate priority for Salesforce. While highly commoditized and readily outsourced, these are areas that competitors such as Workday and SAP address today and hence provide potential advantage to such players.”
But Cameron does see Salesforce.com’s interest as validation that social, Cloud-based HCM is becoming mainstream:
“The adoption of social processes within the enterprise has been steadily growing over recent years, yet the adoption by HR departments has lagged. In recent months, Rypple has seen more and more HR-driven interest in their solutions, indicating that HR buyers are ready for these new people-centric approaches to traditional HCM processes. Now, as part of the larger Salesforce suite, these social HCM processes are positioned for more rapid acceptance in the enterprise…This move by Salesforce is a call to action for all strategic HCM vendors that people-centric, not HR-centric, processes are the future of work.”
That’s where the social capabilities of Rypple come to the fore. Taking the social element and applying it to the HCM market is entirely in keeping with Salesforce.com’s vision. Otter observes:
“[Salesforce.com] is betting that the societal shift enabled by the Internet and social media will transform organisations from a command-and-control style to a more networked style. Today's HCM solutions were designed with command-and-control in mind (with organization hierarchies, job/position hierarchies, for example) . Not only do we expect Salesforce.com to expand into other aspects of talent management like recruiting, career development and learning where social capabilities can be transformative; we also expect that over the longer term they will develop a new kind of HCM system of record that has at its heart the social graph, rather than organization or job/position hierarchies.”
But how long it will take for the ‘gamification’ aspects of Rypple to take hold in the enterprise market remains the question. It might not be that long, argues Richard Absalom of research house Ovum who predicts that gamification - whereby businesses increase employee engagement and productivity by using “gaming” techniques and tools such as badges, leaderboards, rewards, and virtual currencies – will impact on employee-facing processes this year even if it is still seen as a gimmick by many. He notes:
“Gamification techniques have taken off in the consumer-focused marketing sphere, as product designers and marketers aim to improve brand engagement and incentivise consumer behaviour without necessarily resorting to financial incentives. Primarily targeted at the social networking and gaming generation, techniques normally associated with gaming such as point acquisition, leveling up, goals, reward badges, and competitions with leaderboards are used to increase traffic, engagement, and ultimately revenues. Businesses are beginning to realize the potential for these same techniques to be used to improve engagement and productivity among employees.”
With that in mind, Absalom sees Salesforce.com’s Rypple gambit as a sign that the supply side is taking this seriously. He argues:
“ The primary potential of gamification in the enterprise is to act as a tool for HR. Rypple’s value proposition has been to replace “traditional” employee performance reviews with real-time feedback, coaching, and recognition of both success and under-performance. Combining these social and gaming tools and techniques with enterprise applications such as CRM can help to quickly gauge individual productivity, rewarding those who are over-performing and helping those who are struggling to meet targets to improve. It also meets demand from employees to use the kind of tools at work with which they are familiar in their personal lives, providing social functionality, ease of use, and tangible real-time results. ”
But he cautions that organisational acceptance of this is yet to be proven:
“The rate of adoption of SuccessForce among Salesforce.com’s huge and varied customer base will be an interesting gauge of how organisations across verticals and geographies view gamification. Will they see it simply as a cool gimmick that has been plucked from the consumer marketing world, just a re-hashing of existing ideas and practices, or will they believe that it could genuinely improve HR and wider business practices through better employee engagement? For Saleforce.com, the question will be whether gamification gives it a foothold in the more mature HR performance management tools market.”
