Analysis: Salesforce Announces Service Cloud

Posted: March 25, 2009 in CRM
Tags: , , , , ,

Salesforce.com hosted an event in New York on Monday designed to create some separation between itself and the rest of the on-demand world.  Lately Salesforce’s competitors have gone on the attack in an attempt to me-too their way into SaaS prominence by effectively commoditizing some of the more successful aspects of on-demand computing.  CEO Marc Benioff would not sit still and watch and has instead expanded the definition in the last year. 

Cloud computing is now the hot idea and it takes into account more than simply delivering an application to include interoperating with many other Internet based applications.

The commoditization aspect is a neat trick and not unexpected.  Some of the gains of on-demand computing such as browser based applications and stateless computing make it easy to build applications that run on the Internet as well as behind the firewall.  Retrofitting conventional client server applications in this way gives vendors the ability to deliver some of the advantages, especially lower costs, to customers.  It also enables them to offer a choice of deployment options that range from conventional behind the firewall applications to traditional facilities management options and standard on-demand.

In that light there is a lot to like especially if your organization does not want to jump into cloud computing just yet.  Maybe you don’t have an ATM card yet either, but I digress.

The New York CloudForce event was designed to say that there is a lot more to this than using the Internet as the networking medium for enterprise business applications.  The program started by pointing out some of the accepted benefits of multi-tenant computing such as such as all of the technology acquisition and management services built into cloud computing.  We know what they are and they include up time, security, skilled labor and a lot more.

To those table stakes, you can add what I have called WebNecessary applications.  By that I mean, applications or combinations of applications that support innovative business processes that either can’t be done at all, or only with great effort, through conventional computing.

Last fall, Salesforce made a big deal about its integration with Facebook to improve the sales process.  This time, the company turned its attention to the service process and announced integration with twitter, the fastest growing social application on the Web. 

As I look at it the integration of these products makes great sense in a service environment.  The basic idea is that when people need something they are increasingly motivated to ask their circle of friends and acquaintances for advice.  Twitter is a good bit of functionality for broadcasting your need and as the network continues expanding the likelihood that someone will see your plea and send help only grows.  But to me that’s not the important part.

Salesforce has implemented technology that captures the help stream when it gets generated and presents it back to the vendor or manufacturer as a mini-service bulletin or candidate for inclusion in a knowledgebase.  If the solution works the vendor can make it part of the standard support offering.

The idea of customers helping each other with advice like this is not new.  Other service and knowledgebase vendors offer similar capabilities but they tend to be tedious exercises in a more formal writing and approval process. 

The twitter process leaves some things to be desired because it is limited to 140 characters so people who want to help with more involved support issues will need to resort to forwarding links to longer advice.  But that shouldn’t blur the importance of domesticating an easy to use and very popular social application for the needs of business.  It’s a good idea, a 1.0 idea, and we’ll see where it takes us.

Back to New York, for sure.

I got a lot out of the afternoon session I attended — a presentation to the financial analysts (which I am not) about the company and its business prospects.  Like the morning’s review of cloud computing, there was a bit of review but I doubt anyone minded.  Revenues are over a billion bucks, there’s almost that much in the bank, subscribers and customer numbers continue what looks like an inexorable northward march.  It was just the kind of thing to warm the heart of a financial analyst who has covered the Wall Street equivalent of Napoleon’s retreat from Moscow this winter.

Listening to the discussions you get a sense of the scale of this company’s ambition.  CRM is a big market but enterprise business software is an order of magnitude or two greater.  Moreover, many of the enterprise business applications that will make up that market have not been designed yet or are operating in clumsy spreadsheets.

Perhaps a natural concern on the minds of many analysts (and competitors) is how one company using a multi-tenant architecture can expect to serve this growing market.  Doesn’t scale become a limiting factor at some point?

Salesforce anticipated the question and for the first time opened up its kimono enough to provide some insight into its architecture.  Surprisingly, fewer than 50 servers spread across three datacenters runs the whole shebang right now.  And a modest number of (it has to be said) very large database tables — about 20 — holds all the data.  Smart algorithms take care of ensuring your data is delivered in an average of 300 milliseconds with three 9’s reliability.

Salesforce is still a young company despite its billions and its place in the market and I got a sense of that as I listened to a discussion about its finances.  Benioff said that it can take upwards of eighteen months for an investment in sales talent to provide a return.  And like any company today Salesforce tries to be appropriate in its spending— increasing it when the market is accommodating and reducing it in times like this.

All in all the day gave me the impression that CRM is and will continue to be important to Salesforce.com.  Its recent efforts to include social media in the business processes it serves to customers is proof of that.  The company continues to grow and has its eye on larger markets that dovetail into front office computing.  If companies like IBM, Oracle, SAP and Microsoft each represent milestone moments in the history of enterprise computing, and they do, then certainly Salesforce.com is rising to that iconic status.  Its place will be secured if it can continue to convince a decreasingly skeptical audience of the value of cloud computing.

So, what did you think?

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