Apres Dreamforce

It’s over, Dreamforce that is, and I have gotten some needed sleep on the flight back to Boston.  As I contemplate Dreamforce 2012 and its meaning I have three observations.

First, it was what I expected it to be.  If you refer back to my post just before the show opened my expectations were more than met.  You might wonder about the timing of that post but I was under NDA and unable to say much till then.

The company introduced a slew of products and services but aside from the formal introduction of the Marketing Cloud and things like Chatterbox, they were mostly evolutionary additions to the core products.  Instead, Marc Benioff’s keynote was long on customer stories and interviews with CEO and CIO types.  All of this was good and in line with my contention that Salesforce needed to present a case to Fortune 500 executives that the social enterprise is real and that Salesforce is the company to help them march in that direction.

If there is one big difference between Salesforce and all other enterprise and SMB companies it is that Salesforce has the vision and the others have, so far, only come forward with product.  So I think the company was effective at showing how big companies like GE, Burberry’s, Rossignol and Virgin Group are becoming social enterprises with the help of Salesforce and that was a good thing.

It’s worth mentioning that the GE story was more about socializing the man machine interface to give the vendor a better real time understanding of its jet engines’ performance, for instance, and thus to provide better maintenance services.  It was a nice demonstration of what’s possible in the Internet of Things, which has not yet grabbed many headlines.  At another end of the spectrum, Coke showed how it’s nifty new machines can custom blend beverages and enable a customer to develop a recipe and link it to a QR code for later use anywhere.

Also, Virgin will be integrating Salesforce’s social customer service solutions into its customer facing systems including the onboard systems displayed on seatbacks.  That was very impressive.  And finally, Burberry’s CEO Angela Ahrendts was there for an encore to describe how the company’s new store has socialized the customer buying experience.  All very cool and very exciting if you are a C-level person wondering where new growth will come from.

Ok, second, perhaps the company’s greatest asset hiding in plain sight is its ISV partners.  I attended the partner keynote on Day 0 and was blown away.  The meeting took place in a rather large ballroom that was full of partners who wanted to know the latest in the partner program.  What impressed me most, was how many applications (1,706 proven apps, 1.4+ million installs) and certified partners there are and what it means going forward.  But also, Salesforce has basically doubled its commitment to the partners and is driving big business with them.

The partners are incentivized (at least some are) to sell the base product along with their wares.  Naturally, this results in great leverage for Salesforce and that will help to further accelerate growth.  You can’t underestimate this.  The partners have built many, many good applications that all demand the Force.com platform, where they go, Salesforce follows and that should be a good feeling for anyone at Salesforce.

It looked to me like the partners are about to hockey stick their way to prominence and that will be good for Salesforce.

Finally, I don’t know how many people actually attended.  There were 85,000 registrations as of game time on Wednesday and I don’t really care if they all came on the same day or if some percentage stayed home or others did the virtual thing.  The event was very well managed so that its size never felt like a problem.

That said though, I think the company needs to do some planning that will break the single show into two or more big fragments.  An obvious solution might be to have a separate event for partners and technical people while offering another event for business people.  Obviously there would be overlap and that’s ok.  But I can tell you there was simply not enough time for serious meetings, just meet and greet and agree to follow up.

I did some checking and found out that there are 3526 hotels in California and 202 in San Francisco http://bit.ly/SM3cs0 .  At some point you just run out of housing and while I suspect the powers that be are tracking this, it’s worth an out loud wonder.

Finally (again), there’s the inside baseball. There were no picketers that I saw this year other than a man with a bullhorn trying to convert the known universe to some idea or another.  But there was still a silent battle between Benioff and Larry Ellison, Oracle’s CEO.  Oracle will take over the space next week for OpenWorld and there are already dueling registration counts.  It seems Howard Street has become a battleground of sorts.  The street separates Moscone North from Moscone South and people are forever crossing it.  In past years for OpenWorld, Oracle has rented the street from the city, closed it and erected a long tent where it serves lunch and holds parties.

A tent is a good idea, in case the notoriously fickle San Francisco weather decides to do its thing.  In recent years, Salesforce has adopted the practice.  But instead of covering it with a tent, Salesforce has built an open-air park complete with jumbotrons, seating, picnic and live music.  You can still get lunch there but the Salesforce vibe is all open and green and bucolic even if the grass is synthetic.  So even in the street you have a metaphor of the new way to compute which is green and open vs. the old, which is housed in what is reminiscent of an army tent.

There were a few other subtleties like that including billboard sized photos of Burberry’s CEO, Angela Ahrendts posed like the Mona Lisa smiling out on pedestrians below.  To me it all goes back to the idea of showing CEOs that Salesforce is ready to take them into the land of all things social.  What could be a better endorsement than a happily smiling CEO?

Wall Street Cools on Oracle

News out in the virtual world is that some analysts have trimmed their sails regarding Oracle’s financial picture.  The company missed its revenue forecast last time and today the financial guys are concerned about competition in the database business and lack of strong market support for the company’s hardware.

Competition from companies like SAP with its in-memory database solution offers potential to disrupt part of Oracle’s database business.  Oracle also has a memory based strategy and there are other factors to consider.  For instance, how do SAP customers feel about buying their database services from their application provider vs. from their database company?

The same kind of question can be asked about hardware from Oracle, traditionally a software company.  Oracle’s purchase of Sun a couple of years ago changed that equation and you can argue that Oracle is more of a hardware company than SAP is a database company but I think this all misses the point.

Whether we’re talking about in-memory databases, very large computers, data storage and analytic appliances, we are seeing fundamental disruption in multiple markets.  What’s interesting about these disruptions is that the incumbent leaders in these markets are leading the creative destruction themselves.

In a more conventional market disruption we could expect a crop of small companies flying under the radar to create products and nip at the heels of the big guys for a few years until — Oh my gosh the sky is falling! — the moment when the little guys tripped up the big guys.  That’s not happening here.  The big guys, especially Oracle, are doing their own disrupting.

Perhaps it’s because hardware is no longer a place where Steve Wozniak can put a few chips together on a breadboard and invent the new, new thing.  It takes big bucks and lots of R&D to build what Marc Benioff derisively calls a new mainframe or the data storage and analytics appliances the Oracle has brought to market in the last two years.

Oracle has done its job, it has brought out some impressive next generation technologies and it has seeded its biggest customers, the early adopters, with the gear.  It has also received good reviews albeit with some first generation glitches.

Wall Street is doing its job too, though you might want to question the rationale.  The Street has a ninety-day time horizon; we know this.  But disruptions have their own internal clocks and they don’t kowtow to the analysts.  So we have a situation in which Oracle is having some lackluster results regarding market uptake of its newest and priciest products.  Not to worry, I say.

The alternative to really big iron is widely distributed iron and it will be interesting to see how this plays out.  A widely distributed scenario can use smaller and older technologies, but you lose economies of scale, even in a cloud computing situation.

So although Oracle is experiencing slower demand for its new products, I think the situation is temporary.  The new gear strikes me as the disruptive innovation that the market needs and we are going through a normal process of market uptake.  The only difference between this and a more conventional disruption is that as a big public company, Oracle is going through this in full view of all the critics.

Larry and Marc Round 2 or Is It Round 3? #OOW11

Ahh, what a difference a good night’s sleep makes.  The Greeks are still threatening default on their bonds, the economy is still in the loo, the major stock indices are teetering on a bear market precipice and Marc Benioff is still going to speak at Oracle OpenWorld or at least next door.  But there is some clarifying news.

First, the guys at Oracle can claim that they didn’t cancel Marc, they simply moved his talk to Thursday.  Unfortunately, Marc is getting on a plane this afternoon to go on sales calls back east (The man still visits customers and asks for the order.  Not making any comparisons, just sayn).

The trip was planned for weeks according to my sources at Salesforce so there was no way to reschedule.  I am sure that was communicated when Oracle offered the choice 8 am slot on Thursday morning instead.  It’s sort of like saying, no, your vacation was not really cancelled, it’s just been rerouted to Siberia.

There’s been some good analysis by Larry Dignon suggesting that the audience is being played and I think there might be some truth in it.

Last year, if you recall, there was a minor contretemps in the press between Ellison and Benioff over cloud computing.  Larry had introduced his compute server, Exalogic, and Marc was deriding it as a cloud in a box.  “Beware of the false cloud,” he said.  We all laughed and reported all of it.  Larry got coverage, Marc got coverage and it was all good for business.

I am sure this was not collusion, just two guys who know each other’s moves and how to play a certain game.  This resembles improvisational comedy quite a bit or maybe it is real life imitating improv.  Here’s how it works — two funny people can riff on an idea for a long time without ever having a script by knowing a simple rule or two.

The first is be funny and the second is always say yes.  In other words, regardless of what the other comedian says, accept it as valid and build on it, just never say no, I don’t think so, and the sketch can go on for a long time.

“Cloud!”

“False cloud!”

Resembles

“Tastes great!”

“Less filling!”

Don’t you think?

Like many human activities improv resembles an arms race with each iteration ratcheting up the stakes.  Start with an insult, end with a war.  Perhaps.  There are some grains of truth in all this but as with improv, it is hard to determine how much.

For certain, Larry’s talk on Sunday was a train wreck panned by even the mainstream press.  Was there concern that Marc would upstage Larry in his own venue?  I believe Larry speaks this morning also.  Marc will certainly talk about cloud computing and software and deride Oracle’s hardware despite the obvious fact that at the end of every cloud rainbow there is not a pot of gold but a server farm.

On the other hand, Oracle is late to the game with its Fusion products that would give them a whole cloud story.  I sat in a briefing yesterday with nine IT executives and CTOs of companies that were in the Fusion beta program.  We couldn’t report names of companies, but they exist and appear to be happy.  That’s the state of Oracle’s newest cloud software though certainly products like CRM On-Demand have been around almost as long as Salesforce.  Not to worry though, I think Oracle has made excellent progress, as I relate here, in the two years since Larry first derided cloud computing at the Churchill Club.

At any rate, the Larry and Marc show will go on today.  It will be great theater and, like great improv, there will be a grain of truth in everything said by the participants.

Marc, Call Your Tailor #OOW11

A couple years ago Marc Benioff dazzled the audience at Dreamforce by pulling four phones out of his suit jacket to make the point that his products run across many platforms and technologies.  The high point of the talk happened when, after pulling out all those phones, Benioff pulled out an iPad from his pants.  We all laughed and he made his point.

Now though there is an implied challenge from Oracle at OpenWorld.  Oracle has made a faux iPad which is on display at Oracle OpenWorld.  It’s a 70 inch HD TV displaying screens from Oracle applications.  It’s not real but it’s fun.  The next move might be Marc’s or not.

Zuora and Salesforce in Pact

Zuora and Salesforce.com announced today a new offering that highlights the strengths of each company and delivers new functionality to the telecommunications industry.  Zuora for the Communications Industry is a solution based on the Force.com platform that handles billing, payments and customer care for telco and related industries’ customers.

This makes a lot of sense and, as often happens with Zuora, I am scratching my head wondering why I didn’t think of this.  Here are what I consider the highlights.

First, there’s billing and payment for subscriptions with emphasis on the special customer relationship that is defined by a subscription.  Subscribers are free to change almost at will.  True we’re usually locked into two year contracts for wireless services but that’s a relatively short time and there’s no telling when this model will be vacated in favor of something more fluid.  So vendors have to be ready and able to modify the relationship as a customer’s need changes.  Often billing systems don’t enable enough of this because they’re mired in a paradigm — and a system — that assumes customers are on board for life, or at least decades.  This presents a disruption opportunity for subscription billing providers.

Equally important, this relationship also does a lot to redefine an important aspect of CRM.  Over the last few years — in concert with the social revolutions — the contact center function has been deconstructed into two constituent parts that had always been thought of together — service and support.

I think of support as helping a customer with a technical issue related to product use.  Trouble shooting.  Can you help me fix it?  And the like.  Social channels have become increasingly popular for peer-to-peer support — customers helping customers.  Increasingly, support is now done through Twitter, Facebook, email and other community oriented solutions like the Salesforce Service Cloud and Lithium in a peer-to-peer setting today.

Enterprising customers even make video of service issue fixes and post them on YouTube.  In fact, YouTube is so popular that it’s now the number-two search engine.  Of course YouTube is not a search engine, people just use it that way and that’s the point.  Support is being taken out of the vendors’ hands because customers can do it better, cheaper and faster.  Vendors aren’t complaining.

Service is another matter.  I think of service as the irreducible part of the vendor-customer relationship where you have to interact on some level.  You can only go to the vendor when you have a billing dispute or other issue related to the core of the relationship, a peer relationship won’t do much good.  Today’s announcement of a new relationship between Salesforce and Zuora makes that clear and the combination of billing, payments and customer service is spot on.

The idea has legs and telcos around the world are already jumping on board.  The initial customer base includes communications vendors from several countries and continents including Canada, (Barrett Xplore) The U.S. (Open Range) and Australia (Macquarie).

This is a significant announcement for Zuora, which recently opened up its European offices, because it defines a new market and positions Zuora very nicely in the catbird seat in this market.  It’s important for Salesforce too.  Historically, a company like Salesforce has grown by acquisition and by extending product lines.  This announcement is more of a product line extension but it’s done through developing partnerships for its existing products.  Like last week’s announcement of a partnership with Intuit, Salesforce is developing new channels for its existing product as well as new ways to access them for minimal investment.

I expect to see more of this.  In fact, and this is only my hypothesis, last week’s activities might offer an additional insight or market signal.  Salesforce bought Radian6 for $326 million showing, as it has before, that it will buy a company for strategic advantage.  Radian6 is the category leader in social media monitoring and related things and Salesforce scooped it up to bolster its position.

The same could happen with Zuora if billing and telco service becomes strategic enough and there are some interesting reasons to consider this idea.  First, we’re in the beginning or middle of a replacement cycle.  Client-server call center systems have exceeded their useful lives and can be replaced by a new generation of SaaS based, socialized solutions that are significantly less expensive to own and operate.  Also, ten plus years ago, the wireless industry was very different and VoIP was a dream.  These and other factors are potential drivers for the Zuora-Salesforce coalition.

Finally, and this has to be said, Zuora’s CEO and co-founder was one of the earliest members of the Benioff team.  Tien Tzuo is a smart guy and a strategic thinker and he’s proven his chops at Salesforce and now Zuora.  Zuora’s platform is Force.com too.  Lastly, Marc Benioff has a personal investment in Zuora having provided some early cash.  All those stars are aligned, but we’re getting ahead of ourselves.  It is enough to say that the Zuora-Salesforce alliance makes sense for present reasons.  We need to see how the market reacts.

Oracle Open World Preview

Oracle Open World opens up on Sunday with a keynote at the Moscone Center in San Francisco.  The annual convention will attract about forty thousand people to the Bay area and promises to be exciting and interesting on multiple levels.

This will be the first Open World post Oracle’s acquisition of computer pioneer Sun Microsystems.  Last year Oracle introduced a version of its Exadata storage unit based on Sun architecture (and presumptive deal close) and with the company finally in the fold you can bet there will be more product announcements that mix hardware and system software.

I don’t know if there will be net new announcements, but Sun was the driver of the Java revolution and reduced instruction set computing among other things, so I think it’s way safe to say there will be interesting things coming out of that camp.

This is also the first year post limited release of Oracle’s Fusion architecture.  Fusion, you may recall, is a platform intended to unify the many disparate applications that Oracle bought up a few years ago.  It is also the platform for merging and rebuilding applications along a more or less consistent Oracle product direction.  With another year of development and roll out of Fusion, there will be much more to discuss and announce next week.

There’s also cloud computing to consider.  A little over a year ago Larry Ellison was caught on tape at the Churchill Club pooh-poohing cloud computing but that was before Oracle really had a dog, a pack actually, in the hunt.  Now that Oracle is better positioned, and given that Oracle’s database and servers support so much of cloud computing, look for Oracle to claim credit for the sunrise — to paraphrase an old Bill Clinton line.

Then, too, you can expect the usual shenanigans from a whole host of characters and partners.  Everyone in this business today is into coopetition so look for fun announcements from Dell, HP (we want our secrets back) and Salesforce.com for starters.

Speaking of Salesforce, back by popular demand (or whatever) Marc Benioff will again address a crowd at the Yerba Buena Theater just down the street from the conference.  Last year’s inaugural talk was expected to be some kind of challenge to Oracle but turned out to be a very successful symbiotic and statesman-like address.  Too bad too because we all waited outside in the rain for the doors to open expecting something more combustible.  This year, I hope it’s a sunny day.

On the CRM front, Anthony Lye and company have been working hard all year (Sounds like Christmas and the North Pole, doesn’t it?) to advance the front office suite on multiple fronts.  The CRM team has scheduled two hundred sessions for the conference just on CRM.  Forget the database, Java and Sun, if you’re into CRM the conference will have you drinking from a fire hose.

Trying to register for sessions is a Byzantine process though, which uses an on-line system that looks like it was built by monkeys on crack.  To keep my sanity I have decided not to register for anything but to simply show up.  I have a hard copy schedule.  I know this strategy might exclude me from a few popular sessions but I figure that’s what beers are for.

The real star of the show, for me, will be the city of San Francisco.  It’s not a perfect place for sure, but there is a wonderful energy in the city any time and it’s triply true during Open World and Dreamforce.  You walk around high on the possibilities uncovered in the sessions and accented by the environment — the hills, the cable cars, the fog, the restaurants and most importantly the indefatigably optimistic crowd of natives and visitors.  Did I mention the California wines?

I digress.  One week till Open World.  I don’t know what will be announced because I won’t get briefed till later and then I’ll be in quarantine.  So, I don’t know any more than you.  But I can’t wait.