In-Depth

Salesforce.com and the Enterprise Social Revolution

• November 14, 2011

"We were born cloud in 1999," he proclaimed, "but we've been reborn social."

While that has been the mantra for much of the past year, Benioff's appearance kicked into full gear the new direction for his company, which is putting its resources behind a portfolio of tools and services aimed at helping Salesforce.com customers leverage social, mobile and open cloud technologies to "revolutionize" their customer relationships. He compared this "enterprise social revolution" with political protests earlier this year in Egypt and Tunisia, and warned of a "Corporate Spring" for companies that fail to implement a social strategy.

Over the past decade, Salesforce.com has largely defined and delivered what is now known as cloud-based Software as a Service (SaaS). The company has successfully built a business out of offering customer relationship management (CRM), help desk and customer support tools as a service, replacing conventional software as a means of delivering these functions. The success of that business has helped put it on a run rate for $2.2 billion in revenues for its current 2012 fiscal year, while challenging rival providers such as Microsoft, Oracle Corp., SAP AG and others to jump on the SaaS bandwagon.

Now Benioff sees enterprises deploying social-networking tools that have the look and feel of services like Facebook and Twitter, yet have the facilities to enable collaboration and communication in a secure environment. By bringing social-networking tools to the enterprise, employees will be better equipped to access and share information and therefore better service customers, according to Benioff.

"Our social enterprise vision fundamentally changes how companies collaborate, share and manage information," Benioff said. "By creating social customer profiles, employee social networks, customer social networks and product social networks, companies can delight their customers in entirely new ways."

Ray Wang, CEO and principal analyst at Constellation Research Inc., says while Benioff's remarks may come off like marketing hype, the Salesforce.com social enterprise push is for real. "He actually articulated a clear vision of where he sees social going in the enterprise," Wang says.

Building the Social Enterprise
The vision is clear, but the reality is still a work in progress, Wang says. And yet, Salesforce.com appears to have most of the pieces it needs -- and when those pieces come together, the result could be a game-changer in the CRM/SaaS space, both because of Benioff's ability to capture mindshare and his company's ever-growing partner ecosystem.

"He's gotten people excited, and he's generated momentum," Wang says. "But Salesforce also did two remarkable things. First, during the summer, they convinced a bunch of companies -- companies like Dell, Assistly, Infor, Marketo, Eloqua -- that they should align with them as partners, instead of Oracle, SAP, IBM or Microsoft. A lot of those partnering companies didn't look that innovative, but aligning with Salesforce made them innovative by association. It gave them a kind of innovation quotient. And second, they insisted that those partners adopt Chatter."

Chatter is the Salesforce.com Facebook-like enterprise social-networking platform that allows employees to collaborate. Salesforce.com sees enterprise social as the new aggregation point, Wang says, much as the industry saw business intelligence 10 years ago.

"By getting all these partners to bet on their standard -- on Chatter," he says, "Salesforce becomes that aggregation point. In one sense, that's the genius of what Marc Benioff has done."

The year-old enterprise collaboration platform has emerged as the core of the Salesforce.com social enterprise, and the company is planning to roll out several new Chatter components. Among them:

• Chatter Now: Adds real-time chat to the platform, as well as presence features that allow users collaborating directly within Chatter to see when other users move online and offline. Users can chat and share a screen without having to exit the Chatter feed.
  
  
• Chatter Customer Groups: Extend the social enterprise beyond the company by allowing users to invite outside participants into their Chatter network to collaborate in private, secure groups.
  
  
• Chatter Connect: Allows users to make third-party apps "social" by extending Chatter into intranets and portals, custom mobile apps and other enterprise applications. Developers use the Chatter REST API to accomplish this integration. A targeted version of this component aimed at Microsoft SharePoint users also makes it possible to embed Chatter feeds within a SharePoint MySite or TeamSite, and share documents via Chatter.
  
  
• Chatter Approvals: A feature that makes it possible for users to take action on any approval process from directly within their Chatter feed. Salesforce.com cites sales discounts, hiring decisions and vacation requests as examples, among others -- all of which can be approved without leaving Chatter. The feature also incorporates context into approval processes with items such as comments and documents.
  
  
• Chatter Service: Designed to allow users to ask questions of a vendor in a familiar social networking/microblogging feed format (think status updates or tweets). The answer can come from a knowledge base or a company service agent. The service can also be connected to existing public social networks, such as Facebook.

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The company also made its native cloud database service, Database.com, generally available. Announced about 10 months ago, this is a cloud-based, multitenant database of company and customer contact information for CRM that was already used by about 100,000 Salesforce.com customers. The company says it was "built from the ground up to power this new generation of social and mobile cloud applications." The database includes features from Jigsaw, a crowd-sourced contact provider Salesforce.com acquired in 2009.

Salesforce.com is billing the combo of Database.com and its Force.com and Heroku cloud Platform as a Service (PaaS) offerings as a "social enterprise platform" for developers creating social, mobile and open cloud applications for business.

Radian6 is another new piece of the Salesforce.com social enterprise portfolio. The social network monitoring service, which Salesforce.com acquired earlier this year, is designed to track and analyze what customers are saying about a company on social networks such as Facebook and blogs and microblogs like Twitter.

Salesforce.com is also upping its investment in HTML5 with better support for tablets and other mobile devices via a Web site called Touch.Salesforce.com. "You don't get the full social package without mobility," Wang says.

Touch.Salesforce.com is designed to deliver an HTML5-based version of a vendor's applications for touch-based devices. Touch.Salesforce.com allows cross-platform access for all Salesforce.com applications in the cloud, including Chatter, the Service Cloud and CRM, among others. According to the company, all of the 220,000 apps built on Force.com will be mobilized via the site.

Market and channel analyst Laurie McCabe, a partner at SMB Group Inc., likes the new direction of Salesforce.com but has some concerns. While she's relatively confident Salesforce.com will eventually realize its vision, she has doubts about the company's ability to price its social enterprise products to serve small and midsize businesses (SMBs).

"They're not really telling us how much it'll cost to become a social enterprise," McCabe says. "One of the problems with Salesforce has been that there's a lot of complexity in its pricing. Everything you want to add costs more, and it can end up being pricey and complicated. People can feel like they're being nickel-and-dimed to death. So Salesforce proposes a new Social Enterprise License Agreement, which provides full access to everything for one, all-you-can-eat price. But that price is going to be determined on a case-by-case basis, in relation to the value that the total solution provides the customer. I can see how they do that for Coca-Cola, but how the heck do they do that for SMBs?"

Coca-Cola Co. was, in fact, one of the companies Benioff brought onstage at Dreamforce to talk about the benefits of the social enterprise. So were NBC Universal and Walt Disney Co. -- all examples of the kinds of large companies that will tend to command the undivided attention of Salesforce.com.

"Salesforce has really evolved from its CRM roots," McCabe says. "The question is, how will the company and its partners take the business complexity out of the equation for SMBs, and will it give those businesses the time they need as demands from its large customers rise?"

Built-In Partner Magnet
Jeff Kaplan, founder of SaaS consulting specialist firm THINKstrategies, agrees that Salesforce.com is going to gain traction among a growing number of brand-name companies with its social enterprise pitch -- and, in fact, it already has. Why?

"First, because enterprises need better communication and collaboration tools for their increasingly dispersed workers, partners and customers," Kaplan says. "Second, this enables Salesforce.com to penetrate enterprises far beyond the sales or support teams that typically use its SaaS solution."

The Salesforce.com social enterprise vision also has something of a built-in partner magnet, Kaplan says: an additional layer of complexity that's likely to draw an even broader set of implementation partners.

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"Few enterprises have in-house skills to effectively implement and manage Chatter, and [they] need help planning, designing, deploying and monitoring its use," Kaplan says.

"At the end of the day, this is a pretty good deal for the partners, who end up riding along on the Salesforce brand, but don't have to build any of this stuff," Wang adds. "They just enable Chatter and then focus on the things they're good at, like ERP or transactional systems or marketing. It's really a natural alliance."

Corrine Sklar, vice president of marketing at longtime Salesforce.com partner Bluewolf Inc., applauds the company's new social enterprise strategy and says her company's customers are looking to embrace social networking. "Companies are transforming their businesses -- they're seeing a big shift in what's happening, not just from the technology perspective, but in how people engage with each other in general," Sklar says. "That's the opportunity here, the social enterprise that Salesforce is getting involved in right now."

Arjun Moorthy, vice president of business development at HubSpot, a marketing software startup in Cambridge, Mass., says his company is aligned with the Salesforce.com social enterprise vision as well.

"The shift [from cloud to social] is definitely good news," Moorthy says. "Sales and marketing teams in all kinds of businesses are increasingly recognizing the value of social media to their efforts, so cloud-based applications like Salesforce and HubSpot are adding social media features. Standalone marketing applications that lack social media integration lose out on the rich and speedy information source that social media can be."

Moorthy says his small company gets lots of support from Salesforce.com, including technical resources on product integrations and guidance on joint marketing activities. He points to a recent webinar collaboration that "drove a slew of sales," and HubSpot's Dreamforce presence, which drove more than 2,000 leads.

"If you're a Salesforce partner, you're ahead of the curve on the social enterprise," McCabe says. "Even though at the end of the day I'm sure this stuff is not quite as ready-for-prime-time as Salesforce would like us to believe, they're probably further along than their competitors. And they're certainly further along in selling the vision than their competitors."

In fact, the Salesforce.com decision to bet the farm on the social enterprise has serious implications for its rivals in the CRM/SaaS space, says Kaplan. Chatter itself creates "a new functional dimension" that changes the competitive landscape, he says.

And the partner relationships have a definite impact, Wang says, such as the Salesforce.com pact with Dell Inc., which agreed to deploy Salesforce.com offerings to SMBs. "Now you've got the whole SMB channel of Dell on the back end pushing in. It means that Dell's channel is now selling Salesforce [and] going head-to-head with Microsoft, at least in North America."

Dynamics CRM Getting Social Features
For its part, Microsoft is well aware of the threat from Salesforce.com, and has made substantial inroads bringing its Dynamics CRM platform to the cloud with its latest release of Dynamics CRM 2011. "Microsoft still has a good CRM on-demand offering," McCabe says. "They've caught up to a large degree in terms of CRM functionality with Salesforce. Now they've got to catch up with this whole new vision -- the real-time feeds with Chatter and the Radian6 analytics and having this all come together. And they also have to cope with [Salesforce.com's] huge AppExchange [online app marketplace] ecosystem. They're fast followers up there in Redmond, but I don't see them as a leader in this space."

Microsoft has added its own Dynamics applications marketplace, and by year's end the company will be introducing social-networking capabilities to Dynamics CRM via Outlook as well as real-time activity feeds, according to Brad Wilson, general manager of Microsoft Dynamics CRM. Wilson describes the activity feeds as "kind of like Facebook."

The chief downside for Salesforce.com partners and customers is the evolving nature of the social enterprise concept. "Enterprise social is still very fluffy," Wang says, "and by that I mean that the real-world use cases are not yet widely understood. A lot of people are talking about social enterprise in terms of, 'Oh, I'm on Twitter,' or, 'I'm on Facebook.' But that's not really where the real work is. Salesforce has won the battle for mindshare, but the reality is that they still have to address role-based security, and they still have to figure out what happens when you tie different applications together that have different levels of process granularity. It's a good start, but there's a ways to go yet."

Kurt Mackie contributed to this story.

Related:

• Salesforce.com CEO Benioff Touts Enterprise Social Network 'Chatter'
• Blog: Salesforce.com and Social Networking at Work: Do We Have To?
• Salesforce Extends Social Media Push with Radian6 Buy
• With Dynamics CRM 2011 Update, Microsoft's Focus Shifts to Social