One of the phenomena’s that came about during the DotCom era was Customer Relationship Management Software. To be clear it did not start during this period but it seemed to generate a lot of press during this period. It became significant as large enterprises needed to centralize how they managed their relationships with customers. On paper or in PowerPoint it made a lot of sense. Suddenly you had companies popping up providing customers with a solution. On paper and in PowerPoint. In reality it was actually not so bright and cheery. However one company seems to have emerged from the rubble fairly unscathed and intact, Salesforce.Com. It’s worth a look as beyond CRM I think we will increasingly see more of these Cloud players enter the market, in fact we already are.
I gotta admit CRM applications are painful. Does not matter who you are – the user, the administrators, the system integrators, etc…I have been around quite a few of them. Early in my career at Microsoft, a corporate decision was made to go with Siebel Systems Software as Microsoft was growing and had customer information in spreadsheets, databases and 3 rd party software all over the company. It was becoming increasingly difficult to manage and get good information out of those systems. After the decision was made it would take over 2 years before it successfully launched Siebel internally. The user experience was awful. Later when I was part of the account team for Microsoft covering AT&T Wireless, AT&T was implementing Siebel for their call center. Three system integrators later and millions of dollars spent it failed. It was an industry joke.
Why do these systems even exist? Well there is a huge demand for being able to manage customer relationships in a centralized way. Both for small and large business it is important to project sales, pipelines etc..as a measure of the overall health of an organization. When we talk of Enterprise Resources Planning (ERP) we talk about the cost of running a business. With CRM we are measuring to see if our revenues will exceed our costs. CRM is the window into the pulse of the customer, or so it was hoped. Initially CRM was thought of within the confines of a companies IT infrastructure. In hindsight that may have been a limited outlook. The internet was exploding and it seemed apparent that CRM should reach beyond the confines of the corporate network infrastructure. CRM systems during this time period became synonymous with cost over runs.
This brings us to the promise of the cloud in helping us off load those costs. In the dotcom era a lot of companies came that had the right idea, they were just ahead of their time and the technology was not quite ready. A few, however, did survive. One from the era was Salesforce.Com. Unlike other companies I worked with in the Dot Com era SalesForce.Com has a better and more mature plan. An example of a company not so good at CRM in the cloud was a company called Corio. I met with their CTO, who was an entertaining ex-Oracle guy, who laid out the Corio plan. He said they were going to take Siebel, make it cookie cutter and resell to companies with no customization. Remember how I started this blog post? My eyes were rolling as soon as he said “cookie cutter Siebel”.
Getting back to Salesforce, they were much more pragmatic. First their application would live in the cloud. So all up-time and management of systems was on Salesforce. That already is saving an IT department money. Second they would allow customization, through a partner channel. This made a lot of sense, because every sales force is different and always has some unique requirement. To try to create cookie cutter solution is like trying to put a square peg in a round hole. They created a developer platform to support this customization. These are all attractive solution offerings and reduce the burden to IT departments. ATT Wireless was a good example of an IT department with extreme costs and therefore extreme burdens. My last employer, Limelight Networks was an example of a company that was small and needed CRM, just not the headaches that went with it. Salesforce made a lot of sense.
My impressions of Salesforce as a user were fairly favorable. There were a lot of “how to” questions to the Salesforce guru at Limelight. I am not sure any company can have a CRM app without having to hire a person or team of people to act as your go to people for general Q & A. Even with a user interface as kind as Salesforce, there still is a lot happening and you could spend weeks trying to learn everything it does and how it interacts with other corporate information systems, or does not interact. Because companies evolve there is a need for the CRM app to evolve with the growth of a company.
Salesforce right now is maturing. Like many fast growing companies it is in its arrogant phase., This is based on feedback from people I know whom they have called upon. It’s typical. One because their CEO Marc Benioff is an ex-Oracle guy. Oracle guys all seem to be aggressive type-A personalities. Two during the early hip honeymoon phase all tech companies I have been around or worked at are cocky when things are going well, The list is long, Microsoft, SUN, Google, Apple, Yahoo, and every dotcom start-up I was around (something to do with over inflated stock prices). In hindsight, it’s a good place to be. It is a fun period professionally to know you are leading the pack. It will be interesting to see how SalesForce expands and goes to version 2 and 3 of the company. Or it could end up like PeopleSoft and Siebel, two companies founded by ex-Oracle guys only to be acquired by Oracle.
The cloud is very real and is set to become a dominant part of the technology landscape. Salesforce.com survived the dot bomb days and has emerged as a leader in the Cloud App delivery space. They are still in the enviable space that many sales opportunities are greenfield opportunities (meaning net new revenue) which Wall Street loves. Moving forward like any fast growing company they will have to prove they are more than a one trick pony. They will also need to be more humble. Given their executive leadership that may be a bit of a sticking point. The good news as I have said the cloud is here and Salesforce is well positioned to be a leader.
Good Night and Good Luck
Hans Henrik Hoffmann December 9, 2011
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