Will There Be Room on the Software Cloud for Salesforce.com?

We’re out and about meeting companies and attending some technology conferences in Europe this week. One thing we have heard a few times suggests that Salesforce.com (CRM) may be looking more like legacy enterprise software than a new SaaS or PaaS platform.

To be clear, nothing we heard suggests that it’s "game over" for Salesforce but rather that there appears to be a more robust market for more advanced, more flexible and lower-cost solutions in this market. 

It’s been over a year now since we first started hearing from corporate customers that their annual costs for Salesforce.com were out of line with what they felt was justified and what they could get from other offerings. Since people just about always prefer to pay less we didn’t think too much of it at the time.

Wednesday we heard from some more organizations saying that they are finding Salesforce.com to actually be *hindering* and *slowing down* their sales process. This was a bit of a surprise for us but when they took us through the reasoning it had much to do with the rather clunky interface of Salesforce and their continued lack of real integration. (There is still a great deal of cutting and pasting involved in doing anything realistic.)

At the same time we are hearing from consultants and integrators that they are increasingly recommending to clients that they consider options and even build their own systems.

Although just a few pieces of evidence have come forward we generally find they are indicative of some emerging trends. As more software gets developed and deployed in the cloud, it becomes much easier to build applications based on open technology services. This will put some pressure on Salesforce to modernize their products and architecture. Their efforts to transform to a platform company aren’t looking very promising.

At the same time this is probably a more fertile area for new companies than we thought a few weeks ago.

Comments

[Jeff Matthews:]

This is thee lamest article I have ever read. You have heard "some people" say "some things". Meanwhile "some analysts" say Salesforce.com is leading the charge in cloud computing.

The worst but about this article is you do not give an example of a better cloud computing example.

2008 Oct 23 09:35 AM

[FirstCRM:]

Salesforce.com is a victim of its rapid growth and the concept of the Force platform. Customers want more from the basic product....not add-on solutions that are "pre-integrated". Salesforce does not really help a company or division on the business-side of selling - pricing, estimates, orders, etc. The good thing is that there are other emerging platforms that are providing these features as a part of the standard offer.

2008 Oct 23 11:23 AM

[Internation...:]

Is this an article or a rumour?

2008 Oct 24 12:07 AM

[Rich from W...:]

If modernization is needed you can bet SFDC will modernize. The Winter 2009 release has a dense 75-page list of the new features. They do that every six months.

Will prices drop? Of course. Will SFDC have the best margins, for years to come, due to their 1.1 million subscribers and 99% renewal rate? Of course.

Nothing lasts forever but these guys are way in the lead. This article is a wrong rumour, IMO.

2008 Oct 24 10:48 AM

[jnoneiliv:]

Thanks for the article. This is good customer feedback, and nicely presented as "raw data".

It's not the end of the world for customers to complain about software. In fact a Harvard Business Review article ages ago demonstrated that satisfaction in software actually went down after users were trained. The explanation was that expectations went up.

With SF's success, expectations are bound to go up and complaints to start. Typical software lifecycle.

Keep the observations coming!

2008 Oct 28 02:02 PM

[Kris Tuttle:]

Thanks for the comments on this. Some are a little rough. We do write posts that are based on small bits of information if we hear something that sounds different or new, even if it might not be conclusive. That's the kind of flow our clients want. As always we are just trying to be helpful. At the time of this writing and still today we have no position long or short in CRM.

2008 Nov 18 02:57 AM