The company is no stranger to the re-branding idea and has undergone several such exercises during its nine year history as its vision and offerings have expanded. So, what is behind the latest one? We needed a name change because the message wasn’t clear enough, said CEO Marc Benioff. The most important thing is to communicate to customers that we have an applications strategy, that we are a multi applications company. A lot of our customers still think we have only one application. Customers need continual communication and evangelism. We want to explain and demonstrate the full range of applications and platform. However, there are no plans to change the company name or its CRM ticker symbol.
Despite its obvious success, Salesforce.com is in an uncomfortable position. As the SaaS evangelist it is moving ahead and breaking new ground, as indicated by its growing application portfolio, initiatives such as the AppExchange, and more recently the whole Force.com area. But it also has a large and still-growing tail of live subscribers who are primarily interested in its applications and for many, only its sales force automation applications.
As we’ve said before, we think that the service capabilities in Salesforce are a hidden gem, and one that customers are largely ignorant of. Salesforce’s customer base remains one largely for salesforce automation, with much lower uptake of the other applications like partner relationship management, marketing automation as well as service and support, said Ovum principal analyst David Bradshaw. Salesforce seems a little ambiguous over this situation, perhaps with good reason, because sales force automation is still bringing in strong growth for the company, and the other applications remain potential sources of more revenue, but it’s frustrating that the penetration of the other applications remains so low.
The company has to balance its forward-facing extra-revenue generating activities against the needs of its current customers. In the past it said its activities were driven by its customers’ requirements. There has been a subtle change over the last couple of years in that it now has the twin objectives of keeping its customer base happy while also pushing forward with new SaaS applications and platform initiatives despite the limited customer take-up.
We are trying to create these application markets and create evangelists. Even though I get it, I can’t take it for granted that customers do, said Benioff. He is happy to take the long view, gaining 10-20% penetration within a customer through its sales applications for example, then building out into new areas. We might run the sales organization, we may run the call centre, but we don’t run their truck drivers, we’re not on their shop floors, we’re not doing the content automation and so on. For customers we have to take a long view, he said.
The combination of applications and platform is critical to its long term success because that is the way it will build a volume ecosystem, that will in turn contribute to its own growth and credibility. The company view is that it is early days as yet. As Benioff pointed out, it has taken Salesforce.com nearly 10 years to get where it is today. Other vendors have been in the game for longer he noted: Oracle is almost three decades old, Microsoft started in 1977.
Our View
With relatively little direct competition Salesforce.com has had time on its side and has not had to worry too much about limited awareness and take-up of its non-CRM offerings. But with increased activity from SAP and Microsoft and from soon-to-IPO NetSuite that is all changing. To varying degrees, each of these vendors can offer broad-based SaaS applications and/or a development platform with widespread support. The scope of their offerings makes Salesforce’s look sparse if all you see are its CRM applications, which is the case for many of its customers. Salesforce.com’s re-branding and its decision to accentuate its application portfolio are the result of increasing competition in the SaaS market.
