Salesforce Chatter and Faceforce

While searching for a piece that I had written about the concept of visual apps, "The Future of Software? Think Visual Apps," I found that I had written about a potential precursor to Salesforce Chatter back in October 2007.

In order for the Faceforce piece to make sense, you would have had to have read the previous paragraph on Twitter. Here’s an excerpt:

“Do you Twitter? When I first read about it, I thought the last thing the world needs is another time-wasting tool ... I already have Freecell for that. If this is the first time you’re reading about it, Twitter may be the best known of all of the microblogs, with people posting what appears to be only a series of random thoughts or activities (for example, one entry this morning read, “Friday morning and time for laundry.”).

After Mr. Martine and I talked about Fantastic Voyage, he asked me if I had ever used Twittervision, and when I said no, he showed it to me. This takes the Twitter posts and plots them on a map of the world. Every few microseconds, he would get posts from friends and strangers from across the globe.

As soon as I saw it, I had an Aha! moment. Could Procter & Gamble use a private version of Twittervision to track the success of a new product launch? Rather than e-mailing back to corporate, field representatives could log into a private site and post their findings after visiting a store. They can enter the early sales successes, note any competitive responses, and suggest ideas for improvement in real time. This would also be visible across the entire organization.”

OK, here’s the Faceforce piece:

Salesforce.com: Should we look for Faceforce next?

“I recently met with two executives from salesforce.com and opened the meeting with talk about the P&G idea. In addition to new product launches or campaigns, microblogs would also make great tools for either the start or end of a quarter. For example, at the beginning, reps could post their goals or targets, which could be text, voice, or even video. Throughout the quarter, they could provide updates on the status. Microblogs, which would be far more visually appealing and interactive than a portal or e-mail string, would be good tools for global account teams too.

We segued into a discussion of Facebook, the privately-held social networking site with the $15B valuation, thanks to Microsoft’s investment of $240M for a 1.6% stake. Last month, I had written that salesforce.com was not-so-quietly attempting to become the Facebook of the business world: a social network hub for collaboration.

If you haven’t joined, Facebook is a free service that allows you to stay in touch with classmates, coworkers, clients, and friends. The company makes its money by selling advertising on your page. While salesforce.com has attracted 35,300 companies and 900,000 users, Facebook has 60 million people signed up.

Where salesforce.com has 725 third-party applications on AppExchange, Facebook has more than 5,000 applications. Okay, we’re not comparing the same kinds of apples here, but, nonetheless, Facebook adds over 100 new applications every day, with more than 80% of Facebook clients having used at least one Facebook Platform application.
I could envision a salesforce.com community on Facebook. What if salesforce.com offered Faceforce, a social network for top sales and/or marketing people? It’s possible. After all, the salesforce.com execs had come to my office to talk about the new microedition for the wealth management industry, which are microvertical offerings for politics, venture capitalists, human services, insurance agency management, economic development, and microfinance.”

OK, so my idea was not exactly the same thing as Chatter. I hope you might find it interesting nonetheless.

Ready To Trust Google as Your Keys and Wallet?

As I write this it is 66 degrees on a sunny afternoon. One can really get used to a very rare Indian-Summer-in-November streak. That said, it will be dark in just a few hours, and the cold weather won’t be far behind.

I recently received an e-mail from Calvin Fine sent from his office in Melbourne, Australia. Even though we’re enjoying great fall weather, I was envious that it was spring Down Under. In a follow-on email he mentioned that the Melbourne citizenry was buzzing about beaches and BBQs while we will soon be worrying about shovels and boots.

Maybe we need to go visit Calvin for a closer look at Melbourne. In the meantime, here are some of his ideas on a set of products that he thinks we could see from Google in the not-too-distant-future:

Hi Bruce,
 
Thanks for the always entertaining First Thing Monday e-mails, and hello from a cloudy afternoon in Melbourne, Australia.
 
I’ve been thinking about Google in the context of simplifying, since reading about the Google disruption play of including free turn-by-turn navigation directions with each and every Android mobile (see abovethecrowd). I imagine a lot of people have similar habits to mine. The 3 things in my pocket when I leave the house each and every time are keys, wallet and phone. Music is on the phone these days. So is e-mail. If I’m driving some place, there’s a sat-nav and a CD player in the car.
 
In the future we’re likely to only carry one “device.” Your phone has already integrated voice communication, diary, watch, walkman, TV, maps, and more. And with cloud computing to augment process-intensive mobile computing, the phone will likely replace your laptop too.
 
But, what about keys? What about wallet?
 
Cars already run on proximity keys, most new Lexus’ unlock doors on proximity. It wouldn’t be a stretch to wire your house, car, and office into your phone. And we already happily run small value transactions on wireless devices: NTT DoCoMo's Edy mobile wallet in Japan is a prime example, as are London’s Oyster card and Hong Kong’s Octopus card.
 
The largest consumer issue with ‘contactless payment’ and proximity key systems is typically security; and one of Google’s key attributes is that people trust them. With Android running the world's mobile operating system, Google is in a tremendous position to create a global mobile, contactless payment and security system. And they could do it 'for free', at least in the sense that as a consumer you wouldn't have to pay for it. In much the same way as 'free' maps can integrate localised advertising, Google could match up buyers and sellers at the moment of truth better than anyone.
 
It’s "better than the competition" AND "cheaper than the competition," too. No AmEx service charge. No wallet to carry. No train ticket. No hassles. That’s Finance 2.0: Instant, personal, and always on your person.
 
Would people trust it? Would they use it? And who could compete with that as an offering?
 
I hope this finds you well (and not too stressed about the Yankees).

Warm regards,
Calvin

Salesforce.com and Oracle: A Tale of Two Worlds

In the current edition of First Thing Monday I opened by asking, “What’s salesforce.com doing at Oracle OpenWorld? At the conference, I found the answer: salesforce.com is making the most of what might be a one-time opportunity.

On the first day of the conference I stopped by the company’s booth in Moscone West. At the right end of the booth sat a pair of Mini Coopers wrapped with the company’s cloud logos and bearing the “best of both worlds” messaging. Each night at 6:00 p.m. salesforce.com is giving away one of the cars. This will continue for three days. The only requirement is that winners must reside in one of the 48 continental states. Sorry, no shipments to Alaska or Hawaii, or outside the country. Outside the convention center, six similarly clad Minis make a continuous loop around the sprawling Moscone complex.

Next to the car giveaway there was a small theatre that was full every time I walked by. Periodically, a joint Oracle/salesforce.com customer would take the stage to talk about their experience straddling the two worlds. 

I stopped to talk to a couple of salesforce.com employees who were clearly enjoying their front row seats in a foreign arena. One told me that they were thrilled to be invited to participate in the “IT event of the year.”

The heart of the booth featured standup stations with product demos. The banners on top of the booths proclaimed that this was the home of “Service Cloud2,” “Sales Cloud,” and “Custom Clouds.” The latter is a reference to a new announcement with Dell where the two companies will provide cloud offerings for small and midsized organizations.

Ironically, SAP had a booth behind the salesforce.com pavilion. While this may have seemed to be a good opportunity for guerilla marketing, I sense that staffers would have preferred to be almost anywhere else. When I walked through, I saw employees talking only to each other. 

At 12:30 p.m. on Tuesday, Jim Shepherd and I walked over to the Novellus Theatre to see Marc Benioff’s presentation. We were surprised to see hundreds of people already queuing in line despite a heavy downpour. While some may have been there to receive vouchers for one of the 500 Flip video camcorders distributed at the booth, I suspect that most were here for Marc’s theatrics.

Shortly after 1:00, Marc took the stage. He opened by thanking Oracle for inviting him and acknowledging Larry Ellison for being his first investor. He also talked about how he had appeared on this stage many times to introduce new products during his 13 years as an Oracle employee. Before long, he was into a sales pitch for cloud computing. As he talked, a PowerPoint behind him illustrated the three generations–or worlds–of enterprise computing: mainframes, client/server, and cloud computing. For me, the not-so-subtle message was that client/server was the old world that he left behind when he co-founded salesforce.com a decade ago.

After a brief overview, Marc was joined on stage by Michael Dell who recounted the various ways that their two companies have worked together as partners and mutual customers. When Michael left, Marc invited two employees to demo the new Service Cloud2 and the integration with Facebook, Google, and Twitter. In the new cloud world, social networks matter.

Near the end, Marc invited Sanjay Mirchandani, EMC’s CIO, and a mutual Oracle customer on stage. This was another brilliantly calculated move. The messaging here is that smart companies are looking to cloud applications that link to their legacy ERP system.

To be fair to Oracle, salesforce.com is a relatively important customer. Its multi-tenant architecture is built on Oracle’s database and middleware technologies. The company also runs Oracle financials as its internal backbone. 

Still, the presence of salesforce.com only reinforced that we’re on the edge of another critical technology transition. Oracle needs to step up and take a leadership position before new companies do what he did to Cullinet and McCormack & Dodge. Attendees are waiting to see what Larry has to say on Wednesday afternoon.

Stay tuned.

My Checklist on the Economics of Cloud Apps

Over the last year or so I have participated in a several webcasts where my role has been to offer advice on how to select your next business system. If you read last week’s First Thing Monday, you will detect my belief that more and more applications should move to the cloud/SaaS because of the economics.

Here’s a slightly modified checklist from the most recent webcast. Feel free to add/delete or rant/rave.

What’s The Fully Loaded Cost of Software Delivery by Platform?

I wish I had a dollar for every time I found myself in a debate over whether SaaS is cheaper than on-premise software over a 5- or 10-year period. Well, here’s some ammo that’s not going to win me friends in the on-premise camp.

This morning’s edition of the GigaOM blog opened with a piece written by George Gilbert, partner and co-founder of TechAlpha, and Jeurgen Urbanski, managing director, TechAlpa. They reference a new book by Dr. Timothy Chou, former president of Oracle On Demand, entitled “Cloud: Seven Clear Business Models.” What captured my attention was the data on fully loaded costs for the following deployments.

“Traditional legacy applications such as Oracle or SAP have a fully loaded cost of delivery of $1,000-$1,500 per user per month. Several years ago, Oracle On Demand got that cost down to $50-$100, whether it was Oracle-hosted or customer-hosted. Salesforce.com has squeezed that cost down even more to $7-$10, though admittedly just for the much lighter-weight CRM portion of the suite.”

I have to admit that I want to see the spreadsheet with all of the fully loaded costs. Still, if Dr. Chou is even close to being right about $7-10 per user per month, that’s going to grab the attention of the most SaaS-averse CIO.

Heard in the Hall, Part 1

There was a lot of vendor buzz at our recent Supply Chain Executive Conference at The Phoenican. I’ve attempted to capture some of the news and insight that I picked up in various formal and informal sessions, and through dozens of e-mails. Here is a quick summary in alphabetical order, starting with A through C.

Acresso Software recently launched FLEXnet Embedded, part of FLEXnet Suite for high tech device manufacturers. Built on Acresso’s expertise in license and entitlement management, the new software allows manufacturers to easily modify product configurations, simplify field upgrades, and enable trials of new capabilities. The new release enables high tech manufacturers to configure capability and capacity on their products by managing the licensing of embedded software.

Active On-Demand has crafted new partnerships with Inovis and Transfreight. The company is linking its TMS-as-a-service platform with Inovis' BizLink Manager. This will provide FedEx, Honda, and YRC Logistics with increased collaboration capabilities for shipment execution. In the deal with Transfreight, Active On-Demand will provide the 3PL with unscheduled transportation procurement and execution services across North America. 

Next month Acorn Systems will release its new Operational Performance Simulator, which is designed to show the actual financial impact of business decisions. The software has been installed at a well-known retailer that has been using the product to model its supply chain and sourcing strategies, ensuring the most profitable product flow paths and cost effective paths to its retail store locations. Insiders estimate that the customer has already saved more than $30M.

Robert Di Scipio, CEO, Aegis Analytical Corp. was all smiles after adding Merck Serono to his customer list. Aegis provides software for manufacturing process intelligence to companies in life sciences, chemicals, and medical devices. In a nutshell, Aegis aggregates all of your process information from a host of different sources and makes it available for analysis. For example, a company looking at the test results of a new product batch may want to retrieve data on the pH level, raw material supplier, time in the dryer, environmental condition, operator of the production line, and other potentially pertinent details. As Bob put it, “we help customers get to the ‘why’ of the outcome.”

As we were welcoming former Disney CEO Michael Eisner to the stage, Amitive was announcing “SCM in the Cloud.” Customers can select and run Amitive Unity 5.0 in any cloud environment, including Amitive's private cloud, a customer's own private cloud, or a public environment such as those provided by Amazon, Go-Grid or Google. We will have more on this in an upcoming post.

Apriso is set to launch FlexNet Lean Material Flow jointly developed with Accenture, based in part on work completed at Valeo, a leading automotive supplier. The new software generates a unique barcode to scan and synchronize material flows while integrating with ERP across production to final shipment. Benefits include improved visibility, traceability, and material throughput across operations to cut costs and improve cash flow.

Sao Paolo-based Axia Consulting is looking to start operations in the United States this year with the opening of a new office in Atlanta. The company intends to leverage its experience in Global S&OP, Demand Management, and SAP APO to add American customers in consumer goods, mining & metals, life sciences, and machines & components.

Aldata told us that Delhaize has signed on to use its Apollo space optimization software. If the customer name is not familiar, Delhaize America operates 1,500 supermarkets in 16 states in the eastern United States. Stores include Food Lion, Bloom, Bottom Dollar, Harveys, Hannaford Bros., and Sweetbay. Delhaize is an existing customer of Aldata’s G.O.L.D. Enterprise Retail Suite. Aldata plans to integrate the G.O.L.D. and Apollo applications for supply chain and replenishment optimization.

Better Place executives were at our conference to accept one of our Sustainability Leadership Awards. This is the company Shai Agassi started after leaving SAP. Guryan Tighe brought me up to speed on a new agreement that her company has with the City of Copenhagen. The two entities are teaming to build an electric vehicle pilot project for the COP15 conference being held in the Danish capital in December.

It looks like BravoSolution’s expansion into the United States is bearing fruit as sales in this country have led to the most successful quarter in the company’s history. BravoSolution entered the U.S. market with the acquisition of financially troubled Verticalnet. The company is counting on continued strong sales in the health care and energy & utility sectors.

Centric Software's new Product Profitability Planning solution provides detailed visibility into all new product costs and margins before launch. Calculating the fully loaded cost of a new product is difficult, since information like royalties, COGS, marketing costs, freight costs, and channel costs are usually captured by different departments in different systems.

Chainalytics’ Mike Kilgore made it clear that “we're not just optimization guys anymore.” Over the last seven years, Chainalytics has helped clients apply operations research tools to make better decisions in areas like supply chain network design, transportation bid optimization, and inventory optimization, and to improve supply chain performance management. While staying away from systems integration work, Chainalytics is focusing on defining data models, root-cause analysis and cost/service drivers that take BI to a the next level of effectiveness. The company has had a number of recent successes helping companies implement tools and processes in the areas of cost-to-serve and profitability analytics (look for an upcoming AMR Research case study) and transportation management, including a BPO-like offering to help companies reduce the profit leakage from transportation procurement events.

Old friend and former colleague Louis Columbus was waxing enthusiastically about Cincom Guru™ reception at the company’s recently completed Cincom User Summit.  Guru™ is the company’s new .NET knowledge management engine. It integrates into office automation and productivity apps from Microsoft, salesforce.com, and SAP, and gives line-of-business managers hands-on control over workflows and business rules. Mash-ups can be quickly created. Louis overheard one customer say, “This unshackles us from IT once-and-for-all when it comes to getting what we need from our data.”

Look for the next batch soon.

The Future of Work: 3-D Learning

A couple of weeks ago I was flying back from Europe. As we were settling in after boarding, my seatmate pulled the new Kindle 2 from Amazon and asked, “Got one of these?” As I pointed to my dog-eared copy of “Three Cups of Tea,” he bragged about the four books he had downloaded for his travel. 

A few days later, I was reading the Sunday edition of The New York Times (“Is This the Future of the Digital Book") and saw the article on Vook. There was a big color picture of founder Bradley Inman. The caption described how he is building a “platform for e-books that will combine text, video, and social networking.”

I was immediately drawn back to my book. In the future, I will be able to see the grandeur of K2 and the mountains of Pakistan and Afghanistan, the bridge built to help build the first school, the villagers and the climbers, and the relative closeness or distance between the village and the current battles between the U.S. military and the Taliban.

In the not-so-distant future, you can imagine textbooks will be delivered via Kindles and similar devices. Eighth graders struggling with abstract math concepts can see how algebra and geometry fit into the real world. Likewise, history, science, and foreign language studies will come alive. New games will be created to make learning fun.

And how long will it be before you can read our research on a Kindle? It may not be long before you can read our case study on a company’s supply chain transformation, and be able to click on the video interviews with supply chain executive and the CIO. We can take you from the manufacturing plans to the distribution centers to the retailer’s shelves, allowing you a much better view of the overall process and the challenges involved. If you can imagine it, we can deliver it. Think about how this changes the learning process.

What do you think?

The Future of Work

If you looked inside our company, you would see that we currently serve two broad categories of technology buyers: IT executives at large companies who need insight on managing their global enterprise application/ERP architectures, and operations executives looking for our assistance in helping to improve the effectiveness and efficiency of their ever-expanding supply chains.

For about a year or so, I’ve been fixated on a third audience: executives looking at how their organizations will need to evolve over the next five to 10 years.

There’s no shortage of questions: 

• Where will we find the people?
• How will we train them?
• Where will they be based?
• What productivity tools will they need?
• How will we structure their responsibilities?
• What will compensation look like?
• How will we manage the transition from baby boomers to younger employees?
• Who are our future competitors?  

The best-run organizations are already looking ahead. Fortune recently profiled Procter & Gamble’s A.G. Lafley as part of its ongoing “Top Performers” series. P&G has a comprehensive leadership and performance management program that is has branded “Build From Within.” 

A couple of points in the article jumped out:

• P&G plans to hire 2,700 people this year out of 600,000 applicants.
• Nearly all will be new graduates. Less than 5% of the hires will come from other firms.
• The company maintains a database on all 138,000 employees that closely tracks their monthly and annual performance reviews.
• P&G maintains a stable of three viable candidates for each of the top 50 positions.
• All P&G executives teach at the company training center and host weeklong “colleges” for employees moving up in the organization.
• Mr. Lafley closely tracks the development of the top 150 managers.

Clearly, this is a company focused on the Future of Work.

What do you think of “The Future of Work”?

I see the Future of Work as the theme for a lot of our existing coverage on human capital management, customer relationship management, knowledge and content management, SaaS/clouds, office automation tools, business intelligence and performance management, business process outsourcing, and social networking and other Web 2.0 tools. We would need to add some additional coverage around the organizational issues that don’t fit neatly in the software and services coverage areas.

I need your help, though.

What do you think of the theme? We have debated calling it “The Future of Work” or some combination of “People, Performance, and Productivity.” I believe this will be a critical discussion topic, especially as we emerge from the recession. What do you think?

Compiere: Not Just for Open Source Zealots and SMBs

Our recent piece on “The Cloud Versus SaaS: Compiere’s Don Klaiss Weighs In” and the corresponding “Compiere Cloud Edition: The Next Disruptive Breakthrough for ERP?” in First Thing Monday drew a lot of comments and e-mail. Keep ‘em coming.

One reader emailed with four specific questions that may also be on the minds of other readers. Here are the answers:

1. Is there any feedback or statistics regarding how this kind of technology has been accepted by companies with sales of $100MM or more?

Having talked to Compiere and OpenBravo, it’s clear that most implementations are at companies under $100M. That said, Compiere is focusing on moving up-market and has successful installations at companies like Specsavers (a $1.8B UK-based retailer of eyewear), multiple implementations at a $1B retailer in Venezuela, a large European pharmaceutical company, ISO in Geneva, a recent 7,000 seat deal with a part of the French Post, and others.

2. Does the product have interoperability with existing ERP or legacy systems? (avoiding a big-bang implementation)

Compiere is modular and companies can choose which components to implement and in what order. Smaller companies typically implement a full ERP footprint. But in larger companies, Compiere often coexists with existing corporate financial systems like SAP and Oracle. This type of integration is done routinely. A number of Compiere partners have developed conversion packs to move data from legacy ERP systems.

3. What types of interfaces come with the ERP system?

There are a full set of data loaders and Java API as well as a web services layer to facilitate integration. 

4. What happens to a user if the company suddenly goes out of business?

The company is venture financed by strong VC investors like NEA. And, as an open source product, users are provided with the application source code. Companies can either self-implement or get assistance from Compiere or one of the company’s partners. If they are unhappy with service from one provider, they can switch to another. They are also free to continue their subscription with Compiere and benefit from ongoing support and enhancements, or go their own separate way with the software.
 
Do you have any questions on open source apps? 

Does salesforce.com need “Workforce.com”?

This week’s newsletter (subscribe here) takes us to Dreamforce08, salesforce.com’s annual customer event. In this week’s column, we discuss salesforce.com’s cloud computing push and new (and existing) relationships with Amazon, Facebook, and Google. But we’re also interested in where else salesforce.com may go, has the CRM train been taken the end of the line? At the press conference, I asked CEO Marc Benioff if his company had time to add another productivity app, say human capital management/workforce management? He said that there was still a lot of track left for CRM and that he saw a lot of expansion opportunities for being a platform vendor. He also didn’t want to have to incur the expense of hiring a specialized sales force.

 

 

Good points, though I suspect his loyal customers (many of whom treat his company as the “Apple of CRM”) would be more comfortable buying applications directly from him rather than having to deal with a small, under-funded vendor. I suspect that he could deploy a telesales team if he picked the right products. He’s planning to set this up now for willing AppExchange partners.

 

Given the murky economic outlook, now may be a good time to diversify. His largest competitors—Microsoft, Oracle, and SAP—can’t match his growth in providing “CRM-in-the-cloud.” I would outrun them by adding complementary apps, even if it means competing with partners.

 

While his market valuation is off more than 50% from its summer peak, the market cap is $3.46B. At the end of the July quarter, salesforce.com has nearly $600M in cash, cash equivalents, and short-term investments. I suspect that many of the native app vendors and other AppExchange partners may be showing up with their luggage at his San Francisco headquarters. There could have lots of company if the downturn lasts through 2009.

 

Never underestimate Mr. Benioff.

Epicor 3Q, SAP at a Crossroads

As we mentioned in this week’s newsletter (you can subscribe here), Epicor had a busy week. Non-GAAP revenue for the period ending September 30 was $137.8M, up 33% from 3Q07. This was despite a drop in license revenue from the year earlier period as deals slid into future quarters due to the slowing economy. Most of the revenue came from maintenance (a record $52M), consulting ($41.8M), and hardware/other ($21.6M). The latter was driven by POS purchases in the retail sector.

 

Three other numbers stand out in the quarter. The company added 155 new customers, won back 142 more customers who had opted to go off maintenance, and ended September with a 94% customer retention rate.

 

On a different note, a few weeks ago SAP made a minority investment in Crossgate AG, a top provider of hosted B2B integration services. The company has more than 40,000 customers running on the Crossgate Business-Ready Network. This week, I asked Crossgate president Scott Lewin about his new alliance partner. Here’s his response:

 

“In the past 2 weeks, most major IBUs (industry business units) within SAP have requested briefings and are working on joint messaging. Within the SAP customer base, the amount of inbound interest has increased dramatically. I think we are in for quite a ride.”

 

You can read more about our conversations with Epicor, including its rejection of Elliot Associates takeover bid and its embrace of Microsoft's ambitious cloud computing initiative, Azure. We also have insights from our meeting with QAD and our take on SAP's new bite-size, “Best-Run NOW”, applications that take direct aim at Oracle in this week's newsletter.

 

We're off to San Francisco for salesforce.com's Dreamforce conference. We'll have updates as we get them. Until then, what do you think of any of Epicor's, QAD's, or SAP's plans.

Head in the Clouds

For at least a year, we’ve been writing about the tight link among software as a service (SaaS), virtualization, and software appliances. All are variations on the same message: “Let us run more and more of your data center operations for you.”

Now it’s time to add a fourth technology to the soup: cloud computing. Of all the new ideas listed above, this may be the most interesting because it is fast becoming the next major opportunity and battleground for longtime competitors/some-time partners Cisco, Dell, EMC, Hewlett-Packard, IBM, Microsoft, and Sun.

This time, though, they will face a barrage of relative newcomers, including Amazon, Facebook, Google, and salesforce.com, in the race to be the new platform-in-the-sky for businesses and/or consumers. For an analyst, there’s nothing better than tech titans battling to change the face of enterprise computing and the world of software as we know it.
This week’s First Thing Monday column looks at the four types of cloud computing and offers some brief case studies of what’s being done out there (subscribe here). And check out this week’s BusinessWeek, and our friend Steve Hamm’s article, “Cloud Computing: Eyes on the Skies”.