In-Depth

Salesforce.com Must Walk Fine Line

As it grows its CRM services stack, Salesforce.com must grapple with a host of new challenges.

• By Stephen Swoyer
• 11/17/2004

At its inaugural Dreamforce user and developer conference last year, Salesforce.com announced the first of the “seasonal” refreshes of its hosted CRM software, Winter ’04.

Dreamforce ’04, held this month in San Francisco, offered more of the same—although Salesforce.com is now grappling with different challenges than it was at this time last year. For starters, the company expanded its stable of hosted offerings—and, by definition, the scope of hosted CRM—significantly over the last 12 months. So Winter ’05, Salesforce.com’s newest software refresh, encompasses a lot more than just sales force automation software.

The Winter ’05 refresh includes supportforce.com—a hosted customer service offering that Salesforce.com unveiled last month—along with a new on-demand customization toolkit, dubbed customforce.com. Salesforce.com says that Winter '05 is the 17th overall release of its CRM service.

With Winter ’04, Salesforce.com expanded for the first time into extra-CRM markets like billing and contract management (see http://www.esj.com/business_intelligence/article.aspx?EditorialsID=6913&t=y). Winter ’05 takes the company even further afield, says Ian Jacobs, a principal CRM analyst with consultancy Current Analysis. The rub, of course, is that Salesforce.com has traditionally marketed itself as an easy-to-use alternative to on-premise CRM solutions (from Siebel Systems Inc. and others).

As it grows its stable of CRM and extra-CRM offerings, Jacobs says, Salesforce.com must walk a very fine line. “Salesforce.com has hit an inflection point—it has built up a competitive differentiation on ease of use, but it is now building out its service with increasingly complex features and processes,” he writes. “The company is now faced with avoiding transforming into a mirror of its on-premise rivals. To put it bluntly: salesforce.com’s current path puts it in danger of becoming another Siebel.”

Salesforce.com got its start as a mostly turnkey CRM service, only to add additional layers of sophistication over time, Jacobs says. Eighteen months ago, for example, the CRM-as-a-service pioneer announced an initiative—dubbed sforce—to improve integration between its own CRM service and the on-premise applications of its customers. Salesforce.com broadened that effort last month, with customforce.com. The good news, says Jacobs, is that customforce.com appears every bit as easy to use as the bread and butter salesforce.com service stack. “The so-called customforce.com customization toolset also includes some customizable workflow features, but nothing on the order of complexity of the custom scripting found in on-premise CRM suites,” he writes.

Hosted CRM’s biggest competitive differentiator is its low price—in terms of initial acquisition, implementation, support, and maintenance costs—but another value proposition commonly touted by Salesforce.com and other CRM-as-a-service providers is the ability to quickly expose new features and functions to end users. When Siebel builds new features or functions into its on-premise software, so this argument goes, customers must upgrade to the latest version of its CRM suite, or otherwise apply an update or fix pack. These are non-trivial requirements in most enterprise IT organizations. In the hosted CRM space, of course, Salesforce.com or Siebel (which markets an On Demand hosted offering) have only to “turn on” a feature or function to expose it to users.

The Winter ’05 refresh helps to dramatize this advantage. Even though Salesforce.com announced customforce.com just last month, it has already built incremental upgrades into the Winter ’05 release—including a new customer asset management tool called Installed Products. This feature lets customer service organizations track the individual products that a customer has purchased or installed. “These could be products that the company sells, that a partner sells, or even competitors’ products. This will allow service agents to link service cases to actual customer assets,” says Jacobs.

Of course, this advantage is a double-edged sword of sorts, too. “[As Salesforce.com] builds greater complexity into the product, it must craft a system that allows users to keep up with its ambitious release schedule,” Jacobs points out. “User training is an issue—some customers at the event have mandatory training and/or refreshers for users several times a year.”

Elsewhere, Winter ’05 highlights the flexibility of Salesforce.com’s hosted CRM stack. The new release features support for a new “Custom” tab that effective lets users build custom—perhaps even non-CRM—applications on top of the Salesforce.com services stack. “Customers could conceivably use the customization capabilities to construct non-CRM applications to track public relations efforts or to organize their operations department,” Jacobs concludes.