What is the deal with Salesforce.com and their Cult?

Last night I spoke on a panel about Web 2.0 in the enterprise, and one of my co-panelists was Adam Gross from Salesforce.com. All throughout the discussion he kept dinging me as a representative of SAP and insisting that nobody should install software. I find this position a little mystifying because while I appreciate competitive aggressiveness I also reject the notion that any market should be all of one philosophy or another. The whole point of having competitors in a dynamic marketplace is to provide customers with choice, and most importantly, consistently better products and services at lower unit economics. Their position is somewhat undermined when you consider that they have been aggressively touting their SAP connector to bolster their bona fides in the enterprise market.

My SFdC colleague also prattled on about how the user experience should form the basis for everything a company does. It’s hard to disagree with this in principle, but in practicality there are many other considerations that need to be taken into account when building software. I have written here and spoken frequently about the absolute requirement to have improved user experience (and not just a better UI either) as a core and continual value, and quite frankly this is something we have not delivered on over the years. But that doesn’t mean we have failed either, or somehow abandoned our customers… the fact that SFdC will never admit to is that the overwhelming majority of our customers not only rely on our software to run our businesses but that they also willingly do so.

Here’s the real problem that I see SFdC running into with their obsession with multi-tenant hosted software, it’s really their religion and just like you can’t decide it’s convenient to switch religions when the opportunity avows itself, they will not be able to offer anything other than what they are currently doing when customers ask them to. SAP (Oracle and everyone for that matter) has not architected this level of rigidity into our corporate values and as a result if an opportunity presents itself to adopt multi-tenant hosted apps we can do it easily. I would much rather be able to adapt my business to offer a variety of delivery models than be so rigid that I can’t regardless of how many times my customers ask for it.

Lastly, I find it rather unsettling when your competitor can’t be intellectually honest about anything of value that their competitor is doing; when they are in constant selling mode that is the equivalent to a young child demanding attention and validation at every turn. I’d like to think that prospects, customers, influencers, and whoever else we speak to is saavy enough to see through competitive posturing for what it is. I do subscribe to principles of transparency and honesty in my approach to these matters, I have written here and talked publicly about how significant I think AppExchange is, that their efforts to put their system status online is a great idea, and the benefits of their approach to software services, would it be too much to ask that Adam at least acknowledge that SAP has done something of value over the 30 years we have been in business? As a professional in this business you try to have the attitude that the Valley is a small place and irrespective of the competitive dynamics between companies you try to maintain a level of respect for your peers. My experience last night just pissed me off and eroded the goodwill that had been building up with my interactions with other execs from the company.

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30 thoughts on What is the deal with Salesforce.com and their Cult?

  1. Jeff…great argument although I would disagree with your argument that SAP (and all traditional “ERPs” for that matter) could adopt a multi-tenancy model with ease. It is fundamentally a different business model that would dramatically change the economics of the solution vendor/provider. Accomodating various delivery models including SaaS and BPO has a greater impact on the long-term monetization than it does on the delivery mechanism.

  2. We did with Pandesic in 1997. Not only did we introduce a new delivery model, but a transaction-based pricing model.

  3. Jason,
    I actually do take you point to heart, I don’t mean to imply “with ease” but rather just that we could do it whereas SFdC has painted themselves into an ideological corner that prevents them from doing anything other than what they are preaching now.

  4. RightNow Technologies may have the same disease. I had a breakfast with Greg Gianforte once that i really didn’t enjoy. He kept saying things like “I was at British Airways this morning and they tell lme they are never going to buy any more infrastructure software”. I was like- are you on crack? regardless of the truth or otherwise of the statement you’re talking to someone that has already said is an industry analyst with a focus in middleware, whose clients care about middleware issues. at least throw me a bone…

    And as Salesforce is discovering – for a few nines infrastructure really does matter. Nobody should install software? Try telling that to Flickr. Or any iTunes user.

  5. Jeez, I missed a huge opportunity last night to remind Adam that iTunes is installed software when he said that buying software should be as easy as buying a song on iTunes.

  6. Jeff, the point you make in your last paragraph would be stronger if you added some supporting links to your past writings on the subject.

  7. I could have spent 60 bucks on a good meal instead I sat through Sass vs Software argument. I was looking for real debate on what applications in enterprise software segment benefit from consumer/web 2.0 technologies.

  8. welcome to the campaign of 2006. This is negative politics 101. You as incumbent will continue to be painted as”evil”.

    You can keep defending you are wonderful and also go negative on them.

    Much better – you know where SAP’s negative image numbers come from – start addressing them… you know my view on my blog that your economics and partners need fixing

    The race is yours to lose…

  9. Viinie

    what’s your take on what applications really benefit from some of the web 2.0 technologies

  10. Vinnie,
    I think Anon’s point about “I was looking for real debate on what applications in enterprise software segment benefit from consumer/web 2.0 technologies.” is the real issue here. I wanted to talk about web 2 in the enterprise but the whole discussion got dumbed down to the “it’s all about SaaS” subject.

  11. Honestly, I think it digressed to the debate it did because neither really represents Web 2.0. SFDC is like Web 1.5 at best, and SAP is a German monolithic that is more Windows 3.1 than Web 2.0. SFDC is innovative for their business model, and their easy of use, but they haven’t been a major frontrunner (in my opinion) of the cool Web 2.0 technologies. Admittedly, their product inherently will become part of web 2.0 as it advances, but really, what did you expect?

    Honestly, we should all be talking about how cool Vista will be.

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  13. I too thought the event ended up perhaps partially missing its official point. The event was highlighted as “what happens when we go beyond deploying wikis and blogs inside the enterprise”. I think the SaaS vs. on-premises point dominated it to a point where perhaps we missed the topic in large part. Added on to that the SOA part of the discussion and there wasn’t much room for novel Web 2.0 (You tried hard to get back to this by making the summary point all will co-exist in the world and each has its place and each is quite successful, as did Jeff Clavier and even Adam both by asking what other enterprise apps were out there yet undiscovered, but maybe it was too late by then). I tried to inject a little bit myself by asking about rogue applications and what implication they have on the enterprise as they scale, but no one took the bait, maybe it wasn’t an interesting enough to get the conversation to segue out of the SaaS vs. on-premises debate 😉

  14. Why do little yippy dogs snarl and bark at the big dogs? Because they’re afraid.

    Some SFdC folks are hyper-aggressive towards the market leaders (who invest oodles more in R&D for customers by the way) because those SFdC folks themselves don’t fully believe the closed-minded drivel they’re passing on. But its soothing for them to forcefully repeat it.

    Now, you shouldn’t dismiss the good innovation SFdC is doing just because of those salty ex-SEBL competitive types. Just keep a spray bottle handy to squirt them when they need it.

    “Bad! Bad product marketer! Heel!”

  15. Jeff,

    I think your heart is in the right place on this. No one would argue that SaaS is an increasingly important delivery model for applications. Recent SAP acquisitions like Frictionless Commerce show that SAP “gets it” and can embrace SaaS. Like in many things, we will see a diverse world in terms of delivery models for years to come. Innovation will always breed diversity.

    Vinnie makes a good point though. SAP can adjust, but the “traditional” ERP economics will need to evolve. SaaS, Open Source, and even Consumer Apps (ad-based model) will pressure established vendors, like SAP, to lower TCO while delivering increasing value to customers.

  16. Hi Jim,
    I think you meant to write that “no one would argue that SaaS is NOT an increasingly important…”?

    Interesting that you mentioned Vinnie because he recently wrote that evolution, not revolution, is what we need, which I presume supports the idea that we can adapt as opposed to throwaway and reinvent.

    The point about ERP economics is just that, economics which translates into licensing models as opposed to delivery models. This is going to be a challenge if we can’t figure out how to reconfigure our sales processes, but then again that would be presuming that we aren’t already working on this.

  17. Bottled water!!

    I completely agree with you in many ways. Yes, Software installed on premises may not be the solution to everything just as mainframes were not the only reality- but to argue the opposite that all software must necessarily be SaaS is ridiculous. Remember, water and electricity are ultimate utilities (Services)- and some people with unique needs run their own generators, filter their own water etc. Ever bought a bottle of water rather than run to the tap?

  18. Anshu has hit the nail on the head: when a new wave of technology hits, it does not completely and immediately wipe out the preceding solutions. The new thing becomes a layer that complements and extends what has come before. SaaS is great and here to stay, but there will continue to be installed/licensed software for a long time, probably forever. Just as the Internet will not completely replace traditional media such as TV and movies, only marginalize and morph it.

    So though I credit Adam for being willing to take a stand and create some lively debate (compared to some of these boring panels where everybody is singing from the same hymnal), I resonated with Jeff’s basic point that Adam was taking an overly extreme stance.

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  20. “competitor can’t be intellectually honest about anything of value that their competitor is doing” – Jeff, I used to work at JD Edwards a few years ago, and no one in the ERP market could say anything nice about their competitors, even SAP. Before that I worked in the data warehousing space with a great product called the Red Brick Warehouse, and had to contend with Oracle’s snapping.
    Maybe its the nature of the business, or the type of people involved, or tech industry’s ‘winner takes all’ philosophy.
    What do the automotive manufacturers say about each other?

  21. Maybe this all comes down to just a personal style issue for me. It’s one thing to be giving the keynote at OSCON or CES, it’s another altogether to be in a small and highly personal panel discussion in front of 40-50 people, who by the way are expecting a candid and honest discussion as opposed to just another glossy sales pitch.

  22. Jeff:

    Good v. Evil is a vast oversimplification that is a crutch of the intellectually weak. It is as true in Marketing as it is in Politics. Be thankful Adam has no real power and is, therefore, not dangerous.


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  24. Jeff:
    I am sorry I missed the panel but congratulate you and SAP for stepping up to such forums and further posting considered opinions in a blog. As another software veteran I commend and encourage your continued intellectual honesty and recognizing true competitive innovation such as your acknowledging AppExchange and http://trust.salesforce.com. MarcB has demonstrated tremendous courage to innovate these and other high risk models.

    Certainly Salesforce petulance serves them well. Nothing legitimized Salesforce so fast as Siebel’s “ondemand” investment/offering. Respect and share follow when they pick a public fight and land some legitimate blows against larger players. Since ORCL is not worthy in apps, this leaves only SAP and MSFT today, perhaps GOOG or others tomorrow. Such is the price of being the unrefutable market leading solution on every measure – share functionality, # users, # industries, % of software industry profits, etc. Unlike ORCl whose leader truly enjoys being predatory and desires monopolistic advantage despite customer value, I do believe MarcB innovates in line with market and customer value as best he can from his limited view of the truly global enterprise.

    This author shares your frustration as Salesforce should have more productively engaged the panel/audience on how Web2.0 can meaningfully engage the enterprise. If you and Adam worked offline to create and deliver a joint presentation, you could reach an audience of 4000, not 40. Moreover, your respective customers would participate and help guide your investments, along with the thriving ecosystem. Call him out and let some mutually agreed upon moderator set the agenda to keep it fact and value based. An honest debate will raise the quality of the game for both companies and move the conversation from petulance to productive discourse. ( I am not calling you or your comments petulant; I have seen only thoughtful, professional, honest dialog.) For example, choose a mutually convenient competitor, like MSFT and discuss how Web2.0 constructs in Zimbra and Writely have genuinely innovated user value compared to their over the Outlook and Word monopolies. This can help raise collective awareness and direct investment towards the legitmiate power of Web2.0.

    Capitalism is very efficent and we stay comfortable in our share leadership at great peril. Pre-cellphone era, surely Motorola never anticipated their lock on wireless communication would be threatened by a couple firms in central Finland. Nor did any legitmate player in the pre-client server era believe ORCL could disintermediate IBM’s proprietary systems. My point is that market forces at work again in our industry are ripe to disintermediate both SAP and CRM – the future combantants will not come from the shores you might expect.

    Salesforce may be the OnDemand giant, but very vulnerable even as they approach $500m in annual revenues. They do appreciate and learned to cope with today’s market reality: the only thing you can monetize is usage and every login is another validation available for micropayments. To survive and perhaps thrive in this world does require multi-tenancy. However, it’s an unfair fight cause architectures in the late 70s and early 80s (when SAP began was taking share) did not permit it. I do submit that IF SAP customers could choose to install or host but SAP only got paid monthly based on usage, SAP would only support multi-tenacy.

    Similarly, it’s not fair for you to suggest that SAP users willingly choose to use SAP; the preponderance of your users in AP, procurement and shipping never got a vote and cannot choose otherwise and keep their job.

    The market forces will not reverse – buyers do not want to pay up front, front load their risk and pay the vendor and implementors in advance for uncertain benefits. Salesforce has found a way to live in that world. The market at large can learn some things from their innovations. As the anchor tenant in our marketplace, SAP benefits most by investing in the dialog. Salesforce becomes “OnDemand 1.0” unless they learn ever more compelling user experience and more progressive architectures that permit onboarding and viral adoption at less than 50% of revenues going to sales and marketing.

    In the new world we must continuously innovate the user experience until no consulting is required to make it work for your company. If we envision a market where each enterprise user pays only $1 a module for life, then we can avoid becoming the recording industry having just been “iTuned”.

    thanks for listening to my rant

  25. Thoughtful comment, although I have a little issue with the notion that “…SAP users willingly choose to use SAP; the preponderance of your users in AP, procurement and shipping never got a vote and cannot choose otherwise and keep their job.” The great majority of enterprise software users don’t get to choose what app they want, it’s provided to them for reasons that go well beyond simply their preference.

    I take your remaining points to heart, and in fact they reinforce what I have been writing about and speaking about, enterprise software needs to change, but not because of new competitors but because of new opportunities.

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