Is Salesforce for sale? The market leader in CRM is worth $50 billion, despite the fact that it's made a loss of $600m since 2001. Yet there have been rumours for the last two weeks that the company is on the market.
What does a potential sale of Salesforce mean for your CRM project? Especially if you are still trying assessing which technology best meets your needs.
The possible contenders seem to be:
Let's have a look at what some of those might mean.
The first question is, how long would the Salesforce product stay around in the form that current users expect? Gartner identifies these companies as Salesforce's top four competitors by market share in the CRM space.
Salesforce currently runs on a cluster of Oracle databases, some located deep in the Arizona desert and others elsewhere across the globe. There's a synergy there. But Oracle already has three other CRM technologies - Seibel, Oracle CRM and CRM on Demand. Could it handle another similar product? And even if it could, would it? Certainly, when Oracle bought Seibel, the SQL Server version of the product did not stay around for as long as was promised.
Actually, it sounds as if Oracle would rather someone else bought Salesforce to stir up the market
Meanwhile, Microsoft and IBM both have their own major database or DBMS solution. If one of them proceeds with a purchase of Salesforce, how will this affect the product? Would either be happy to leave Salesforce on Oracle?
Microsoft had the second fastest growth in the CRM sector. Microsoft CRM also offers multiple variants of Dynamics CRM. However, unlike SalesForce the different options are not significantly different in functionality, the differences are in how the solution is licensed.
The CRM Online offering is significantly cheaper than the other options – clearly it is being subsidised. Microsoft could start charging more a realistic price for its CRM Online offering once SalesForce was out of the way.
If Microsoft bought Salesforce it would be head, shoulders and more above any other company in the CRM space.
Salesforce is the only CRM vendor in the list above which is restricted to being exclusively cloud-based. All the others offer and support on premises products as an option.
One of Salesforce's catch cries during the pre-sales phase is that because it is in the cloud, you can implement without your IT people being involved. 'IT being involved' is of course a euphemism for 'getting in the way, slowing things down and making it more complicated'.
This sounds good, but often turns to dust. The unwary buyer realises that they need help from IT, but having been dodged in the selection process, IT are often not as amenable to solving the problem created by trying to avoid them.
The strategic incentive for these companies is to expand their cloud offerings into the enterprise space.
There is clearly a demand for cloud based CRM solutions. However, SalesForce here, and elsewhere, muddy the waters. They rarely openly explain the difference between public and private cloud. While public cloud does have its advantages, it also has its downsides and these should be explained.
Google and Amazon already have strength in Infrastructure-as-a-Service (IaaS). Strengthening their SaaS abilities would help them challenge Microsoft, which is strong across both areas.
To me, Facebook are the real outrider in the list. If Facebook bought SalesForce, would they use the SalesForce techniques to strengthen their own data security and privacy, or would they allow their new CRM to leak data, or would they have almost opposite paradigms for the two products?
Salesforce's licence price is one of the highest in the competing products – when you do a like for like comparison. Salesforce offers several levels of product, and because it's all SaaS and centrally managed, it's easy to upsell. Initially, one of the cheaper options appears to meet your needs, until you start the project, and gaps become apparent. But by then you are committed to Salesforce.
Salesforce also sell more licences than many competitors.
So why has Salesforce made a loss of nearly $50 million a year since 2001?
One possible reason is that they bundle a lot of 'free' services in order to get the sale.
The Salesforce sales process also relies on the ignorance of the buyer, which often leads to blow out of the project. One organisation who recently moved from Microsoft Dynamics CRM to SalesForce were bitten badly by this.
The main reason this organisation made the switch from Microsoft Dynamics CRM to Sales force was because all the reports that they could need were included in the price. They believed that all their changes would be met by reports. However, in order to get the data for the reports that they wanted, they needed to make many other changes that were not included in the 'all you can eat' reports offer.
As I said above 'one of the cheaper options appears to meet your needs, until you start the project'.
'Marry in haste, repent at leisure.'
The Salesforce proposition of implementing CRM 'without getting IT involved' already lays a company open to risk. IT may slow the process down a bit, but they also make it safer. They're used to defined requirements and they know from experience that 'the devil is in the detail' and you need to check that before you commit.
The idea of 'Salesforce for Sale' simply adds another level of uncertainty to the Salesforce proposition.
Even if you do involve IT, do you want to commit to a CRM product with an unclear future?
Opsis is an expert CRM consulting company. We are not an IT company, nor a management consultancy, although we often work with both of these. Our focus is wholly CRM, and particularly Microsoft Dynamics CRM. We are based in Sydney, NSW, with clients in Sydney, Canberra, Melbourne, Brisbane and across Australia. Our range of CRM services include CRM strategy, CRM scoping, CRM implementation, technical support and CRM training.