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Dreamforce Dreamforce '12 Recap and Review

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Social, CMO’s and The Shrinking Distance Between Innovation & Commoditization

The tenth Dreamforce finished today and I find myself considering how this tenth Dreamforce is notably different than prior conferences and how this event will influence the foreseeable future for Salesforce.com and the competitive landscape.

Sure, attendance is up. Salesforce.com put the figure at over 85,000, but after deducting the free and low cost registrations given out in mass online and on college campuses to people who don’t actually attend the event, or maybe just attend the concert, its unclear what the real attendance is. Whatever the actual number, it’s clearly a super-sized event and it continues to grow.

Marc Benioff and team continue the social revolution mantra. And for good reasons. Business is becoming social and Salesforce.com both spearheads this opportunity and is clearly a thought leader in explaining, demonstrating and promoting how this enables a never before seen business opportunity.

Salesforce.com notes that people are collaborating in social channels, but many companies are still sitting on the sidelines. Companies must transform how they market, sell, service and collaborate with customers, staff, partners, devices and machines if they are to take advantage of the social revolution.

The company goes deep on social business, well beyond just a few social business software tools. Benioff aptly states that “the social revolution is a trust revolution” and suggests that social must be integral to company culture to succeed. These are clearly wise words from a leader who leads by example. Other business leaders would do well to seriously consider his evangelism now while it still can be applied for competitive advantage, not later when it will forced upon them as a cost of doing business.

A New Push to CMOs

Benioff has taken note of the oft quoted Gartner forecast that CMOs will spend more on technology than CIOs by 2017. In fact, in the analyst Q&A session Benioff indicated he believes the change is coming even faster. Salesforce.com also recognizes that CMOs are uniquely without an underlying technology platform to call their own, and instead continue to grapple with a mix of manual processes and disparate niche solutions.

The Salesforce Marketing Cloud is the result of the Radian6 and Buddy Media acquisitions, and is an interesting start, but remains overly cloudy in its role as a marketing platform. In reality, the product is a social marketing cloud, which bodes well for aiding the social enterprise, but lacks many of the lead generation capabilities most needed by marketers. CRMsearch.com attracts about 900 to 1100 marketers per day and in our outreach sampling with these visitors they consistently share that they seek solutions for lead acquisitions, with technology that supports capabilities such as anonymous lead tracking, online lead acquisition, lead scoring, nurture campaigns, lead transfer and rich lead gen marketing analytics. Salesforce.com’s marketing cloud does few or none of these things. For these most in demand capabilities, customers must turn to third party marketing automation solutions such as Eloqua, Marketo, Act-On, Pardot and Silverpop.

Forcing third party marketing automation software solutions to satisfy demand generation requirements is viable, for now, but significantly increases TCO (total cost of ownership) and the complexities of multi-vendor systems and relationships. As marketing automation is now late in the game, a build it yourself option is undesirable, so it’s unclear why Salesforce.com hasn’t already acquired one of their marketing automation partners – something I’ve been suggesting for over two years. From some comments he’s made, I suspect Benioff views these solutions as glorified “email marketing”, and somehow old-school or otherwise less than exciting. But if Salesforce.com expects the marketing cloud to reach the stated billion dollar threshold, it will need the growth and revenues marketing automation continues to achieve. Expect Salesforce.com to finally acquire one of its marketing automation software partners before the next Dreamforce.

Product Announcements

There was a notable absence of significant product announcements. Last year’s introduction of Saleforce Touch now delivers a new HTML5 mobile presentation layer. Work.com was released as the next incarnation of Rypple. Do.com was announced as a personal or small workgroup online project office. Chatter now has a Chatterbox to sync files. And several product announcements such as Chatter Communities, Salesforce Identity and the Data.com social key won’t be available until 2013.

This year the show felt as though it was missing that big announcement that would provide something new and excitedly different. It felt like there was a promotion or announcement that was planned, but never came to fruition and missed the annual event. While it’s difficult to launch innovative technology every year, this has been a hallmark of Salesforce.com and something the company effectively uses to position itself as unique. For the CEO whose most asked question to others is “What does the future look like?”, this year’s Dreamforce looked like incremental advancements of existing solutions.

The Shrinking Distance Between Innovation and Commoditization

Salesforce.com has brilliantly executed a CRM product strategy and evolution not by advancing the CRM software to any unique capabilities but by introducing innovation on the fringe or periphery which arguably adds value to the core CRM software – and creates new messaging that catches competitors by surprise and leap frogs the competitive landscape. Just think back to the announcements of cloud, social, AppExchange, Force.com, data.com, heroku, chatter and other concepts and product offerings that pumped new life into a 20+ year old CRM software industry. The CRM software itself doesn’t do anything that hasn’t already been done for nearly two decades, but by introducing and heavily promoting innovation on the fringes, the sum of the pieces creates a synergy that has taken the market by storm.

Dreamforce has historically been the event to introduce new innovation and promote its rolling thunder messaging which raises the bar and puts competitors on the defensive. In fact, in many ways, Dreamforce is the event with the marked purpose to position its CRM software as unique in some new way. That didn’t happen at Dreamforce 2012. Make no mistake, CRM software in the cloud or otherwise is rapidly becoming a commoditized market. Salesforce.com along with virtually every competitor performs account/contact/activity/opportunity/campaign/case management equally well.

The prior two Dreamforce’s positioned Chatter as the value-added internal collaboration tool that customers needed and competitors didn’t have—and in the process kept the flagship CRM product more relevant. But now Microsoft, Oracle, SAP and others all have a comparable internal network and collaboration tools. This Dreamforce introduced a social marketing play by way of the Radian6 and Buddy Media acquisitions, but competitors such as Oracle have acquired the same types of tools (Vitrue and Collective Intellect) which negate the type of unique positioning historically achieved by Salesforce.com.

Competitive advantage is achieved when products and services meet the three criteria of being relevant, measurable and unique. The last tenant of being unique is clearly the most difficult to achieve and nearly impossible to sustain. And without uniqueness, commoditization accelerates and forces pricing pressures and margin erosion. Salesforce.com currently sells its solutions at a high premium relative to other cloud CRM software competitors, which is a testament to its brand, and its ability to be perceived with competitive advantage. However, as of this year, there is nothing material or notable – perceived or actual – that Salesforce.com offers that isn’t also delivered by competitors. Unless this situation changes, and the company introduces new (actual or perceived) product innovation that gives it unique footing, CRM software competitors with much lower prices will find increased customer acquisition success and market share growth. End

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This year the show felt as though it was missing that big announcement that would provide something new and excitedly different. It felt like there was a promotion or announcement that was planned, but never came to fruition and missed the annual event.

 

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