Salesforce.com has been at the vanguard of cloud computing, and Force.com is one of the leading cloud platforms today. If you’re an Independent Software vendor (ISV), Force.com provides a great opportunity to build a cloud app or a cloud business, without having to re-create your own cloud infrastructure.
However, most ISVs -- established and start-up -- find it extremely challenging to build a business in the cloud. After spending all the effort and investors’ cash, many do not see the return on investment. Why?
It happens because ISVs don’t ask the right questions before jumping into the cloud. The usual first question is “I have this application, or I want to do this – should I use Force.com?”
Force.com’s applicability has as much to do with your company’s goals and circumstances as with the application or technology you want to build. Many of the considerations are business-related rather than technical.
In addition, the cloud computing model imposes significant dependency on the cloud provider – in this case, salesforce.com. It’s very important to work the relationship with salesforce.com to your commercial advantage.
In this article, we provide a high-level introduction to the reality and misconceptions around salesforce.com and its work culture, as seen through the eyes of a partner. The article is extracted from our recent book, “Thinking of … Force.com as your key to the Cloud Kingdom? Ask the Smart Questions,” which also features a Foreword from Parker Harris, co-founder of salesforce.com.
Salesforce.com Sales Model
As salesforce.com transitions from the hottest start-up with a cool product to the industry leader that most companies want to partner or compete with, its internal culture assumes more significance.
Marc Benioff’s long association with Oracle helped attract a lot of talent from the tech giant. While the strong focus on innovation helped build a motivated workforce, the deep Oracle roots defined how the company worked with its customers and partners. Salesforce.com built a partner ecosystem of companies that provided complementary products and services. However, the core offering is mostly sold directly by the salesforce.com sales teams.
For its next phase of growth, salesforce.com is looking to recruit OEM partners and Value Added Resellers (VARs) – companies that will build their products on the Force.com platform and sell a bundled offering. If you build your product on Force.com, you may have a choice to be a part of this indirect channel, or you may also choose to sell your product separately as a plug-in and let the salesforce.com direct sales rep sell the Force.com seats.
The Common Misconceptions
That partner ecosystem that salesforce.com built helped them sell Salesforce CRM and make it sticky. The partners were mostly either consultants providing implementation and support services, or ISVs selling add-ons to Salesforce CRM. This group of partners still forms the bulk of the partner ecosystem. For them, the focal point of each engagement is Salesforce CRM sold by the salesforce.com direct sales team, in most situations. The sales and partner engagement model that evolved was based on a tight relationship between the partner and the salesforce.com sales and marketing teams.
As an ISV with a cloud product, where you will be reselling Force.com, your success will be driven by you, not salesforce.com. Your product will have to become the focal point of each sale, with salesforce.com supporting you as your infrastructure provider. This model is different from the model used by earlier salesforce.com partners.
However, the older model, being the dominant model, often leads ISVs down the wrong road. When it comes to critical items such as how to create/manage a multitenant product, how to work with salesforce.com or how to get revenues from the product as opposed to services, most ISVs end up following the consulting model, threatening the viability of their cloud business.
Where is Salesforce.com Headed?
After changing the landscape for sales force automation, salesforce.com has successfully opened the world’s eyes to the larger cloud computing opportunity. They are the innovator, the market leader, as well as the industry’s blue-eyed boy in terms of potential. Since they have executed so well, there is every reason to believe that they will maintain their dominant position, and Force.com will evolve into the cloud platform of choice.
However, salesforce.com is still a relatively small company when stacked up against the larger cloud computing demand and opportunity. Larger players such as Microsoft, Oracle, IBM and a few others have the incumbent advantage, deeper pockets and wider partner/reseller networks. Salesforce.com has yet to clearly spell out if it wants to go deeper with Sales & Service Clouds using its current direct sales model or wider with the Force.com platform through an indirect sales channel. What happens to Force.com if salesforce.com is acquired?
It is true that Marc Benioff, in his quest for the “end of software,” has been instrumental in starting a revolution. “He’s shown he can topple an industry – but can he lead one?” asks Joshua Weinberger, Managing Editor of CRM Magazine. It remains to be seen whether salesforce.com can maintain the leadership position it currently enjoys.
As with any new model, there are many unanswered questions and risks. However, the opportunity is also too big and too real to ignore. Salesforce.com has helped us to see the opportunity and forced us to have a discussion about the cloud.
Despite the risks, doing nothing doesn’t seem to be an option anymore, because cloud platforms like Force.com also significantly lower the barrier to entry for your competition.
Should We Just Emulate Salesforce.com?
Everyone wants to copy the sales, marketing and development model that salesforce.com adopted, and for good reason. “After all, if they became a billion-plus-dollar company using that approach, why don’t we just adopt the winning formula,” reasoned the CEO of an enterprise software company that was considering building a product on Force.com.
In fact, there’s a lot to be learned from salesforce.com’s model. Their marketing team is, arguably, the best we have seen in the software world. Their sales organization is top-notch. Above all, Force.com is their creation, so who else would know the ins and outs of the platform better? So go ahead and absorb what you can.
We wish it were that easy. Emulating every aspect of salesforce.com also has strong disadvantages since your situation will be different from theirs in so many respects. For instance, salesforce.com never had to build and market on a third-party cloud computing platform. You will.
What do we do, then?
Choosing the right cloud platform and company is clearly critical. But there are other extremely important considerations too. A shift to cloud-based solutions has far less to do with technology than with getting into an entirely different type of business.
There are several other important areas where you will need a lot of clarity, such as:
- Selling a product versus delivering a service
- Creating a multi-tenant model versus a single-tenant model
- Product revenue versus consulting revenue
- Implementing Salesforce versus developing a commercial cloud product
- Building in a public cloud versus an on-premise platform
Building your cloud business using Force.com will require a very tight collaboration between your business and technical teams. In most organizations, one leads the other, making joint decision-making harder. Our book provides all the questions, which need to be asked and answered by your teams. They have been divided into two sections: Questions for Suits and Questions for Jeans.
Having considered all the questions, you may come up with the answer No. That’s a No to Cloud Computing, or No to Force.com, or Not now but possibly later. Any of these answers is fine.
In fact, No would have been a better answer for many of the organizations we have talked to who have launched, spent money, cannibalized their existing business and ended up with less than they started with.
What is important is that the decision has been made with due consideration.
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