Salesforce's cloud computing strategy pushes forward

Salesforce.com keeps adding to its open and social cloud computing strategy through acquisitions and internal development, while some observers wonder if the company isn't spreading itself too thin.

Like many Salesforce.com customers, Michael Walsh, vice president and chief information officer of D-Link Systems Inc., considers himself a big fan of his vendor and said he is “extremely happy” with the company’s direction and cloud computing strategy.

But there are moments when Walsh said he hopes Salesforce isn’t doing too much, too fast.

“You don’t want them to lose sight of what they are,” he said.

Walsh is not alone. Based on a dozen interviews with IT executives, marketing and sales managers and industry analysts over the past several weeks, it is clear that many are wondering just how Salesforce.com will continue to be the nimble and innovative company that once thumbed its nose at the software establishment now that it is transforming into a corporate giant.

“It isn’t haphazard or random in any way, but it is following an inspiration,” said Michael Maoz, distinguished analyst with Gartner Inc., as he described the Salesforce.com strategy. “It is as if Salesforce is saying, I don’t know what my last mile is, but I am building a new highway.”

There is no question the company is on a roll. On May 19, the company revealed another growth quarter, reporting revenue of $504 million for its first quarter of 2012. What’s more, it added 5,400 new customers to its roster, bringing the total base to 97,000.

Salesforce CEO suggests you can’t do it all 

But in an earnings conference call following the release of its financials, Salesforce’s chairman and CEO, Marc Benioff, implied Salesforce could be reaching a critical juncture where expansion plans need to be very carefully evaluated. When asked if the company’s acquisition earlier this year of Radian6 would morph into a new marketing cloud, Benioff said it eventually would, but it is not a priority.

“Honestly, the problem is we are in a lot of things already that are hot,’’ Benioff said about the idea of launching a marketing cloud. “We are very cautious about doing that because if we go ahead and build that out right now, what will suffer? Will we have our eye of the ball in one of these other critical areas.’’

Benioff’s comments could appeal to customers who have been concerned about the sheer volume of initiatives under way at Salesforce.com. For example, the company has snatched up several companies in a string of acquisitions over the last 12 months, including:

  • Radian6, a maker of social media and monitoring tools, which was purchased for $326 million in early 2011.
  • Jigsaw, a provider of so-called crowdsourcing technology to manage business contact data, which was acquired in April 2010 for $142 million.
  • Heroku, a creator of a Ruby application platform, which was purchased for $212 million at the close of 2010.
  • Dimdim, a maker of communications software for real-time collaboration and communications, which was purchased for $31 million in January.
  • Manymoon, a developer of Web productivity apps, which was picked up for an undisclosed amount in February.

Some analysts, such as Ray Wang, CEO and principal analyst at Constellation Research Inc., believe the Salesforce.com acquisition strategy is smart.

“The platform is almost 11 years old,” said Wang. “In the world of the cloud, they are the oldest. The acquisitions are injecting new life, rather than leaving it to developers who could take longer.”

“We are definitely moving fast and we’ve made a lot of changes, but that is to respond to major disruptions in our industry," said Sean Whiteley, a senior vice president of marketing at Salesforce, in an interview earlier this month. “Our job is to make sure our customers don’t get left behind. It is understandable that it is hard to keep up.”

Customer react to Salesforce’s pace

The trick for some customers is to figure out what their next CRM move should be based on the roadmap Salesforce is presenting.

For Dan de Silva, a Salesforce user and vice president of marketing at OraMetrix Inc. in Richardson, Texas, the rapidly evolving nature of Salesforce’s business model can be challenging.

“I have a sense of the endpoint, but how to manage it along the way is what I could use more of,” de Silva said. “It is happening so fast and so broadly. It isn’t always clear.”

While attending a session last year at Dreamforce, the company’s annual user conference, de Silva said he interpreted a presentation to say that Chatter is the preferred content manager in the Salesforce environment. Chatter is an internal social network that resembles Facebook and allows for the sharing of content.  

“If I hadn’t sat in a session, I would be thinking about my content library differently than I do today,” de Silva said.

Do the driving yourself 

Some Salesforce.com customers suggest that the best way to deal with the company's rapid growth is to get in the driver’s seat and not let the vendor dictate how it will move forward with their CRM plans.

Bill Hicks, a senior vice president and CIO at Ultimate Software in Weston, Fla., said he likes the broad platform of tools and application that Salesforce is creating because it enables him to “pick and choose.”

“We’ve taken the approach of, ‘Where do we want to leverage their platform?’” Hicks said.

For example, Hicks said that in addition to the Salesforce.com core application platform, his company uses Flow for Salesforce, a tool that enables employees to create and script workflows. “We think the Flow is great for us,” Hicks added. On the other hand, “We aren’t Ruby on Rails,” he said referring to the Heroku platform, “so we will probably never look at that.”

Another user agrees about being in the driver’s seat, but has taken a different approach. Barry Newman, senior vice president of information technology at Saveology.com of Fort Lauderdale, Fla., said a key appeal to Salesforce.com is it is a “one-stop shop,” and the concept of a complete platform from a single vendor meets his business needs.

The Salesforce.com strategy “is a lot,” he said. “It is more than we could possibly know, but it is definitely the right way to go. They know they want to be a platform.”

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