Will Salesforce Become A Data Player, Not A CRM Player In Time?

Salesforce.com seems to be blowing out its sales numbers and in a lot of ways that is great news. What is good for the market leader is good for everyone in the space: the great sales numbers validate our market message and really proves that all businesses need a great CRM initiative.

One of the curious things I have seen, however, is that Salesforce.com continually seems to be moving away from its core product message. While SaaS and “the cloud” have permeated the company’s message to date – at least in the early years when the company was ramping up we heard a lot about the actual business software it was developing.

Now, apart from Chatter, I have not heard much about actual CRM features from Salesforce.com in what seems like years. Now, I am sure they are developing the apps – don’t get me wrong. It just does not seem a focal point anymore.

Why? Well, there are a number of possibilities. I’d like to explore two potential options. (Both, one, or neither could be true as I am just postulating here.)

One explanation about the perceived lack of actual feature/CRM development is that the actual Platform capabilities of Force.com are a reality. (And not, as one observer called it – “Farce.com.”) What I mean is that if Force.com is even half as easy to use as say Sugar Module Builder and Sugar Studio – customers can build features they need so that Salesforce.com does not have to do so. This is a possibility – but the limitations of the multi-tenant model make truly deep code-level customizations hard to perform and manage in terms of upgrades etc.

Another option, and this one is far fetched I admit, is that Salesforce in time will shift its revenue model away from application subscription fees and into data services fees of various types.

Huh? You mean Salesforce.com would STOP charging for what has proven a potential multi-billion dollar business?

Well, yes and no. Salesforce.com has created a huge revenue stream for itself, granted. However, it’s prices are proving too high for the market in terms of value received. Even Microsoft is coming down to SugarCRM price levels. For Salesforce.com to compete effectively against better engineered CRM software and highly competitive pricing – it needs to innovate in new ways.

Salesforce.com’s multi-tenant model makes it difficult for the company to offer a lot of different vertical, geographic, etc. solutions, since there is technically “one version” of the system. But – Salesforce.com’s multi-tenant model makes it perfect for another concept – data collection, segmentation and other data-centric services. Having one HUGE database of customer, product, sales information, etc. about thousands and thousands of companies – coupled with data from it’s Jigsaw acquisition and the type of customer sentiment data from Chatter – and that becomes a valued asset.

Salesforce.com seems to be on some sort of track around this, with plans to offer a free, stripped down version of Chatter to any interested party in the coming weeks. This would allow non-Salesforce.com users to enter data into their huge environment and allow Salesforce to leverage that data in any number of ways. I think of Salesforce taking the cue from Google – understanding thew value of data and information, not plain out of the box apps.

I do not think Salesforce.com would abandon what is a highly valuable revenue-stream any time soon. But it does seem to have an innovation gap happening in CRM. And if it were to couple seriously interesting (to marketers especially) data services with its core CRM tools, it might be able to at least sustain its bloated pricing rates for the time being.

I have railed against the company’s multi-tenant architecture as limiting for some time. But here I think its huge database might be how it remains a relevant company in the future.

Martin Schneider is Director of Product Marketing at SugarCRM. In his role, Martin handles competitive intelligence, marketing positioning and analyst relations. Prior to joining SugarCRM, Martin held the position of senior analyst with technology industry research firm the 451 Group, headquartered in NYC. Martin covered the CRM landscape for the 451, analysing and consulting on such topics as Software-as-a-Service, business intelligence and open source applications. Martin also covered the CRM space as news editor with CRM Magazine in New York.