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Salesforce Industries Summit

Riding the Salesforce Wave

By Denis Pombriant
Aug 31, 2011 10:27 AM PT

Salesforce.com is riding the crest of wave after wave of good news as it starts Dreamforce, its annual convocation for customers, prospects, the press and analyst communities. Forty thousand people are expected in San Francisco for the event at some point in the week.

Riding the Salesforce Wave

In a sign of how big this event has become, last night I saw work crews closing down Howard Street by the Moscone Center. They were erecting what looked like a structure on the street to turn it into some kind of pedestrian area. Only Oracle, one of Salesforce's biggest competitors (and curiously Salesforce is among Oracle's largest database customers) ever does this when they attract similarly sized crowds to their annual meeting, Oracle OpenWorld. If you need symbolism for how large Dreamforce has become, you can't do better than that.

The Forbes Bump

But back to Salesforce.

The company is riding high after reporting strong revenue numbers and that it is on track to generate well over US$2 billion in business in its current fiscal year. The company has raised its guidance to financial analysts.

Salesforce CEO Marc Benioff is on the cover of Forbes magazine, which announces a cover story on the "50 Best Companies of Tomorrow." Salesforce has the No. 1 spot, and the ranking was done by none other than Clayton Christensen, the Harvard Business School professor who coined the term "innovator's dilemma" in a series of books by that title.

Forbes is the same magazine that once ran a cover story on Tom Siebel with the headline "The Man Who Can See Around Corners." It was about how Siebel and his customers, using analytics software, were able to spot a slowdown in the economy and adjust their businesses well ahead of their competition.

But Benioff took a page from Christensen's book and completely disrupted Siebel, and he is well on the way to disrupting the whole software industry and beyond. Salesforce is in the process of doing nothing less than introducing a new paradigm for the way that companies do business, deal with customers and fit into the world.

Chasing Dead Ends

Remarkably, Salesforce's competition is comparatively stuck in the mud trying to figure out how to move beyond traditional enterprise computing with its high costs and long delivery cycles. Salesforce has forced them to take a fresh look at computing and customers, and they have largely responded with bandages for their legacy products.

They've adopted what is easiest about Software as a Service (SaaS) and borrowed the term "cloud computing" to lend it the cache of relevance. But while that might be enough to continue making money on legacy software, it's a dead end, and other CEOs -- notably Tien Tzuo of Zuora, a billing and payments solution for subscription economy companies -- are making bold predictions.

For example, earlier this week Tzuo predicted the death of conventional ERP software. Tzuo had a single-digit employee number at Salesforce before he started Zuora, by the way.

Desire and Rejection

So if you are Salesforce and Benioff, what better day is there for Cornell University to come out with a new study on creativity: "The Bias Against Creativity: Why People Desire but Reject Creative Ideas."

According to Jack Goncalo, assistant professor of organizational behavior at the Cornell University ILR School and the coauthor of the research, which will be published in an upcoming issue of the journal Psychological Science, people love creative ideas, but they reject them because we all have a bias for certainty and creative ideas raise uncertainty.

That is in microcosm what the software industry has been going through for the last decade. Many of the people who sell and buy legacy software might be afraid of change for the disruption it may cause. But if you read Christensen, you understand that disruption is the key to innovation and profits. It's an idea Benioff and his tribe have no trouble dealing with, and they have no trouble dealing with the rewards either.

Over the last decade you could have discovered what the Cornell researchers discovered just by watching Salesforce. Today you can read the Cornell study, or just buy a copy of Forbes.


Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and website. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at denis.pombriant@beagleresearch.com.


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