Despite Investors’ Funk, Salesforce.com Chatter Is All Good

Salesforce.com released its Q4 figures last week, peppered with the usual positives: growth, acquisition, more growth, and so on.

Specifically, the company reported that earnings per share were 31 cents on revenue of US$456.9 million. Year-over-year revenue increased 29.1 percent.

Much of the focus for the quarter — as well as the year — was on Salesforce.com’s enterprise social messaging application Chatter. It also recently acquired Dimdim — a $31 million transaction — to enhance the collaboration features in Chatter.

However, Salesforce.com’s Q4 profit dropped by close to half due to rising costs and expenses, some of which were related to the buildout for Chatter. Its net income for the quarter was $10.9 million, down from $20.4 million in the prior year.

Wall Street has mixed feels about Salesforce.com: While the stock is up 94 percent for the year, according to a Wall Street Journal article by Brett Arends, it has been performing rather poorly on the Monday after its Q4 figures were released, down by as much as 5 percent.

Overpriced Maybe, but Much Beloved

Arends’ detailed analysis of why Salesforce.com might be overpriced is an interesting read for investors, but the CRM community has no doubt already shrugged it off.

Chatter is being quickly taken up by firms, according to CEO Marc Benioff, who claimed that more than 85 percent of the company’s 92,300 customer base have deployed the networking tool.

Salesforce.com did not return CRM Buyer’s call requesting comment by press time.

Increasing Productivity

Firms love the Chatter application for its productivity, said Nucleus Research Vice President Rebecca Wettemann.

“Our initial look at Chatter showed that there was greater visibility and increased productivity for the sales team and less time spent managing, filtering and filing email,” she told CRM Buyer.

The increase in productivity could be as much as 5 percent to 10 percent, she estimated, and perhaps even higher depending on how companies can leverage it across teams and geography.

The recent acquisition of Dimdim shows that Salesforce.com does indeed plan to build out the app even more, focusing on collaboration, said Wettemann.

“Firms are recognizing that there is a lot of opportunity for collaboration right now,” she noted.

At first many companies viewed it as a glorified email messaging service, observed Beagle Research Group Principal Denis Pombriant.

Companies began trying it, though, and many viewed it as a transformative experience for their companies, he told CRM Buyer.

The fact that Salesforce.com built Chatter on industry standard APIs and made it available on a stand-alone basis is also helping spur sales.

“Salesforce.com made a smart move offering this on a good corporate citizen platform,” said Pombriant. “It means any company can use it, regardless of whether they are using another CRM application such as Microsoft.”

The Social Enterprise

Another reason Chatter is being so quickly adopted no doubt lies with Facebook’s rampant popularity.

Salesforce.com first introduced Chatter in 2009 at that year’s Dreamforce event. Although other companies had introduced similar products ahead of it, the concept was still relatively new. The audience instantly grasped Chatter’s functionality, as it borrowed from the social networking models made popular by Facebook and MySpace.

Essentially, it allows employees to collaborate internally using a secure, private social network. It lets people set up and manage their own profiles, status updates, feeds and groups. The profiles include such information as area of expertise, work history, photos and so on — making it easy to reach out to colleagues for assistance on a particular issue. Status updates, provided via a real-time feed, allow workers to keep the rest of the network up to date on their projects.