Salesforce: CRM (Second Major Blog Post)

Recently, Fortune Magazine published an article about how the big software company, Salesforce, hits its stride. The article was interesting enough to catch some IT people’s eyes when flipping through the magazine. Not saying I am an IT guy, but an article about Salesforce is definitely something that many would be aware of. It is one of the fastest growing companies at the turn of the century with today’s market capacity hitting 5.46 billion and stock market price of $43.6 a share. Very hard to imagine, a decade ago this company didn’t even exist, but now it’s being one of the best 100 companies to work for.

In 1999, Marc Benioff, the founder of Salesforce, announced that software industry was dead. Earlier that year, he quit his job at Oracle, another well known software company, and decided to start his own company: Salesforce. Benioff believed the industry was not providing what the customers truly wanted; sooner or later, people would end up searching for something else to replace the industry. So, he wanted to search for a new key that would satisfy the consumer’s demand-lock. As a result, he came up with the idea of letting companies to rent the software instead of buying it. The software that Benioff was aiming to provide is a web-based program that manages customer relationship and data. Everyone was able to access the program through the use of the Internet, as long as one has registered and paid to be a subscriber. The idea was unheard of, but it worked. The company is making a billion dollars a year and growing at a rate of 60% per year. Benioff successfully provided companies and business people with what they have always been looking for.

People like Salesforce, and many reasons contribute to its strength and success. The first thing that people like about Salesforce.com is its convenience. Staffs in companies can operate Salesforce.com’s programs easily through the use of the Internet. In other words, people don’t have to be in offices to work on their projects or to receive services; as long as they are connected to the Internet, Salesforce’s on-demand services can be provided, which is extremely convenient.

Second of all, ever since 1999 when the company was founded, Salesforce has been expanding dramatically. It now has more than 3300 employees working for the company. On top of that, it has a large customer base of 55,400 and over 1.5 million subscribers.

Salesforce provides many different programs that satisfy customers’ demand. Some of these programs include the most frequently used CRM (Customer Relationship Management), AppExchange, Force.com Platform, etc. Today, these programs are called “software as a service.” To further enhance its programs, Salesforce allows users or customers to customize their applications and software.

As a result of its success, Salesforce is now ranked 43rd on the list of the largest software companies. It is no longer an American company, but a global one. It has regional headquarters in Dublin, Singapore, Tokyo, serving Europe, Middle East, Africa, and Asia. Moreover, it has offices in Toronto, New York, London, Sydney and San Mateo. Also, the software and application that they provide are also available in many other languages.

The strongest strength of Salesforce mainly comes from the passionate professions that operate and invest in this company. Some of these people include former executive Marc Benioff, (founder of Salesforce), Larry Ellison (co-founder and CEO of Oracle), and Halsey Minor (founder of CNET). These people give the company a very strong background.

A lot of people are investing in this company, and they continue to have good words about its success. Simply looking at the company’s most recent SEC 10K report filed in January this year, it is impressive. Based on a recent financial analysis done by Morgan Stanley, the result of the company’s previous quarter’s revenue was, in fact, unexpectedly higher than predicted, especially during this recessionary period of the economy. Although the numbers are doing well, there are many other factors that start to worry the investors and users of the CRM software. It is true that this new idea is hot, and people are interested about it, but people are also wondering how long this hot idea is actually going to last when they start to spot some crucial problems with this company.

There are a lot of problems with Salesforce, but the obvious one is its company’s software demos. Many users that have used or experienced Salesforce’s software complained that the demos are nice and make the software seemed to be something easy to use, but in reality, the software is complicated and hard to operate. Hence, it is to say that the demos give a false image of what the actual software is like.

Second of all, Salesforce, like many other vendors, is believed to have a very high turnover rate. Because switching cost is low and hardly any restrictions exist, subscribers can easily cancel their subscriptions.

Third, though customizing function of the software is allowed and given, for small business owners, customization is costly. Furthermore, even if people do buy the customizing functions, once again, it turns out to be hard to use.

Another big problem with Salesforce is that it doesn’t have any service level agreement with its customers. So, the company has the right to shut down its servers whenever it wants to. Though the company will shut down its servers randomly, if it does, for sure it will bring a lot of troubles and losses for its customers. Customers have complained that outages and downtime occurred before.

The second biggest problem with Salesforce is its customer service. It has been noted by many people that the company’s sales representatives are overly aggressive and tend to think they know better than their customers. Especially when the sales representatives are informed that they are no longer being considered, they tend to perform some outrageous revengeful actions towards the customers by filing some law suits or complaining to people in higher positions of the customer’s company that the project management team was not making the right decision to choose Salesforce. This kind of situation happened many times as if that was the company’s routine behavior. In essence, the company’s sales representatives’ arrogance has transformed into unethical behaviors.

The biggest problem with Salesforce.com is that the company’s strategy is short term and mismatched. The company likes to boost its sales and revenues by keeping stock price high, but in long run, this doesn’t really help big enterprises. And, the company defines itself as helping customers to manage their customer relationship database, but the “corporate DNA” is still about pushing sales and getting as many customers as possible, not exactly helping.

Consequently, the company’s success should start to become a question mark for people who have truly looked beyond the content in magazine pages. Putting aside all the successful stories or numbers that have been heard or out-performed, the company’s sales teams’ unethical attitude and its unfit strategy are definitely not going to make the company survive in the next 10 or 15 years. I wouldn’t say people who are buying or using its service today are naïve, because it is understandable that this is a new product strategy and everybody wants to give it a try. But, people are rational; therefore, it would be hard to imagine that customers will want to go back to Salesforce again.

Salesforce is “the leader in customer relationship management (CRM) and cloud computing,” but how ironic its sales-force team does not even understand how to manage its customer relationship. Four years ago, there was a major competitor in the field named Sieble System; it functioned and provided something very much like Salesforce. But, at the end, it was bought out by Oracle for 5.9 billion dollars. So, if Salesforce continues the way it is today, it is not hard to predict its future.