Benioff educates investors on which numbers they should look at Wednesday, December 05, 2007

In an interview with Business Week, Marc Benioff, the larger than life CEO of Salesforce said

we're not going back to disclosing our number of subscribers each quarter. It's not a meaningful, revenue-based metric. We don't think investors should look to non-GAAP numbers. High-fidelity numbers like revenue, profit, and cash flow are things investors should measure us on. It didn't make any sense to me why people should anticipate a subscriber number. We're not just a one-product company. When we were a single-product company with salesforce automation, then it was apples to apples. Now it's apples to oranges.

Interesting. Usually investors get to make their own mind up on what's interesting. Moreover, some investors might find subscriber growth numbers or revenue per subscriber a useful indicator of the company's activities. Financial numbers don't tell the whole story and normally lack any context. It's also a little unnerving when a CEO asks you to stop looking at a set of numbers and tries to get you to look elsewhere for your own best interest, regardless of motive.

Hypothetically, if you happen to winning big deals by slashing your prices, then you might not want to announce small revenue increments and big jumps in subscriber numbers, in case this became obvious.

That said, Salesforce is clearly doing a great job persuading the security departments of big banks to trust them - Merrill, Citibank and Deutsche have now signed up as customers - Citi has 30,000 seats.

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posted by John Wilson @ 12:47 PM Permanent Link ,

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Salesforce creates a data protection nightmare

Techcrunch is reporting that tomorrow Salesforce will launch a new service called Salesforce to Salesforce (S2S) that facilitates the sharing of data between companies that use Salesforce’s software as a service (SaaS).

I'm less familiar with USA data protection provisions, but here in the UK you'd be best to start off with the assumption that companies using this would be committing a breach of the Data Protection Act unless clients have specifically permitted the sharing of their data with a third party.

This won't be a Salesforce problem, only an issue for the companies sharing their data. Moreover, whilst they may be permitted to share some info, you can bet it will be easy to inadvertantly share too much.

Best to follow the line in the original Star Wars movie when the heroes found themselves being crushed in a garbage device. Uncertain of which device to shutdown, Luke Skywalker told the robots to shut them all down.

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posted by John Wilson @ 12:14 PM Permanent Link ,

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Facebook wrongfoots its competition Monday, June 04, 2007

The recent announcement by Facebook regarding their Developer API was greeted with delighted, astonishment and horror by different constituencies.

Facebook with its 20 million+ users looks to be a heavenly place in which to build a business, and is reminiscent of the early days of the AppExchange from Salesforce. It too launched with what was then a free and open API with few restrictions on what use developers could make of this service.

However, as Ivan points out on Vecosys, the T&Cs raise some potential issues that could be exploited down the line

1. Facebook can limit you or terminate you at any time at their sole discretion (Section A.3)
2. Facebook reserve the right to impose fees at time and in any manner (Section 3)
3. Facebook can copy and distribute your Application, and analyse the content in order to target advertising (Section 4)
4. Facebook may create similar applications to yours, with no obligation to you (Sectition 4)
5. You can’t use any name or domain name address containing ‘facebook’, even at the third level, eg.g “facebook.xxx.com” (Section 6. C)
6. Be careful what ID you use for your developer account - IDs can’t be transferred or sold on, but nor do there seem to be corporate IDs. (Section 7)
7. Facebook can change the Terms and Conditions at any time, your only recourse if you don’t like this is to STOP USING THE SERVICE
(all sections below)

A cynic might suggest that Facebook could exploit the R&D being undertaken by developers and simply replace the most popular widgets with Facebook ones, and thus avoid their own experimentation. Obviously this might create a serious backlash, but as you may recall it didn't stop MySpace turning off Photobucket widgets recently, albeit as a device during negotiations to buy Photobucket.

Certainly, and as I forecast at its launch, Salesforce has now commercialised the AppExchange and shares in the revenues generating by those offering services on it. For Facebook, why shouldn't they share in the success of those companies that might make great revenues within their realm?

In the meantime, the most immediate question for other social network sites is how to respond - should they maintain "walled gardens", copy Facebook or muddle on with ad-hoc arrangements/facilities. Whilst the first of these provides maximum control, it may leave their users disappointed / frustrated with the offering. The second leaves them looking "me-too" like yet will require considerable effort to implement in most cases, whilst the third suggests lack of managerial vision/clarity (not a quality investors generally seek). A couple of such sites I've spoken to since the Facebook announcement privately concede they were caught on the hop and have yet to determine their strategy.

Do Social Networks really need to engage in an arms ("widget") race? Will users be likely to hop networks for better facilities? Certainly there are barriers to migrating (getting your friends to move too), but increasingly, and as I found recently on Facebook, most people already belong to many such networks and so there's a good chance that you'll find many of your friends already belong to "better" sites.

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Koral acquired by Salesforce Tuesday, April 10, 2007

Blimey, I was caught out by this one. Transpires I must have been asleep in March as Techcrunch today made reference to Salesforce's acquisition of Koral, an online document collaboration application which I have blogged and raved about in the past. That said, Koral only announced it on their quiet blog on Monday.



I was aware that Koral was working on a funding round in January which was being led by the States side co-founder of Koral, Mark Suster and targeting US investors. But I hadn't consciously considered that I'd not chatted/spoken with the UK based co-founder Tim Barker for over a month. The last conversation we'd had was about the work Koral was doing to configure their application to operate on the Salesforce platform and be offered via AppExchange.

Well, they went much further than this and Salesforce evidently spotted the same potential, electing to use them as a major plank in their continuing advance across Enterprise 2.0.

The terms of the deal haven't been made public but congratulations are in order for the (small) Koral team, who have now been subsumed within Salesforce.

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The Users that know more than IT Wednesday, February 28, 2007

It was never meant to be this way. IT was way too complicated for the users and that was the way IT departments liked it. "You pay us and we'll sort out this difficult stuff, just hand over the money and watch us do our magic."

Well, a combination of increasing number of IT literate users and available online services are starting to challenge this arrangement. When the guy paying the bill knows as much as the person providing the service, or at least enough to ask the right questions, the balance of power shifts back towards the user. When the user can declare UDI when either service satisfaction is not forthcoming from IT or is not delivered at a reasonable cost or in appropriate timeframes, then the power has truly moved.

This post from Ed Sim nails the story.

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posted by John Wilson @ 11:29 PM Permanent Link ,

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SAP on the slide or is this a turning point? Friday, January 26, 2007

SAP, the world's largest business software company, is getting battered on the stock market. Its' shares are down 15% already this year as worries mount about its' ability to continuing growing given the saturation in the large corporate market.

Back in 2000 it did begin attempts to enlarge its market focus to include SMEs but most people consider its' software far too complex for this space.

However, SAP is clearly renewing its focus on this SME market and has announced that it is to introduce a SaaS offering from the end of March. It will be subscription based and mark a departure from SAPs usual licencing model.

SAP claim they will be the first company to offer a business suite of products on demand, rather than niche CRM or accounting components.

Is this a desperate attempt to revive their fortunes by hooking up to what SAP may perceive as a fad/fashion or a genuine refocussing of the company to eventually operate alongside pure-SaaS players like Salesforce?

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Salesforce to make money from AppExchange finally Thursday, January 25, 2007

6 months after posting about Mark Benioff's ("evil") plans to get rich from AppExchange, I learnt this week from a couple of companies on the Exchange that Salesforce will be introducing consolidated customer billing and simultaneously introducing a revenue rake off of what I understand to be 20%.

To my surprise, there hasn't been more comment about this and I am still searching the Salesforce site for the details of the arrangement. Nonetheless, it's beneficial for customers since they now only have one invoicing supplier to deal with rather than many.

As for developers, clearly handing over 20% when you didnt before may feel like a drawback, but I think the early days were simply the free trial and 20% still represents considerable benefit - think of the costs of selling outside of the AppExchange with its' prebuilt distribution channel.

I'm intrigued as to whether Salesforce will simply book the commission or take the whole 100% to top line revenues and show the 80% as a cost of sale. Much will depend on the presentational impact on the absolute values and the ratios in terms of the materiality of the change this introduces.

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