Salesforce Moving Trust from a System of Record to Engagement and Intelligence

HfS believes that the winning providers in the As-a-Service Economy are those shifting their solution model of securing client trust away from developing and maintaining proprietary software and people. Instead, they are focusing on establishing trusted common services that include data collection, augmentation and insight creation. 

It’s no longer about “software eating the services industry” as Marc Andreessen famously quoted in recent years, but instead it’s about data eating the services industry.  During a recent analyst event, HfS saw how this change was manifesting itself in the strategy, products and partner ecosystem of Salesforce. The CRM and enterprise application vendor which really first marketed the concept of “no software” responds to the growing prevalence of the As-a-Service economy across not only the SMB marketplace, but that of enterprise clients as well. 

To continue its market leadership, Salesforce will need to replicate in systems of intelligence and systems of engagement the same success it has had to-date as an enterprise system of record.

The Salesforce Customer Success Platform has been expanding rapidly over the last few years to now encompass a suite of 7 different business applications or clouds (Sales, Service, Marketing, Community, Analytics, App Cloud and IoT. This expansion from an origination in salesforce automation via the Sales Cloud has meant that Salesforce is moving as a platform to cover being a system of record, systems of engagement and increasingly towards being a system of intelligence as well for SMB and the enterprise. HfS notes that many businesses now use Salesforce as the central strategic application for the enterprise, linking and augmenting core data from adjacent finance, HR and procurement applications.  Establishing customer data at the core distinct shift from legacy ERP strategies, which based everything around the general ledger. Salesforce helps drive the focus away from software and towards data quality and orchestration.

Years ago, Salesforce achieved overcame one of its earliest strategic challenges which was to earn the trust of enterprise clients as a system of record (today’s Sales Cloud) with all of the client data being held on the client. Today, that isn’t an issue for most enterprises who in many cases are seeing in fact that Salesforce may be in a better position to develop responses to evolving data security requirements quicker and more effectively than can be done by each client individually. The general evolution of enterprise confidence in “cloud” has certainly expedited the adoption of this trust, but it’s clearly been one of Salesforce’s achievements as well.

But earning trust as a system of record isn’t the same as with a system of engagement with the focus shifting from processes to the interaction with customers. Salesforce application clouds such: Marketing, Community, Service and even the IoT Cloud entail a level of interaction with end users (human and sensor) that requires a further level of trust from the enterprise because each (and applications further built on them) represents the enterprise in interactions with clients. Having enterprises accept that both the applications and the data derived from those client interactions can also reside with Salesforce in the cloud in multi-tenant, largely standardized forms is the current strategic challenge for Salesforce.

In our discussions with Salesforce HfS also saw that as trust is being won over from the enterprise in systems of engagement today, the next challenge is already appearing.   How can enterprises trust Salesforce not just to just collect records, engage with clients but also then perform the analysis and derive the insights from these interactions in the form of Systems of Intelligence (with Salesforce IQ and Wave Analytics leading the charge today). By taking on this responsibility with a highly automated solution, Salesforce is moving further into replacing roles and capabilities previously viewed as integral to the third party service providers and/or the enterprise itself and turning those into further “As-a-Service” offerings. Implicitly, at this stage, Salesforce is eating both the services industry and parts of the enterprise and changing the relationship as a result.  

We saw promising signs that Salesforce is getting the initial permission to be a much more comprehensive enterprise partner, however, this doesn’t come without risks. Risks related to trust and maintaining the security of not just the data, but also the end client relationships and trust related to the quality and effectiveness of the insights provided. Current Salesforce ecosystem partners (ISVs and service providers) also have to build new trust relationships defining where the Salesforce Systems of Engagement and Intelligence will stop and start to leave opportunities for these partners to work with the enterprise as well. Its next challenge will be to drive its enterprise partners to focus on the mid-market and not only the high-end, which provides a challenge for the lines of Accenture, Capgemini and IBM which are all seeing to leverage platforms like Salesforce to replace lost revenues from flagging SAP and Oracle practices.

It’s still the early days of this movement to higher level systems but we expect to see this evolve further by Dreamforce ’16.