Salesforce in Focus:
The Analyst Perspective

Michael Krigsman: Welcome to Episode #217 of CxOTalk. I’m Michael Krigsman, industry analyst, and the host of CxOTalk. These episodes bring the most insightful, experienced people in the world to have conversations about the impact of technology on our society, on culture, on business organization. Today, we are doing a special show with a focus on Salesforce.com, and we have three truly extraordinary industry analysts who have been covering Salesforce practically from the beginning, in some cases, maybe from before the beginning, in fact.

I’m going to start with Liz Herbert, who is from Forrester Research. Hey, Liz. How are you doing?

Liz Herbert: Hi! I’m good! I’m glad to be here today!

Michael Krigsman: So Liz, very briefly, what do you cover at Forrester?

Liz Herbert: So, I'm on Forrester's applications team, and the two key areas that I focus on here for Forrester are Software as a Service and services that surround ecosystems like the one that Salesforce has built up at this point. So, there are the two main things. And, for anyone who doesn't know Forrester, we work a lot with end-user clients as well as with the vendor community. So, hopefully, I'll be able to share with you perspectives from sort of a wide range we've been tracking here.

Michael Krigsman: Fantastic! You know, and I forgot to mention that right now, there is a tweet chat going on using the hashtag #cxotalk. So, please participate. You can ask questions, and we'll try to get those answered.

I also want to mention that I want to give a huge thank you to Livestream for providing our video infrastructure and distribution. And so, Livestream, thank you very much. They are just a fantastically great company, and I'm very grateful for their support of CxOTalk.

Our second panelist is Paul Greenberg. Paul, tell us about yourself and where your focus is.

Paul Greenberg: Well, I’m Managing Principal of the 56 Group, LLC, which is actually 55 more than the number of employees I have. Then, I’m the author of “CRM at the Speed of Light,” and I'm covering … I started out in CRM, but I've expanded my coverage to customer engagement, customer experience; pretty much anything with the word customer in front of it, or customer-facing department.

Michael Krigsman: I will mention that Paul is very modest. His influence and impact on CRM, customer experience, CRM marketing, and the CRM industry are very, very substantial and significant. He's just so well-respected.

Our next respected analyst and panelist is Sheryl Kingstone from the 451 Group. Hey, Sheryl. Thank you for being here!

Sheryl Kingstone: Hi! Thanks, Michael for inviting me. And, I am the Research Director at 451 Research, and my channel or area of expertise is customer experience in commerce. So, I cover that area along with my team, and it looks at everything from the CX stack including Adtech, to Martech, to service, to commerce. So, it's nice to see some of the changes there, along with all the different deployment strategies and the infrastructure that goes along with it. We do look at it from an end-user point of view, and then we also work with a lot of the vendors.

Michael Krigsman: So, we have an amazing panel today. I think we should begin by placing Salesforce into context; maybe, discussing the history of Salesforce briefly. It has got a run-rate of roughly ten billion dollars, and they've announced revenue guidance for 2018 of ten billion dollars. So, it's a large company and a growing SaaS company. Sheryl, maybe you can begin; tell us why we should care about Salesforce?

Sheryl Kingstone: We care about Salesforce because they're a disruptive force in the industry. They were the pioneer of a new deployment strategy and way of delivering software. They came at it in 1999 and every one of us; I know myself, and Liz, and Paul; have really followed Salesforce from the beginning. When they started out, they were truly focused on sales, and they quickly grew to the entire CX stack. But, what's fascinating is what they bring to the table is more than an application. It really is a platform of engagement. And that's what changed. They shift the market around CRM to be less around a transactional system of record, and much more around a system of engagement that combines both aspects of what we need to do today to deliver effective customer experiences.

Paul Greenberg: You know, to add to what Sheryl is saying: The thing with Salesforce which has always been incredible is that they didn’t even invent the cloud. The cloud was there before they were, right? But, what they did do, which goes to Sheryl’s point on delivery is they popularized it. They actually made it something that everybody started to use. That’s what their initial disruption was from. Now, since 2003, they’ve been a platform-focused company, even though their revenue comes mostly from sales cloud and service cloud, and the like.

I had a conversation with Tien Tzuo, who was at the time, the Chief Marketing Officer of Salesforce back in 2003. He told me that … I asked him, “What’s your future going to be?”, because I think they had just gotten the CRM designation on the stock pitch [...]. We figured, CRM. But, he said, “Well, CRM is just a means to an end for us.” He said, “What we’re really looking at is being,” I forget the exact way he worded it, but something along these lines, “the web service that all business applications are run on.” And, they’ve never, ever taken their eyes off that idea. Not for all these years from then on. Never.

Sheryl Kingstone: They really haven't, Paul. One of the things I do want to point out is even before they got the CRM acronym when he [Marc Benioff] was creating the market, in 2000-2001 doing roadshows, being frustrated in the back room that he named the customer "Salesforce," and that really wasn't his goal. He didn't want to do that, but, C'est la vie, it was what it was; and he couldn't even get forty people in the room for a roadshow. And now, when you look at what Dreamforce is, at 150-180 thousand - he has to bring in a cruise ship - those are dramatic results.

Michael Krigsman: Liz, what has caused this dramatic result, as Sheryl just said?

Liz Herbert: Yeah. I mean, I agree with everything that Sheryl and Paul have been saying. You know, one of the things we've seen is what Paul mentioned, and Sheryl as well; that is with Salesforce really pioneering the move into cloud computing for the enterprise in particular. Clients that we're speaking with have gotten much more comfortable with cloud computing. In fact, a lot of the concerns that we used to see in the past like security, like performance, like integration and customizations, those are perceived as advantages today. Clients I've talked to today now think they'll have better security when they go to the cloud because Salesforce can invest many times more than we ever could. Actually, the idea of a new kind of customization that's faster and maybe perhaps more vanilla is a better thing. It gets us out of that cycle of technical debt that we've all been dealing with.

And so, if I look at what we’re seeing today in terms of what our clients are thinking, not only are they viewing it as able to go head-to-head with any large enterprise technology, they trust it to run mission-critical parts of their business.

And then lastly, I would echo something that Sheryl started talking about, which is clients are viewing Salesforce as the way they can transform business. One of the most interesting changes we’ve seen over the past couple of years is that companies are even looking beyond Salesforce as a platform or a suite of applications, and they’re looking to it as an enabler of new business models. We saw this, for example, with the GM, General Motors example that got announced at Dreamforce a couple of years ago, where GM is like other automotive companies looking to become more of a connected car company, and they’re also looking to grow their revenue streams. Salesforce is actually an integral part of one of those new revenue streams, which is the way that they serve out marketing in the car when someone’s driving by restaurants, coffee shops, etc. that they’re interested in.

You know, to me, that really is what has gotten people so excited about Salesforce the company, and also shows where this next generation of Cloud is going.

Paul Greenberg: Yeah. And that actually goes to the heart of a couple of things that Salesforce does. One thing they do better than anyone else; and one thing that they do, no-one else does.

The thing they do better than anyone else is they actually are capable of executing on the idea of vision. And, that means something. Well, you know, here’s the thing: Vision has two parts, right? Part One is an idea of how things are going to look. However, if you go on to Part Two, that’s just science fiction, right? Part Two is the person hearing it is thinking, “Oh, you know what? I see myself as part of that!” That’s what Marc Benioff’s talent is. He actually can sell as vision, not just to customers and prospects, but to his own employees.

So, typical of most tech companies, Salesforce makes product announcements [about products] they don’t have yet. However, they have about - let’s call it 60% of the product. That’s just a number I’m making up; I don’t know that’s the real number. But, the thing is, they tend to actually get the rest of that much quicker than most other companies because the employees buy into it, right? And then the employees put the time and effort into it. So that’s the thing they do better. They have a real vision, it gets presented in a way that the people get engaged with.

Liz Herbert: And also …

Paul Greenberg: Well, one more thing.

The second piece is Ignite, right? They have a program called Ignite, and Ignite is a program that is not really … Oddly, it’s vendor-agnostic in terms of the way you approach it. What it is, is basically a way that as a trusted advisor, a Salesforce employee and staff member will go in with their prospects and companies, or customers, and say, “Hi! Let’s discuss business transformation. Let’s figure out how to do it. Let’s be innovative. Let’s work this through.” And they’re not saying, “Let’s use Salesforce,” they’re just saying, “Let’s come up with ideas.” They leave them both with their framework and methodology, and new business models, to Liz’s point.

Liz Herbert: [Laughter] I would also say one other thing that they do better than any other company that I've seen. [They] get clients excited about Product in a way that they're willing to go on record and share their stories. One of the things that are very notable about Salesforce is they do paint this vision, and exactly as you said, how they're great about following through. Then, they get the customers up on stage. But, whether that's literally up on stage in Dreamforce, which Sheryl mentioned has just become a humongous tech industry event, and really an entertainment industry event at this point … And on top of that, if you look at YouTube or any other public channel, they go further than any company I've ever seen in terms of that transparency and depth into which you can find real customers talking about real stories that they do. They take that from vision to reality. It's exactly as you said, Paul.

Michael Krigsman: But, they’re …

Sheryl Kingstone: [...] to add with that, though. One other point on the customers is, I don’t want to make this that they’re doing absolutely everything perfectly, because, everyone makes mistakes. There are still lessons to be learned and problems with the user interface, with some ways of looking at it. But, the point is that customer are willing to be upfront with what was working, and what was not working. They have a sense of transparency that no other software company really delivers on today, and that’s something that the whole industry has to learn on; because the world has shifted to true transparency.

Liz Herbert: [...]

Sheryl Kingstone: Views out there … We need metrics, and we need maturity models. And that is something that Salesforce has always been very upfront with. And maybe, they’ve stated it themselves, “Look, we fell behind in X, Y, Z. We’re now working on it,” or, “This is where we’re going to work on roadmaps.” And so, that sense of transparency adds trust to their customers and the customers feel confident in saying, “This is how we’re going to use the next generation of the platform.”

Paul Greenberg: You know, that actually … To Sheryl's point, I actually remember [what] the story was about. Three or four years ago, I went to the DC version of Dreamforce. They do these roadshows everywhere. And this one, oddly this was in DC, they had 14 thousand people, right? And, Marc Benioff, the CEO, stood up and said, "Look, audience. I want to pass our messaging that we're going to potentially use at Dreamforce with you." And he pushed the Social Enterprise, which turned into an utter failure, of course. But, he actually tested it and said that's what he was doing with the audience, and then was soliciting feedback. I've never in my life heard that from any, let's say, leader of a company speaking on stage! Their messaging is well-crafted and focused, and typically, they don't let you know that from that standpoint, it isn't the absolute truth about everything. This guy was saying, "Look. This is a test. I don't know if it works or not. Why don't you tell me?"

Michael Krigsman: Yeah. But Paul, one thing about this. I mean clearly, Salesforce’s marketing is incredible, and their vision is incredible as well. But, they have taken stabs at things like that whole “Social Enterprise,” and they presented it as the way of the world. Yes, as …

Paul Greenberg: [unintelligible]

Michael Krigsman: As they were developing the message, yes. But at the same time, at Dreamforce, it’s the way of the world.

Paul Greenberg: But, look. The answer is yes, they do that, but so does every company that you’re ever going to go to at any conference. All of combined have probably been to what? Four million and two hundred thousand conferences? Somewhere in that vicinity? Not far off from the truth, either. So, every single one of the companies does exactly that.

Look. Salesforce says … It’s funny you bring that up, because that goes to a different part of Salesforce, but it’s not just the marketing part [where] marketing says, “We are the ones.” You know, look. I have a standing mantra on the “We are the only ones,” and my mantra is very simple. It’s as follows: “Look, if you’re not telling me that you’ve just invented a new element in the Periodic Table, you’re not the only one,” right? So, you know, don’t even say it, right? But they all say it.

The thing with Salesforce, though, is they have this extraordinary culture. There really is an actual, genuinely extraordinary culture. I know a lot of just lower-level employees at the company. Several of them are literally the children of people I’ve known for forty years, right? And they love the company. They absolutely love it: the benefits, everything about it, and the workplace environment. If you take that culture, which is one of … And also the fact that they take political stands, they diverse, or attempt to be diverse, I should say; they’re doing all the things that, let’s say, the younger generations and everyone; but at least the younger generation; should be concerned about in the workplace in doing that. In the meantime, it is the most explosive, dynamic company in the technology world.

But, what happens is, when that happens, you find people in the company who become arrogant - very arrogant, in fact. I mean, you know, I fired shots close to their bowel for that reason a few times. And why? Because the people misread what the culture is. Now, the culture doesn't support or enable that in any way. They can actually disable it, and discourage it. Their culture's really good. But, those kinds of definitives, "We are the only ones," or, "We're it,” and individuals … Those are, let’s call it “outlier results” of things …

On the one hand, the individuals doing the outliers; on the other hand, the messaging of “We are the only,” is the message; and they’re going to always do what every company does. Salesforce seems more definitive because they are the most dynamic of the companies.

Michael Krigsman: What are some of the challenges? We’ve had this real lovefest. Are there any challenges facing Salesforce, or is everything perfect?

Liz Herbert: I mean, I'll start with a couple. I know we've all got some ideas on this. You know, one of the biggest challenges that we're seeing is the thread from new competition. You know, when Salesforce first started emerging onto the enterprise application scene, really from Forrester's standpoint, we really didn't start seriously tracking them until 2004, even until 2005. And even at that time, most people were skeptical that the whole Software as a Service model could really materialize into something for a large-scale, mission-critical type of application the way that it has, today. And you saw that same behavior with the leading vendors. Most vendors were still very negative on the whole idea of Software as a Service. Other large ISPs had attempts at "as a Service," but it was never really front-and-center with their strategy. And, if you look at the competitive landscape for Salesforce today, it's exactly the opposite, right? Everybody's talking "cloud," everybody wants to be the leader of the cloud world; and to me, only in the last year or two have we even seen real, viable threats to Salesforce.

To me, that's one of their biggest threats, which is they used to be in a unique position to be able to go out there and win these deals. Nowadays, they've got much steeper competition coming from, really everywhere. And then on top of that, what you see is like anybody, as you start to grow, your culture does start to [...]. And one of the things we've identified with clients we're working with is that Salesforce is behaving a lot more like the traditional, large ISB behavior. They're a lot more difficult to deal with. They're actually getting a little bit more aggressive on discounting and costs, and some of the traditional factors that our clients always complained about with any of the large on-premise ISB.

To me, that sort of … I wouldn’t want to say it’s overly negative, but there is this growing negative sentiment in their customer base because of some of that behavior, combined with the threat of new competition. To me, this is going to be one of the biggest challenges for them in the next few years.

Sheryl Kingstone: I agree with everything Liz just said. They do have challenges with respect to competition. I would say, looking at some of the issues that they are [having], and the struggles that they’re having today, it has to do with transitioning to improving that UI [user interface].

So they were cutting-edge at first, and now enterprise companies are still struggling with the best way to maximize the information in it. We're still struggling with that 360° view of the customer across all the different clouds. We're still struggling with the ability to really maximize the return on investment because, in the early 2000's, we did make the case for premise-based versus SaaS. But, we were actually targeting, even though they thought it was a low-end type of solution, the way we made the case was targeting Siebel because Siebel was a multimillion dollar deployment. It was a no-brainer.

Now, we have a different environment. And so, now we have to understand issues around pricing. Whether the pricing models are changing, what we are doing with best practices of getting quick information in and out of these systems … Again, it really comes down to ease of deployment and ease of use, which is sometimes out of the hands of Salesforce. It's, "What do you do with the software itself?" And, that was a problem that Siebel had. When you appear more towards a platform play, you're also enabling the enterprises themselves to make mistakes and implement something that's actually not usable within an organization. And that's what they're trying to do with Ignite. But, the other thing with Ignite is it's very high-level. It's business transformation, where you also need to pay attention to grassroots deployments.

How is every user within the organization leveraging that platform for their use? How easy is it to get in? How easy is it to find the information, and how easy is it to collaborate on that information? And that’s something that’s going to be a stumbling block, still.

Michael Krigsman: Well clearly, as Salesforce has grown, it is no longer just about the technology, but rather; how does that technology have an impact on the business, inside the customer organization? As you said, the role of the key roles of that Ignite program is to support the transformation of customers.

Now, we have a couple of questions from Twitter, so let's go to them. So, Liz, there is really for you, from the B2B News Network. And you mentioned, Liz, earlier, that customers are looking at Salesforce as a platform enabler for new revenue streams. And, the B2B News Network is wondering if you or anybody could give some examples of that?

Liz Herbert: Sure. Yeah, I mean I gave the example of General Motors. They were one that was talked about publicly, so I know they're one that we are allowed to say. So, just to recap that example: GM, as part of its connected car, recognizes there are many ways they can create additional revenues beyond the early use case of OnStar, which was part of a health and safety-type of solution back in the nineties. Actually, when GM watched OnStar, they realized that marketing, and collecting advertising revenues as a driver was going on their way. Maybe getting an ad for a local Starbucks, or something like that would be a new revenue stream for GM. It would have really opened them up into a new kind of an engagement with their customers, that perhaps, hadn't really been there before. So, this is an example where they realized that [while] the technology that had made OnStar very successful actually had kind of a pioneering technology in the nineties, it really was too brittle to be able to sustain this new revenue stream.

Salesforce is part of that modern, OnStar platform, and it does represent some new revenue streams for them. I would say this: A lot of clients that I'm speaking with are looking at it. I know in some of the Salesforce events, they've also talked about a lot of companies who, even beyond that Ignite program, they're looking to know …  Because every company is now kind of becoming a SaaS company, that's something that we've been doing a lot of research around: whether you're in financial services, manufacturing, or health care, a lot of what you're doing now is acting as a SaaS company and more and more sales correspond to being part of that.

It’s hard to say too many more examples. I have to check which ones are public, and which ones we’ve known through our NDA’s, so I’ll probably hold off on more than just that GM example right now.

Paul Greenberg: Well, I mean, another one which is a little bit nebulous, but it actually goes through a problem Salesforce has more than this company: Philips Healthtech is another one. Philips Healthtech is one of Salesforce’s longstanding customers. They use other things. They use Oracle for some things, and alike, too; but, they’ve collaborated very closely with Salesforce especially since Philips itself split into two companies. And, the interesting thing with Philips Healthtech, is that Philips Healthtech started out originally as kind of devices and software, and then transformed to a platform company, now. And they’re selling multiple services. They’re still [selling] hardware and software, but it’s primarily platform-based. It is expanding the service offerings greatly, and they’re building that out in conjunction with Salesforce.

Where Salesforce has a problem, though, is it kind of goes to, to me, one of the biggest issues. All of these things; and why it's not going to be easy to not be able to present these kinds of examples is they're arguably one of the great platform-thinking companies that I've ever seen. They've made is easy to be part of the company with the app exchange originally, the APIs are open. It's very easy to get into the marketplace with Salesforce. And, when Leyla Seka created it, she's now back on it.

The thing is that the problem is, where do they fall down when it comes to the other part that makes a company successful and scalable to the levels that Salesforce wants to go; and partner well, which is ecosystems - and they’re not ecosystems thinkers. They have a natural, organic ecosystem that is unlike anything I’ve ever seen, but they don’t know how to take advantage of it at all. And that’s why you see it almost every time they deal with a partner; they end up relegated to the app exchange, instead of kind of strategic, “Go to market” kind of approaches.

Now, they have a program in place with ISPs now that has some promise, but there's no bridge between the app exchange and getting to that program. Number One, typically when they do a strategic relationship with a company, it's just basically, "Stick ‘em on the price list and forget ‘em," right? And that's it. And there's only eight of those.

So, that makes it difficult to create the Philips Healthtech relationships, to carry them, and expand them much longer even though they've been successful up to a point. But, it's hard for them, as a company, to get past that point until they actually do make it platforms and ecosystems combined.

Michael Krigsman: And in fact, that’s going back to the DNA of Salesforce from the early days, building the platform with the app exchange, and being able to present lots of apps on that platform to have partners extended.

We have another question from Twitter, from Jesús Hoyos, who many of us know. And, Jesús Hoyos is asking, “How do you see Salesforce moving from a traditional B2B CRM stack, to a combined B2B, and B2C stack with so many clouds?” So, in other words, they are now selling to customers, and to businesses. And that’s the movement, right? So how do they manage that transition, and is that actually happening?

Sheryl Kingstone: Part of what they’ve done is they’ve traditionally been very [...]. So, yes. They were very strong in the B2B sales-oriented approach. However, they’ve made key investments that people don’t realize over the past year, that were beyond Demandware. With the applet, with Heroku, and some other platform issues that are clearly giving them some expertise there. They’ve made some investments on the marketing side, with their exact target, and they’re reworking some of that.

What was absolutely critical was their acquisition of Demandware. And that changed the game. And, I know that I'm a little biased because I do look at customer experience and commerce as a complete entity, but that gives them the expertise to look from their customers' customers' point of view. It gives them the data, and more of a connection into that business-to-consumer [space], that will actually benefit the marketing cloud. And, in the end, that will change the game for them to give them more expertise that they didn't have on a B2C approach, versus the traditional sales automation opportunity forecasting side of it.

And then, when you look beyond that, that expertise that they also have with the service cloud … Because, when we look at the industry differences between a B2B company and a B2C company, there are similarities, but there are direct differences between how we handle those interactions with our customers, especially when you’re talking about a scalability issue. So, we do have to understand how to shift the dynamics into self-service. They’ve made movements there, they’ve made acquisitions in, for example, great acquisitions in a relatively unknown company around live message; again, bringing in expertise about how to interact with consumers.

And, all of this also brings [us] into data. So, in the future, as they look towards leveraging, for instance, Krux, where they’re taking the combination of Krux with commerce, and they’re expertise in marketing, that does give them a lot more insight to connect and show brands how to connect with their consumers.

So, no longer are they a B2B company, especially with some of these marquis acquisitions that they have, because the have the insight, and they have the technology. Now, they really need the partnerships; and again, it goes back to what Paul said - the ecosystems to execute more effectively in a B2C model.

Liz Herbert: And I would just add that you see the same trend playing out within their services provider ecosystem; [an] ecosystem, of course, means lots and lots of different things, but specifically the partners who have been helping clients go live, and get value out of this solution. If you look at who those partners were ten, fifteen years ago, it was very much the companies who are focused on enterprise application rollouts. Accenture and Deloitte were early partners. They had a number of boutiques really focused on sales and service. For the last couple of years, something interesting has happened. You actually see agencies now in the Salesforce ecosystem. So [...] is now a Salesforce partner. And so to me, when you look at how this technology really goes live and gets successful within a client account, that service provider ecosystem is such a big part. And that's another ship that will help them get there. It’s not all on Salesforce that they’ve been able at least to start to attract some of these service providers that are really experts in the B2C world.

Michael Krigsman: It sounds to me like this is the natural evolution of a software company as it grows, evolves, and becomes a large company and matures.

Paul Greenberg: Well, the natural evolution of a company that wants world domination, yeah. I mean, it's not the natural evolution of most companies [in] that they're hitting an entirely different category of existence that they want, right? I mean, which is what they're doing.

I mean, what Liz and Sheryl both said was on the money. There isn’t a whole lot to add on that. The only thing I will .. When we were at the analyst seminar that you all remember, they were making continuous- let’s say slightly louder than a whisper references to B2C on a fairly regular basis, even though they never sat and spent the time to discuss or verify it. They’re just all-in right now on that. And, the key is to Sheryl’s point was Demandware.

And also, the other aspect: They’re completely revamping all their thinking about customer journeys too. You see, a B2C customer journey is a whole other universe.

Sheryl Kingstone: [...]

Paul Greenberg: Go ahead!

Michael Krigsman: Go ahead, Sheryl.

Sheryl Kingstone: [...] But the other thing we haven't discussed, speaking of acquisition and where they're done, eleven - and this has nothing to do with B2B agencies, it's the platform again - but eleven acquisitions in artificial intelligence and machine learning. And, what are they going to do with that? The reason I'm bringing it up is we know what they're going to do. I'm saying, let's discuss letting that into their business applications. The other thing we have to point out, and one of the things I said earlier, it is about the data. So, one of the criteria that they do have to work with over the next five years, is getting their customers on board with opening up that data stream for educating Einstein for improvements. But, if we do talk about digital transformation and where companies are shifting in the future, a lot of it has to do with leveraging the data. What I am throwing out to the team is: How are we going to get beyond this so that Salesforce can also use some of the key assets that they have today, for their customers?

Paul Greenberg: Well, you know, we’ll have to get Marc himself to open the LinkedIn APIs up.

The thing is that I think a lot of it does go to both not just use of data, but to what you were saying more about use of data, and the AI user data - the combination, really. They're taking a very explicit [stance], when it comes to AI, which is Einstein's part of the platform. Where Oracle, for example, is absolutely adamant that it's not part of a platform, it is [rather] effectively added into applications. That's literally the way Melissa Boxer and Company look at it.

To me, the single most important thing that came out of DreamWare was putting Einstein and platform [on it], because that gives them the opportunity to effectively shape and formulate its use in anything they're doing. And you saw all the use-cases they had in that gigantic wheel of which they probably have three of them. But, the reality is that the initial group is going to be pretty much on a combination of, from what I understand anyway, a combination of - let's call it, "engagement intelligence," and the equivalent of telling a story one way or the other; narrative things like that, right? I don't exactly know. They phrase it differently, but those are the two concepts, really; meaning, take the insights and actually do something with them. But, that's where they're seeing Phase One of Einstein across multiple clouds. I know Marketing Cloud sees it that way explicitly.

Michael Krigsman: Well, it seems to me that they are still figuring this out. As Sheryl said, eleven acquisitions in AI really tells a big part of this story, which is their intention, as well as the importance that they place upon AI in their future: using and distributing AI and AI benefits to their customers across all different parts of their platform. But these are very early days, as far as that goes.

Paul Greenberg: Yeah. I mean, keep in mind AI itself has been around a long time. It's starting to become something that's being seen as necessary, as in scale. And Salesforce really has no option but to get involved in it, really. I mean, aside from their direct competitors, the big guys, Big Four-and-a-Half - I heard Adobe's the "half," right? The Big Four-and-a-Half is … You'll potentially have Death by a Thousand Cuts there, too. Little companies like Cogito, Agent.ai, Radius, and all these other companies who are doing pretty substantially advanced kinds of AI work that have real business results that they can point to. There are hundreds of companies like that right now. I mean, I'm not saying they're all equally good, but I can probably sit down and list 20 off the top of my head that are [...]. And, Salesforce has no option but to either compete with them or to bring them into their orbit. And, Einstein, in effect has to be …

And look at their B2C market. What’s the big deal now? You’re talking about voice interfaces like Alexa, and so on and so forth. You’re talking about all that kind of stuff, but guess what? Amazon put a thousand people on there. A thousand people on the Echo, and the Alexa, and that whole idea of new interfaces for the use of advanced artificial intelligence. And then you have robotic automation? I mean, Salesforce has no option but to go all-in. Yes, it’s early-stage, but they have to move really fast.

Liz Herbert: Yeah, exactly. I mean, I think I would just add to that, Paul, that you already brought up Alexa. I mean, to me, the new breed of competitors that they're fighting within this territory, it is the players that have historically been considered infrastructure-oriented.

Paul Greenberg: Right.

Liz Herbert: So, AWS, Google, Microsoft; that’s that side of the dynamics apps that are more on the Azure stack; all of those companies that you’ve alluded to; they’ve got some pretty deep investments, whether it’s voice recognition, image recognition - those are a couple of ones; AWS, and that’s in their particular customer event this year.

And, exactly. I see that Salesforce not only has to keep pace with customer expectations based on what goes on in the apps world but these cloud platform providers as well who keep moving up the stack with their own ecosystems, marketplaces, developer tools, etc., etc. They're not exactly commodity infrastructure plays anymore, nowadays.

And, the other point I would go back to is what you said right up front, which is: This is another place where Salesforce really needs to figure out its broader ecosystem strategy because no one company is going to own AI. I mean …

Paul Greenberg: Yeah.

Liz Herbert: … you’ve got bots, and you’re going to have more industry-specific use cases like bots in health care. Every service provider under the sun has its own AI play. You’ve got IPSoft, and some of the investments they’ve made. So, to me, that’s not a place where Salesforce really can try to be all things to all people. It has to figure out what exactly does Einstein do, where does it hit some of these partners, where does it work together with these other companies?

Paul Greenberg: Absolutely.

Sheryl Kingstone: And it goes back to the business case. So that's why I raised it out. Putting it in the platform is great; putting it in the application or powering those use-cases is essential, which is what Salesforce has done. But, Liz raises a great point about the infrastructure companies are coming up fast, and when we look at the rise of what I call "invisible interfaces," now all of a sudden, again, these traditional business applications have the ability to be relegated into the unknown so they become very behind-the-scenes. Well, what are we going to do to make sure that they're powering those invisible user experiences, and staying relevant to their customers? And that's another thing that they have to transition. Think about how Siebel didn't remain relevant because they were relegated to a system of record. The Same thing is going to happen as we maybe, finally start shifting to speech.

We’ve been there; we’ve been talking … This isn’t new. We’ve been talking about speech for twenty years. Nuance tried to do it for years overlaying business applications. But now we’ve got, as you said, Paul, a thousand people using new technologies, and then putting intelligence of it; it is going to change the way we interact with applications.

Michael Krigsman: And one of the extraordinary things about Salesforce, it seems to me, is the way they are able to be Agile, and to change and adapt over time, and to innovate and stay focused. I mean, think about some of their larger competitors who have lost their way, and they’ve had trouble innovating and bringing products into focus in a reasonable timeframe to market. I mean, Salesforce has done an incredible job being able to do that.

Paul Greenberg: Yeah, but I don't underestimate their competitors either. You know, that's sort of, to me, a lot of that is an urban myth. I mean, look. One of the most innovative companies that I've ever seen is SAP. They just don't know what to say about it once they do it, right? I mean, they just can't get it out the door, right? But they're…

Michael Krigsman: But Paul, I don’t mean to interrupt, but isn’t that … If we talk about innovation, innovation that doesn’t get out the door; is that innovation?

Paul Greenberg: Well, yes. That's metaphorical, right? I mean, they're just bad marketers, is what I'm really saying, right? You know, the thing is with Salesforce ... The problem with the speed of change is that it's accelerating now. And, you know, even if we said earlier, AI has been around a long time, it's just the last one. Eight months or a year [ago], they were really talking it up, like, massively; everywhere. And I'm not saying that people haven't been concerned, but it's becoming a matter of popular lore now, right? You know, that AI is something that has to happen.

What Sheryl was talking about would be the transformation of user interfaces. Look, I used a product that was literally called "HAL 2000," in 2000, right? It was a voice interface using; what was it called; "X-10," right? It was for the house. It existed! And it wasn't bad, you know? Not good either, but it wasn't bad. But, this stuff has been around.

But now, what’s happening is it’s becoming popularized. It’s becoming part of culture. It’s becoming part of how people do what they do. It’s not a coincidence that when the Echo first came out, it was an amazing device, but it didn’t do anything, really. And I had it! And, me and Brent Liu were talking about it, in fact, and saying, “Well, this is amazing, but it doesn’t do anything right now. But someday … “ I mean, you knew it, right? Someday, this is going to be something.

And then now look at it. Five million of them sold over Christmas, right? Five million! You're talking about something that's actually weirdly as sexy and hot and exciting as it is. It's becoming commoditized already, right? I mean, it's like … And that's why there are a thousand people turning it into natural language.

But, this is what Salesforce has to put up with! Guess what? What else have we been talking about for fifteen years? The idea of the consumerization of IT. But, that's just a matter of how we think inside of work, right? And that's what we're really talking about. We're talking about consumer IT; we're talking about, "We want it at work," because that's what we think about. The smartphone was the first thing like that. Now we're starting to wear all these things.

Salesforce has to stay up with all of that, and one of the reasons for that is because they are a … This is of their own doing. They're the most, in terms of, let's call it, "following," they're the most Apple-like company in all of enterprise technology and all of business technology. They have fanboys and girls. What kind of company-of-business has fanboys?

Michael Krigsman: Well, there is …

Paul Greenberg: [...]

Michael Krigsman: There is no doubt about that! And …

Paul Greenberg: Yeah, but that means they have to actually utilize the customers who buy them. That’s the one difference. These are the ones who make these multimillion dollar decisions.

Michael Krigsman: They have …

Paul Greenberg: No, go ahead.

Michael Krigsman: They have found a way to activate those fans. And that is the Holy Grail of marketing. Liz is shaking her head.

Liz Herbert: I would say, exactly. I mean, something very unique about them in terms of how they can continue to innovate at a fast pace is they are loved by business users.

Paul Greenberg: Yeah.

Liz Herbert: They have always had hearts and wallets of business users, and that’s something most of these Four and a Half, maybe not so much the Half, but the other four ISB’s - they’ve struggled with that; I mean, they’ve always been perceived as much more IT-centered versus business. To me, when you look at exactly what Sheryl said earlier; it’s going to be about the business case, who is going to win in these battles, and, it’s either innovations coming more from the ideas that you’re getting really from the business directly, the horse’s mouth. You do some advantages. I think today, they still have a leg-up on some of the competition because of that.

Sheryl Kingstone: And, wait a second. I'm going to go back to the other, other thing that really did push them into the winning case. Let's still go back to the platform, and what they did to enable the long-tailed development of applications. Because if they stayed at that core, vanilla, "Here are your sales, here's your service," they would never have been where they are today because the maturity of applications that are used in the industry today across multiple different verticals are those one-off applications that Salesforce can't create. And those are what makes things sticky. And so, I keep going back to, it's great that they are focusing on the platform because they are enabling their customers to create sticky applications that stay. But, the also need guidance. And so, that's where Mike comes into play.

Michael Krigsman: Okay.

Paul Greenberg: And, to your point on the platform: The other thing with them, and I’m going to go all the way back to the idea of their vision; they’ve never, ever, ever taken their eyes off the fact that they want to be a platform and not an applications company.

Michael Krigsman: And, very customer-centric, as well.

Paul Greenberg: Yup.

Michael Krigsman: We are basically out of time. But, I think we should do one last quick round-Robin of each of your offering your thoughts, comments, and advice for buyers, advice for Salesforce; any last, closing thought. Who would like to go first?

Paul Greenberg: Okay. I'll take it. So, it's what I said earlier. Salesforce, you're at the point now where you have to think in combination with Platform, that ecosystem. That means harnessing the organic ecosystem you actually have, right? And then doing something in a go-to-market, strategic sense with them, and then making that whole ecosystem - that partner technology ecosystem - work. That is, to me, a strategic goal as an organization changing the way your structure works. Everything about you, that's what you've got to do.

Liz Herbert: My advice is more for buyers. I work a lot with buyers who are in it with Salesforce. As Sheryl mentioned earlier, the idea of lock-in, which very much is happening. So my advice is, don't go too fast. We have a lot of clients out there today who believe speed is everything, they believe business agility is the Holy Grail, they believe fast is better than perfect, there are all sorts of flavors of this. But, sometimes this can actually be a downside, because Salesforce has executed in every single division, all with different strategies, with no central thread. Usually, it ends up a mess, it ends up expensive, you end up stuck, and in the long-run, you're not going to have a lot of agility when you're moving that way. So, we're trying to encourage our clients that, "Yes, it's great that you can go a lot faster, you can do releases much more quickly; that doesn't mean that you should just do it ad-hoc and with no planning if you're really viewing it as a strategic platform, and especially when you're thinking about using it for that long." [That's] because, it's not equally suited to every app under the sun, the way some might believe. And that's not a place where we [want to] see clients get into trouble.

Sheryl Kingstone: Lastly, fundamentally, the applications haven’t changed. It really is all about simplicity and user experience. And, the one thing that can bite you is if you don’t think through that workflow, and that business process and what you’re delivering to your end-customers. And, the data. I keep going back to the data. You are going to the owners of some critical information that could change the game for your business decision making, and if you’re basing decisions on poor data, which is what historically has happened with a lot of CRM applications, you’re dead in the water. So you have to make sure that A) Your users are using the application, which means it’s simple. B) That it’s clean, and they have the right data, and C) That it’s complete, right?

So, take a look at all the data that you’re missing today. Capture everything, because that knowledge is essential for leveraging it towards the future.

Michael Krigsman: Alright. Wow. We have been talking with three of the top industry analysts in the world, covering Salesforce.com. You have been watching Episode #217 of CxOTalk, and I want to thank Liz Herbert, from Forrester Research, Paul Greenberg, from the 56 Group, and Sheryl Kingstone, from 451 Research. And everybody, thank you so much for taking the time. I really appreciate the three of you being here today.

Paul Greenberg: Thank you.

Liz Herbert: Thank you.

Michael Krigsman: Thanks for watching CxOTalk. We have an amazing show coming up this coming Friday, so check the schedule: cxotalk.com/episodes. And, thanks for participating everybody. Bye-bye!