This, most observers agree, is the year that cloud based technology services — software and hardware assets delivered via the Internet — are gaining mainstream acceptance in corporate IT departments. It’s also the year that cloud software vendor Salesforce.com almost doubled the number of attendees at its San Francisco-based user conference, to more than 90,000.
The company is clearly benefiting from the mainstreaming of the cloud. Its revenues rose 34% in the last quarter, to around $731 million. Yet the company’s customers may end up paying a price for its success. Salesforce.com may be reducing the overall effectiveness of its services, as its emphatic outreach to executives outside the IT department threatens to cause a fracturing of IT services within organizations, reducing the potential effectiveness of each of those individual applications.
The value of cloud-based services depends to a great extent on the speed with which cloud software vendors can improve their applications and services for customers. Dan Petlon, CIO at Enterasys, told us this summer the “pace of innovation” that cloud vendors sustain has driven him to adopt cloud services instead of locally run software in most cases.
But to many observers, the rat-a-tat pace of Salesforce CEO Marc Benioff’s new product introductions this week is too much. The latest offerings include new features for Chatter, its social networking service, as well as an identity management application that allows users to access all their cloud and on-premise applications in a single swoop. Salesforce also introduced a platform that could replace collaboration portals and file sharing applications such as Box. They represent an almost desperate attempt to engage customers in multiple ways, hoping something “sticks,” in the words of Gartner analyst Daryl Plummer. Constellation Research principal analyst Ray Wang says the rash of preannouncements this week is “a way to grab mindshare first” to counter increased competition among the vendors.
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Salesforce, of course, begs to differ. John Taschek, its senior vice president of strategy, says the company is releasing new features at “the same rhythm as it always has.” But 300 new features in every release speaks as much to competitive pressures as to a desire to serve its customers.
The greater problem for customers, says Plummer, is that many of them are still only trying to figure out how to use cloud services, and Salesforce’s dominance could entice CIOs to bite off more Salesforce than they really need. For instance, he says, CIOs may well want to adopt some of Salesforce’s applications, but not its identity management application. “I would hate for customers who don’t know how they’re going to use SAAS and are looking at one vendor [launching] all this stuff while they’re still figuring out what they need, and not just what’s available from Salesforce,” he told CIO Journal.
Salesforce, with its emphasis on social software, is also increasingly emerging as a potential threat to the influence of CIOs. The vendor is brazenly circumventing IT and speaking directly to CEOs and CMOs. Burberry CEO Angela Ahrendts, GE CEO Jeff Immelt and GE CMO Beth Comstock, all actively endorsed Salesforce during this week’s conference.
The vendor’s aggressive courting of line-of-business leaders is a great reason for CIOs to work closely with their peers as they implement these services. They should collaborate, but also make a strong argument that data becomes useful information only when it’s properly governed and managed with other data points to create insights. CMOs can and should own customer relationships, but only CIOs can maximize the informational value of those relationships by federating data and making it available to the larger organization — and not just in the hands of the CMO.