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The Economic Impact of Dreamforce

The Economic Impact of Dreamforce

It's tempting to look at the news coming from Salesforce's Dreamforce conference in terms of the return on investment on an individual deal or announcement. But how will the collective set of changes Salesforce is ushering in -- the Virtual Residency Option, the social enterprise, the Heroku buy -- affect the ways we work and make money now and in the future?

It's worthwhile to consider the economic consequences of Dreamforce -- the products announced -- as well as the cultural issues it raised. Now, I am not an economist, and I encourage you to think about that and maybe not read this if that matters.

Many people might look at the news coming out of San Francisco and try to calculate the ROI on one or another introduction or announcement, but I think that's like looking through the wrong end of the telescope. ROI is a financial measure, and when I think about economics, especially marco economics, I am trying to figure out how the changes affect the ways we work and make money now and especially in the future. Let's take a look a just a few ideas.

The VRO

Salesforce announced a Virtual Residency Option aimed at letting companies store their data on their own devices rather than in the cloud. I've already written that this approach will be welcomed by companies and government entities that can't, for regulatory or policy reasons, let their data reside on a cloud infrastructure. There are many organizations in that position, and this should be a boon to their approaches to IT, and also a boon to Salesforce's business.

About the only folks who might be adversely affected will be other vendors. Companies like Microsoft and Oracle have made a big deal of offering architectures that run in any mode, including online, on-prem and hybrid implementations. They've taken this to market and used it as a differentiator with Salesforce, but that's rapidly fading in importance -- in part, I believe, because these solutions preserve single-tenancy for applications.

True enough, the other vendors can claim that companies can still own their source code and to be able to manipulate it at their whim, while Salesforce still holds the code and is totally responsible for managing it. Of course, customer-developed code might be stored in the cloud, but Salesforce will not be editing it, just backing it up and acting as a custodian.

Which is better? I like the idea that Salesforce will continually upgrade its code and make sure that its updates do nothing to corrupt my code. In my humble opinion, VRO is a net positive. Sure, it goes against the Salesforce religion, but it gives customers what they want and does not compromise the applications.

The Social Enterprise

Salesforce did a good job of defining what is most important: the social enterprise. This is not a new buzz word or a new shiny object. In incremental steps over the last three years, the company has been defining social business, building products to support it and training the early adopters.

There is a lot of heavy lifting left to do here, and the world outside of Dreamforce is not always welcoming. At a press conference on Thursday, Salesforce CEO Marc Benioff told an interesting story about this reality. He said that he speaks with CIOs and other C-suite people all the time, and on one occasion recently -- a conference, I think -- he showed a CIO Chatter. When the CIO saw the stream his first question was, "So now the person receiving all this has to answer it?" The answer was not, shall we say, appreciated, and with that, the CIO said this isn't for me. Net/net, there's still a lot of proselytizing to be done and a lot of reticence to be overcome. Last week I mentioned some research just out of Cornell that examines why we like creative ideas but shy away from creativity -- check it out here.

The Social Customer

There are many manifestations of the social customer. It can be someone who renders an opinion on a product or service, someone who lends a hand to help out someone with a question or an issue, and it's someone who values privacy. In watching Marc's conversation with Eric Schmidt of Google, it struck me how many times Schmidt, in describing a social interaction, used words like, "With the user's permission."

One question from a British reporter at the same press conference had to do with not wanting a socialized customer service person to see everything a customer might have recently posted on social media. Some things, while social, are still reserved for the intimates of the poster. That's a fair point and one that right now gets the very unsatisfactory answer of, well, if you don't want the world to see it, don't post it. That's hardly comforting to many people, but I think the issue won't be solved with more technology. I think it will be an issue of professionalism. We forget that in addition to building out a new technology infrastructure, that we're also building the rules of the road, and this might be an example of where smart use of the technology trumps more technology.

This will likely be a touchy topic for some time, and the sensitivity will be different from culture to culture and country to country. As an economic issue, privacy might be the biggest roadblock to mass adoption, and my advice to anyone listening would be to never take it for granted and to continue being as explicit as Schmidt.

Heroku, Ruby and Developers

One of the areas that gets almost no coverage is what all this means for developers, and as it turns out, there was a lot at Dreamforce for them. Salesforce is on a path that delivers tools for three major kinds of development: business applications, websites and -- I don't know what to call it -- Web resident apps. Schmidt was emphatic about the need for the modern company to be able to develop quickly and iterate toward perfection while enabling users to get at products quickly.

For business applications, there's the Force.com platform with a choice of Java and Apex, the company's proprietary language that basically fills in declaratively where point, click, drag and drop don't do enough. Then there's the company's website builder. You can build a website integrated with your Salesforce instance using your data. This capability is most useful for building customer-facing apps that capture customer data and interact directly with them. So a registration page is the obvious example.

Finally, Salesforce spent a lot of cash buying Heroku, which is a development environment that uses Ruby on Rails and several other languages like Java to build applications that are intended to live on the Web, perhaps at other sites. A great example of this is Facebook integrated applications. Some people are referring to "F-commerce," meaning commerce apps on Facebook, and that's very exciting. Heroku is a go to choice for building applications that run well and scale massively for the Web. In a demo, we saw an application built by NBC to promote Warner Brothers' new "Harry Potter" movie.

Obviously, this illustrates the idea that Heroku might be a good choice for this kind of app, but even more importantly, it shows us that we probably don't know how all of this technology and infrastructure will be adopted and consumed in the years ahead. That's what makes Dreamforce so interesting and the ideas unveiled there so powerful.

I am glad I dodged a hurricane to get to Dreamforce. I lost my voice but recovered and saw a lot of cool people. It's going to give me something to write about for a while.


Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and website. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at denis.pombriant@beagleresearch.com.


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