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The Fast Break of the Social Enterprise

The Fast Break of the Social Enterprise

During previous disruptions in business, the same application types survived into the next generation to be built upon and extended. But social represents a break that is not limited to computing or hardware alone. Social is a bigger break because it goes to the heart of how a business operates, what it does and even what is considered its secret sauce. And the break is happening fast.

By Denis Pombriant CRM Buyer ECT News Network
12/02/11 9:00 AM PT

I was sitting in the "blogpound" at Cloudforce New York, the seating area where Salesforce.com considerately places press, analysts and bloggers along with tables, power and WiFi, when it dawned on me: Despite all the articles, blogs and books (and Paul Greenberg's ceaseless public speaking) dedicated to the social media phenomenon in CRM, we may have been under-reporting its importance all this time.

It's hard to say or believe this, I admit, but look at some of the evidence. We've all generally agreed that social represents a major disruption in business, but somehow it seems even bigger than other disruptions. While those other disruptions were legitimate, they left the business world more or less intact. Client-server replaced mainframes, and we got a few more application types (like CRM), but business went on. The same can be said for the Internet revolution and even the mobility upswing. These all made business move a bit faster, but it was still business as usual. Brian Solis published a very good book recently called The End of Business as Usual.

In all those cases the same application types survived into the next generation to be built upon and extended. But social represents a break that is not limited to computing or hardware alone. Social is a bigger break because it goes to the heart of how a business operates, what it does and even what is considered its secret sauce.

Sketching Out the Social Enterprise

It used to be that the secret sauce was a patented product or process that you built a business model around to protect. That often meant controlling information flows between your company and your customer. Your company was the sole source of the product or service as well as being the sole source of truth about it. That's been gone since the Internet boom started, but companies have nonetheless been able to operate, though somewhat hobbled, in their old models. But not much longer.

This week's Cloudforce, New York, conference made it official. With the rather low-key introduction of the Social Marketing Cloud, Salesforce has completed at least the rough outline of the social enterprise -- a term used by CEO Marc Benioff lately and one that you'll need to get used to. Here are some reasons for my thinking this.

At the press conference just after his keynote, Benioff told us that the attendee list for the event had multiple instances of companies sending anywhere from 20 to 50 employees to the event. You do that kind of thing when you are marshaling resources and implementing a plan. In this case the plan is about how to pivot the business to become a social enterprise.

That's not all. There were significant early adopter examples on display at the event. Angela Ahrendts, CEO of Burberry, has a vision of making her company a social enterprise and is using the Salesforce suite of solutions to get there. She spoke live with Benioff during the keynote, but perhaps more informative was a two-minute video in which she said -- of becoming a social enterprise -- "If you don't do that, I don't know what your business model is in five years."

There was also a conversation with the head of GE Capital that provided a similar moment. But the show-stealer was the video of Toyota's CEO, Akio Toyoda, in Japanese with subtitles in which he said, "This has changed my life."

So from all indications, the early adopters are on board and they are influencing other early adopters, and in the next year you can figure the early majority will come along.

Preserving Differentiation

This disruption will be incredibly fast as this sort of thing goes. Unlike the decade-long march from standalone computing to networks, I think, given Ahrendts' timeline, the next several years will see a great deal of activity as big and not-so-big companies scramble to get to the new, new thing. There is a growing sense that there isn't a lot of choice in the matter, and when there isn't a lot of choice there isn't a lot of time either.

All this is good for the economy. Every recession needs a new idea to drag it out of the trough and reignite growth. The social enterprise is that thing, and not simply for the obvious reasons that I've mentioned already. Social enterprises should be able to operate far more efficiently using fewer inputs for the same or greater output. That will be a critical driver in adoption as companies constrained by the ongoing credit crisis learn how to do more with less capital.

What's most interesting to me is that Salesforce has found a way to preserve its differentiation in a marketplace that has exerted itself to catch up with its cloud computing innovations over the last decade. All other CRM, and let's say major software companies, have developed cloud offerings that mimic the basics that Salesforce pioneered -- hosted applications operating in weightless browser interfaces. Some have even made inroads in social computing.

But most have stopped short of multi-tenancy, preserving the data-center model by simply moving it to the sky. Microsoft executives recently told me that keeping data separate was the only serious way to handle the stuff, but they didn't tell me why. I wonder if it's radioactive; perhaps it is, or maybe it's simply toxic to the old paradigm.

With its emphasis on the social enterprise, Salesforce preserves its blue-ocean strategy as its competition is still locked in an old paradigm. Benioff told us the company will do US$3 billion in revenue in its next fiscal year on its way to a goal of being the fastest to $10 billion in history. For reference, in 2011, Seaboard was number 500 on the Fortune 500 list with revenues of $4.385 billion.

You know what I'm talking about?


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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