Sizing Up salesforce.com's Social Enterprise

"We were born cloud in 1999, but we've been reborn social," salesforce.com (NYSE: CRM  ) chief and co-founder Marc Benioff said in kicking off last week's Dreamforce customer conference in San Francisco. The message? Social media is serious business, and salesforce.com plans to profit from the shift.

Stalking a strategy
As usual, Benioff wasn't short on hyperbole. In a Bloomberg interview ahead of the conference, he called on companies to become "social enterprises" that listen in on customers and partners when they post to popular social networks. Call it the fall of the Rolodex and the rise of social profiling.

Benioff suggested that every tweet, every Facebook post, every "like," every group affiliation, every game played is fair commerce for the company hoping to engage in a business relationship. Thus, as he sees it, knowing my penchant for playing Zynga's Empires & Allies on Facebook is more important than knowing my most-frequented email address.

I know. Stalking as a strategy? Weeeeiiirrrd. Yet Benioff does have a point. Getting to common ground -- i.e., finding out what the customer cares about and relating to that need -- is Sales 101. Good relationships always precede big deals, and we've come to depend on social media as a tool for getting to know acquaintances, friends, potential mates, and (of course) business partners.

"In today's world you need to get to know who your customers are and what they 'like,'" the company said in a blog post. "When you know who your customers are, you can serve them better." Who can argue with that logic?

Chatter and the importance of collaboration
Skeptics rightly point out that, while the story sounds great, salesforce.com's profit picture looks bleak when compared with traditional peers Microsoft (Nasdaq: MSFT  ) , Oracle (Nasdaq: ORCL  ) , and SAP (NYSE: SAP  ) . From the latest 10-Q quarterly filing with the SEC:

We plan to reinvest a significant portion of our incremental revenue in fiscal 2012 to grow our business and continue our leadership role in the cloud computing industry. As a result of these investments, we expect diluted earnings per share for fiscal 2012 to be significantly lower than diluted earnings per share for fiscal 2011.

In other words, Benioff and his team are making an all-in bet on collaborative cloud computing as the model for customer-centric business software. Profits will come, they say. The time to invest is now. Talk about rule breaking.

Yet I find the vision inspiring. While others talk about what social media might become, salesforce.com is building a platform that's social by nature. Chatter ties together all the various salesforce.com implementations so that collaboration is encouraged but not forced. Aggregated data is relatively easy to find and share. Ideas flow.

I've never been able to try Chatter, but the more I look at it the more I want it. My gut tells me this is what "groupware" was supposed to be but never became. Why? Four new additions to the service convince me:

  1. Chatter Connect, which allows things outside non-salesforce.com to become social by plugging in Chatter functionality. A plug-in for SharePoint promises to make it possible to use the service for sharing documents.
  2. Chatter Now, which adds a style of instant messaging to Chatter that's eerily reminiscent of Facebook's own real-time messaging platform.
  3. Chatter Customer Groups, for private collaboration with outside customers, partners, or consultants.
  4. Chatter Approvals, for managing any sort of required approval -- for a contract proposal, vacation request, etc. -- inside a Chatter feed.

Now contrast this with groupware, which was an emerging category of software for managing projects when I began working in tech more than 15 years ago. The idea at the time was to codify a workflow that everyone on a team would stick to, thereby increasing control and (hopefully) productivity. Only when reality set in -- that work outside the factory floor is typically messy and free-form -- did enterprises realize they'd wasted millions on software that couldn't possibly deliver on its promise.

Data, data, data everywhere
Of course Chatter and the underlying salesforce.com system can't do much without good data and widespread access. The company moved to address both issues with two new services:

  1. Data.com, which is based on the Jigsaw online database. Think of as a customizable version of LinkedIn (NYSE: LNKD  ) , wherein executives trade business information. Data.com adds Dun & Bradstreet information and customizable features to enrich the (ahem) data viewable in a salesforce.com record.
  2. touch.salesforce.com, which provides touchscreen access to the entire salesforce.com platform. All major devices -- from Apple's (Nasdaq: AAPL  ) iPad to Research In Motion's (Nasdaq: RIMM  ) Playbook -- are supported by an HTML5 interface, the company said in its PR materials.

Sir? Here's the cold cup of coffee you ordered ...
In the end, there's a lot to like about what Benioff and his team had to say at Dreamforce. More than 45,000 attended, and most seemed to greet the functional enhancements announced there with enthusiasm. Two techies we sent from Fool HQ also reported positive things, and if the promo videos and subscriber numbers are to be believed -- Benioff said during the Q2 conference call that more than 100,000 companies are using it -- CEOs are committing to Chatter, giving salesforce.com what could become an extremely lucrative first-mover advantage.

Yet here's the interesting thing. As the conference was concluding, I got a note from a colleague at Fool HQ that an "urgent" package sent to our old headquarters address in Alexandria, Va., had arrived for me. I work out of Colorado, so naturally I asked her to open it up. Inside was chocolate candy and a note from salesforce.com that promised to teach me how to discover what my customers "liked." All I had to do was follow the company on Facebook and elsewhere.

The irony? (Besides sending to the wrong address.) I hate chocolate. My wife is the only one who can get me to eat it. I like your story, Mr. Benioff. But I'd like it even more if you would practice what you preach.

Fool contributorTim Beyers is a member of theMotley Fool Rule Breakers stock-picking team. He owned shares of Apple and Oracle at the time of publication. Check out Tim'sportfolio holdings andFoolish writings, or connect with him onGoogle+ or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.

The Motley Fool owns shares of Research In Motion, Apple, Microsoft, and Oracle.Motley Fool newsletter services have recommended buying shares of Ssalesforce.com, Apple, and Microsoft, creating bull call spread positions in Apple and Microsoft, and shorting Salesforce.com. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.


Read/Post Comments (4) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 13, 2011, at 5:58 AM, pccoffee wrote:

    Tim,

    Sorry about the chocolate. What would be better next time?

    - Peter Coffee, VP Platform Research, salesforce.com

  • Report this Comment On September 13, 2011, at 10:25 AM, TMFMileHigh wrote:

    Peter,

    No problem. I'm a big fan of cheese and fruit, for what it's worth. But I'd just as soon get good press materials and an interview. What do you say?

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On September 13, 2011, at 10:04 PM, KarlGoldfield wrote:

    Mark B and the SFDC posse gulping down the Enterprise 2.0 kool aid is refreshing. Now with IBM countering with a multi-billion dollar bet on the Social Business, we have heavy weights pioneering what will make the consumer and B2B experience a more relevant and enjoyable experience.

    As a co-conspirator and pioneer of online collaboration and sales 2.0, I commend them.

    Karl Goldfield, Collaboration Agent 001 http://teambox,.com

  • Report this Comment On July 13, 2012, at 2:47 PM, IlluminatInvest wrote:

    Why in the heck is salesforce.com sending boxes of chocolates to analysts who recommend their shares?

    Even minor conflicts of interest like this show how desperate CRM is to have people continue buying into their Ponzi Scheme.

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