A first take on Salesforce’s industry cloud strategy

SUMMARY:

What insights can we glean from this week’s announcements about Salesforce’s industry cloud strategy and what can we expect from its other vertical clouds?

Cloud euro sign under magnifying glass on blue sky © spacezerocomThis week, Salesforce announced its Financial Services Cloud, the first of several industry cloud offerings it has been developing. In a separate post earlier today, I assessed how that new offering stacks up. In this post I’ll discuss what we can glean about the strategy surrounding it.

Equally significant for the strategy was the Salesforce Lightning announcement made at the same time. Headlined as the launch of a long-overdue overhaul of the Salesforce user experience, the Lightning experience is much more than a new look and more even than “a new way to sell.”

Building on the work done originally to enable more flexible mobile applications on the Salesforce1 Platform (and already previewed at last year’s Dreamforce), the crucial outcome of Lightning is to fully decouple the Salesforce interface from the structure of the underlying data. This gives developers and administrators infinitely more freedom to present and work with data in whatever way they might desire.

Industry cloud foundation

As a result, Salesforce aims to become a far more versatile platform for building a range of applications customized to the needs of individual customers — or of entire industries. Thus Lightning provides a crucial foundation for the industry cloud strategy going forward because it can be adapted so flexibly to a vast range of different requirements.

The platform revamp can therefore be seen as aligning Salesforce to remain relevant alongside the emerging new generation of industry cloud vendors described by Gordon Ritter, co-founder and general partner at Emergence Capital, an early investor in several of these ventures:

The first 10 years of business cloud applications was about horizontal markets — a mile wide and a foot deep. Salesforce is the poster child for horizontal applications focused on customer relationship management across every industry. By now, most of the horizontal opportunities have been covered. The next decade will be about depth. It will be about industry solutions.

The newly upgraded platform is the mechanism by which Salesforce aims to turn its horizontal strength into a foundation on which developers can layer industry-specific depth. It will support an ecosystem of new ventures such as Emergence-backed Veeva Systems, where Ritter is chairman of the board.

Where it’s all leading

Working with partners will give the platform much wider reach than if Salesforce were to attempt to build solutions for every industry on its own. At the same time, Salesforce has made it clear there are certain verticals it intends to target and it is interesting to look at its reasons for doing so.

The Financial Services Cloud, implemented using Lightning, is the first proof point for this new industry cloud platform. So it provides an opportunity to examine what insights this gives us into the overall strategy.

Reviewing my rating of the new offering against Ritter’s five hallmarks of a successful industry cloud business, I would draw out the following points as the most important indicators of Salesforce’s broader industry cloud strategy.

  • Building on experience. Domain expertise is crucial to vertical industry success and therefore Salesforce will focus on industry verticals where it already has significant experience and relationships with existing customers. As I explained, the vendor has had a particularly lengthy engagement with the wealth management advice sector (it’s even been suggested that the new offering was almost called the Salesforce Wealth Cloud until a wily communications professional realized that name might be too much of a hostage to fortune). It has similar relationships with key customers in other industry clouds on its roadmap, which include public sector, healthcare and life sciences.
  • Exploiting scale. Whereas many industry cloud vendors have targeted heavily B2B sectors, it’s interesting that the new offering is one that is designed to be used collaboratively by the general public when engaging with their wealth advisors. I suspect we’ll see other Salesforce industry clouds also addressing volume market opportunities where its reach and scale enable it to roll out a solution to networks of consumer-facing agents or partners. So for example, when it unveils a healthcare solution, this will likely be one that both clinicians and patients can interact with.
  • Working with partners. The partnerships with integration vendors and with a specialist portfolio management cloud ISV demonstrates an interesting readiness to partner with other cloud vendors to round out a solution with functionality that the core platform lacks. Salesforce has also partnered with SIs for implementation of the new offering, including Deloitte, with whom it had already announced a partnership last year to develop an industry solution for financial services. There will likely be other intriguing partnerships emerging as Salesforce expands its industry portfolio.
  • Showcasing the platform. It’s no coincidence that this new application makes extensive use of cloud connectivity and integration to enable real-time collaboration between advisors and clients viewing attractively presented analytics based on up-to-date data. The industry cloud portfolio will have the explicit aim of showing off the competitive strengths of the Salesforce platform to customers and partners, prospects and rivals.

Disclosure: Salesforce is a diginomica premier partner. I am traveling to Dreamforce next month as part of a paid consulting engagement with Salesforce ISV partner Vlocity.

Image credit: Cloud euro sign under magnifying glass on blue sky © spacezerocom – Fotolia.com.