Scoring the Salesforce financial services industry cloud

SUMMARY:

How does the new Salesforce financial services cloud rate as an industry cloud offering? I scored it against top investor Gordon Ritter’s five hallmarks.

Cloud dollar sign under magnifying glass on blue sky © spacezerocom – Fotolia.comThis week, Salesforce began its promised foray into the vertical industry cloud market with the launch of the Financial Services Cloud. This is the first of several industry clouds the vendor has in the pipeline as it seeks to scale revenues towards the $10 billion-a-year mark, with moves also planned into the public sector, healthcare and life sciences verticals.

There’s a lot be gleaned from this week’s announcements in terms of understanding Salesforce’s overall strategy for industry cloud, which I’ll come to in a follow-up post giving my first take on the strategy. But first of all I thought it might be interesting to see how this first offering measures up against the benchmark devised by Emergence Capital’s Gordon Ritter, a leading prophet of (and investor in) industry cloud ventures, of five hallmarks of an industry cloud company.

  • Talent — domain expertise is an essential attribute in the management team, says Ritter. The new Salesforce product — which despite its more generic name is specifically focused on the personal wealth management segment of the industry — has a mixed scoresheet here. Simon Mulcahy, who has led the financial services team at Salesforce for just over a year, is an IT industry veteran with no background in financial services, who joined the vendor in 2011. On the other hand, Salesforce has a long track record of serving financial service advice teams. For some years starting in 2007, Merrill Lynch was the vendor’s largest customer, with a 35,000-seat deal to roll out a customized version of its application to a nationwide network of advisors. At the time, CEO Marc Benioff described the vendor’s Wealth Management Edition, due for release later that year, as a next-generation challenger to financial services information provider Bloomberg.
  • Data-driven insight — it’s essential, says Ritter, that an industry cloud player helps its customers make sense of increasingly large volumes of data. This is one of the main propositions of the Salesforce offering, which uses Yodlee and Informatica technology to aggregate information from multiple sources and then presents the results using the Analytics Cloud technology built into the Salesforce platform.
  • Strong referrals — in tightly-knit vertical industries, everyone knows everyone else and a newcomer can rapidly build a reputation, says Ritter. Clearly, Salesforce has been a presence in the industry for almost a decade and in creating its latest product it says it has listened carefully to feedback from customers in the wealth management industry such as AIG Advisor Group, Northern Trust and United Capital. On the other hand, Ritter warns that bad news travels fast so it’s important not to mess up. While it’s clear that the new product is a different, far more integrated proposition than Salesforce’s previous offerings in the space, prospects will want to evaluate carefully whether it meets their needs before making the leap.
  • Market share — it’s often ‘winner-takes-all’ in a vertical market, notes Ritter. On that score, Salesforce believes it has identified a market that’s currently served only by high-end specialists — “55-year-old men serving 55-year-old men,” says Mulcahy. That leaves a valuable, unserved mass market of younger clients eager to access wealth management advice using their smartphones and tablets. If Salesforce is able to make rapid headway, there’s potential to end up as the dominant player.
  • Layer cake product strategy — Ritter’s final hallmark is the ability to straddle multiple sets of functionality, such as CRM, marketing, content management and analytics, which he says was much more difficult pre-cloud. Salesforce already has pretty much all of this already built into its platform — which we’ll discuss further in my follow-up post. Interestingly, it has partnered with cloud vendor Advisor Software to add the industry-specific functionality of portfolio rebalancing rather than trying to build this itself.

So the offering is very strong in some respects, qualified in others. As to the insights we can glean from this first offering, now read my follow-up post on Salesforce’s wider strategy for its industry cloud portfolio.

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 dollar sign under magnifying glass on blue sky © spacezerocom – Fotolia.com.