Dreamforce 2015 – a view from the cheap seats

SUMMARY:

Watching Dreamforce 2015 from the cheap seats provides a different perspective on events

SassyHaving the opportunity to observe Dreamforce from the comfort of my own home provides a different perspective on the event. It is never possible to capture the energy or nuance from the cheap seats but memories of past Dreamforce attendance help. It also means that anything written from the cheap seats needs to err on the side of caution.

Dreamforce is unlike any other technology conference currently on the fall circuit. It is part booze fest, part arts celebration, part music festival, part thank you to customers, part sales pitch and yes, some technology thrown in. The emphasis is on fun but I wonder if CEO Marc Benioff has created a monster that needs a refresh and possible relocation. He alludes to that in the conversation he had with Stuart Lauchlan:

Some of his team want to move to Las Vegas, but he’s not keen, arguing (correctly) that that would cost the event in terms of energy and spirit.

So ways will have to be found to make it work, possibly including cutting back or eliminating the number of free expo passes, for example.

In turn, Benioff promises something bigger. Hmm. Abseiling down Salesforce Tower? Maybe in 2018. How about a two center event a la Live Aid with Benioff in one location one day and magically appearing in another location in the same afternoon? It’s do-able.

The Microsoft thing

In a piece discussing the appearance of Satya Nadella, CEO Microsoft, Phil observed that:

Nadella’s session was different. Although Benioff was there, introducing Nadella at the beginning of the session and then thanking him at the end, it was the Microsoft CEO who owned the stage throughout, while his Salesforce counterpart sat with the rest of the audience in the auditorium.

And while partnership was mentioned, the bulk of the session was an unabashed infomercial for Microsoft — for its culture, its CEO and several of its product innovations, which Nadella personally demonstrated.

It was truly shocking to see Nadella demonstrating Cortana – a competitive product yet I had a sense of deja vue at the integrations between Salesforce and Outlook. It reminded me of what Microsoft and SAP promised way back when with Duet. Benioff and Salesforce co-founder Parker Harris sold it like it is a miracle but it isn’t. And it isn’t a new idea.

There was talk in the postings that Nadella’s appearance was some sort of practice run for the day Microsoft acquires Salesforce. It’s an interesting sentiment but I see the wider ‘business operating system’ argument as more persuasive. Microsoft remains the de facto owner of the business user’s office environment and has a good chunk of change in the small and mid-market ERP space. Its own CRM has interesting  use cases but there are always opportunities for co-existence.

Having what amounts to Microsoft endorsing Salesforce makes Salesforce president Keith Block’s sales job a LOT easier in the large business C-Suite, an issue about which both SAP and Oracle should be concerned.

Product?

Speaking of applications, I was less than impressed with what I saw in the product announcements. Last year I was hyper critical about Wave. Nothing (much) I heard changes that view. Pricing is way too high for Salesforce SMBs and even though Phil Wainewright tries to put a positive spin on the current Wave story, he concedes that:

There are still very few customers at this year’s Dreamforce showing off what they’ve done with Wave and the Analytics Cloud — the short list of names (Cisco, EMC, HP, Verizon and a couple more) mostly comprises those who got early access.

Building analytics applications is really, really hard and my guess is that Salesforce is finding out just how difficult  it can be. More to the point, unless Wave becomes a general purpose BI application, it won’t get the adoption needed to become part of that business operating system. Excel and, increasingly Tableau, have that market cornered.

The other major product announcement was actually a roadmap announcement. Thunder, Salesforce take on complex event processing (CEP) won’t be available for at least 10 months. It makes copious use of open source technologies but that matters less than the fact there is an established market for CEP for which I count TIBCO, Software AG, IBM, SAP, Oracle and…Microsoft as leaders with mature offerings. Interesting? Sure, in the context of the much hyped IoT pantheon but not something we need worry about for a while.

There were plenty of other tidbits but those were the headline grabbers for me.

That leaves us with three things – customer stories, partners and industry verticals.

SPIV (Stories, Partners, Industry Verticals)

As always, Salesforce rolls out an impressive list of customers and their stories are often compelling. We caught a share of the really good ones. The Morgan Stanley story, which talks about building side car HR applications, caught my eye. Mention is made of ‘extensive customization’ which is a great segue to Phil’s reporting of the Salesforce ecosystem.

Cloud naysayers are quick to point out that cloud apps are ‘put up and shut up’ offerings. Morgan’s is demonstrating that is not the case and, as has been made clear in the past, every Salesforce implementation is slightly different. That’s a great incentive for the likes of Accenture to rapidly expand its Salesforce practice to build off the Salesforce platform. But it brings with it a cost burden, the extent of which is just emerging. Back to Phil, discussing research published in conjunction with IDC:

The research, to be published in full next month, found that the value of professional services going through the ecosystem was 2.9x Salesforce’s own revenues in 2014, and will rise to 3.7x in 2018.

It doesn’t stop there. Salesforce boasted of:

The IDC research we presented really represents the professional services aspect. If you add the ISVs as well, it becomes much bigger. And if you add on top of that the professional services opportunity on top of our ISVs, it compounds.

Phil then ran the calculator over what this means and comes up with:

ISVs that have built solutions on the Salesforce platform, or that connect into it, add significant extra revenues into the mix. For example, we know from its public filings that Veeva pays 15 percent of its revenues in subscription fees to run on the Salesforce platform. The remaining 85 percent added more than $250 million of revenues into the Salesforce ecosystem last financial year. Add those figures in for the entire ISV population in the ecosystem and the total together with SIs could top $30-40 billion.

That is a far cry from the $200 billion Vinnie Mirchandani claims it costs the SAP Nation each year. But it begs the question – where’s the value?

So far, we’ve not heard too many rumblings but we occasionally hear sharp intakes of breath about the cost of having Salesforce in your technology inventory. The fact those partner revenue ratios are rising sharply should be a point of concern but I can equally see how the complexity of hefting multiple clouds a la Salesforce will lead to cost creep. This is one to watch.

Finally we have the industry verticals. There are only two so far – healthcare and financial services. Salesforce is careful not to over stretch itself. That is wise. Far better to go deep on a few than wide on many and then find you can’t service them correctly.

My take – popcorn included

My overall impression for Dreamforce 2015 is that it represented a clear appeal to the large company buyer while nodding vigorously in the direction of both partners and, to a lesser extent, to its core SMBs. Is that enough to maintain the momentum? Benioff hopes so:

We have a multi-billion dollar pipeline in that keynote room. This is a mission-critical event. It is super-important for us that this goes well. It sets up the trajectory for the rest of the year. If you are someone who is spinning plates, Dreamforce is a big pole that’s going to keep them spinning for a while.

Keep spinning Marc, it’s going to get tougher out there in 2016. CYA next time in person? We’ll see – I quite like the cheap seats. 😉

Disclosure: Salesforce, SAP and Oracle are premier partners at time of writing