Cloud's industrial revolution - Salesforce's Chief Product Officer explains why it's not "all CRM to me" anymore

Stuart Lauchlan Profile picture for user slauchlan June 9, 2021
Putting the shift to industry clouds into context, Salesforce CPO David Schmaier makes the case for why customers want vertically-focused solutions.


I think this is the future of where the whole industry is going - if you have the choice between industry-specific and not, why wouldn't you choose the industry-specific version for your business?

So said David Schmaier, President and Chief Product Officer at Salesforce, speaking at the Cowen 49th Annual Technology, Media & Telecom Conference last week as part of a session that provided a useful piece of context-setting for the cloud firm’s hosting of today’s Industries Summit.

Today's event is one that, as Schmaier observed, wouldn’t have been on the horizon a couple of decades back, but such is the firm’s focus on verticalization, it’s a big deal today.

Salesforce currently has 12 industry cloud products in its portfolio, ranging from manufacturing through financial services and retail to healthcare and life sciences. In addition, since Gavin Patterson took up his role as Chief Revenue Officer, the worldwide field sales structure is now almost completely verticalized, an organizational overhaul to which CEO Marc Benioff was keen to point  approvingly during the company’s most recent quarterly earnings call.

Until a year ago, when he was promoted to CPO, Schmaier was head of Salesforce Industries, in which role he tapped into his experience as founder of Vlocity - acquired by Salesforce for $1.3 billion in 2020 - during which time he built a go-to-market strategy based heavily around six core vertical markets.

Indeed, as Phil Wainewright noted last year at the time, the Salesforce takeover of Vlocity was driven in large part by its ambitions for expanding its own industry-specific cloud thinking:

Vlocity's founders had mapped a far more ambitious trajectory. They were inspired by the success of Veeva, the first — and so far only — Salesforce-native ISV to secure a stock market listing with its IPO in 2013, when it achieved a near $5 billion valuation (today, Veeva has a market cap of $22.3 bn). Veeva's early founders, joined by CEO David Schmaier and others with a background in industry solutions at CRM pioneer Siebel, formed Vlocity in January 2014 with the goal of replicating Veeva's success on a far grander scale. Whereas Veeva had targeted just the pharmaceuticals and life sciences industry, Vlocity would develop solutions for multiple industries, enabling growth across all these verticals at a much faster velocity

Or as Schmaier said back in 2015 of Vlocity:

If Veeva was the first industry cloud company, we're the first multi-industry cloud company.

In fact, his vertical thinking at Vlocity was itself built on a previous role as Chief Product Officer at Siebel, Salesforce’s one-time CRM bête noire and now part of Oracle. Again, verticalization was a driving theme back then:

It sounds like science fiction, but if you check the facts, it's actually true that at Siebel, when it was acquired by Oracle in the mid-2000s, we used to ship 24 verticals in 20 languages on the same day. So I learned a lot about what to do and what not to do…The Vlocity team saw a real opportunity to bring verticals to the cloud. The cloud is faster and easier and simpler, but the industry cloud…it's even faster than a generic cloud.

Nuanced thinking

And that’s a vital thread of Schmaier’s argument - some industries are “more nuanced” than others, with specific characteristics around how products and services are going to be priced, bundled and distributed that mean it’s not just a case of “all CRM to me”. He pointed to the telecoms sector as a case in point, where customers may want to move address or add or remove services from their bundle of services:

So I move from this house to that house, or I add services, or I disconnect services, or I change them. I go from one geo-location to another and expect that services just turn on in the new place. If you buy something and I live in apartment 12 and you live in apartment 11, you would assume that when you buy it, it turns on where you live, not where I live. So that's a very telecom-specific capability called ‘the premises’.

But there are plenty of other examples to be found elsewhere, he added:

There's a lot of those kind of capabilities in insurance - there’s policies and claims and rating and underwriting. You find there's real nuance in health insurance - there’s the coverage and the liability and going from quote-to-card, where you basically quote insurance and get your insurance card. So in each one of these industries, there's real nuance to it beyond what I would call standard CRM.

That’s a basic principle that appeals to customers who do really want vertical industry applications, he said:

Industry applications give you faster time to value. They're also very sticky, because they're much more mission-critical because they go beyond the front office into the mid-office or sometimes into the back office…If you're an insurance company, you're CEO of an insurance company, why wouldn't you want the insurance cloud? If you're a telco CEO, why wouldn't you want the communications industry or media industry cloud? It's purpose-built. It's kind of streamlined to your business.

As noted previously, Salesforce Industries is now made up of 12 purpose-built industry clouds. Schmaier explained:

It's gone from a small number to 12 . So now, when you want to sell [to] financial services, healthcare, telecom, media, energy, government, education, non-profit, if you're in one of those verticals, [an industry cloud] is the product that we lead with now…When you take industry products with industry teams, magic happens. The customers really light up, because we're speaking their language, we have software that’s purpose built. It's really a game changer. And I think it's one of the more important, and maybe one of the more under-reported, strategies that is going on at Salesforce

And there’s more nuance to come, he added:

I think what's really exciting is then it goes to a new place, which is with AI and Machine Learning and Big Data. Now that you have more data - like, you have the subscriber data or the device data in telecom and media or streaming data media, where all the patient data and the holistic data in healthcare is - you can do very intelligent things. This is kind of the next generation.

My take

We’ll return to the topic of verticalization of cloud offerings later in the week when we report back from the Salesforce summit. Until then, this was a timely summation of how industry thinking has grown and grown in importance over the years for the firm.

A grey colored placeholder image