While it may seem like just yesterday that subscription model pricing and SaaS solutions upended the traditional perpetual license and maintenance model on its head, this trend has now been firmly in play for the past decade. Most organizations are still struggling with this transition or are just late to the game, while others have been aggressively migrating their IT environments to a multi-cloud and/or hybrid cloud environment, pushing a large proportion of costs over to the subscription licensing models that every IT vendor is now moving towards at light speed.
In fact, the more innovative IT vendors are now pushing the envelope further in a modern-age effort to meet all of their customers’ needs across multiple functional and organizational silos; quite reminiscent of the good old ERP days. Today’s leaders in moving to a platform approach are moving quickly to create new, cloud-based ecosystems that are integrated across service lines and third-party data sources, seek to provide self-contained workspaces, embed AI at the product layer, and offer low-code/no-code application development environments and application marketplaces.
The MIT Sloan Management Review discusses lessons learned from its recent 2018 MIT Platform Strategy Summit from which it presents five key principles representing “platform value” in today’s marketplace. The article lists these principles as:
Let us take Salesforce.com as the leading example of the vendor that pioneered the SaaS software movement and is now taking the lead in creating the Platform Economy. We will walk through the key criteria identified above to qualify as a Platform Economy vendor and see how Salesforce fits the MIT Sloan Management criteria as our guidepost.
Historically, SaaS vendors, in this case Salesforce, offer individual SaaS services that target a specific business functional domain. The services are independent of one another and offer little in the way of deep integration or a single view of the customer. Customers regularly consume one or more of these services to meet specific business and customer needs, but with no ability to create synergy across the stack.
Source: Info-Tech Research Group
With the recent acquisition of MuleSoft for over US$6B, twice the cost of the recent Demandware acquisition from which Commerce Cloud was refined and re-branded, Salesforce now has the technology to create strong integrations between its respective SaaS services AND provide robust external connectors to third-party data and application sources.
Source: Info-Tech Research Group
With an annual revenue target of over $20B by 2022 and with 75% of its top 200 customers running four or more SFDC clouds, scale is a given. As the undisputed leader in the CRM market segment coupled with high-growth business in its ancillary business lines such as Service Cloud, Marketing Cloud, and Commerce Cloud, Salesforce has also leveraged this scale to operate in both its own private cloud as well as running on AWS. The continued diversification of both the underlying infrastructure and the diversified product lines hedges market risks. Additionally, Salesforce is the third largest cloud provider even when taking into account IaaS providers:
A timely quote from the MIT Sloan article drives home the impact of the MuleSoft acquisition:
For MuleSoft, a provider of API services, the transition from manual to self-service options reduced friction and accelerated employee onboarding times from weeks to minutes. MuleSoft’s CTO Uri Sarid said “there has to be value in the platform, and self-service reduces friction in setup. Service in seconds is digital; service in days is not.”
I think we can check the box on this guiding principle and move on…
As scale, complexity, and risk grow and the platform matures, there manifests, “…the need for more sophisticated decision engines to harness value.” The MuleSoft integration shines brightest on this point, as cross-platform network effects are required to drive to the next level on the value chain. To commercialize and launch this capability, SFDC has re-branded MuleSoft as Integration Cloud and just debuted the upcoming Salesforce 360 service. Salesforce 360 will now link across all SFDC clouds culminating in a master customer record comprised of data inputs across multiple channels (e.g. social media, email, and phone). This capability will be launching in 2019, so the jury will be out on the quality of this service, however, the direction forward is clear – build a state of the art application ecosystem in the cloud that will enable customers to link the customer experience from marketing to sales/commerce to service within one platform.
The article speaks to the need for platform companies to scale up their advanced skills talent in the areas of AI and the sub-domains of AI, such as machine learning, deep learning, and NLP. Salesforce has taken unique, groundbreaking steps to ensure it has the talent on staff to create next-generation AI capabilities, but also in how it deploys AI offerings to customers.
The graphic below illustrates (less MuleSoft) that Salesforce will go buy the talent where it sees a strategic, long-term fit with the business.
Source: True Blue Partners
For its customers, Salesforce has again taken a leading effort to bring AI to bear in the product solutions in such a way as to inherently complement the work already occurring in each area. Contrary to the approach of some of its competitors, which offer AI platforms upon which smart applications can be developed and carry the cost of finding specialized talent, Salesforce has embedded AI capabilities into the core solutions. For example, an Einstein customer using Sales Cloud will now have access to automated Lead Scoring and Opportunity Scoring that leverages the data already in the system to enable the sales rep to focus on clients with a high probability of buying or to flag lagging opportunities, in real time. Einstein was developed for multiple clouds and with Salesforce 360 may soon be able to offer a comprehensive view of the customer along with data-based recommendations for closing more deals faster. As if this is not enough, further synergies are derived when other Salesforce products are combined, such as how Salesforce Inbox and Analytics further serve to streamline the sales process via a data-driven, AI enhanced and integrated offering.
The MIT Sloan article states that, “Diversity has also shown to be a driver of value for organizations, and there is growing evidence that diverse teams are sharper and more creative than homogeneous teams. Yet, the tech sector is an area that often lags significantly. For example, tech employs half as many African-American and Hispanic workers compared with the rest of the private sector. Can a platform help?”
Does Salesforce.com fit the bill when it comes to diversity? It is certainly doing more than many companies in this regard. Salesforce actually posts its diversity data annually and tracks the diversity of its workforce. Equality is a founding principle at Salesforce as evidenced from this excerpt from the 2017 diversity report:
"Here are some of the key findings:
Salesforce also takes pride in giving back to the community via the 1-1-1 program, which pledges 1% each of profits, market cap, and employees’ time to charitable causes.
This point takes the form of the ever-growing trend of software specialization that targets specific industries. Salesforce has been refining its core products to include industry-specific functionality, some of which now sport their own clouds – Commerce Cloud (retail), Financial Services Cloud, and Health Cloud. This is a critical differentiator that enterprise software providers must get right, as there exists a fundamental shift in the focus of enterprise customers. These customers are demanding more focused solutions that address their respective industry challenges.
The shift in developed economies from goods producing demand to higher services demand necessitates the development of solutions that allow industry-specific customers to set themselves apart from the competition. Recent employment reports in the US show that ~80% of new jobs in the US are in the service-providing sector. This trend has been occurring for quite some time and demonstrates that the “Demand Chain” is now at least on par in importance as the traditional Supply Chain. The Demand Chain pulls from systems focused on CRM, Sales, Service, Commerce, and Marketing to present innovative products such as dynamic pricing, targeted advertising, client engagement and the like, enabling the refinement and enhancement of services provisioning.
Salesforce has developed a comprehensive strategy to provide customers use-case and scenario planning for most major industries:
Drilling down to Consumer Packaged Goods (CPG), as an example, yields a services roadmap for customers to see how they can deploy the Salesforce platform to their industry:
This is but one example of dozens publicly available to see how Salesforce views the future of Demand Chain vs. Supply Chain. Salesforce is not seeking to create a better ERP system to manage the supply chain; it is creating the current generation system to meet the exponentially larger Demand Chain services-based markets. We have really just scratched the surface in discussing the Platform Economy, Demand Chain vs. Supply Chain, and the ongoing shift from XaaS to Platform Economy. Future notes will delve into more detail around these topics and the key drivers propelling this seismic shift in technology consumption.
Salesforce demonstrates that it is the de facto leader in the new wave of Platform Economy vendors. By attacking customer needs from multiple angles (integration, customer id linkage, application development, and industry segmentation), it is truly moving towards being a one-stop shop for the Demand Chain buyer.
Traditional accounting practices are tailor made for waterfall project management. Organizations that have transitioned to the use of standing product teams using Agile and DevOps need to transform their accounting practices as well or they will leave valuable capital expenditure dollars on the table.
IBM is changing the terms of its ubiquitous Passport Advantage agreement to remove entitled discounts on over 5,000 on-premises software products, resulting in an immediate price increase for IBM Software & Support (S&S) across its vast customer landscape.
So you’ve gone Agile. You do daily scrums, retrospectives, and all the “right” Agile ceremonies. But still your organization isn’t quite convinced. It is now critical to balance the drivers and goals of both Agile and traditional thinking in order to achieve organizational success.
Do you feel like your Agile teams are treading water – going through the motions but never going anywhere? It’s a risk, and practices such as daily standups, retrospectives, and demonstrations need to be used wisely or you risk losing discipline to meeting fatigue.
Stakeholders expect the speed and responsiveness of product delivery does not come at the expense of quality. QA tools offer retailers the ability to continuously ensure both business and technical quality standards are upheld, but these tools should not be viewed as a silver bullet.
No matter how good your product roadmap and backlog are, they are only as good as your audience’s ability to understand your vision and priority.
The scrum master is like the conductor of an orchestra, ensuring that every piece fits together at the right time to create something greater than the sum of the parts. You don’t have to know how to play each instrument, but you do have to understand what each part contributes to the overall masterpiece.
Tools are important to product teams, but only when they support solid people and processes.
Aha! introduces scenario planning to give product owners the ability to create and compare multiple release approaches based on team capacity and backlog priority.