3. 3www.indigobeam.com
History Lesson
• F-Series - Ford’s best selling truck
• Camry - Toyota’s best selling car
• 1984: Apple II and Macintosh
• 2003: iPod, iTouch and iPhone
• Why is this relevant to your case study?
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Cannibalize your best selling product?
• What is CRM?
• Salesforce.com – world’s first hosted (on-demand) CRM
• Siebel, Oracle and SAP CRM
On premise CRM
Hosted (on-demand) CRM
Hybrid CRM
• What was the biggest casualty of Salesforce.com?
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Traditional CRM and Salesforce.com
• 1996-1999 – Siebel, Oracle and SAP
CRM growth 50% - 1996-1998
CRM growth 71% - 1999
• 1999 – Salesforce.com
Marc Benioff, Chairman and CEO
Started with ten employees
World’s first on-demand CRM
What was Microsoft doing?
• 2010 – Salesforce.com
87,200 customers
$1.3 B in revenue
4th ranked in 100 fastest growing companies
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Traditional CRM
• Targeted large business
• Selling using traditional licensing models
• Cost of owning servers and infrastructure
• Took 18-24 months to setup CRM
• TCO for 200 users CRM was $1.8 M
• TCO for 200 users CRM over 5 year period was $4.0 M
• 60% CRM implementation failed
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Salesforce.com
• Web-based, on-demand CRM offering
• Accessible from anywhere
• Centrally deployed and managed
• Stripped down features and simple to use
• Freed company of costly deployments
• $65 per user to access CRM applications
• $156K per year for 200 users
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Salesforce.com Strategy
• Salesforce.com’s initial strategic move on the delivery platform
Traditional CRM companies focusing on packaged CRM software sales were worried that providing
an on-demand CRM service risked cannibalizing their traditional licensed software sales. They
eventually responded by offering a hybrid solution between
Traditional CRM companies started providing on-demand and on-premise applications to retain their
existing target customers (large and mid-sized organizations). It’s just another way of deploying it,”
although this was exactly what Salesforce.com was trying to do and why its offering was attractive.
• Force.com and AppExchange: a strategic move on the product platform
In the mid-2000s, Salesforce.com launched Force.com, a cloud application development platform,
and AppExchange, a web-based portal for applications trading. The Force.com platform allowed
external developers to create add-on applications for almost any business need on a cloud basis and
host them on Salesforce.com’s infrastructure. These new applications were packaged and distributed
through AppExchange, where developers could upload applications they had built, and corporate
customers could search, read reviews, test for free, and ultimately purchase and download new
applications to their Salesforce.com environment.
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Salesforce.com Strategy
• Chatter: a strategic move on the service platform
By offering the Chatter service to business users, it transposed the concept of social
networking to the corporate environment. Chatter allowed users to easily communicate
and collaborate on-line while doing their jobs. Users could send and receive information
via a real-time news stream. They could follow co-workers and receive broadcast
updates about project and customer status. Users could also form groups and post
messages on each other's profiles to collaborate on projects. In so doing, they received
timely updates about what their colleagues were doing, as well as on the status of
important projects and deals, and thus had a full picture of what mattered most to their
business.
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Which one(s) of the six paths did Salesforce.com look across to create a
new market space?
Purchase, Delivery, Use, Maintenance, xyz, abc
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Can you draw the value curve of Salesforce.com’s initial on-demand
CRM offering in the early 2000s versus traditional CRM software
vendors’ on the strategy canvas?
Price per user (TCO), Infrastructure Investment, Purchase Cycle, Product Features, Usability, Subscription, Ubiquitous Access
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How was Salesforce.com able to sustain its market leadership in the
on-demand CRM market vis-à-vis both large players and new entrants
for more than a decade?
• 1st Strategic Move
• 2nd Strategic Move
• 3rd Strategic Move
