Salesforce Connects With Twitter, Facebook
Salesforce.com has added Twitter functionality to the software its customers use to manage call center activities. "We can connect the old world to the new world," senior vice president of product management Alex Dayon told me during a conversation Tuesday.
Ignore for the moment the irony of referring to cloud computing as "old world," but recognize that adapting enterprise software in a way that allows customers to make use of the speed and immediacy of social networking allows Salesforce.com to steal a march on rivals like Oracle, Microsoft and SAP, which are still trying to catch up to Salesforce.com's cloud computing prowess.
Indeed, I had always thought the inherent strength of software-as-a-service (SaaS) was the ability for vendors to iterate new versions of the software with added features very quickly, and distribute it to customers on a regular basis. But now I see that SaaS vendors can also quickly adapt to major shifts in the industry, adding such features as Mash-ups with Google maps, adopting Web technologies like Ajax, or creating integration points with social networking vendors, while their on-premise counterparts are caught flatfooted.
Dayon walked me through the new functionality, which adds a Twitter plug-in to the standard Salesforce.com interface, and allows customer service representatives to access articles in a knowledge base. And much as people today search the Web for answers from others with similar questions or experiences -- what sociologists of the Web call crowd-sourcing -- the Salesforce.com application will allow customer service agents to browse through suggestions from other users and experts that can be found on the Web. That ability will be extended to Facebook in the first quarter of next year.
The application also allows Salesforce.com customers to organize their customer interactions through Twitter in the same way that interactions through a call center are organized, effectively reducing the potential for chaos that could ensue if more than one customer service agent started exchanging Tweets with customers. "Twitter conversations can be routed so you can scale your social networking support," Dayon said.
I asked Dayon if Salesforce.com were encroaching on the turf of Twitter and Facebook, both of which are trying to find services they can sell to enterprise customers. Dayon denied that Salesforce.com is cutting in on them, saying the company has technology partnerships with both social networking companies. "We're enabling those companies to connect their businesses to their users. Who's better at [applications for managing customer accounts] than Salesforce? Who's better at social networking than Facebook and Twitter? They are leveraging a lot of our expertise and vice versa," he said.
Back to what I alluded to earlier, Dayon talks as if cloud computing is already old school -- the "old world" -- but as my colleague Erik Sherman has noted, the business model still has some questions to answer. Even with more than $1.2 billion in annual revenues, even with operating margins up to 9 percent (up 300 basis points from last year, according to Bruce Francis, the company's vice president for corporate strategy), Salesforce.com earnings per share remain a paltry 17 cents per share. For the sake of comparison, Oracle's is $1.09, Intuit is at $1.35, Microsoft is at $1.62 and SAP is at $2.29.
Salesforce.com has been around for over ten years. Francis tells me the company is still in growth mode. But companies it considers its peers, like Amazon and Google, have arrived on much more solid ground more quickly than that. I asked Francis how customers could be confident that the vendor will stay in business for another ten years. After all, with on-premise software, the software is on your servers. Were a cloud computing company like Salesforce.com to disappear, it would bring another meaning to the term "vaporware."
Francis responded that Salesforce.com has "an extremely healthy balance sheet, over $1 billion in cash, record profits and revenue in the last quarter, and we're growing faster than any software company of our size. That speaks to a very sound and growing company."
It sounds good, but I still don't get why EPS remains so low after all this time.