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Even here in the U.K., we are well aware that Salesforce.com’s annual event Dreamforce is happening this week in San Francisco. Unfortunately I couldn’t be there, but a contingent of the Ventana Research team is there, and from what they are telling me it is quite a show. I have written before that Salesforce has the best marketing machine in the world, let alone the software industry, and it seems to have topped previous events. The company undoubtedly has changed the way many companies think about software, forced many vendors to change their delivery models and is impacting the way consumers think about communicating and running their lives. But let me make a few long-range observations.

Apparently 42,000 people (which is nearly half the number of Salesforce.com customers) have made the effort to be there, so not everyone lives only in the cloud. Despite all the chat about Salesforce Chatter, people like to meet people and talk and interact with them in person. The same is true about customers; they will research products on the Web and watch promotional videos, but only a fraction of worldwide sales are made over the Web. Many more will “speak” their voice on social media, but how many will be “heard”? My point is that companies shouldn’t forget all the other channels they use to do business; doing so they risk alienating lots of potential customers. This is why I wrote that you should think carefully about social media and your customers.

Despite the Salesforce logo and marketing messages, every service you get from the company is based on software; it is just that the software resides at its sites and users access it over the Web. The important thing for companies to remember is that regardless of how it is delivered, the most important thing about software is whether it has the capabilities you need to run your business; if it doesn’t, it won’t get used and you won’t get the business benefits. On top of a product’s capabilities, you also need to take into account whether it is secure, can scale to meet your users’ demands, provide acceptable response times and be customized to meet your specific needs. In the cloud you also have to consider what happens if the vendor’s site(s) is hit by a disaster, how to integrate it with other systems, and what happens if you should decide to revert to on-premises deployment.

And of course, as evidenced by the hundreds of partners displaying their products and services at the show, Salesforce doesn’t do everything itself, so companies have to look beyond it to meet all their requirements. Indeed after a recent U.K. event, I wrote that many customers have successfully used Salesforce products to meet rather more basic business needs than perhaps suggested by all the futuristic hype, such as to build a better order-processing application or consolidate systems and servers.

The big question for any company is where it is heading. CEO Marc Benioff started with a dual mission: to beat Oracle at providing sales force automation products and to move companies away from the on-premises model to using systems in the cloud. A LinkedIn discussion about the top three “CRM” systems suggests he has won the first battle and that the cloud is now on everyone’s agenda. The latest announcements are still about moving to cloud, but now the focus is more about data, mobility, the Force.com platform and all the partners and customers that have adopted this as their development environment, and finally about the social customer and the social enterprise. Add all these messages together and the goal is putting hardware and the system development vendors out of business and persuading all of us that we have to do business in this new way.

Many of us have lived through the eras when the mainframe was declared dead, and then when client/server was dead, yet numerous examples of both live on. Cloud computing undoubtedly is an option that adds to the choices companies have, and used properly it can help them innovate in the way they do business and I have written innovate the contact center. Social media is here to stay also, but as I noted, people still like to talk and companies should view it as an alternative communication channel, not a replacement for others, and fit it in with their overall strategy for interacting with customers. Lots of us have changed the way we work, but many more people still go to the office. Here also, regardless of the value of smartphones and tablets, companies shouldn’t forget how to support the large majority of their employees who work with desktop systems most of the time.

Salesforce.com has some great products, services and partners, and some customers I have spoken with say it has enabled them to innovate in new ways and also be part of a contact center technology revolution that I have written about. Also realize that Salesforce Chatter is a big step forward in collaboration and social media blended together and will require you to think outside the box in making investments. But let’s all keep our feet on the ground and make sure that whatever you choose meets your business needs. Also, please come tell us more and collaborate with me and for those based in Europe, I hope to see you at Cloudforce later this month in London. If you want to read my colleagues analysis of Dreamforce you can get to it now and prepare for Salesforce event in London.

Regards

Richard Snow – VP & Research Director