March 10, 2008
No, Salesforce.com Doesn't Have Anything to Worry About
That is my answer to Erick Schonfeld's [rhetorical] question posted this morning, Zoho People Launches for Free. Does Salesforce.com Have Anything to Worry About?, on TechCrunch.
While the Zoho suite of apps may be fine for personal use or even small-business use, Salesforce's bread-and-butter customers are not going to be taking their multi-hundred or multi-thousand seat installations that are most likely integrated with other legacy systems and migrating them to Zoho.
These customers expect a level of service, performance and trust that Salesforce has spent the past 9 years building and it's going to take a lot more than a free/$4 month service to move them.
March 10, 2008 in competition | Permalink
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Comments
Your points against ZoHo as a risk to CRM sound reasonable.
However, beware that this is much the same argument the enterprise vendors told themselves when CRM launched at the then-ridiculously low price of $125/user.
: We're firmly integrated into our customers' solutions
: They want/need more than that lightweight stuff
: They won't go for these high-risk solutions
We all know how that played out.
A few years ago companies like Siebel and PeopleSoft found themselves in a bind. They were beat down from above by SAP and ORCL who offered lower-cost versions of almost-as-good software and had strong existing relationships. And they were squeezed from below by the upstarts like CRM who were offering a much smaller solution for a much smaller price.
I'm not saying ZoHo or Salesboom or someone like that is the death knell for CRM. But CRM's competitive position is going to continue to get tougher, which is why we should expect them to have to continue to spend tons of money on marketing and SG&A.
In the end, the competition is good for customers.
Posted by: Roscoe | Mar 10, 2008 2:47:30 PM
What the post doesn’t recognise is that Zoho people is a ground shift in office SaaS productivity apps. By stealth Zoho is slowly but surely building an integrated suite of solutions that could become a significant threat to both Microsoft (office productivity), Salesforce (CRM) and other SaaS vendors (CRM, Wiki).
Zoho is a fascinating business to watch. While some have said that People is a scatter gun approach towards application development, I believe it an extremely calculated move. Next move I’m picking is a filling out of the space between the current small business offerings and People, the first larger business offering.
Posted by: Ben Kepes | Mar 10, 2008 5:17:07 PM
1,000,000 users / 41,000 customers = avg 24 seats per customer. Seems to me that salesforce's 'bread and butter' is really 30 seats, not multi-hundred.
Posted by: Bill Emerson | Mar 11, 2008 5:05:41 PM
Point taken Bill. The point I was trying to make was that I don't think the hundred+/thousand+ seat installations are going to be rushing off to Zoho any time soon, bread-and-butter or not....
Posted by: Mark | Mar 11, 2008 7:43:05 PM
When I first read this I thought the same thing as you Mark. I agree that SF's customers are not suddently going to jump ship. And then the first thing I thought right after that was... Roscoe's comment above.
However, Roscoe compares SF to Siebel. These were two different models of business. Now, Zoho and SF are the same model of business.
Now, a brand new startup might decide to go with Zoho to start off instead of SF. One less "potential" customer for SF. Though SF's 9-years of experience do have some pretty good leverage.
Either way, as Roscoe says, "In the end, the competition is good for customers."
Posted by: Boyan | Mar 12, 2008 7:32:50 PM
I'm all for competition - especially as a Salesforce customer! Anything to keep them innovating...
Posted by: Mark | Mar 12, 2008 9:10:29 PM
I love how Roscoe always somehow manages to get in a plug for salesboom - what a coincidence!
Posted by: Jim Bales | Mar 14, 2008 3:16:15 AM
I love how Roscoe always somehow manages to get in a plug for salesboom - what a coincidence!
Posted by: Jim Bales | Mar 14, 2008 3:23:58 AM
Jim,
My mention of Salesboom was actually a swipe at them -- as in, "Jokers like Salesboom will never be the death knell for CRM despite cut-rate pricing." The reason to use Salesboom is that the combination of their silly name and negligible market impact double reinforces my point.
Posted by: Roscoe | Mar 14, 2008 12:00:40 PM
