by Robert Desisto | February 21, 2014 | 1 Comment
One of the top questions Gartner receives from clients evaluating salesforce.com is, why are salesforce.com services so expensive versus the competition? With the recent introduction of salesforce.com’s Performance Edition (see “Salesforce.com Announces New Comprehensive CRM Edition”), customers who would have purchased Unlimited Edition (no longer available) are paying 25% to 35% higher prices than they would have with Performance Edition. Salesforce.com does offer more functionality in Performance Edition, but not all customers need those capabilities.
Gartner has seen customer evaluations that indicate that salesforce.com can be as much as three times the subscription price versus that of the competition. In some cases, customers assume that if salesforce.com is that much more expensive it must be better. Gartner suggests that customers avoid equating price with value, a trait inherited from consumer buying habits. Functional differences between salesforce.com editions may be minor for particular customer solutions; salesforce.com has continued to hold their premium, particularly for larger enterprises. Over the course of hundreds of evaluations, we asked clients why they would pay such a premium for salesforce.com, and we have come up with five basic conclusions that we will explore in a just published research note (see When, and When Not, to Pay the Salesforce.com Premium). It was clear the customers who did not choose salesforce.com did not place enough importance on these reasons to justify salesforce.com’s price premium. This is research is a must read if your in the vendor selection or contract procurement process with salesforce.com.
Category: CRM salesforce automation salesforce.com Uncategorized Tags: CRM, SaaS; Cloud Computing;, salesforce.com
by Robert Desisto | December 2, 2013 | 19 Comments
It has been popular to discuss the impending doom of on premise software business models. You often hear the on premise vendor’s dependency on large capital purchases make it difficult to transition to the smoother SaaS subscription revenue stream. There is no dispute there is an issue with on premise vendors looking to make the transition to SaaS. The real question is: Are the current crop of enterprise SaaS vendors vulnerable themselves?
The short is answer is, yes. The reason is the vast majority of vendors who offer SaaS in the enterprise market do so with a fixed term subscription basis. This means there is no ability for a SaaS customer to pay for what they use, something we commonly see with infrastructure as a service or in many lower end consumer or SOHO applications. This was supposed to be one of the foundational tenants of SaaS but has rarely been offered because SaaS vendors want large contract lock in. SaaS vendors were also supposed to be agnostic to the end of quarter or end of year deals. Clearly, in my experience of reviewing 100s of contracts a year, SaaS vendor salespeople behave just like their on premise ancestors.
The bottomline is SaaS vendors will resist to the move to “pay as you go” because it will have a very big impact on their business model predictability. However, all it takes is one viable vendor to figure out the “pay as you go” formula for applications in a market. Once it happens, we will begin talking about those legacy SaaS vendors tied to a dinosaur business model and the whole replacement cycle will start over again.
Category: Cloud SaaS Software as a Service Tags: SaaS; Cloud Computing;
by Robert Desisto | October 16, 2013 | 1 Comment
In recent conversations with Gartner clients I was surprised to see clients are stunned that SaaS vendors do not provide “Pay as You Go” contracts. SaaS contracts are typically per user per month price with a minimum annual or multi-year volume commitment with no ability to reduce users. In other words, if a you sign contract with a vendor for a 1000 users for a three year term, you will pay for those 1000 users over the term of the contract regardless of actual usage. In addition, clients are also surprised that a vendor often requires a pre-annual cash payment (again not all vendors but most).
I am not taking the vendors side but I clearly understand the vendor’s motivation. A SaaS vendor needs predictability in their revenue and want cash to fund future capacity expansion in front of demand. The fact is vendors are driven by maximizing shareholder value. Cloud purists like to site vendor examples where there is “Pay as You Go” and state vendors who don’t conform to this are not true cloud providers. Really? So does that mean salesforce.com and their billions of revenue is not cloud? I am not willing to go that far, in fact, if you look at most enterprise SaaS providers they do not do “Pay as You Go”.
The fact that the vast majority of enterprise class SaaS vendors don’t provide “Pay as You Go” is no reason not to use them. There are other benefits from SaaS such as time to market and agility. The point is one should not base their decision to move to SaaS because they believe they will gain flexibility that for the most part is not available.
Category: Cloud SaaS Tags: SaaS; Cloud Computing;
by Robert Desisto | October 3, 2013 | Comments Off
I will be presenting on two exciting topics at the Gartner Symposium in Orlando, Florida the week of October 7. Look forward to seeing you.
My sessions are:
Creating Practical SaaS Strategies
8 October, 2013 (2:30 PM – 3:30 PM)
Software as a Service is at different maturity levels among varying software markets. Even the meaning of what is a SaaS application has morphed, creating confusion with potential customers. Our presentation provides clarity to the state of SaaS adoption across multiple software segments, and best practices for creating a successful SaaS strategy.
Mobility will Boost Sales, While Causing CIOs Headaches
10 October, 2013 (10:15 AM – 11:15 AM)
The presentation will provide advice on how sales organizations can move from a rigid, low batter life, heavy laptop based world to a world of endless mobile opportunity to boost sales performance while not compromising IT policies and procedures.
Category: Cloud mobile mobile sales SaaS Tags: SaaS; Cloud Computing;mobile, Sales force automation
by Robert Desisto | September 20, 2013 | Comments Off
Gartner has released the 2013 vendor rating for salesforce.com. All 2012 ratings have been updated and new catagories have been added including Marketing Cloud, Communities, and work.com. The vendor rating was developed by a team of 12 Gartner analysts representing multiple application and service areas. It is a good read for both existing salesforce.com customers and salesforce.com prospects.
Category: Cloud CRM salesforce.com Tags: SaaS; Cloud Computing;, salesforce.com
by Robert Desisto | September 17, 2013 | Comments Off
On 12 August 2013, Salesforce.com announced its first major pricing and packaging overhaul in eight years by eliminating Unlimited Edition from its portfolio and launching the new Performance Edition to appeal to broad CRM projects. The new Performance Edition will combine Service and Sales cloud and continue to provide free access to Force.com for Performance Edition users. The Performance Edition will also bundle in Data.com, Work.com, Live Agent, Knowledge and Salesforce Identity. The list price for the new edition is $300 per user per month and will be available on 4 November 2013. The current equivalent capabilities will list at over $500 per user per month when combining Unlimited Edition and the bundled options.
Salesforce.com Unlimited Edition will no longer be available for sale or upgrade from lower editions as of 4 November 2013. Salesforce.com will create new quotes for Unlimited Edition contracts through 3 November 2013 and will honor open Unlimited Edition quotes for up to 30 days after the day quoted. Existing Unlimited Edition customers will not be forced to migrate to the new Performance Edition.
Check out the just published research note Salesforce.com Announces New Comprehensive CRM Edition.
Category: Cloud CRM salesforce automation salesforce.com Tags: SaaS; Cloud Computing;, salesforce.com
by Robert Desisto | September 4, 2013 | 1 Comment
My collegues and I just published a very comprensive Gartner Special Report on planning, sourcing and implementing SaaS Projects. The Special Report has a number of downloadable spreadsheet toolkits to help estimate TCO, evaluate applicablity of SaaS, and implement specific contract language for SaaS contracts. The report takes the reader from the definition of SaaS to architecture considerations to providing guidence on implementation resources needed to be succussful in SaaS projections Anyone engaged in SaaS applications should take a look!
Category: Applications Cloud SaaS Software as a Service Tags: SaaS; Cloud Computing;
by Robert Desisto | August 22, 2013 | Comments Off
During the earlier part of the summer I was enjoying a vacation in Hawaii. I took a peak a my iPhone and I saw a flurry of email about the partnership Oracle annouced with salesforce.com. Knowing both vendors very well my first impression and ultimate conclusion was the annoucement was more about hype then any tangible substance. As I read email and various articles written about it in the press it was very clear no one was actually looking at for the real substance that was in the annoucement. I decided that since the annoucement did not amount to much not to write on it. However, I started getting calls from clients with all kinds of questions such as: “Is Oracle pulling out of the CRM market?,” “Will Oracle salespeople sell salesforce.com?” and “Is this the first step in Oracle buying salesforce.com?”. Many of the same unfounded conclusions I saw in email. I realized I had to write something to distill really what this annoucment meant, or more importantly what it did not mean. When writing the research I thought about Seinfeld, the popular television show that aired in the 90’s in the US. A show or in this case an annoucement about nothing. I suggest anyone who wants to gain a true understanding of the annoucement should read, Oracle-Salesforce.com Announcement Will Have Little Impact on Sales Application Decision Makers.
Category: Cloud CRM Oracle salesforce automation salesforce.com Tags: oracle, salesforce.com
by Robert Desisto | August 14, 2013 | Comments Off
Often clients call me asking whether a vendor is truly providing software as a service. Clients ask because some vendors engage in “cloud washing” their offerings. Basically in a desire to get higher valuations for their company a vendor claims software as a service or cloud computing. It does not matter what a vendor calls itself, it does matter how they delivery their service. It is not to say that managed hosting or on premises are wrong. In many cases those may be the more optimal delivery model. However, Customer considering a vendor’s offering should not assume a vendor offers SaaS and its potential benefits. To eliminate this confusion I just recently published a research note, The Right Definition of SaaS Will Reduce Its Business Value Uncertainties. This note provides a clear concise definition of SaaS, including emerging concepts such as private SaaS, and community SaaS.
Category: Applications Cloud SaaS Tags: SaaS; Cloud Computing;
by Robert Desisto | June 21, 2013 | 1 Comment
Business application managers have a long-term responsibility to protect their company from potential SaaS delivery problems. I recommend 10 best practices to avoid common mistakes that can lead to SaaS delivery issues. In the recently published research report Ten Ways to Avoid SaaS Delivery Problems and Protect Your Organization I layout the specfic best practices with links to other Gartner research that provides more detail on each best practice.
The report recommends to:
- Ensure proper treatment of intellectual property in the cloud.
- Estimate total costs over five years.
- Evaluate integration scenarios.
- Assess scale and performance.
- Model and track consumption patterns.
- Have a disaster recovery plan.
- Gain appropriate service-level assurances.
- Ensure provider security processes meet organizational standards.
- Develop an adequate exit strategy.
- Prepare for multiple SaaS releases per year.
Category: Cloud SaaS Tags: SaaS, SaaS; Cloud Computing;