Verticals vs Vertigo

In the last couple of weeks, two pieces of news regarding the Salesforce platform have emerged which caught my eye. Take each of them in isolation and it’s little more than an interesting development; but consider their similarities and the fact that they arrived at virtually the same time, and you wonder whether perhaps they begin to hint at something bigger. Let’s investigate further…

First, on June 25th, Salesforce1 for Retail was launched. Focused on mobile clienteling and communities, it aims to help retailers build one-to-one relationships with shoppers anytime, anywhere and on any device.

Salesforce1 Platform on Tablet

Then, the very next day at the Salesforce1 World Tour event in Paris, Salesforce announced that they had partnered with Philips to deliver a cloud-based platform for the healthcare sector, based on the Salesforce1 platform.

Philips Healthcare Platform Partnership

Two industry-specific products appearing on the scene at the same time. Weird coincidence, huh?

But just as one swallow doesn’t make a summer, two announcements like this don’t herald anything too earth-shattering, do they? Well, taken as standalone developments, possibly not. But consider that other events earlier in the year have hinted at a strengthening interest in vertical specialisation and perhaps a strategic theme is emerging.

Back in January, at the start of the company’s new financial year, many of Salesforce’s account teams were realigned into new IBUs, or Industry Business Units. And then in May, at the London leg of the Salesforce1 World Tour, a Salesforce employee speaking at a session on the Telecommunications sector mentioned that the organisation was keen to focus on some key verticals and wanted to get out and see customers in each sector to learn of their specific industry needs.

So it definitely looks like a trend is emerging, and not just one that reshapes the business internally but one that sees them investing heavily in new products and platforms aimed at specific industry verticals.

But why now? Why would a company independently and universally acclaimed as being at the top of their game start meddling with a winning formula? Why risk their market-leading position by trying something new?

Well, it’s my opinion that their market leadership is the exact reason they *are* doing this.

Salesforce spent enough time as the up-and-comer – the underdog, the challenger – that they know exactly what it takes to knock a market leader of its perch. Whereas once they were the ones shaking the tree, they now need to look down and watch out for others trying to do the same.

Yes, they’re the world’s number one CRM, SaaS and PaaS company, but at these heights vertigo can strike even the strongest. Number ones don’t stay in the top spot forever – and they know that better than anyone. If Salesforce doesn’t keep innovating, evolving and pushing ahead of its competition, then the organisation will naturally begin to stagnate and, before long, the disruptor will become the disrupted.

As the incumbent brand in the CRM space, they’re now the ones everyone else will be targeting for attack. Perhaps it is Salesforce’s belief – from their own experience – that a market leader which is seen purely as a generalist is easier to attack. If so, then launching products which give them a strong foothold in the largest industry verticals may mean their position is harder to attack. When faced by challenges from new disruptors – be they generalist or specialist in nature – Salesforce’s defence can shape-shift between ‘global CRM leader’ and ‘specialist in CRM platforms for the XYZ industry’. And that’s a pretty powerful position to be in.

So it could well be that Salesforce1 for Retail and the healthcare partnership with Philips are the start of a move towards more vertically-aligned solutions. But even if that’s the case, it must be presumed that the organisation will continue to abide by its principle of a single primary code base for all customers (even if some bespoke solutions are developed on top of it to address common usages across key industries). And the AppExchange and ISV model must still be viewed as the key channel through which skilled partners, rather than Salesforce themselves, will provide solutions that satisfy deep-dive requirements in niche industries.

Even so, the signs look clear. Salesforce’s innovative and powerful platform has brought phenomenal growth that has given them enormous success across a breadth of sectors. Now they want depth. And you wouldn’t bet against them getting it.

 

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