More Food for Thought
In the last article Clash
of Titans – Microsoft and SAP weigh in of this little series, I discussed the strategy of two of the big
four and how they are positioned in the platform
play of the business software titans – and others. All these business
software vendors are competing in a market that is changing – commoditizing –
at a fast rate towards an experience market, and probably beyond, if I follow
the argumentation
and thoughs of CRM godfather and friend Paul Greenberg. Business application
vendors can stay really successful only if they morph into platform players.
And this platform is more than just a technology platform, but encompasses four
dimensions.
The four dimensions that are paramount to be able to deliver
great engagements that result in lasting positive experiences are
·
Platform (IaaS/PaaS)
·
Ecosystem
·
Insight
·
Productivity
In this article I look at Oracle and Salesforce and how they
position themselves in this game of thrones.
But now, without further ado, let’s dig into the topic.
Oracle
Since the launch of what originally was project Fusion and
now is Oracle CX, the company has done a remarkable pivot from being an on premise
company to becoming a cloud company. The company has its strength in being a
full stack provider with a full range of business applications. However, its main
strenght is owning the gold standard database engine that runs the majority of
business workloads worldwide.
From its overall technological profile one could position
Oracle somewhere between SAP and Microsoft as it with Open Office also owns a full fledged office suite that
helps on the productivity side.
However, Oracle is not a public cloud IaaS player although,
at its core, it is rather a technology company than a business software company.
The main purpose of the Oracle cloud is running Oracle applications, and
running them efficiently. And to further reduce the resulting risk of customers
defecting to other vendors Oracle introduced its Cloud
at Customer back in 2016, which was actually a pretty good idea. This is
also evidenced by Microsoft copying it with the Azure Stack.
Ecosystem-wise, Oracle appears to be trailing Microsoft,
Salesforce, and SAP. While the company owns significant assets that have their
roots in the open source community, like Java, or Open Office, Oracle does not
have the reputation of being much of an ecosystem player, but more of a kind of
bully.
Still, Oracle has a good number of implementation partners.
Insight is one thing where Oracle has strengths. For one
there is a full stack of business applications that are capable of delivering a
lot of important data into Oracle’s machine learning algorithms. But there is
more.
The database.
Especially since the introduction
of the Autonomous Oracle Database Service. This service promises to bring
down cost, while increasing performance and delivering unprecedented
scalability and security. And it delivers data that can be used for improving
one of the most worrisome challenges: It delivers the insight on security problems
and is capable of acting on it. This is a value proposition that currently none
of the other vendors can claim to have.
Although it is only a temporary advantage, as so frequently
in this business.
Oracle owns a good number of productivity tools, namely the
above mentioned Open Office. It has also intelligence built into the business
applications – and the administration layers – that increase staff
productivity. So, they are playing fairly well in this dimension, too.
In my eyes Oracle should work on becoming more approachable,
and getting rid of the image of being a bully. Improving on the ecosystem
frontier while using the great database asset that the company has could make
it an even more formidable player than it already is.
Oh, yeah, and do not set your sights too much on AWS.
Microsoft is your real opponent.
Salesforce
Salesforce surely is the current synonym for CRM software,
and this not only because the company wisely chose this acronym as its stock ticker
symbol.
Evolving from its origins the company has evolved its
portfolio into a wide variety of customer facing applications. The company also
has realized long ago that business applications will get commoditized and that
there consequently is a need for a platform, which can get used by its vast
ecosystem of ISV’s and implementation partners.
The platform that helped Salesforce starting their ecosystem
is Force.com and, in combination with being an ecosystem player at its heart it
was able to create one that is probably rivalled only by Microsoft’s. Salesforce’s
Trailhead education platform is even better than what Microsoft offers.
While the technical platform is (mostly) limited to customer
facing applications, which also has a challenge on the data side, discussed
below, the thriving ecosystem is Salesforce’s biggest asset. The combination of
ecosystem and relentless focus on customer facing applications resulted in
Salesforce taking an undisputed leadership position in the wider CRM market.
Well, a strong sales strategy and execution helped to get
there, too; still helps.
However, as mentioned above, the company’s focus on CRM-like
applications and then e-commerce results in limited access to data.
And data is the raw material for insight – which is
actionable information.
From an insight angle, Salesforce has created its Einstein
layer, which is embedded into the applications.
Embedded intelligence is what can create immediate value for
business users. It provides predictive analytics and recommendations, sometimes
even prescriptions to users and/or takes away tedious tasks.
And this is exactly where Salesforce’s data challenge lies.
Salesforce has a lot of customer and order data, but none of supply chains or
relations outside a company realm. This is where Oracle, SAP, and especially
Microsoft have an edge. This was also an important reason for Salesforce attempting
to acquire LinkedIn
and looking at acquiring Twitter.
The company finally acquired
Mulesoft, which can alleviate the data weakness to some extent, while also
serving as an improved glue between Salesforce owned applications and
Salesforce to non Salesforce integrations.
Mulesoft connects processes and therefore gives access to
business data which it can also feed into Einstein’s machine learning
capabilities.
The main productivity tools that Salesforce offers, are
Chatter, the embedded analytics applications including the Salesforce Inbox and
the Lightning UI. With these the company covers business productivity but still
trails the ability that e.g. Microsoft can offer with the office suite of
products.
In summary, Salesforce is a formidable player. Right now, no
competitor can afford ignoring them in the wider CRM area. It, however, is not
all hunkydory in downtown San Francisco. The company is in need of getting more
access to data and better access to the supply side of businesses instead of
focusing on the demand side, where it is undoubtedly very strong.
Another facet is the need to staying perceived as the
innovator of the industry. This one is particularly important as it helps
Salesforce command premium prices, which keep it profitable. While, from a
customer experience point of view one cannot go around Salesforce, the
company’s low profitabilty is an achilles heel that the competition does attack
and will continue to do to.
In order to not run into the risk of getting sidelined,
Salesforce needs to continue playing its strength in innovation while improving
on its profitability – without increasing prices.
In Summary
Salesforce is sitting on the throne that the other three
companies are after. However, it is not a stable position. Salesforce owns the
definition of CX, but it is dangerously limited in its scope. Looking at the
big four, Salesforce for SAP and Microsoft is the enemy’s enemy, that keeps
them in a carefully balanced alliance … which probably gets instable if
Salesforce shows signs of being dethroned – by either Microsoft or SAP.
Having said this, I do not see Oracle as being one of the
top three vendors, rather a number four. This is in spite of its tremendous
database force, which already is attacked, too.
Oracle is lashing out at Amazon, both Microsoft and SAP have
Salesforce in their sights, for time being.
The company that should get into the sights of everyone else
is Microsoft. Microsoft has all it takes to become the number one, including
the most compelling strategy for small and emerging companies.
Then we see some smaller players like e.g. Freshworks or
Zoho that have the chance of disrupting the big players from below.
But is this a fixed outcome? Not by far. All these companies
are playing their strengths.
And then we have the big infrastructure players, too.
Amazon, Google, and Alibaba.
And then there is Apple.
These companies, plus the likes of Facebook and Netflix, sit
on the one commodity that becomes more valuable by the minute: Data.
Alea iacta est! Non tacitus!
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