Paul Sylvestre's Business Strategy and Marketing Blog

Friday, July 01, 2005

Salesforce.com Showing Some Growing Pains

How scalable is Salesforce.com, really? While it is theoretically possible that information technology should allow businesses to mass customize products and services for all their customers, there are limits to how well technology can be leveraged to meet everyone's needs.

To illustrate the point, I share with you this example taken from an article in Computerworld.

"What once looked to be a marquee deployment of hosted CRM software at Cisco Systems Inc. is now the subject of a damning report from a research firm that says the project has stalled. In a note published on June 22, analysts from JMP Securities LLC suggested that a deployment of CRM software from San Francisco-based Salesforce.com Inc. had been temporarily delayed.

Salesforce.com signed a deal with Cisco during the second half of 2004 that called for an initial rollout of up to 2,000 seats and a later installation of as many as 10,000 seats by June 2005, according to the JMP Securities report. But end-user resistance and integration challenges forced the deal to be renegotiated so that the rollout is staggered. Completion is now set for March 2006."

The moral of the story? Be careful of the hype. Even the best, most mass customizable applications have their limits. In truth, a company can't be everything to everyone, no matter how good the technology. Jim Billington of Harvard Business School argues that you can mass customize effectively for only about 20% of your customers. Personally, I am a bit more optimistic on the power of technology than Jim and think it is a little higher than that, but he still makes a great point.

If your company needs a customized solution, and is about to ink a deal with a vendor whose strategy is built around the concept of mass customization, check to see if your company has similar needs to that vendor's top 20% of customers. If you don't, and/or if your needs are clearly out of the scope of the vendor's core product (i.e. you need A LOT of customization), look for another vendor.