Marc Benioff, CEO of Salesforce.com, has often said that tactics drive strategy at his company. That’s the opposite of what we think of regarding how decisions should be made especially in big companies. The image is often of high-level decisions being refined into finer grained activities until you have tactics. Much of this is encoded in the acronym GOSPA, which stands for goals, objectives, strategies, plans and actions.
So what’s going on when a high growth company like Salesforce decides to work backwards? Some might say that whatever it is should be continued because it works and while that seems like an easy answer, it is quintessentially pragmatic and there is much to say in favor of pragmatism especially when it is diametrically opposed to dogma. Nonetheless a little analysis wouldn’t hurt here.
This is all brought into high relief by last week’s announcement that Salesforce would buy a small human capital management (HCM) company, Rypple, and that Salesforce would next field a cluster of applications around HCM or HR which it named Successforce.
Critics immediately started by stating the obvious, that a single shot HCM application based on Facebook was not the rock on which to build a magnificent cloud based human capital application set. They were right, too, but the situation was like a very good hockey ref trying to officiate a baseball game. They missed the point by calling high sticking on the man in the batter’s box.
All of the major enterprise software vendors have at least one human capital or human resources offering. SAP just bought SuccessFactors for $3.4 billion, Oracle has PeopleSoft solutions and Workday, headed by PeopleSoft’s founder, Dave Duffield, is also in the game. The market is estimated at $6 billion annually, which represents a nice revenue stream for all vendors.
As the preeminent social software vendor, Salesforce bought Rypple, a social HCM solution and announced Successforce, at least in part as a means of showing that it intends to be a player in every niche that conventional software companies play in. Salesforce could do no less because it has to show that all application areas both conventional and some not invented yet are addressable by a cloud and social solution. This is a good and probably necessary strategy and though it may have been percolating along for some time, the tactical announcement may have been dictated by recent activity. The announcement also takes some of the spotlight off of the SAP-SuccessFactors activity.
Starting with a social aspect of HCM makes a fair amount of sense because in one stroke it says Salesforce is in the market and no one need ask if Successforce will leverage social media to support business just as the other Clouds do. Of course, the pressure is now on Salesforce to deliver broad HCM functionality, which may entail additional acquisitions or a rapid development process or both. I have no idea what the company’s tactics will be but I am sure they will reflect some pragmatic thought on their part.
(Cross-posted @ Beagle Research, LLC.)