I’m a bit late chiming in on the Enterprise 2.0 conference I attended last week – in large part because I didn’t have a whole lot to say about it. Saw some interesting technology and met some nice people (plus caught up with some old and new friends) – but the fundamental E2.0 pitch really hasn’t changed all that much from the ‘collaboration is good’ pitch Lotus was making for Notes 20+ years ago (and still is…).
Collaboration is good, but the answer that still seems to elude many – and hold back widespread market adoption – is ‘what’s it worth?’
I heard plenty of discussion around business value – i.e. the dreaded TLA ‘ROI’ – of E2.0 – with some suggesting that it must be measured, others that it can’t. I’ve always been firmly in the ROI camp myself – if you can’t measure it, you can’t manage it – and more importantly companies simply won’t invest in it.
But what finally spurred me to post something was the hot debate going on inside the Enterprise Irregulars yesterday around the pricing for Salesforce.com’s Chatter, which Marc Benioff formally launched in his typically enthusiastic fashion yesterday. In particular, the debate centers around Chatter’s $15/user/month price point for Chatter (for non-Salesforce customers – current customers get it free) – and whether companies will actually pay it.
Personally I suspect Chatter will be widely adopted throughout the Salesforce.com installed base (why not?) – but far less so outside of it. It will be interesting to watch either way, since Salesforce certainly won’t shirk from pushing the product.
Is $15/user/month too much to pay for enhanced productivity? If it truly enhances productivity – and can prove it – then this seems like a small price to pay.
Has Salesforce.com opened up a pricing umbrella for other vendors to come in under and succeed?
Or are companies still unwilling to put hard dollars on the table for the gauzy promise of Enterprise 2.0 / Enterprise Social / Facebook for the Enterprise / etc…?
We’ll know soon enough.
Chris –
Very interesting analysis. I think Chatter is the first commercial product I’ve seen that has taken an exciting approach towards applications chattering to people about “important stuff.”
As to pricing, however, I think you are undervaluing the risk of the alternatives that might compete with Chatter. Chatter has very low risk in implementation, as compared to other approaches, due to its excellent usability, pre-integration with Salesforce.com for sales and services staff, and the company’s viability. Any start-up should be considered to be around an order of magnitude riskier (or more!) than Salesforce.com with respect to company viability, and project risk raises the overall risk factor that should be applied when calculating value (see http://dbmoore.blogspot.com/2009/07/enterprise-software-buyers-bill-of.html and http://dbmoore.blogspot.com/2009/07/when-and-why-to-accept-less-than-pmax.html for discussions on the pricing of risk in enterprise software products); with that in mind, Chatter should be priced at least an order of magnitude higher than start-up alternatives, in order to adequately account for risk.
I enjoyed your analysis – keep up the excellent writing!
– Dennis
Dennis,
I agree with you. Marc & Salesforce have always liked to draw simple consumer-ish analogies for strategies that ultimately go much deeper (remember when AppExchange was ‘iTunes for Enterprise Software’?) – plays better with the media – and I suspect similar things will happen here. What we’re seeing now with Chatter is just a first step in a strategy that undoubtedly goes much deeper.
I also agree about the risk factors – Salesforce has absolutely become a safe ‘nobody got fired for buying’ vendor which deserves and that alone will earn them a price premium.
It is going to be interesting to see what type of customer value Chatter delivers – particularly outside their installed base. It’s going to take time but they’ve certainly made the commitment – now they need to deliver the goods. If they’re successful, Chatter could be a good thing not just for Salesforce but for the entire E2.0 market.
Thanks for the comments!
Chris