Read the following Case Study and then, answer the four
questions at the end in an essay:
Case Study:
salesforce.com: taking CRM to the cloud.
As the leading CRM software vendor, Salesforce.com is also
the pioneering company that launched cloud-based software as a service (SaaS)
for enterprise-level applications. Founded in 1999, the company boasts
double-digit annual growth, with sales topping $6 billion by 2016. In the early
years, however, Salesforce had a difficult time convincing other companies
that a cloud-based solution for CRM would work or that their sensitive data
would be secure.
Larger enterprises, in particular, were reluctant to move
such data off their privately managed servers housed in their own data centers.
But Salesforce persisted, offering a “pay-as-you-go” subscription pricing model
that allowed companies to identify a small number of users to try out the
service. The advanced CRM features that Salesforce offered were often well
beyond what the company’s own CRM software could do, particularly on mobile
devices. Salespeople are on the road quite a bit, and having the ability to
manage their leads, tasks, customer communications, and other data important
for CRM from anywhere at any time quickly became a “must-have.” The company’s
approach essentially propelled the era of enterprise-level cloud computing.
Analysts project that 50% of organizations will select SaaS for complex
business process support by 2018 as they wind down their private data centers
and move applications to the cloud.
Salesforce.com has a growing number of competitors, however,
and focuses heavily on continuous innovation for its products. For example, the
company added the “Wave Analytics” app to its services so that business users
can analyze data in real time and take action from within the app. To encourage
innovative thinking, Salesforce.com draws on the ideas of its millions of
customers who contribute their thoughts to the Idea Exchange. Other customers
can vote on the ideas by clicking thumbs up or down, and those with high vote
totals are reviewed by Salesforce staff who decide whether to include the
feature in an upcoming release. The Idea Exchange shows the fate of each idea
so contributors can see the outcome.
The relentless drive to innovate led company executives to
recon-sider office space design. Salesforce.com CEO Mark Benioff brought in
Buddhist monks to give their thoughts on how to configure the company’s
skyscraper headquarters in San Francisco. The monks observed that the employees
were talking all the time and working constantly and suggested that space
should be provided for more contemplation. Benioff added “mindfulness” areas on
each floor so that employees would have a quiet place to think and reflect.
Despite very rapid growth, Salesforce.com faces a number of
challenges. One involves the need to constantly upgrade its services and
technology. For example, it relies on Oracle databases, but the company is
considering moving to an open-source database solution to reduce costs. It also
must ensure that its own platform is constantly available for customers. A
major outage in 2016 left customers very frustrated, and 5 hours’ worth of data
updates were lost.
Perhaps the most important challenge for Salesforce.com is
maintaining security, especially because the data’s sensitivity is quite high.
Concerns about security have always been uppermost in customers’ minds, and
Salesforce.com continually bolsters the systems used to monitor traffic and
access. Its Salesforce Shield, for instance, allows IT administrators to see
user activity in real time.
To grow, Salesforce.com spends a large chunk of its revenue
on sales and marketing and also technology to improve and expand product
offerings. While revenue is growing, the company often posts losses with
expenses exceeding income. But with growing adoption of SaaS and cloud
computing in general, Salesforce.com should have a promising future.
Questions to answer:
-Identify one way that in the early years Salesforce.com addressed market
confidence in its cloud-based systems. Was this way successful? Why or why not?
-How does Salesforce.com use the Idea Exchange for
competitive advantage? What benefits does it provide to the company and its
customers?
-Explain how office space design in the San Francisco
headquarters was changed and why this change is expected to return value to
Salesforce.com.
-Identify at least two challenges that Salesforce.com faces
and explain why these are important challenges to Salesforce.com.
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