Five Reasons Why Salesforce.com’s Chatter Will Fail

I have been watching the concept of Chatter for a while now. On the one hand, I could kick myself for not making more hype out of Sugar Feeds, the exact same functionality Sugar has had in its product for more than a year prior to availability of Chatter. My bad.

On the other hand, I think Chatter has been over-hyped in a dangerous way, one that will lead to failure for Chatter as a product line for Salesforce.com.

And since I’m feeling particularly snarky on this pre-Labor Day Friday, I thought I’d jot down a “top 5″ list of reasons why I think Chatter will prove yet another one of Salesforce.com’s interesting, but ultimately unprofitable ventures.

Here we go…

1. Chatter is only an internal collaboration tool. There are many of these available, but more important is the fact that if Chatter is the lynch pin of Salesforce.com’s “social” strategy it is missing one very important thing – customer engagement. Unless Chatter “opens up” and becomes a true community/social engagement tools for users to collabroate and engage with real customers in real time, it is going nowhere in my opinion.

2. Chatter is not enough to unite departments and override data and people silos. I get that millions of users are on salesforce – but they are all ONE department inside an organization. To really benefit from the tenets of Enterprise 2.0 – all departments need to be on the same page – and I simply do not feel Chatter is equipped at this stage to be a unifying app to make an externally hosted system THE main collaboration platform. Not yet at least.

3. Chatter (and Salesforce.com) costs too much to have wide appeal. At $15 per non-CRM user, Chatter’s pricing will creep on a large organization. And smaller firms can simply collaborate in person or using IM or other tools – and resist adding even more fees to an overpriced CRM bill. I think Salesforce.com has some cool ideas around Jigsaw and adding data updates to the CRM and alerts to new data changes via Chatter – but at that rate we are looking at $45 per user, per month for someone using Chatter with Jigsaw alerts – and they get ZERO CRM capabilities to boot! If a user was using Salesforce’s Enterprise edition and Jigsaw they could be paying nearly $2000 per user per year!!!! Compare this with SugarCRM which gives you all this stuff for $30 per user.  Yes, there really is the opportunity to cut your CRM and collaboration costs SEVEN TIMES with SugarCRM versus Salesforce.

4. (Do I really need to keep going after pointing out how ridiculously expensive this stuff will be for a company?  Ok, I’ll go on…) Salesforce.com’s outdated multi-tenant model will hold Chatter back. Look, Salesforce has a lot of cool ideas for Chatter and its web site shows some suggestions for use – document sharing, etc. But is there a Chatter developer kit?  can there be one?  Will salesforce.com let people really take Chatter and run with it to create collaboration engines that integrate between applications, departments, inside and outside multiple firewalls, leverage Oauth to activate engagements through multiple social networks? I don’t know, but I doubt it. Chatter seems like a great idea locked inside a limiting architecture – yearning to break free.

5. Adoption will be underwhelming. CRM vendors sell into sales and marketing and support departments. These guys have a lot on their plates, and most have no “social agenda.”  Salesforce.com in my opinion would be better off simply selling the value of its core solutions, which are solid well-built apps, instead of branching off into these new areas where it has no domain expertise. I toyed with #5 being “Salesforce has lost its focus” but I think that happened years ago. But seriously, as noted in #2, I think there are way too many barriers to success for a concept like Chatter as a paid-for tool. I am not saying Chatter doesn’t do what it says it does 9for the most part it does) but I think that Salesforce.com must leverage Chatter as a “cool add-on” or value-add rather than expecting this to be a profit center, because I think they are too far ahead of the pace considering their true target market.

…OK, those are just a few of my thoughts around Chatter. Ultimately, I think Chatter is cool, but underwhelming as a standalone product line. Maybe that is why I did not make more hype around Sugar Feeds – I simply see that most companies are wrestling with getting core CRM right, social-collaboration is rocket science to them – foreign and scary. Being asked to pay extra for these kinds of features must feel like a slap in the face.

Maybe I’m wrong. I mean, the Jigsaw capabilities could be really hot for Salesforce. Or, maybe the majority of small businesses are still learning to walk with CRM and getting social…paying a ton of additional money with no clear ROI path to start running with social and CRM might not make sense for a lot of companies right now.

Sugar Feeds - Social Collaboration without the hype or high price tag.

Sugar Feeds - Social Collaboration without the hype or high price tag.

9 thoughts on “Five Reasons Why Salesforce.com’s Chatter Will Fail

  1. Great blog Martin.

    “If Chatter is the lynch pin of Salesforce.com’s “social” strategy it is missing one very important thing – customer engagement.”

    !!!!

    “Chatter is not enough to unite departments and override data and people silos. I get that millions of users are on salesforce – but they are all ONE department inside an organization”

    !!!!

    If we want to bring social to the masses, as we know every company can benefit from understanding social, we will have to make pretty, easy to use, and affordable. No one has flawlessly done that yet.

    Keep blogging–great ideas!

  2. 1. Its not the lynch pin there are a load of other social apps including the twitter app (http://bit.ly/cjdYgj) or LinkedIn app (http://bit.ly/aYM4CN) which is exactly what your talking about. Chatter is typically an internal colaboration of information AND people. When records get changed you can see it on your chatter feed. One of my clients actually use it to alert them when their kit has stopped working on a clients site so they know before the client does. Anyway chatter is only what they are pushing this half of the year as the “new thing”. I’m sure they will shift to pushing VMForce later in the year.

    2. If the whole organisation is using Salesforce doesn’t it make sense? everyone I know that use Salesforce use it across their entire organisation, in varing degrees of use from just as a customer addressbook to full sales automation/finance etc… allowing for data and people to colaborate. Why are Salesforce really pushing it? because they have realised that those who do use it use Salesforce more which means more licenses. Why do people use it? because its helpful for them.

    4. Yes see app exchange

    5. Marketing departments with no social agenda?! hmm.. ok. Chatter is a “cool add on” anyone who uses Salesforce with a salesforce license gets it for FREE. I disagree with the loss of focus. Just look at Salesforce Ideas, focusing on what customers want and moving into PaaS and creating VMForce. I’m working with one client and their salesforce is almost unrecognisable but they use it to drive very complex business processes within their company.

  3. I agree with you that Chatter will indeed have to open up and integrate with other social tools to incorporate customer engagement. All the responses about what Chatter may one day do are excusing it in its current state. Chatter as it currently stands, (and I use it at work), does not feel like a finished product. However, that said, I think it’s opening some eyes to get big companies thinking socially and Chatter is an evolving opportunity for organizations to begin to unravel internal social strategy and create a more productive workflow.

    User adoption will increase as the dev community adds more functionality to make it more useful and incorporate all the wonderful things Salesforce can do. This is perhaps the most important differentiator to Chatter’s competition. There are better internal social platforms out there but I can’t think of one that can be integrated into the work flow.

    You are right to say that Salseforce is mainly sales/support but I think Salesforce is banking on pulling in more departments with tools like Chatter and their growing number of applications.

    Also, rumor has it that Chatter will be made free for all Salesforce customers really soon so price is not an issue.

  4. Pingback: CRM Outsiders » Blog Archive » Treating Customers Like End Users, And Vice Versa…

  5. I don’t think the software is amazing or destined for failure. There are enough people using salesforce it will be used.

    I can’t really see it picking up as a standalone product, but it certainly keeps them competitive market with MS bringing out their “vibe” software.

  6. Perhaps it won’t fail overall, as Salesforce seems hellbent on baking it into the solution architecture for good or for ill.

    But it does fail in one important regard: it distracts Salesforce from dealing with actually developing their application in constructive ways. For example, a SF Droid app has been ‘under review’ for close to two years now; however, there’s a beta for a Droid Chatter app already.

    Why have a Chatter app if you don’t have a Salesforce app? I like Salesforce, but I’m afraid that the emphasis on Chatter is helping it lose its focus.

  7. Couldn’t agree more Mitch – now SFDC is shelling out hundreds of millions on Radian6′s analytics tools – again taking focus and resources away from core CRM

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