Asian SME cloud journeys derailed by migration, legacy IT issues
By Gabey Goh July 22, 2015
- Hesitation centres on migrating or co-existing with legacy on-premises systems
- Top-down sponsorship aids adoption, but a great experience naturally drives adoption
THERE is no doubt that small and medium enterprises (SMEs) are embracing the cloud, recognising it as a means of competing on a global stage with international peers and unbound by capital constraints.
At last, that’s what Salesforce.com’s area vice president, commercial business unit, Asia, Simon Tate believes.
“The momentum we’re seeing suggests that SMEs are very much leading that way in terms of embracing the cloud, and this is across all industry verticals so we’re seeing equal opportunities for growth,” he told Digital News Asia (DNA) at the company’s office in Singapore.
In Singapore, the retail and manufacturing sectors have been particularly aggressive with adoption, he added.
However, there are challenges and many customers are still hesitant although they acknowledge the benefits adopting cloud-based infrastructure and solutions would bring.
Tate said the biggest hesitation centred on migrating or co-existing with legacy on-premises software, which is more an issue with companies that are mid-market up to the enterprise level.
“I was talking to one customer in Singapore which shared that it was seven years into implementing a new ERP (enterprise resource planning) system, with only half the countries it is in [having completed deployment] –a process that should have taken just three [years] originally.
“So the challenge with these companies is that they get so absorbed into seeing these projects through that they don’t have the bandwidth to focus on customer-centricity.
“Almost immediately, they’re in a competitive disadvantage with younger, more agile companies that have already made the move to the cloud,” he added.
Making tools sticky
Tate (pic above) said that a key focus for Salesforce is how it can help its customers unwind, scale back or make a different decision that would give them the same growth opportunities as other customers which are not burdened by similar capital constraints.
“That’s one of the important differentiators with Salesforce – we enjoy a very low attrition rate as we are maniacally focused on customer success,” he claimed.
“Post-implementation, we focus on adoption rate. Are customers using it? Is the usage rate on or above industry benchmarks? And if not, how can we proactively do something about it – either via better enablement or enhancements?
“Adoption is a key post of the decision-making process with any new technology,” he added.
Tate said that the core driver of internal adoption, and also the easiest, is the usability of the platform.
“The generational shift to using technology that’s 100% social and mobile … has been paramount in driving the adoption of corporate apps,” he said.
Pointing to Salesforce’s founding vision 16 years ago, Tate said the company’s founders wanted to create corporate apps which were as easy to use as consumer apps.
“They wanted to make the experience of using a corporate app as simple as buying something off eBay. Ten years ago, legacy vendors still provided software that was complex and not intuitive, which created this phenomenon of change management to push adoption.
“Fast forward to the present, and every touch point and engagement point with customers revolves around these concepts.
“When you put Salesforce into users’ hands, it has to look and feel like the apps they’re used to using – that’s our focus and [this] is key to adoption,” he added.
Tate admitted that top-down sponsorship of new software tools by management will always aid in adoption, but said that giving users a great experience will naturally drive adoption.
He pointed to one Malaysia-based customer just starting its Salesforce journey asking similar questions about how management could help drive adoption.
“I told them that as long as you yourselves use the app and advocate it internally, it will help adoption.
“In our experience, when users love the tools, you don’t need dictator-like mandates to get them to use them,” he added.
Adding analytics to the mix
Having easy-to-use cloud-based software that helps manage and enable better customer relationships is only one component of stickiness and adoption.
The other is how useful it is in the decision-making process and how much insight companies can garner on their customers, to pinpoint service needs and improve loyalty and retention.
Salesforce is moving quickly to position itself as the integrated supplier of such business intelligence tools, with a key corporate message being its desire to be “a part of our customers’ growth.”
“The fact is that the customer will continue to be a bigger and bigger part of every company’s growth story, and the customer has to be at the centre of any growth aspirations,” Tate said.
Last October, Salesforce launched its first-ever cloud-based analytics platform, Wave Analytics Cloud, which it claims would allow enterprises to deploy sales, service and marketing analytics, or build custom mobile analytics apps, by using any data source.
Tate could not disclose what the uptake has been like with customers in the Asia Pacific region, calling it “early days” for its analytics offering but described interest and momentum as “amazing.”
“An overwhelming number of customers that have looked at Wave said that ‘this is the missing piece,’ and it makes perfect sense to put analytics in the hands of everyone in the business, instead of just IT,” he said.
Tate said that for the first time, it’s analytics for the rest of the company, as opposed to the analytics tools of the past, which have resided with IT or analysts, and only gets to the business units days later – such a delay is no longer tenable in today’s rapid mobile and social landscape.
“This presents enormous opportunities for all companies to make better decisions, by having access to analytics in real time via their mobile device.
“Consumer behaviour has changed drastically, becoming hyper-connected – business needs to follow suit,” he added.
“The CEO of Coca Cola at our Dreamforce conference said that ‘worse place to make a decision is in the office, the best place is where your customers are’,” he added.
Tate said Salesforce Marketing Cloud Predictive Decisions, launched in March, is one example of how analytics capabilities can be leveraged across its platform.
The offering fuses CRM (customer relationship management) and marketing data with relevant contextual data such as web browsing activity, using native predictive intelligence decisions to increase conversions and engagement in a single application.
It is intended to allow marketers to harness the power of data science to analyse customer engagement and proactively deliver new recommended content, products or offers to customers.
“Marketers can be much more granular about how they construct customer journey,” said Tate.
Advice for SMEs
Tate often gets asked for advice from his SME customers, and shared his top three tips: The first is to grow with the cloud and make it a part of the company’s strategy.
“That’s an obvious one – if you do that, then the barriers to entry are minimal and this puts you on the same stage as your global competition. You can then differentiate early without needing to sink painful capital expenditure into infrastructure,” he said.
The second is to make that transition to running the entire business from one’s mobile.
“Everything you do as a business today must have a social and mobile connected context,” he said.
The last is to “connect with customers” as how well companies establish and maintain that one-to-one relationship will be the single biggest differentiator for the next 10 years.
“There is no doubt about the link between customer-centricity and revenue. So the key scope of our work will remain: How do we help our customers make that shift to customer-centric company, from their business model to their go-to-market strategy,” he said.
The two-year horizon looks very bright from Tate’s perspective and Salesforce’s growth opportunities in the region, as there is “no better time to be in business in Asia, and no better time to be a small business in Asia.”
Though he could not share specific revenue figures or give a breakdown by market, some regional customers include StarHub, Lazada, Changi Airport Group, Telstra and Japan Airlines.
For its full fiscal year 2015, Salesforce reported global revenue of US$5.37 billion, an increase of 32% year-over-year (YoY).
A MarketRealist report highlighted that as of April 30, 2015, Salesforce generated free cash flow of US$731 million, a YoY increase of 54%. The company has cash, cash equivalents, and marketable securities worth US$1.92 billion.
It has a total debt of US$2.04 billion with no short-term debt, and as of the first quarter of its 2016 fiscal year, a working capital deficit of ~US$1.35 billion.
“We’re growing just like our customers are, and the Asia Pacific region is one of our fastest-growing regions in the world – which is testament to the level of interest and momentum here,” said Tate.
“One area of focus for the next two years will be on accelerating customers in the early stages of their Salesforce journey – the more successful they are, the more successful we are,” he added.
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