Competitive Advantage of Salesforce.com

Salesforce.com and Competition

Salesforce.com is a service provider which allows companies to share client details on demand. Although the organization has enhanced its top line growth and market positioning over the past few years, the intense competition in the industry from organizations such as Oracle has affected its operations and consequently the profitability of the company. Today, there are various cloud computing firms around the world with most of them located in the US. Thus, this has saturated the US market and has drawn salesforce.com and other competing companies to concentrate on expanding their influence on a global scale. However, organizations can often underestimate the impacts of expanding their brand, particularly when entering a new market (Carpenter & Dunung, 2012). For instance, when a certain firm makes a misstep in its foreign market due to a number of weaknesses, it can adversely affect its entire operations and profitability. Being one of the organizations that face stiff competition from other cloud computing firms in the US, selesforce.com have recently exhibited particular competitive disadvantages which in return has made its opponents capitalize on the weaknesses to assert influence in the ever dynamic market.

Limited Deployment and Cloud Options

The current market environment demands organizations to offer quality services with unlimited options (Carpenter & Dunung, 2012). One source of a competitive disadvantage to salesforce.com is the fact that the company offers limited deployment and cloud options, while all its primary competitors such as SAP CRM and Microsoft Dynamics provide multiple deployment options to their customers. For instance, Salesforce does not support public clouds such as Rackspace, Microsoft Azure, and others while Competitors such as Oracle let the clients choose different cloud platforms such as public cloud, vendor cloud, or private cloud. The peculiarities exhibited in the services offered by Salesforce not only reduce various hosting options but also threatens its IT investment which in return may affect its overall returns. By failing to offer a system that supports various options, Salesforce fails in creating value activities which can be largely relied upon to achieve a competitive advantage. For instance, customers looking for services will opt to choose an organization that offers superior benefits to them at a relatively lower cost.

Limited Data Centers and Global Expansion

Salesforce embarked on an expansion strategy in order to capture the attention of international clients, expand its new market, and make its operations cost-effective. However, one of the competitive disadvantages that may adversely affect the progress of Salesforce plans to go global is the fact that international clients who rely on the services offered may find the system unappealing when compared to the services offered by its competitors. The speed of any system is solely dependent on the number of data centers established within a particular location and the distance of the center from one user to another (Marston et al., 2011). Thus, with the current limited Salesforce data centers, potential clients may reconsider their options when purchasing cloud services due to possible performance issues such as recurring system downtime and constant interruptions. Moreover, due to the fact that some countries may present regulatory concerns over the confidentiality of their data, Salesforce may lose existing customers to its competitors who may have the capacity to establish in-country data centers or comply with the regulations. In a bid to take advantage of this drawback, Salesforce main competitors have created collaborations with other similar firms in order to be able to serve more countries and integrate their services with ease (Rivlin, 2007). For instance, in a bid to take advantage of Salesforce’s limited number of data centers in the foreign countries, Oracle bought NetSuite but still maintained its cloud based-applications and data centers and kept its operations distinct. In addition, given by the fact that NetSuite had already established its presence in a number of countries, Oracle prioritized on purchasing it rather than establishing their presence in the new market. In doing this, as a Salesforce competitor, Oracle was able to manage the challenge of limited data centers and other foreign government regulations which Salesforce experience.

Complex System and UX

Salesforce is a complicated system which demands its users to successfully complete an introductory training session which most often consumes a lot of time. The sales representatives and members of the marketing team are prevented from performing responsibilities due to the complex nature of the system. Unlike other systems such as Oracle which is non-complicated, Salesforce requires its users to differentiate between accounts and opportunities, review and understand all the peculiarities of events. The root cause of these complexities can be traced back to its UX since it was designed in such a way that it would first benefit the sales management team rather than the sales team. The complexity of the system can be linked to a high attrition rate in its workforce. When compared to other competing organizations, Salesforce spends most of its time in training and developing the employees. Salesforce plays a critical role in helping organizations create complete solutions to the services that they offer to their clients (Rivlin, 2007). However, despite the fact that Salesforce acts a powerful platform for companies to build sophisticated user interfaces and other software, an organization which relies on Salesforce have to develop numerous complementary applications in order to create or develop a solution that satisfies their needs. In this regard, Salesforce should concentrate on investing in new and integrated technologies which will reduce the demand for complementary applications which are costly and complicated. Given the rapid expansion that Salesforce is experiencing, it can be attributed to its failure to invest more resources in the integration of the services offered across the board. For instance, Salesforce does not have an enhanced business intelligence system where individuals searching for online analytical processing or warehousing services can be assisted. In this regard, most of the time clients are forced to request for expensive third-party solutions from AppExchange or other stores.

Costs and Excessive Functionality

In a bid to maintain a competitive advantage, companies should be in a position to offer services that exceed their competitors’ at relatively lower prices (Marston et al., 2011). In doing this, an organization will be able to create superior value for its clients while at the same time registering an enormous profit. However, when compared to other competing companies, Salesforce is more expensive and has other implicit costs. For instance, one of the major concerns that may present a challenge to the customers is the unnecessary subscriptions and other excessive functionality. In addition to the unnecessary subscriptions, Salesforce has hidden costs on some of the services that it offers its customers. For instance, the corporation demands additional charges for enabling sandbox where clients can test the system functionality as well a test or develop new applications.

References

Carpenter, M. A., & Dunung, S. P. (2012). Challenges and opportunities in international   business. Creative Commons by-nc-sa, 3.

Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. (2011). Cloud computing—     The business perspective. Decision support systems, 51(1), 176-189.

Rivlin, G. (2007, November 12). Salesforce and Benioff Takes on New Challenge.             Retrieved September 19, 2018, from https://www.nytimes.com/2007/11/12/technology/12iht-salesforce.4.8301649.html