Users up in arms over Salesforce pricing for analytics feature

Salesforce is heading for a fall over analytics pricing - can it really expect users to cough up for this feature? appears to be walking slap bang into a customer storm over pricing for its analytics edition.

Chris Kanaracus at IDG first alerted us to the problem late last week: customers are sounding off about the fact that an upcoming Analytics Edition of the CRM (customer relationship management) software will have an additional price tag, saying that the functionality it includes should be part of their base subscriptions.

Marc Benioff, CEO is usually quick to find a defence of the company's position but on this occasion handed it off to the PR department who are reported to have said:

"Many of our customers have been asking us to bring the magic of Salesforce to the aging BI market. ... Our Analytics Council, which is made up of dozens of customers, advise us on the features and pricing based on their needs as a social enterprise," the statement added. "The pricing for Analytics Edition reflects an entirely new model for BI, delivering higher ROI for companies and individual employees."

Duh? That doesn't fit with the many comments being left on the company's forums. An example from 'brkandivy':

Salesforce has known for a very long time, as users have made it well known that the Out of Box analytics is severely lacking in functionality. At the last Dreamforce and during the months since the new Analytics Edition was announced but, we were really not given much info. This new edition will have much of the functionality that users have been begging for. Joins, bucketing, Cross filters, increased limits...etc. BUT... In order to get this needed tool, we have to pay for it, AND, pay for it for every licensed user you have regardless if they will use it or not. ... Knowing that so many users have been asking for a very long time for this kind of functionality, and then making us pay for it is like holding our data hostage. Bad Salesforce.... In my mind, this is something that should have been done as core functionality long ago.

That doesn't sound much like bringing the 'magic of Salesforce to the ageing BI market' to me. From what users are saying, the cost will be $40 per user per month for everyone choosing to use the Analytics Edition. I can't see that holding up. Salesforce now has a good number of customers that have thousands of users on its Enterprise Edition. The thought of ponying up what could easily run millions of dollars a year for baseline functionality will not sit well with them.

That is always assuming they've not already bought an analytics tool from elsewhere. Drew Edinger notes:

We pay a premium for SFDC Enterprise edition over other vendors who already include analytics. As great as a new 'edition' will be I am not going to be able to convince our leadership that in a still tight economy to spend more. Filtering, Joins, bucketing are basic reporting needs, not analytics.

The extent to which this is causing ill will is further emphasised by Paul Harris of SDL International:

Cross filtering and outer joins are hardly BI level requirements. Consider the economics: We recently purchased a standalone BI tool for analysing data from our Finance, ERP and Ecommcerce Systems, total cost was less than $100k for 40 people on a perpetual licence. So my choice is to move to SFDC analytics edition and pay $40 per user per month for my ~400 users eg $200k per year knowing that at least 320 of them will never use it or export my CRM data / plug in my BI tool for the cost of a few extra seats? ~$5k ? I love SFDC and I'm a big advocate, but this is not a choice...

It is a lot worse than the comments quoted above and echoed by many others. Salesforce analytics have been abysmal. More than two years ago Parker Harris, co-founder of Salesforce and the person in charge of technical direction hinted the company was looking to re-architect analytics around an in-memory database.

At the time I got excited since I already knew SAP was going that direction and had inklings from Workday about just how powerful an in-memory database could be in providing real time operational information. That project fell off the radar within six months and in talking with the product strategists of the time, Salesforce was far from clear about how it planned to tackle the problem.

Part of the problem is technical, the details of which are far too long-winded to get into here. I know a good amount about this from having worked with developers on the platform who have been faced with the exact same issue. After many months of struggling to get answers from Salesforce, they ended up developing their own solution which is currently in the late stages of development.

Elsewhere, Workday bundles its analytics capabilities into its HR and financials solutions. It's a key differentiator against Oracle, from which Workday is winning most of its current business. Oracle wants its customers to pony up for both transaction systems and then Hyperion. The same goes for SAP with BusinessObjects.

The fact Workday and Salesforce have a good working relationship brings this pricing mismatch into sharp focus. Benioff & co are convinced that their portfolio of solutions are the backbone of modern business and assume that customers will pay premium for the pleasure of riding that wave. Some will, but many will not. How does this hash out going forward?

My sense is that the number of comments left on the various forum threads is insufficient to get Salesforce to change its mind any time soon. Instead, I think they will find customers will vote with their wallets and that over time, Salesforce will relent. That's what happened with Chatter, which started out at $50 per user per month and is now free. At the time, commentators guffawed, knowing that competitive offerings could be had for $3 per user per month or less.

Following's Q3 earnings call in November 2011, the market hammered the stock price on the back of light Q4 projections. No-one is suggesting it is having a 'Siebel moment' but the fact the company is making the same pricing mistake as it has in the past for functionality its customers believe should at best be free suggests it is out of touch with enterprise reality.

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