Sunday, June 22, 2014

Are You Azure-Curious?

Something surprised me this week. Azure was awarded the Best Cloud Platform at the Cloud World Series Awards. Initially I thought this was some kind of Microsoft conference but not the case. The Cloud World Forum has sponsors from all disciplines, including Google, Amazon and Salesforce.

This surprised me, not because of personal experience with Azure, but because I had thought Azure was another Microsoft fast follower, still catching up with the competition. Perhaps Microsoft Azure was not longer following but was now edging ahead.

Coincidentally, I had recently decided to test the water with Azure, thanks to my MSDN subscription which gives me $160 of Azure credit per month to play with. I thought I would share my experience of using Azure in case, like me, you are also Azure-curious but anxious about what is involved.

Starting Up Azure

If you have an MSDN subscription, you can activate Azure, and go to the Azure management portal, directly from the ‘My Account’ page. No credit card needed; the service simply turns off when you run out of credit.

If you do not have an MSDN account, you can still start a trial with Azure from the Microsoft Azure site. You get a month and $200 of credit to play with (which is plenty).

Managing Azure

Azure management is done through the Azure Management Portal, which is crazy simple to use. I literally had a machine up and running in minutes.

You give it a name, assign an OS (including Linux flavors such as SUSE, Ubuntu and Oracle), the machine size and what region you want the machine to run in. Then you click ‘Create’ and a few minutes later you have your box, ready to go.

To access it, the management portal also gives you a remote desktop connection (RDP) file. Once in, you have nothing else to do other than install software and browse the net.

IP Confusion

One niggle I did have was the IP number allocated to my box was coming up as Brazil on IP Geolocation, even though I had specified the West US coast. I spun up another machine on the east coast and got the same behaviour.

A bit of browsing revealed that Microsoft recently bought a bunch of Brazilian IP addresses and many of the IP Geolocation services were still playing catch-up on the re-allocation.

Cost

For my simple purposes, the $160 was plenty to get a feel for the service. You only pay for the server while it is running so it was simple to spin it up during my lunch break, have a play and then shut it down again.

As you can see, I was spending about 6c per hour on compute time and a little less than 10c per Gig of transfer. With the $160 credit, I was in no chance of hitting my limits.

Internet Speed

The speed I got from the box, compared to my home box was massive. At home I have ADSL2+ and here are my internet speed test results (welcome to Australia).

Compared to the Azure box

So Azure is about ten times quicker on the download and about 100 times quicker on the upload. If I need to get files quickly, the Azure box is the way to go. In fact, with my OneDrive (formerly SkyDrive) I can download files into the OneDrive folder on my Azure server, access them either on the server or via my OneDrive account and also have them eventually automatically sync to all my other important locations.

To test it, I tried downloading a movie file (nothing dodgy I promise). The file came down in seconds and within a minute it was available on my OneDrive where I could stream it on my local machine. An hour or so later the OneDrive sync had also brought the file down to my local machine.

More Than Just Servers

Azure offers a lot more than just virtual boxes. For example, I often have to spin up a CRM portal demonstration and Azure provides a great way for my developers to spin up a web site and configure it, as required. Here is the menu of ‘stuff’ available on Azure.

Conclusions

Before I took the leap, I thought that setting up a machine on Azure would be a complicated process involving network configuration, OS installing and other complicated processes best left to network administrators. While I am sure in some more complicated scenarios (such as getting the Azure box to talk to other boxes) some of this is necessary, for simply dipping a toe in the water, the process was easier than setting up a new laptop.

If you are Azure-curious I urge you to try it out from an MSDN account or give the trial a go. You can then judge whether Azure is the Best Cloud Platform on the market (I am certainly thinking it is one of the easiest for spinning up a virtual machine).

Monday, June 9, 2014

Predicting Salesforce’s Subscriber Count

So this is my third consecutive post on Salesforce. I promise the next will be Dynamics CRM or something non-Salesforce at the very least.

For avid readers of the blog, you will know that every quarter I review the quarterly submissions of Salesforce to the Securities and Exchange Commission (SEC). Up until January 2011 this included the subscription numbers but a sad thing happened after this date; Salesforce no longer released their subscriber numbers. After July 2011 they also stopped releasing their customer numbers. There was no explanation, the numbers just stopped coming. Here are the data we have from Salesforce’s public statements up to these dates.

Financial Quarter Month Subscribers Customers Average Company Size
2003 Q4 Jan-03 76,000 5,700 13
2004 Q1 Apr-03 85,000 6,300 13
2004 Q2 Jul-03 96,000 7,000 14
2004 Q3 Oct-03 107,000 7,700 14
2004 Q4 Jan-04 127,000 8,700 15
2005 Q1 Apr-04 147,000 9,800 15
2005 Q2 Jul-04 168,000 11,100 15
2005 Q3 Oct-04 195,000 12,500 16
2005 Q4 Jan-05 227,000 13,900 16
2006 Q1 Apr-05 267,000 15,500 17
2006 Q2 Jul-05 307,000 16,900 18
2006 Q3 Oct-05 347,000 18,700 19
2006 Q4 Jan-06 393,000 20,500 19
2007 Q1 Apr-06 438,000 22,700 19
2007 Q2 Jul-06 495,000 24,800 20
2007 Q3 Oct-06 556,000 27,100 21
2007 Q4 Jan-07 646,000 29,800 22
2008 Q1 Apr-07 742,900 32,300 23
2008 Q2 Jul-07 800,000 35,300 23
2008 Q3 Oct-07 952,500 38,100 25
2008 Q4 Jan-08 1,100,000 41,000 27
2009 Q1 Apr-08 1,177,200 43,600 27
2009 Q2 Jul-08 1,287,900 47,700 27
2009 Q3 Oct-08 1,398,600 51,800 27
2009 Q4 Jan-09 1,500,000 55,400 27
2010 Q1 Apr-09 1,660,400 59,300 28
2010 Q2 Jul-09 1,769,600 63,200 28
2010 Q3 Oct-09 2,000,000 67,900 29
2010 Q4 Jan-10 2,102,500 72,500 29
2011 Q1 Apr-10 2,319,000 77,300 30
2011 Q2 Jul-10 2,554,400 82,400 31
2011 Q3 Oct-10 2,790,400 87,200 32
2011 Q4 Jan-11 3,000,000 92,300 33
2012 Q1 Apr-11 3,321,800 97,700 34
2012 Q2 Jul-11 3,640,000 104,000 35

The numbers in red are my best guess, based on the known numbers.

So is there anything else we can use to indirectly infer the subscription numbers?

My Old Idea

Up until this blog, my proxy for the subscription numbers had been Revenue which is still reported every quarter. Essentially I assume the average revenue per subscriber per month and then use this to derive a subscriber count. Generally I pick the revenue PUPM to be around $50 which, for the latest quarterly report, gives us a subscriber count of a little over 8 million subscribers and, assuming the average size of a Salesforce customer is 35 users, this gives us a total of 230,000 customers.

The above estimates rely heavily on my guess for the revenue PUPM and the average Salesforce customer size. While consistent with known historical values, they are still a speculation. There turns out to be a better way.

Daily Transaction Numbers

A couple of years ago, Ross Dembecki (Silverpop/Core Motives/CWR guru and seriously nice bloke) sent me a message suggesting that, if I was interested in Salesforce’s growth, to consider monitoring their daily transaction levels, as published on their ‘trust’ page. It turns out Ross was on the money and it has only taken me two years to catch up. By scouring the internet and using this article, we get quite a few data points for Salesforce’s historic transaction levels.

Date Transactions
28/09/2006 53,000,000
09/10/2007 117,000,000
2009 150,000,000
20/05/2009 195,000,000
10/11/2010 394,000,000
11/2011 500,000,000
17/11/2011 623,000,000
11/2012 1,000,000,000
08/2013 1,300,000,000

Plotting the transactions against the known subscriber levels gives us this.

The x-axis is the number of subscribers and the y-axis is the number of transactions.The “R-squared value” tells us how related the two sets of data are. In this case, there is a 97% match, suggesting the two are very correlated.

What is more, the equation of the closest fitting line (y=150.27x-40,000,000) tells us that for each subscriber that comes on board, the daily transaction count goes up by about 150.

Doing the same for the customer numbers gives us this:

 

Predictions From the Graph

We know that in August 2013, there were 1.3 billion transactions. Using our linear equation, this suggests that in August 2013, Salesforce had just shy of 9 million subscribers. Looking at the trust site, Salesforce is on the cusp of a 2 billion transaction day, which puts subscribers at around 13.5 million. In terms of customers, we get about 383,000 customers.

This is a lot more that the 8 million subscribers I predicted via the revenue which means one of my assumptions is wrong e.g. my predicted revenue PUPM is too high. In fact, at 13.5 million subscribers, the revenue per user per month is closer to $30. The numbers also predict the average customer size is 35, about one third of the average customer size of Dynamics CRM (4,000,000/40,000 = 100). This average company size is consistent with the known numbers where the last known average company size of 33 (and increasing). Also, the $30 revenue prediction is consistent with the known numbers where the last known value was $51 and falling.

Conclusions

Unless Salesforce release actual numbers, all of this is speculation but, using the transactions seems to be the best approach with minimal assumptions. The numbers predicted are consistent with the known data and their trends from three years ago. While the transaction numbers predict a very large subscription base (three to four times that of Dynamics CRM), if they are correct, Salesforce make a surprisingly small revenue from their subscribers and the average size of the companies using Salesforce is also surprisingly small.

Monday, June 2, 2014

Microsoft Stops the Nibbling

 

 

It has been quite a week for CRM. The Non-Disclosure Agreement has been lifted on the Dynamic CRM Spring Release which means lots of blogs and tweets on what we can expect in the next couple of weeks or, if you are using Dynamics CRM Online, what you already may have.

Also, in case you have not seen it, Satya Nadella (the new Ballmer) and Marc Benioff have signed an agreement to play nicely. What does this mean for us folk in the Dynamics CRM space? What does it mean for Microsoft? Does this mean Marc will no longer be calling Microsoft bad names? Here are my thoughts.

The Partnership

The details from the press release are:

  • Salesforce1 (the app development platform for Salesforce) will play nicely with Windows and Windows Phone
  • Better integration with Office 365
    • Collaborate on Office content (Word documents, PowerPoints, Excel spreadsheets etc.) from within Salesforce and Salesforce1 apps
    • Use OneDrive and SharePoint as storage options for Salesforce
    • Better integration between Salesforce and Outlook
    • Connect Salesforce to Power BI

The Windows Operating System

Apple machines are making in-roads into the most traditional of offices. They are now mainstream. They even exist in my CRM team at Oakton. Even amongst the CRM MVPs, pre-Surface, there were increasing numbers of the thin boxes with the glowing fruit on the back. For the MVPs, I believe the Surface has reversed this trend (I plan to do a blog on this at some stage but I digress) but there are still many in the wild that prefer to fly through Air than to glide on the Surface.

Similarly, amongst consumers Android and iDevices are ubiquitous. The household without one (like mine) seems to be the exception, rather than the rule.

So how does this deal affect Windows? Salesforce1 will play nicely with it. So, for enterprises building apps on Salesforce1, a Windows-based tablet is now an option whereas before the Apple/Android alternative may have been necessary ‘evil’ for a roll-out. With Apple devices being the more expensive, cheap Android slates would be a good bet.

However, at Build 2014, Microsoft announced Windows devices under nine inches in size are royalty free. For Android devices, manufacturers pay royalties to Microsoft because of certain patents held, to the tune of $10-15 per device. So, in theory, a manufacturer could make a sub-nine inch device for less using the Windows or Windows Phone operating system than using the Android operating system.

Assuming, at worst, Windows devices come out at a similar price to Android slates, Windows is now an option for the enterprise rolling out Salesforce1 apps. Given the Windows operating system is familiar to the internal IT support crew, this potentially stops Google and Apple getting their foot in the door into what would otherwise be a ‘Microsoft shop’.

Windows Phone

It may come as no surprise that I have a Windows Phone (a Lumia 925 to be precise), now my second Lumia phone. While I love the phone and the Windows Phone operating system (it trained me on how to use Windows 8 even before Windows 8 was released), there is a BIG problem with Windows Phones which is the app ecosystem.

There is no question the apps which are available give me everything I need. However, the number of times I see a retail organisation advertise an app which is available on Apple and Android but NOT Windows Phone drives me nuts.

While, in the consumer market, things are unlikely to change any time soon (unless Microsoft develop their own version of an Android emulator for Windows and release it as a standard part of their devices), for business apps developed on Salesforce1 this now encourages the rollout of Windows Phones for similar reasons as above for Windows slates i.e. internal familiarity, cost.

Microsoft Office

From my interactions with clients it seems Office 365 is gaining traction. Customers, more and more, speak of ‘Office 365’, rather than ‘Office’. Google apps is still out there in smaller organisations and, while I have not used it extensively, it seems to be a pale imitation which people put up with or tolerate out of defiance rather than out of any functional superiority. Similarly with other products like OpenOffice; it is a product which is Office-like but not a superior, compelling alternative.

In making it easier for Salesforce to work with Office content in Salesforce and Salesforce1, Microsoft again stops Google and others getting a foot in the door. It is conceivable that, in the past, if a small part of the business was using a Salesforce cloud product or a Salesforce1 app, with the choice of an awkward integration with Microsoft Office or a simpler integration with Google apps, the latter would be chosen. The new deal means such a concession is no longer needed.

OneDrive and SharePoint

There are so many cloud storage options out there. Google have the Google Drive and there is always the hipster’s favourite, DropBox. What does the discerning enterprise pick to compliment their cloud app system? For any organisation with an Office 365 subscription (giving them OneDrive) or an Enterprise Agreement with Microsoft (which inevitably includes SharePoint) it is now a no-brainer. The new deal shores up the defences against the onslaught of other cloud storage options.

Dynamics CRM

The last two parts of the deal (Outlook and Power BI), within themselves are not a big deal but, from a Dynamics CRM perspective, hurt a lot.

Outlook has never been a focus for Salesforce; they simply do not care. I was recently speaking to a friend of mine who works at Salesforce and he summed it up well. Salesforce see email as a channel to feed into their Salesforce applications so the only integration they desire is to make it easy for Outlook users to pass emails into, say, the Sales Cloud. Running a full-blown version of Salesforce within Outlook is irrelevant and not part of their cloud-first paradigm. For Microsoft, Outlook is where business lives so it makes sense to run Dynamics CRM, as much as possible, from within it. For businesses which do not live in Outlook, there is the web client and mobile apps.

However, when asked what are the main differences between Salesforce and Dynamics CRM, I cite the following areas:

  • Cost (Dynamics CRM is consistently cheaper than the Sales/Marketing/Support cloud equivalent offerings)
  • Better Outlook integration (if you work out of Outlook, Dynamics CRM simply works better)
  • Better integration with Microsoft Office
  • Better integration with the Microsoft ‘stack’ (Active Directory, Exchange, SQL Server etc.)
  • Deployment options (on-premise, hosted or cloud)
  • (more recently) The awesome power that Excel’s BI tools bring to CRM, especially with the Leo/Spring Release

The Microsoft/Salesforce arrangement erode three of these points (Outlook, Office and Power BI).

For Enterprise Agreements this is not a big deal. Microsoft will simply bundle in Dynamics CRM at a competitive rate. Similarly for organisations with Office 365, getting Dynamics CRM is as simple as ticking a box. However, for Microsoft partners, competing on a direct sale against Salesforce, things have become a little tougher. Perhaps Microsoft partners will need to compete on something other than the product, like great customer service, industry acumen and a focus on the customers’ strategic goals. For a company like Oakton which is a Microsoft AND Salesforce partner, the balance has shifted slightly but, in the big picture, little has changed.

Conclusions

The partnership is not about Salesforce and certainly not about Dynamics CRM, it is all about how Salesforce enables other competitors like Google and Apple to nibble away at Microsoft’s market share in a range of other areas which provide a lot of revenue to the Microsoft bottom line. By ‘making friends’ with Marc, Satya strengthens the walls around Microsoft core products like Windows and Office and gives their cloud/mobile offerings like Office 365, OneDrive and Windows Phone a fighting chance of getting a piece of the customer pie.

The cost to Microsoft comes in partner-direct sales of Dynamics CRM but, given Dynamics CRM is a ‘rounding error’ on the Microsoft revenue general ledger, and partner-direct sales are a fraction of this small fraction, I can see the logic (as a CRM MVP it does not mean I have to like it though). To survive, Microsoft partners will either broaden their offering to include Salesforce, focus more on consulting services than direct sales or become more customer-focussed and provide value to clients beyond the product.

 
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