1. Voice of the analyst Feb. to May 2009 This report summarizes the best analyst research quotes by leading research firms such as Gartner, IDC, and Forrester, on salesforce.com and our marketplace. While all the quotes can be used in one-on-one interactions with our customers and prospects, they are NOT approved for Mass Marketing. For approval to use a quote for mass marketing, contact Aimee Lynch or Erin TenWolde. The full reports that are available for external distribution are stored in Content in SFDC along with many of the other reports referenced. If you want the full report and you dont see it in our Content management system, ask Wendy Close for a copy.We have purchased distribution rights (send the full reports to your prospects when needed) for these favorable analyst reports:Nucleus Research, FORCE.COM DRIVES FASTER DEVELOPMENT, May 2009. Great forsending to CIO and IT types regarding the benefits of Force.com - On average,developers found that they could deliver applications 4.9 faster on Force.com thanon JAVA or .NET. https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000fQUDeploying Sales Force Automation Even in a Down Economy, Feb. 23, 2009Great for VPs of Sales on why invest in SFA even in todays economy.http://mediaproducts.gartner.com/gc/webletter/salesforce.com/volume3/issue1/gartner1.html Gartner CSS quad, April 2009 Great for CSS/Contact Center/VPs of Support - ShowsSFDC as a leader: https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000aX2 Gartner User Survey Analysis SaaS Enterprise App Markets WW 2008 Oct. 2008Externally approved content to send to prospects ---Gartner user survey from July 08 onSaaS. Packed w/ good charts and quotes on SaaS. See quotes file in content as well w/the best quotes already pulled out and sourced. https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Bk4 Datamonitor has developed the on-demand CRM Decision Matrix. This report explores thecompetitive dynamics within the on-demand CRM market and helps enterprises select avendor based on its technology strength, reputation among customers, and impact in themarket. It lists Oracle, salesforce.com, and RightNow Technologies as market leaders butshows us with the greatest market impact. Send to prospects when in a competitiveposition against other on-demand CRM players.https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000ekH Table of Contents1. Our Leadership 2. Service Cloud 3. Sales Cloud 4. Salesforce Mobile 5. Market Share Data for all Major Markets We Play in 6. Forecasts for all Major Markets We Play In 7. CRM Verticals (by Industry) Forecast 4.09 by Subsegment (CSS, Call Center, SFA, Mkt) 8. Cloud Computing, SaaS, and Salesforce.com Good in a Down TurnBenefits of Cloud Computing

2. 9. Investing in CRM/SFA in Tough Economic Times10. Most Common SaaS Apps Deployed11. CRM On-Demand Forecast and Vendor Shares12. AppExchange Vendor Hit List13. CRM On-Demand Market Growth/Forecast Compared to On-Premise CRM - Organizationsare moving away from on premise14. Worldwide On-Demand CRM Applications Implementation Plans by Segment15. CRM Spending16. SaaS Deployment Times and Resources Needed17. SaaS CRM Adoption18. SaaS ISVs and Overall Spend Over the Past 10 Years19. SaaS App. Use in India, Singapore and Hong Kong, 200920. SaaS in Finance21. CRM Outlook in Europe22. CRM Pricing23. Build versus Buy24. Challenges with On-Premise CRM Software Upgrades25. Giant Maintenance Fees Ever Increasing for On-Premise CRM Apps26. CRM Vendors27. IT Budgets 200928. Percent of IT budgets Forecasted to be Spent on SaaS29. North American Midsize Business Software Spending30. IT Spending Forecast - Updated Feb. 200931. Cloud Computing/Cloud Services Market Forecast32. App Development Forecast33. Content Management34. Enterprise Social Networking35. Indirect Sales Channels for the Software Vendors36. % of Reps Prepared for Sales Meetings37. Why CRM Projects Fail38. American Recovery and Reinvestment Act (ARRA) Boost to Tech Spending in Energy,Healthcare, and Government Sectors39. Negative Quotes on SAP Upgrades Our Leadership https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000W1F Salesforce.coms FY 2009 results flew in the face of the recession, with 4Q growth of 34%and full-year 2009 revenue more than $1B, a 44% increase from the prior year. (Source:AMR Research, What Recession? Salesforce.com Passes $1B, March 3, 2009) The worldwide on-demand CRM applications market was again dominated bysalesforce.com with a market share of 49% of the total market in 2007. It was anotherstellar growth year for salesforce.com with a growth rate of 49.6%. (Source: IDC,Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares:On-Demand Offerings Compelling in a Down Economy, Dec. 2008) 3. SaaS pioneer Salesforce.com now has thousands of customers and books $1B/year in revenue, mostly from its sales automation solution. However, in the past year Salesforce.com has been pushing its cloud platform (Force.com) and Web 2.0 features are rapidly being introduced. Unlike Oracle, which so far seems mainly concerned with internal sales collaboration, Salesforce.com also connects to the outside world of Facebook and Twitter, and integrates nicely with community solutions from Lithium and others. (Source: CustomerThink Corp., Web 2.0: The End of the Beginning, By Bob Thompson, Apr. 04, 2009) http://www.customerthink.com/article/web_2_0_end_of_the_beginningDatamonitor finds that the competitive dynamics in the on-demand CRM market ischaracterized as follows: Oracle, salesforce.com, and RightNow Technologies emerge asmarket leaders. (Source: Datamonitor, Decision Matrix: Selecting an On-Demand CRMVendor Decision Matrix, January 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000ekH (Source: Datamonitor, Decision Matrix: Selecting an On-Demand CRM Vendor Decision Matrix, January 2009)Service Cloud https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000XfS On Monday, March 23, 2009, salesforce.com announced expanded capabilities of their Service Cloud offering with Twitter integration (at no charge) called Salesforce CRM for 4. Twitter. The January 2009 announcement of the Service Cloud was the first significant stepin turning the orientation of customer service from one of complacency, whereorganizations wait for customers to come find them with their problem, to seeking outcustomer issues in the great Cloud known as the Internet. The Service Cloud is really theelectricity that makes this latest Twitter announcement hum. (Source: IDC, Salesforce.comExpands Service Cloud Just Tweet for Service, March 24, 2009) IDC believes the inclusion of the Twitter capability is a strong move and one that thecustomer service realm needs. (Source: IDC, Salesforce.com Expands Service Cloud Just Tweet for Service, March 24, 2009) In the case of Salesforce.com, the firm is very focused around its Force.com platform andits new Service Cloud initiative, which Saugatuck believes has significant market potential,and may be the engine of growth for its core CRM business this year. (Source: SaugatuckTechnology, Saugatuck Trip Report - On the Road in Early 2009, April 12, 2009) Salesforce.com was onto it when they adopted the Cloud as their ubiquitous nomenclatureand synonym for the Internet. (Source: IDC, Salesforce.com Expands Service Cloud JustTweet for Service, March 24, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000aX2Sales Cloud "In theory, the Sales Cloud brings a set of effective new capabilities to the sales team,"says Rebecca Wettemann, vice president of research for analyst firm Nucleus Research."In practice, it still means salespeople have to learn to share. For companies withcollaborative sales processes in place, this is an excellent set of tools." But the value,Wettemann says, runs deeper than that. "The important thing here is the operationalpossibilities Salesforce.com has added," she says. "Salesforce.com's brand of cloudcomputing is becoming stickier and deeper." (Source: DestinationCRM.com,Salesforce.com Expands the Cloud to Sales, Feb. 10, 2009)http://www.destinationcrm.com/Articles/CRM-News/Daily-News/Salesforce.com-Expands-the-Cloud-to-Sales-52602.aspx 5. Force.com "Salesforce.com is the current enterprise leader in this market (APaaS) with its Force.complatform, but it cannot succeed alone." (Source: Gartner Inc., APaaS: A Step to a 'KillerApp' for Cloud Computing?, June 1, 2009) Nucleus analyzed existing Force.com application deployments and found an averageof 4.9 times faster development. End customers, developers, and ISVs experiencemore rapid time to value, lower cost, and greater ongoing flexibility. (Source: NucleusResearch, FORCE.COM DRIVES FASTER DEVELOPMENT, May 2009)] On average, developers found that they could deliver applications 4.9 faster onForce.com than on JAVA or .NET. (Source: Nucleus Research, FORCE.COM DRIVESFASTER DEVELOPMENT, May 2009)] In particular, we believe that Salesforce has a much larger opportunity and will have a lotmore success selling its Force.com platform to mid-to-large enterprise users for customCloud development than its early positioning as a vehicle for traditional ISV replatforming.(Source: Saugatuck Technology, Saugatuck Trip Report - On the Road in Early 2009,April 12, 2009) "Our in-depth analysis shows that cloud computing is dramatically changing the cost andtime equation for custom application development," said Rebecca Wettemann, vicepresident, research, Nucleus Research. "Given the rapid time to value, lower cost, andgreater ongoing flexibility, Force.com is likely to grow in popularity as an option for customapplication development." (Source: eWeek, Report: Salesforce.coms Force.com is FiveTimes Faster than Java, .NET, May 15, 2009http://www.eweek.com/c/a/Application-Development/Report-Salesforcecoms-Forcecom-is-Five-Times-Faster-than-Java-NET-878047/Salesforce Mobile Many employees are pushing to use their mobile devices as a replacement for theirdesktops or laptops, with Salesforce.com being hands-down the most popular application.(Source: Network World, Does the iPhone belong in corporate networks? 4.1.09http://www.networkworld.com/news/2009/040109-voicecon-iphone-coporate-networks.html "Ten years ago, accessing applications on your cell phone was considered advanced.Today, mobile access to enterprise applications is expected," said Sheryl Kingstone ofYankee Group. "Salesforce.com understands the productivity benefits that come withmobile access, and is making Mobile Lite an added benefit of Salesforce CRM." (Source:PR Newswire, Salesforce.com Takes Enterprise Cloud Computing to the Masses With NewFree Mobile Service, April 7, 2009)http://findarticles.com/p/articles/mi_m4PRN/is_2009_April_7/ai_n31507911/ "Salesforce CRM gives our employees mobile access to the data they need in the cloud,"said Brian Fisher, Director, Business Technology, Papa Murphy's Take 'N' Bake Pizza, theworld's largest take-and-bake pizza company. "Over half of our employees work remotelyand access critical Salesforce CRM data via BlackBerry smartphones. Mobile access to 6. the Sales Cloud has resulted in better data quality, faster data capture, andeliminating paper processes." (Source: PR Newswire, Salesforce.com Takes EnterpriseCloud Computing to the Masses With New Free Mobile Service, April 7, 2009)http://findarticles.com/p/articles/mi_m4PRN/is_2009_April_7/ai_n31507911/Market Share Data for all Major Markets We Play in https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000W1FForecasts for all Major Markets We Play In https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000W1FCRM Verticals (by Industry) Forecast 4.09 by Subsegment (CSS, Call Center, SFA, Mkt) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000dNRCloud Computing, SaaS, and Salesforce.com Good in a Down Turn https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Bpm Thus, SaaS sales have outperformed traditional software as the economy worsened. "Ithas low cost and low risk," said Rebecca Wettemann, an analyst with Nucleus Research,which helps IT managers evaluate software programs. (Source: Reuters, Cloud softwarematures as economy boosts allure, May 6, 2009)http://www.reuters.com/article/reutersEdge/idUSTRE5447AD20090506?pageNumber=2&virtualBrandChannel=0&sp=true Adoption of software as a service (SaaS) continues to grow and evolve within theenterprise application markets as tighter capital budgets in the current economicenvironment demand leaner alternatives, popularity increases, and interest for platform asa service and cloud computing grows. (Source: Gartner Inc., Market Trends: Software as aService, Worldwide, 2008-2013, May 5, 2009) Because of the severe economic downturn and credit crunch, companies such asSalesforce.com that rely on customers making purchases as an operating expense have adistinct edge over those whose customers use capital expenditures to pay for technology.The trend gives an advantage to services-oriented companies. (Source: BusinessWeek,Tech Spending: The Great Divide, By Steve Hamm, March 12, 2009)http://www.businessweek.com/print/magazine/content/09_12/b4124072350407.htm Saugatuck expects to see SaaS solutions gain significant share during and immediatelyfollowing the current economic turmoil. SaaS offers customers the ability to continue toinnovate at a substantially lower absolute cost of entry and ongoing TCO, during a periodof intense capital spending constraint. (Source: SaaS in Finance: Mainstream, Growing,and Poised for Growth, Feb. 12, 2009) A recent IDC survey of IT executives, CIOs, and their line of business (LOB) colleaguesshows that cloud services are 'crossing the chasm' and entering a period ofwidespread adoption," said Frank Gens, senior vice president and chief analyst at IDC."Moreover, IDC expects the cloud adoption trend to be amplified by the currentfinancial crisis. The cloud model offers a much cheaper way for businesses toacquire and use IT in an economic downturn, the appeal of that cost advantage willbe greatly magnified. This advantage is especially important for small and mediumbusinesses, a sector that will be key target in any plan for recovery." (Source: IDC,"IDC Finds Cloud Computing Entering Period of Accelerating Adoption and Poised to 7. Capture IT Spending Growth Over the Next Five Years", Oct, 20 2008) In cases where hardware investment is deemed critical and necessary, users are lookingmore and more to Cloud as an alternative to traditional servers, storage, and otherhardware. A general lack of capital and tighter credit among a growing number of userfirms means more of them need to use operating income to acquire, use and supportnecessary IT. Traditional IT is difficult to acquire using operational monies; Cloudcapabilities are not. In fact, Cloud provision, delivery and payment models tend to bedesigned to fit operational spending. (Source: Saugatuck Technology, Server Signs: Cisco,Sun, IBM Cloud the Future of Hardware Master Brands, March 19, 2009)https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000Yds Licensing the software via a subscription agreement shifts the expense of the license overthe operating budget, reducing the pressure on capital budgets. At the same time, SaaS,which combines a subscription approach with web delivery, can ease the capital expenseburden further by reducing the need for in-house infrastructure such as servers to supportthe software. (Source: IDC Software Spending To CAPEX or not to CAPEX?, 3.26.09) A recent IDC survey of line of business and IT directors/VPs (n=400) found that the push tolower capital expense was very high on SaaS buyers' minds as 78% ranked it as their mostimportant driver, a close second behind "immediate access to patches and upgrades."Besides capital expense and operating expense considerations, there are myriad of otherreasons why customers and vendors might favor a subscription and/or SaaS approach.(Source: IDC Software Spending To CAPEX or not to CAPEX?, 3.26.09)Benefits of Cloud Computing Organizations can leverage the cloud as a platform to reuse code, standardize coreprocesses and package IP without the need for maintaining hardware, middleware andsoftware and the upgrades. (Saugatuck, A Look Forward to the Key Services Trends of2009, March 18, 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Xb5 Disruptive IT, such as SaaS, Cloud Computing, virtualization, and open source, can be aneffective means of helping to transform IT, how the business uses IT more cost-effectivelyand more efficiently, and how the business itself operates. (Saugatuck Technology, A LookForward to the Key Services Trends of 2009, March 18, 2009)https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Xb5Investing in CRM/SFA in Tough Economic Times https://na1.salesforce.com/sfc/#version?id=068300000000gel Fifty-one percent of organizations say CRM is more important to their businesses in thecurrent economic environment, 37% say it has the same level of importance, 5% say it hasless importance, and 7% don't know. (Source: Gartner Inc., Dataquest Insight: The Impactof CRM Spending During the Recession, April 13, 2009. In February 2009, Gartner askedmore than 300 organizations worldwide about the importance of CRM and plans for CRMinvestment in the current economic climate.) In all economic circumstances, improving customer satisfaction is the first or secondpriority. (Source: Gartner, Looking at CRM in 2000 Foretells Its Future in 2020, Feb. 4,2009) 8. CEO attention continues to focus on CRM, because the goals of acquiring, developing andretaining customers in a profitable manner are timeless. (Source: Gartner, Looking at CRMin 2000 Foretells Its Future in 2020, Feb. 4, 2009) Fight the desire to cut customer experience projects and programs in an economicrecession, if your competitive differentiation is based on a superior customer experience.Customers do not forget a poor experience, and they will remember those companies thatwent out of their way during tough times. (Source: Gartner, Looking at CRM in 2000Foretells Its Future in 2020, Feb. 4, 2009) In this economy, it's more important than ever to identify, protect and retain the profitablecustomers you already have (while managing out those that may not be worth keeping).(Source: Dataquest Insight: How to Retain (or Fire) the Appropriate Customers in a DownEconomy, Dec. 10. 2008) The last thing a sales organization is thinking about in a down economy is spendingmoney. However, investing in sales application software may be exactly the right thing todo. (Source: Gartner Inc., Deploying Sales Force Automation Even in a Down Economy,Feb. 23, 2009) With shrinking sales resources and market opportunities, investing in technology toautomate critical sales processes may be the only alternative to still meet sales targets.(Source: Gartner Inc., Deploying Sales Force Automation Even in a Down Economy, Feb.23, 2009) Sales effectiveness applications optimize each interaction a salesperson has with his orher customers, a particularly important factor in an environment where the number ofcustomer conversations is on the decline. (Source: Gartner Inc., Deploying Sales ForceAutomation Even in a Down Economy, Feb. 23, 2009)Most Common SaaS Apps Deployed 9. (Source: Forrester, Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends, April 2, 2009) 10. (Source: Gartner Inc., Market Trends: Software as a Service, Worldwide, 2008-2013, May 5, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000f5x Office suites and digital content creation (DCC) remain the fastest-growing markets for SaaS although starting from a smaller base, with a 63.8% compound annual growth rate (CAGR) and a 39.1% CAGR, respectively. Adoption is driven by new entrants in office suites, but gated by Internet broadband availability for DCC. The content, communications, and collaboration (CCC) market continues to show the widest disparity of SaaS revenue generation, with SaaS representing 2% to 3% of enterprise content management (ECM) and more than 70% of Web conferencing. Adoption of SaaS within ERP and supply chain management (SCM) varies based on process complexity. SaaS is expected to represent only about 1% of ERP manufacturing and operations revenue, but more than 18% of human capital management (HCM) and 30% of the procurement segment by 2013. The CRM market exhibits more general market adoption, ranging between 9% and more than 33% of total software revenue, depending on the CRM subsegment. Overall, SaaS accounted for more than 18% of CRM market total revenue in 2008.(Source: Gartner Inc., Market Trends: Software as a Service, Worldwide, 2008-2013, May 5, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000f5xAppExchange Vendor Hit List (Source: Gartner Inc., Market Trends: Software as a Service, Worldwide, 2008-2013, May 5, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000f5x 11. (Source: Gartner Inc., Market Trends: Software as a Service, Worldwide, 2008-2013, May 5,2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000f5xCRM On-Demand Forecast and Vendor Shares https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000W1F 12. The on-demand portion of the customer relationship management (CRM) applicationsmarket continues to grow and embed itself as a viable and attractive solution as both acomplement and as an alternative to on-premise products. The market crossed over thebillion mark in 2007, with a total revenue of $1.4 billion dollars. The market is forecast toreach a total revenue of $1.8 billion in 2008, with a growth rate of 33%. (Source: IDC,Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares:On-Demand Offerings Compelling in a Down Economy, Dec. 2008)CRM On-Demand Market Growth/Forecast Compared to On-Premise CRM - Organizations are moving away from on premise https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000W1X The worldwide growth rate for the total on-demand CRM applications market hits 47% in2007 with a projected 2008 growth of 33%. These two strong growth years will ensure thatthe market reaches a total CAGR of 26.6% for the forecast period. When compared withthe overall growth rate of the total CRM applications market of 6.3% for the same timeperiod, it is easy to see which segment of the market is driving the growth in CRMapplications. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecastand 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec.2008) (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) There was a small increase in organizations stating that they were evaluating SaaS-basedCRM applications from 5.3% in June 2007 to 8% in October 2008, but the change is toosmall to be significant. We do observe that organizations are moving away from onpremise in the final two columns, where 6% in October 2008 and 7.3% in June 2007were moving away from this delivery model. (Source: IDC, Worldwide On-DemandCRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand OfferingsCompelling in a Down Economy, Dec. 2008) 13. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) Saugatuck projects that user adoption of SaaS offerings will grow substantially faster than traditional on-premise offerings through 2012. (Source: Saugatuck Technology, Safety First: SaaS Survey Shows Data Concerns Rule, April 30, 2009)Worldwide On-Demand CRM Applications Implementation Plans by Segment https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000W1F When the individual segments within the CRM applications market are analyzed, it shows a distinct preference among those using sales force automation and marketing automation to use the SaaS delivery model. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) The installed base of sales force automation shows 20% of the population having SaaS-based product versus 9% for marketing automation and 3% for customer service/call center. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) In evaluation cycles, sales force automation and marketing automation have a high representation of 13% for both segments. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) In the "Implementing category" we see 11% for sales automation and 9% for marketing automation. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) For all categories of implementation, it appears that the on-premise delivery model is still the dominant one for customer service/contact center solutions. (Source: IDC, Worldwide On- 14. Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) Collectively, IDC believes that these survey results show that there is a general level of acceptance of the SaaS-based offerings for CRM applications. The early foothold within sales automation is now spreading into the marketing automation space. (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008) (Source: IDC, Worldwide On-Demand CRM Applications 2008-2012 Forecast and 2007 Vendor Shares: On-Demand Offerings Compelling in a Down Economy, Dec. 2008)CRM Spending https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000gfU Fifty-one percent of organizations say CRM is more important to their businesses in the current economic environment, 37% say it has the same level of importance, 5% say it has less importance, and 7% don't know. (Source: Gartner Inc., Dataquest Insight: The Impact of CRM Spending During the Recession, April 13, 2009. In February 2009) Sixteen percent of organizations say they will spend more on CRM in the current economic environment, 39% say they will spend the same, 28% say they will spend less, and 17% don't know. (Source: Gartner Inc., Dataquest Insight: The Impact of CRM Spending During the Recession, April 13, 2009. In February 2009) The two sectors most likely to see CRM as important but are still cutting spending were discrete manufacturing (automotive and high-tech) and services (software, retail and business services). (Source: Gartner Inc., Dataquest Insight: The Impact of CRM Spending During the Recession, April 13, 2009. In February 2009) The two sectors most likely to see CRM as more important and are increasing spending were communications (telecommunications, media and cable) and financial services (insurance, retail banking and commercial banking). (Source: Gartner Inc., Dataquest Insight: The Impact of CRM Spending During the Recession, April 13, 2009. In February 2009) (Source: Gartner Inc., Dataquest Insight: The Impact of CRM Spending During the Recession, April 13, 2009. In February 2009, Gartner asked more than 300 organizations worldwide about the importance of CRM and plans for CRM investment in the current economic climate.) 15. SaaS Deployment Times and Resources Needed With the rise of SaaS CRM applications, the associated projects have been faster (oftencompleted in less than six months), and the resources needed are commonly only two orthree consultants. (Source: Gartner, Looking at CRM in 2000 Foretells Its Future in 2020,Feb. 4, 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000UgZSaaS CRM Adoption Avoiding SaaS will prove futile for most organizations, because many new CRMapplications will only be delivered through SaaS. (Source: Gartner, Looking at CRM in2000 Foretells Its Future in 2020, Feb. 4, 2009)https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000UgZSaaS ISVs and Overall Spend Over the Past 10 Years "Today IDC estimates that there are more than 1,000 worldwide SaaS providers and morethan $33 billion has been invested in SaaS providers globally," according to RobertMahowald, Director of SaaS and On Demand Research at IDC. (custom quote for usapproved by IDC for mass marketing)SaaS App. Use in India, Singapore and Hong Kong, 2009 https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000fxg Comparable levels of adoption are seen among respondents in Hong Kong, Singapore andIndia, with close to 90% of them already using software as a service (SaaS). However,India-based respondents are much-newer users with the least penetration rate, as all oftheir respondents only have fewer than 50% penetrations within eligible users in theirorganizations. (Source: Gartner, Inc., User Survey Analysis: Plans for SaaS ApplicationSoftware Use, India, Singapore and Hong Kong, 2009, May 1, 2009) Most combined respondents of the three countries/markets indicate a slight increase intheir SaaS investment by year 2010. India-based respondents are the most enthusiastic,with more than 90% of respondents indicating they need to increase their SaaS investmentby 2010. (Source: Gartner, Inc., User Survey Analysis: Plans for SaaS Application SoftwareUse, India, Singapore and Hong Kong, 2009, May 1, 2009) Primary reasons for deploying SaaS in India, Singapore and Hong Kong are lower totalcost of ownership (TCO) and easier/faster deployment compared with an on-premisessolution. (Source: Gartner, Inc., User Survey Analysis: Plans for SaaS Application SoftwareUse, India, Singapore and Hong Kong, 2009, May 1, 2009)SaaS in Finance Recent Saugatuck Technology research indicates that not only are Finance executivesembracing software-as-a-service, they see it as a key means of improving the strategic andoperational capabilities of the Finance organization. That should lead to not only improvedFinance operations, but improved business planning and operations both keys tocompetitive survival in the current economic downturn. (Source: SaaS in Finance:Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) 16. Finance executives see broad-based value in the use of SaaS across both tactical point solutions (i.e., sales & use tax management) and core finance systems, functions and roles. (Source: SaaS in Finance: Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) Nearly sixty percent of Finance executives indicated that their firms are using SaaS for mature business applications categories such as Payroll, which will continue to grow approximately five percent or more in account penetration over the next two years. (Source: SaaS in Finance: Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) While starting from a much lower account penetration base, SaaS adoption into key financial functions and processes such as electronic billing, cash management, core financial accounting, tax management (both state and sales), budgeting, governance risk and compliance (GRC) and business intelligence (BI) will experience explosive growth of 40 percent to more than 100 percent by the end of 2010. (Source: SaaS in Finance: Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) Finally, within the next five years, SaaS will begin to replace many core and non- core legacy Finance applications currently in use, effectively displacing some leading on-premise Finance and business applications in large and small enterprises despite traditional IT and vendor assumptions that legacy systems never die. (Source: SaaS in Finance: Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) We see 2009 through 2013 as an especially relevant timeframe, as many of the financial systems that were put in place to address the Year 2000 (Y2K) crisis were implemented in the five years leading up to the crisis 1995-1999. This suggests that many of todays core and non-core financial systems across all size companies will have been deployed for 15 years or more by 2013. (Source: SaaS in Finance: Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) 17. (Source: SaaS in Finance: Mainstream, Growing, and Poised for Growth, Feb. 12, 2009) Through 2009 and beyond, the CFO buyer will have greater experience with SaaSsolutions (68 percent) than the general SaaS buyer (42 percent) given the high historicalpenetration rates of payroll systems. (Source: Saugatuck Technology, Great Expectations:SaaS Strategies in the Finance Organization, Feb. 11, 2009) By 2010, greater than 65 percent of Finance organizations will use SaaS solutions toenable the attainment of their business goals and to allow Finance to focus on Finance andnot on systems. (Source: Saugatuck Technology, Great Expectations: SaaS Strategies inthe Finance Organization, Feb. 11, 2009) By 2012, the use of SaaS by Finance organizations will double for almost all categories ofsystems except payroll, which already has over fifty percent penetration. (Source:Saugatuck Technology, Great Expectations: SaaS Strategies in the Finance Organization,Feb. 11, 2009) Through 2012, adoption of SaaS-based financial solutions will be led by small-to-midsizecompanies; however, by that time more than fifty percent of Finance organizations of allsizes will have adopted the SaaS model for one or more of their core financial systems.(Source: Saugatuck Technology, Great Expectations: SaaS Strategies in the FinanceOrganization, Feb. 11, 2009)CRM Outlook in Europe https://na1.salesforce.com/sfc/#version?id=068300000000fQQ CRM applications show an average increase in spending for 2009 compared with 2008.31% of all respondents said their CRM spend will be much higher or slightly higher during 18. 2009 compared with 2008. Germany has better than average spending prospects, whilethe reverse is true for France. by industry, business services and retail/wholesale appearmore inclined to increase CRM spending compared with the average, while manufacturingand utilities appear less likely to spend than the average. Finally, when 2009 CRMspending plans are examined by company size, organizations with fewer than 1,000employees appear eager to increase CRM spend; the opposite is true for large enterpriseswith more than 2,500 employees. (Source: IDC, Enterprise Applications Spending PlansEuropean Investment Reality Check 2009, March 2009) CRM does not look as bad as ERP. CRM is in many ways the wildcard of this economicdownturn because it was so severely impacted during the previous downturn (the post-Y2Kcrisis), when it saw negative growth rates in Europe two years in a row, in 2002 and 2003.This time around we see a different picture. The CRM applications market is much morerobust for a number of reasons, such as usability innovations, delivery model innovations,built-in support for core industry processes (for example, for organizations in localgovernment, consumer packaged goods, telecommunications), and a healthy competitivemarket as opposed to domination by a single vendor (as was the case with Siebel and theCRM market around 1999/2000). (Source: IDC, Enterprise Applications Spending PlansEuropean Investment Reality Check 2009, March 2009) Adapt your CRM messaging and sales approach to the current downturn. Priorities areshifting in sales and marketing across Europe. Among the requirements high on theagenda, we find initiatives around customer, channel, and employee self-service, salesforce automation and efficiency, ecommerce, and customer loyalty and retention. Vendorsmust adapt value propositions, packaging, and product development to support specificinitiatives in the areas mentioned above. The general advice for ERP vendors also appliesin CRM, in terms of providing customers with an iron-clad business case, clear businessobjective (e.g., reduce indirect spend or improve working capital management), and limitedupfront investment. (Source: IDC, Enterprise Applications Spending Plans EuropeanInvestment Reality Check 2009, March 2009) If you sell to business service providers, increase your efforts. Providers of businessservices, i.e., engineering, legal, management, real estate, and other business services,will increase CRM spending more in 2009 than other industries. IDC expects CRMinitiatives in business services to evolve around sales force automation, customer andemployee self-service, and service automation. Vendors can increase efforts at manylevels including marketing and awareness, strengthening field organizations, andincreasing R&D investments in product capabilities specific to business services. (Source:IDC, Enterprise Applications Spending Plans European Investment Reality Check 2009,March 2009) If you sell to small and midsize organizations, increase your efforts. Small and midsizebusinesses are more recession-resistant and will not cut CRM spending as much as largeenterprises. Vendors should examine how to strengthen their approach to the small andmidsize segments with investments in channel sales teams, channel marketing, andservices for small and midsize organizations. Vendors should furthermore reexaminelicensing, pricing, and packaging in order to make current products more to consumable tothe SMB segment. (Source: IDC, Enterprise Applications Spending Plans EuropeanInvestment Reality Check 2009, March 2009)CRM Pricing The effect of SaaS on pricing means that, on average, organizations are paying $800 peruser per year in 2009. This will drop to near $500 by 2020 as competition for SaaS CRM 19. intensifies. (Source: Gartner, Looking at CRM in 2000 Foretells Its Future in 2020, Feb. 4, 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000UgZBuild versus Buy The percentage of homegrown, custom-built CRM applications will continue to decline, from 65% in 2008 (particularly in the largest, smallest and public-sector organizations) to less than 35% by 2020, as packaged CRM applications provide a better fit. (Source: Gartner, Looking at CRM in 2000 Foretells Its Future in 2020, Feb. 4, 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000UgZChallenges with On-Premise CRM Software Upgrades Fewer than 10% of organizations are currently running the latest versions of their CRMsuite providers' technologies; this will change to 50% of organizations running on the latestversions by 2020, as SaaS applications force users onto the latest releases. (Source:Gartner, Looking at CRM in 2000 Foretells Its Future in 2020, Feb. 4, 2009)Giant Maintenance Fees Ever Increasing for On-Premise CRM Apps Anticipate the percentage paid for maintenance for on-premises CRM applications to continue rising to an average of above 30% by 2020, resulting in bigger upfront license discounts being offered by vendors. (Source: Gartner, Looking at CRM in 2000 Foretells Its Future in 2020, Feb. 4, 2009) Maintenance fees have risen from 10% to 12% in 2000 to 20% to 22% in 2010, and will keep rising to near 30% unless there is government legislation. The shift to SaaS means that nearly 50% of all field sales applications will be delivered in this way by 2012, compared with less than 1% in 2000. However, the percentage of all CRM applications delivered through SaaS will be only 25% in 2012, and 40% in 2020. (Source: Gartner, Looking at CRM in 2000 Foretells Its Future in 2020, Feb. 4, 2009) Maintenance fees usually add up to between 30% and 60% of a software companys revenue. (Source: Forrester, Yes We Can (Cut Our Software Maintenance Costs), May 8, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000fQY (Quotes you can send to prospects) Maintenance fees usually add up to between 30% and 60% of a software companys revenue but contribute a much greater share of profit. Although most software companies also sell consulting services, those are a very low-margin business compared with new license sales and maintenance (approximately 10% versus 80% to 100%). License revenues generate high margins, but at an extremely high cost in terms of sales and marketing (S&M), which can represent anything from 60% to 150% of the license revenue that it is intended to generate: 20. (Source: Forrester, Yes We Can (Cut Our Software Maintenance Costs), May 8, 2009). . . With Unfair, Inflexible Policies The software industry has gotten away for years with customer-unfriendly customs and practices that wouldnt be accepted in other spheres. Examples include: Forcing customers to pay maintenance on shelfware. The traditional policy that buyers find hardest to accept is the policy that customers pay maintenance based on all licensed products, even if they arent using some modules and havent deployed to full capacity. We only found one company that would admit to allowing customers to take a maintenance holiday on shelfware and then reinstate licenses at a later date when it needed them again.3 Most would allow customers to reduce cost by scrapping shelfware irrevocably waiving rights to excess products or capacity, but customers are loathe to dump assets that they may need again later. Some wont even allow customers to do that. For instance, one of the main sources of complaint to Forrester by Oracle customers sourcing managers is that vendors maintenance repricing policy. Bundling support and upgrade rights. Only a couple of respondents offered support and enhancements as separate services. Most vendors would lose substantial revenue if they offered this choice, because it would allow third-party support providers to undercut their OEM offerings without having to persuade customers to give up upgrade rights. Microsoft is a notable exception access to future patches comes free with the license so customers can get support from Microsoft or one of its partners irrespective of whether they buy software assurance (SA). Preventing competition. Why are there so few independent providers of support for the major products? The main reason is that the economics of support depend on scale, so any new entrant would have to operate at a loss for a long time until it could reach the critical mass needed to compete effectively. OEM maintenance is so profitable that any major services provider could capture significant market share and still generate a better margin than its current business they already have the scale, skills, and knowledge. Unfortunately, they seem to be too afraid of a backlash from their software company partners to move into this market. Independent third-party support is a frequent topic of client inquiries, but while it is available for some products, it is not yet a credible option for most companies. (Source: Forrester, Yes We Can (Cut Our Software Maintenance Costs), May 8, 2009)CRM Vendors The five largest CRM application vendors by market share (SAP, Oracle, salesforce.com, Amdocs and Microsoft) represent almost 60% of the market. Three or four large vendors will remain with an aggregate of more than 50% market share in 2020. However, instead of trying to build everything, these large vendors will provide a set of core CRM services and 21. processes, and will act as platforms for software and service partners that are willing to build the requirements needed by smaller industries and specific functional niches of the market. These platforms will also be the base on which large organizations build out their unique requirements.IT Budgets 2009 (Source: Forrester, Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends, April 2, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000XmG Average of IT Spending by Industry per Employee, U.S., 2009: $13,500. (Source: Gartner, Inc., IT Spending and Staffing Report, 2009, Jan. 27, 2009) Average IT Spending by Industry per Employee, U.S., 2008: $13,119. (Source: Gartner, Inc., IT Spending and Staffing Report, 2009, Jan. 27, 2009) The outlook for 2009, based on survey data collected throughout 2008 (primarily in the second half of the year), is for an average planned increase in IT spending of 2.7%. This is much less optimistic than last year, when the planned increase was 5%. Because of deteriorating economic conditions around the world since September 2008, many organizations' may have revised their spending intentions downward after we collected the data. (Source: Gartner, Inc., IT Spending and Staffing Report, 2009, Jan. 27, 2009) 22. (Source: Gartner, Inc., IT Spending and Staffing Report, 2009, Jan. 27, 2009)Forrester: CIOs are reducing IT costs. An October 2008 survey of 129 IT decision-makers found thatonly one in four were expecting the same or greater spending in 2009. (Source: Forrester,Redesign IT Roles To Drive IT Cost Reduction, March 5, 2009)Percent of IT budgets Forecasted to be Spent on SaaS Further, survey data found that the percentage of U.S. firms which plan to spend at least 25% of their IT budgets on SaaS applications will increase from 23% in 2008 to nearly 45% in 2010. Respondents cited reduced TCO, reduced infrastructure costs, faster "time-to-value" and quicker access to patches and upgrades as key reasons of the increased spend on SaaS.(Source: IDC, Economic Crisis Response: Worldwide Software as a Service 2008-2012Forecast Update, Nov. 2008) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Bk4 North American Midsize Business Software Spending North American midsize businesses expect to spend approximately 19% of their IT budgets on software in 2009, which is down from 28% in our 2008 survey. This downward trend of almost 10% can be attributed to a challenging later half of 2008 and the deep recession the economy has slipped into, with only a glimmer of light in sight toward the end of 2009. (Source: Gartner Inc., "User Survey Analysis: Where Will North American Midmarket CIOs Invest in Software in 2009?", Feb. 23, 2009) 23. Most midsize businesses remained concerned about the state of the North American economy through the end of the year. For the near future, we expect this segment to focus on software projects that deliver immediate benefits more so than larger strategic initiatives. Despite the year-over-year downward revision, midsize-business spending on software continues to outpace that of larger enterprises. (Source: Gartner Inc., "User Survey Analysis: Where Will North American Midmarket CIOs Invest in Software in 2009?", Feb. 23, 2009) (Source: Gartner Inc., "User Survey Analysis: Where Will North American Midmarket CIOs Invest in Software in 2009?", Feb. 23, 2009) CRM is also cited more in the lower midmarket than among upper-midmarket companies. As CRM offerings have matured, businesses with from 100 to 499 employees are now asking whether the functionality offered is truly needed or simply adding unnecessary complexity when evaluating these solutions. The increasing use of SaaS (SaaS is forecast by Gartner to have a 23.8% compound annual growth rate through 2012) continues to pose a threat to CRM vendors offering traditional on-premises solutions. SaaS solutions reduce upfront costs for hardware and software and trim maintenance costs for cash-strapped lower-midmarket companies. Although lower-midmarket companies continue to actively seek out CRM solutions that will meet their needs, many upper-midmarket companies have already deployed CRM and are seeking to improve the customer experience by integrating them more tightly with their BI, back-office ERP and SCM systems, as well as adding things, such as social networks, to the mix. (Source: Gartner Inc., "User Survey Analysis: Where Will North American Midmarket CIOs Invest in Software in 2009?", Feb. 23, 2009)IT Spending Forecast - Updated Feb. 2009 24. https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000X1E In September, the forecast for real global GDP growth in 2009 was 2.5%. By mid- October, it had dropped to 1.8%. By February, it had dropped further to -1.0%. As a result, IDC has dropped its forecast for IT spending growth in 2009 from 2.6% to 0.5%.(Source: Economic Crisis Response: Worldwide IT Spending 2008-2012 Forecast Update, February 2009 Revision, Feb. 2009) Emerging regions that account for 22% of IT spending in 2009 will account for nearly 50% of all new IT spending worldwide between 2009, 2010, and 2011. (Source: Economic Crisis Response: Worldwide IT Spending 2008-2012 Forecast Update, February 2009 Revision, Feb. 2009) The software category still has some high-growth markets, like search and discovery and security, and the services categories combine growth in outsourcing with a decline in project-based work. (Source: Economic Crisis Response: Worldwide IT Spending 2008-2012 Forecast Update, February 2009 Revision, Feb. 2009) We are creating a new downside scenario - Just as the February IT spending forecast took $260 billion of new spending off the table from 2009 to 2012, the downside scenario takes $700 billion out of the market forecast in January 2009. At the end of four years under this scenario, the market is only 1% bigger than it was in 2008. a gain made all in 2012. (Source: Economic Crisis Response: Worldwide IT Spending 2008-2012 Forecast Update, February 2009 Revision, Feb. 2009) The information communications and technology (ICT) marketplace is on the verge of its most significant transformation yet and is poised to hit the $4 trillion mark worldwide by 2016. This transformation is shifting IT complexity into the network cloud, making it possible for the corporate experience to more closely reflect the consumer experience. (Source: Yankee Group, Enterprise in the Cloud: The Emergence of Anywhere IT, March 24, 2009)Cloud Computing/Cloud Services Market Forecast Gartner Research now expects 2009 sales of so-called cloud-based software to grow 22percent to a record $8 billion, a touch higher than before, the firm said on Tuesday. "Weare still going strong," said Gartner analyst Sharon Mertz, who advises IT managers onsoftware purchases. "The model is pretty solid, even in these tight economic times."(Source: Reuters, Cloud software matures as economy boosts allure, May 6, 2009) "Cloud computing is reshaping the IT marketplace, creating new opportunities for suppliers and catalyzing changes in traditional IT offerings. Over the next five years, IDC expects spending on IT cloud services to grow almost threefold, reaching $42 billion by 2012 and accounting for 9% of revenues in five key market segments. More importantly, spending on cloud computing will accelerate throughout the forecast period, capturing 25% of IT spending growth in 2012 and nearly a third of growth the following year." (Source: IDC, "IDC Finds Cloud Computing Entering Period of Accelerating Adoption and Poised to Capture IT Spending Growth Over the Next Five Years", Oct, 20 2008) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000XlL A recent IDC survey of IT executives, CIOs, and their line of business (LOB) colleagues shows that cloud services are 'crossing the chasm' and entering a period of widespread adoption," said Frank Gens, senior vice president and chief analyst at IDC. "Moreover, IDC expects the cloud adoption trend to be amplified by the current financial crisis. The cloud model offers a much cheaper way for businesses to 25. acquire and use IT in an economic downturn, the appeal of that cost advantage will be greatly magnified. This advantage is especially important for small and medium businesses, a sector that will be key target in any plan for recovery." (Source: IDC, "IDC Finds Cloud Computing Entering Period of Accelerating Adoption and Poised to Capture IT Spending Growth Over the Next Five Years", Oct, 20 2008) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000XlL Gartner estimates the current market for cloud services is $46.4 billion. By 2013, the market will reach $150.1 billion. The compound annual growth rate (CAGR) varies widely between different types of services. The overall CAGR is 26.5%. (Source: Gartner, Inc., Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, March 18. 2009) --- (This research and forecast differentiates between "cloud computing," which is a style of computing, and "cloud services," which are commercially delivered services offered by a provider that uses a cloud-computing approach. The forecast does not track revenue generated by IT products and services sold to those developing cloud computing approaches, rather revenue generated by those selling cloud services.) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Xtq Cloud application services evolving from SaaS offerings are almost twice as large as the market for system infrastructure, and will continue to generate greater revenue through 2013. (Source: Gartner, Inc., Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, March 18. 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Xtq During the next five years, an increasing array of application functionality will become available as cloud services to supplement those from current leading cloud application vendors such as salesforce.com, Taleo, SuccessFactors, Rearden Commerce and Axentis, among others. Many of these net new applications are not yet visible and have not been factored into our SaaS forecast. To cover this possibility, we have added additional incremental amounts through the next five years, ending with 20% extra to our SaaS forecast for 2013 to capture the likely future range of cloud application services. (Source: Gartner, Inc., Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, March 18. 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000Xtq Business processes delivered as cloud services will be significantly larger components of the overall cloud service market than application or infrastructure services through 2013. (Source: Gartner, Inc., Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, March 18. 2009) https://na1.salesforce.com/sfc/#version? selectedDocumentId=069300000000Xtq Although much of the publicity for cloud computing centers on system infrastructure delivered as a service, this is still an early stage market. By 2013, such services will account for only 7% of the overall cloud services market. (Source: Gartner, Inc., Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, March 18. 2009) https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000XtqApp Development Forecast https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000f9rApplication Development - Dynamic Web Application Tools 2009 - $94.3B 2012 - $131.6 26. (Source: Gartner, Market Trends: Application Development, Worldwide,2008-2013, Jan. 30, 2009) (Source: Gartner, Market Trends: Application Development, Worldwide, 2008-2013, Jan. 30, 2009)Content Management Its said that 85% of information in enterprises is unstructuredits growing farfaster than your structured information in databases. (Source: AMR Research, Puttingthe E in ECM: A New Definition for Content Management in the Enterprise, March 4,2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000X5LEnterprise Social Networking The business potential of enterprise social computing (ESC) goes far beyond typicalreports promoting it to improve marketing and customer service. Research releasedtoday by Saugatuck Technology shows that ESC solutions also deliver quantifiablebusiness value by improving collaboration and business performance within andbetween user enterprises, from Research & Development to Customer Service &Support with the result that ESC is increasingly viewed as an business game-changer. (Saugatuck Technology, Bridging the Gap: Achieving the Promise of EnterpriseSocial Computing, March 11, 2009) While market rhetoric today centers on externally-focused Enterprise Social Computing,most of the activity is still internally focused. Saugatuck sees this changing quickly. Byyear-end 2009, the majority of Enterprise Social Computing will be externally focused, dueto a greater emphasis on ROI. Such significant shifts in usage require important shifts inresource and user policy and management. (Saugatuck Technology, Bridging the Gap:Achieving the Promise of Enterprise Social Computing, March 11, 2009) By year-end 2009, membership retention will overtake acquisition and participation as theprimary concern for a majority of social network and community managers. As theirbusiness models change, providers will face fundamental changes in their revenue streamsand compensation models. (Saugatuck Technology, Bridging the Gap: Achieving thePromise of Enterprise Social Computing, March 11, 2009) By year-end 2010, one-quarter of user business process improvement initiatives willinclude the integration of information from Enterprise Social Computing solutions into thecontext of business applications and workflows requiring customization and integrationsignificantly beyond what is available today. (Saugatuck Technology, Bridging the Gap:Achieving the Promise of Enterprise Social Computing, March 11, 2009) Through 2011, more than fifty percent of externally-focused Enterprise Social Computinginitiatives will fail to meet user executive expectations due to misalignment with businessgoals or corporate culture conflict. User-Provider relationships will suffer. (Saugatuck 27. Technology, Bridging the Gap: Achieving the Promise of Enterprise Social Computing,March 11, 2009)Indirect Sales Channels for the Software Vendors Vendors no longer own the direct client relationship. With almost half of sales fromindirect sources, the software vendor only controls 54% of transactions (see Figure 12). Infact, local or regional value-added resellers (VARs) or system integrators (SIs) comprise15% of deals, large or national VARs and SIs comprise 14% of all deals, and large or directresellers drive 12% of transactions. Vendors face significant risks as clients move awayfrom the vendor as the trusted advisor. Forrester expects solution-centric ecosystempartners to play a greater role in shaping the software agenda as they retain a betterunderstanding of client issues and solutions.(Source: Forrester, Craft Your Negotiations Strategy To Reflect New Packaged AppsLicensing And Pricing Trends, April 2, 2009) (Source: Forrester, Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends, April 2, 2009)% of Reps Prepared for Sales Meetings 28. (Source: IDC Best Practices in Sales Productivity Improvement: The First Line Sales Manager, March 12, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000XlI 29. (Source: IDC Best Practices in Sales Productivity Improvement: The First Line Sales Manager, March 12, 2009) https://na1.salesforce.com/sfc/#version?selectedVersionId=068300000000XlIWhy CRM Projects Fail https://na1.salesforce.com/sfc/#version?selectedDocumentId=069300000000WuUTop Three Real-World Pitfalls That Can Trip Up CRM Initiatives (People Issues):1) Slow user adoption (49%) 2) Inadequate attention paid to change management and training (36%) 3) Difficulties in aligning the organizational culture with new ways of working (15%)(Source: Forrester Research, How to Risk-Proof Your Culture for CRM, Feb. 27, 2009) ---------------------------------------------------------------------------------------------------------------------- Top Five Real-World Pitfalls That Can Trip Up CRM Initiatives (Technology Issues):1) Application functional gaps and deficiencies (30%) 2) A lack of appropriate technical skills in user organizations (23%) 3) Data problems (19%) 4) Systems performance challenges (19%) 5) Poor application UIs (8%)(Source: Forrester Research, How to Risk-Proof Your CRM Technology Platform, February 27, 2009) ---------------------------------------------------------------------------------------------------------------------- Top Four Real-World Pitfalls That Can Trip Up CRM Initiatives (CRM strategy and deployment Issues): 30. 1) Inadequate deployment methodologies (40%)2) Poorly defined business requirements (25%)3) A lack of organizational alignment on objectives (18%)4) A failure to tightly manage program costs (18%) (Source: Forrester, How to Risk-Proof Your CRM Deployment Strategy, Feb. 27, 2009)----------------------------------------------------------------------------------------------------------------------Top Three Real-World Pitfalls That Can Trip Up CRM Initiatives (CRM businessprocesses Issues): 1) Technical integration issues (48%)2) A lack of sound business process design (31%)3) A need to customize solutions to fit unique customer management requirements (21%) (Source: Forrester, How To Risk-Proof Your CRM Business Processes, Feb. 27, 2009)(Source: Forrester Research, How To Risk-Proof Your CRM Technology Platform, February 27,2009)--------------------------------------------------------------------------------------------------------------------- Why CRM Software Deployments End in Failure: 1) Sales representatives and, to a lesser extent, marketing professionals, just aren't using the technology - nonadoption is leading to failure2) It's just not easy to use3) It just doesn't offer any value to them (sales representatives)4) Initially designed to appeal to sales management, not the sales user(Source: AMR senior research analyst Robert Bois, TechTarget, CIO News, CRM projects fail because users say 'no thanks', Oct. 18, 2007) http://searchcio.techtarget.com/news/article/0,289142,sid182_gci1277542,00.html 31. American Recovery and Reinvestment Act (ARRA) Boost to Tech Spending in Energy, Healthcare, and Government Sectors https://na1.salesforce.com/sfc/#version?id=068300000000Xvx We estimate the $788.7 billion spending in the ARRA will stimulate approximately $101.2 billion of technology spending in the energy, healthcare, and government sectors. This includes both traditional IT spending and technologies not typically considered part of IT (e.g., technologies associated with wind and solar power generation). The largest portion of the technology spending ($77.6 billion) will be associated with the energy sector. Healthcare is expected to see $21.1 billion in technology spending. And government is expected to receive $2.5 billion in technology spending for its own internal use. This will be incremental spending that will take place between 2009 and 2014, with the heaviest spending taking place in the later years. (Source: IDC, Business Strategy: Capturing Your Share of t he American Recovery and Reinvestment Act, March 2009)Negative Quotes on SAP Upgrades http://www.macro4.com/News-Events/News-Press-Releases/SAP-customers-caught-in-upgrade- crisis.aspx 90 per cent of SAP users point to upgrade challenges in new research (Source: Macro 4, SAP customers caught in upgrade crisis, April 22, 2009) 90 per cent of the 135 SAP users from UK, France and Spain who participated in the survey admitted that performing upgrades was a challenge. Their main complaints included the time that upgrades consume (mentioned by 73 per cent), the complexity involved (60 per cent), and the staffing resources involved (50 per cent). 41 per cent of respondents were worried about the risk of system failure following an upgrade and 39 per cent were concerned about potential loss of data. (Source: Macro 4, SAP customers caught in upgrade crisis, April 22, 2009) Dont See What You Need? Contact Wendy Close for research requests including 3rd partyanalyst research, customer satisfaction survey data, focus group requests and results, and otherresearch you might need to strengthen your case and direct your course. Improve your decision making. Shorten your decision cycles. Back-up your plans withresearch facts. Arm yourself with industry quotes. Test your assumptions with customers.Be prepared to succeed. Ask Wendy at wclose@salesforce.com.