2. Objective:
Provide
a
strategic
go-‐to-‐market
plan
for
lower
tier
markets,
with
recommendation
on
whether
or
not
it
is
worth
positioning
a
stripped
down
version
of
Analytics
Cloud
to
smaller
companies.
Analytics
Cloud,
powered
by
Wave:
Up
until
now,
Salesforce
customers
have
been
able
to
run
reports
on
data
in
Salesforce
to
understand
some
trends,
but
have
not
been
able
to
cross
reference
that
data
with
other
data
they
have
in
other
systems,
like
ERP,
or
other
back-‐end
systems.
Analytics
Cloud
is
a
new
service
provided
by
Salesforce
that
enables
companies
to
use
the
data
they
have
in
Salesforce,
back
end
systems,
and
even
product
usage
trends
so
that
those
companies
can
make
strategic
decisions
for
the
future
using
all
this
data
together.
The
pricing
structure
is
currently
as
follows:
1
license
of
Wave
to
power
the
platform,
$495,000/year.
Builder
licenses
(to
create
reports)
-‐
$3000/year,
and
Explorer
licenses
(for
business
users),
$1500/year.
Analysis
Overview:
Company
and
Climate:
At
Dreamforce
’14,
Salesforce
launched
Analytics
Cloud,
positioning
the
product
for
enterprise
level
companies.
Given
the
cost-‐
prohibitive
budgeting
required
to
pay
for
this
product
by
smaller
companies,
we
will
explore
whether
or
not
there
is
a
legitimate
opportunity
for
Salesforce
to
take
the
product
down
market
after
the
initial
launch,
assuming
the
product
find
success
in
at
the
enterprise
level.
3. As
there
is
already
a
team
in
place
for
this
product,
we
are
assuming
that
rolling
this
out
to
a
new
market
segment
would
require
relatively
few
additions
to
the
existing
Analytics
Cloud
team
of
product
developers,
engineers,
marketing,
and
management.
We
are
going
to
outline
the
additional
required
resources
in
this
report.
Customer:
As
mentioned,
typically,
Salesforce
customers
have
been
looking
for
a
way
to
combine
all
of
their
data
together
to
make
more
sense
out
of
expected
market
trends.
This
is
the
classic
Big
Data
problem
that
has
arisen
with
the
success
of
cloud
computing.
Collaborators:
The
main
collaborators
here
will
be
existing
implementation
partners
as
well
as
other
divisions
in
the
company.
Many
of
our
implementation
partners
serve
as
advisors
to
our
customers
and
help
them
implement
of
our
products
with
best
practices
to
help
ensure
success.
These
partners
can
be
educated
on
our
new
product
at
so
that
they
are
knowledgeable
on
new
opportunities
with
their
clients.
While
these
partners
are
used
more
in
the
upper
tier
market
segments,
they
are
still
used
frequently
as
low
as
the
SMB
market
segment.
In
conjunction
with
how
Salesforce
markets
all
of
its
non-‐CRM
products,
positioning
our
core
sales
teams
to
loop
in
Analytics
Cloud
will
be
a
commonly
used
internal
“lead-‐pass”
system
that
Salesforce
already
uses
for
all
products.
Competition:
Our
closest
competition
to
Analytics
Cloud
(AC)
would
be
Tableau,
as
they
target
the
same
business
need
as
AC
does.
While
many
of
Tableau’s
capabilities
mirror
those
of
AC’s,
Tableau
does
not
cover
some
of
the
key
differentiators
like
predictive
analytics,
and
of
course
lacks
the
thorough
4. integration
with
the
world’s
most
commonly
used
CRM,
Sales
Cloud
by
Salesforce.
Strategy
and
Implementation:
With
our
recommendation
to
pursue
the
SMB-‐MM
business
segments,
we
plan
to
utilize
the
existing
team
in
place
from
the
launch
of
Analytics
Cloud
from
a
product,
engineering,
and
management
perspective,
all
while
adding
minimal
staff
to
handle
the
additional
responsibilities
around
marketing
and
sales
for
this
segment
and
2
additional
staff
for
the
product
as
it
will
be
positioned
to
this
segment.
The
product
will
also
be
stripped
down
from
its
original
formatting
to
fit
the
needs
of
smaller
businesses.
The
product:
Many
of
the
capabilities
will
need
to
be
reduced
with
the
lower
edition
product,
including
reducing
the
max
users
of
the
platform
down
from
400
users
to
20
users.
As
with
the
higher
tier
product,
if
they
need
more,
another
Wave
license
would
need
to
be
purchased.
Additionally,
we
recommend
limiting
the
number
of
outside
applications
that
can
be
integrated
for
data
addition
to
1
app
and
a
product
channel
as
well.
Most
of
these
smaller
companies
won’t
need
as
many
channels
for
input
anyway
to
other
systems,
and
this
will
be
a
good
way
to
get
them
to
upgrade
to
the
higher
tier
should
they
continue
to
grow.
The
price
of
the
product
will
therefore
drop
to:
Wave,
$50,000,
Builder,
$1,200,
Explorer,
$600.
The
people:
As
with
many
other
Salesforce
products,
we
will
include
our
sales
team
in
a
co-‐prime
model,
where
a
core
AE
will
be
able
to
engage
the
appropriate
resource
when
they
discover
a
potential
opportunity.
This
is
the
5. way
Salesforce
has
had
success
with
other
products
like
Marketing
Cloud,
Service
Cloud,
Desk.com
and
Data.com,
and
we
fully
expect
this
to
continue
to
work.
This
also
allows
us
to
add
minimal
staff
as
we
have
already
hired
and
staffed
most
of
the
other
positions
for
AC
earlier
in
the
year
for
the
enterprise
launch.
In
order
to
justify
our
business
initiative
towards
marketing
a
lightweight
and
barebones
version
of
the
Salesforce
Analytics
Cloud
software
to
ESMB-‐MM,
we
first
identified
the
total
approximate
potential
opportunity
for
our
product
launch.
To
begin,
we
leveraged
data
collected
by
the
US
Census’
Statistics
of
US
Business.
The
Census
data
collected
has
been
pooled
together
annually
from
years
1988
–
2011.
Given
that
we
are
in
Q4
2014,
we
developed
a
way
to
annualize
changes
in
the
segmented
data
by
taking
the
average
growth
rate
broken
down
into
the
following
market
segments.
A) US
Firms
with
less
than
20
Employees
B) US
Firms
with
20-‐99
Employees
C) US
Firms
with
100-‐499
Employees
Our
itemized
market
data
begins
goes
from
2006
to
2011.
We
chose
this
time
frame
to
capture
our
economy
prior
to
the
economic
downturn,
the
downturn
itself,
and
the
slight
recovery
that
followed.
We
argue
taking
the
average
change
in
total
US
firms
–
segmented
by
total
employees
would
give
us
a
growth
rate
in
order
to
project
US
business
data
for
years
2012,
2013
and
2014.
(Itemization
of
each
market
segment
is
shown
in
Exhibit
A.)
6. It
is
worth
acknowledging
that
given
the
current
macro-‐economic
landscape,
GDP
is
still
relatively
low
and
our
recovery
from
the
most
recent
economic
downturn,
we
are
still
struggling
to
gain
traction
as
a
country.
Even
with
Unemployment
hovering
around
5.8%,
the
under-‐employed
add
significant
percentage
points
to
the
unemployment
rate,
bringing
the
US
closer
to
11.5%
percent.
Because
of
this,
we
are
comfortable
using
average
negative
growth
rates
for
our
forward-‐looking
data
as
outlined
above
(Exhibit
B).
Salesforce’s
launch
of
Analytics
Cloud
primarily
targets
firms
of
enterprise
scale
(Exhibit
C).
We
argue
developing
a
barebones
version
of
their
latest
Analytics
Cloud
software,
packaging
it
with
their
CRM,
and
targeting
ESMB-‐MM
companies
would
add
significant
top-‐line
revenue
for
the
firm
and
its
shareholders.
Additionally,
we
provide
an
entry
point
into
the
broader
Salesforce
suite
of
services
as
the
small-‐to-‐mid
sized
companies
scale
up
over
time.
We
have
divided
the
potential
market
into
the
following
two
segments
(Exhibit
D):
1.Those
currently
using
Salesforce
–
without
Analytics
Cloud
(44.5%
of
top
5
CRM
Market)
2.Those
not
using
Salesforce
and
not
using
Analytics
cloud
(55.5%
of
CRM
Market)
Based
off
our
2014
estimate
for
total
US
businesses,
there
are
approximately
528,272
firms
that
currently
employ
people
ranging
from
twenty
to
500
employees.
Not
all
of
those
firms
are
equal
candidates
worth
targeting,
as
the
data
includes
small
“mom
and
pop”
type
companies
and
other
small
7. businesses
such
as
convenient
stores
and
skilled
labor
proprietorships
that
would
not
need
to
use
our
software
or
could
not
afford
it.
Therefore,
we
assumed
net
opportunities
of
40%
of
the
528,272
companies
are
worthy
potential
customers
to
either
a)
enhance
their
current
Salesforce
relationship
by
selling
them
the
Analytics
Cloud
software,
or
b)
companies
not
using
any
Salesforce
software.
Per
AMI-‐Partners
CRM
growth
projections,
the
total
market
share
opportunity
for
2014
is
approximately
$3.25bn.
With
respect
to
the
44.5%
of
CRM
users
currently
utilizing
the
Salesforce
software,
we
assigned
a
20%
close
ratio
and
a
15%
close
ratio
for
those
currently
not
using
the
Force
platform.
Given
these
close
ratios,
we
predict
that
over
a
five-‐year
business
development
initiative,
we
can
collectively
close
approximately
18,806
firms
and
17,591
firms
in
each
respective
market
segment.
The
total
opportunity
is
36,398
firms.
Given
this
estimate,
we
can
project
a
total
revenue
opportunity
as
follows:
36,398
potential
firms
*
$15,380
Average
Revenue
per
firm
equates
to
approximately
$559.8MM.
(Exhibit
E,F)
The
above
average
revenue
projection
on
a
per
firm
basis
is
a
conservative
estimate.
Our
goal
is
to
sell
the
CRM
and
Analytics
Cloud
Software
for
roughly
$51,800
per
company
for
those
already
utilizing
the
Salesforce
platform
and
$53,300
per
company
to
those
not
currently
using
the
Salesforce
platform.
The
difference
between
the
two
is
that
the
additional
cost
accounts
for
a
$1,500
per
year
CRM
fee
on
top
of
the
$51,800
Analytics
Cloud
user
fee.
We
calculated
a
Customer
Lifetime
Value
in
Exhibit
G.
8. The
Task
Force
will
be
comprised
of
8
Account
Executives,
2
Analysts,
2
Sales
Engineers,
and
2
Software
Engineers.
The
total
cost
of
running
this
unit
will
cost
$1,270,000
per
year.
Salesforce.com
will
also
allocate
.5%
of
their
R&D
budget
for
this
project,
which
translates
to
approximately
$3mm
over
five
years
(or
$623k/yr.
for
five
years).
In
addition
to
R&D,
the
company
will
also
budget
.2%
of
their
gross
profits
for
marketing
-‐
$6,205,150.
The
total
costs
of
adding
this
program
is
approximately
$10.5mm
(see
Exhibit
H).
Of
the
allocated
.5%
of
2014
gross
revenue
of
$3.1bn,
a
maximum
of
70%
will
be
used
to
acquire
new
customers
currently
not
using
Salesforce
and
the
30%
will
be
used
to
upsell
existing
Salesforce
CRM
clients
with
our
new
Analytics
Cloud
tool.
Total
Marketing
Campaign
Costs
for
Existing
Salesforce
CRM
clients
and
new
customers
is
$4,653,862
and
$10,859,012
respectively.
(Exhibit
I)
Cost
of
Customer
Acquisition
is
approximately
$1,237
and
$3,087
respectively.
This
cost
will
remain
the
same
from
Years
1
through
5,
assuming
that
our
program
will
be
able
to
penetrate
the
target
market
at
20%
per
year.
(Exhibit
J)
Our
total
projected
revenue
for
the
product
launch
over
an
estimated
five-‐
year
horizon
is
$1.9bn
($974mm
for
market
1,
$937mm
for
market
2;
see
Exhibit
E)
Competitive
Analysis
The
biggest
emerging
player
in
the
SMB
Business
Intelligence
market
is
Tableau.
This
company
was
founded
in
2003
and
recently
went
public
in
2013.
Tableau
is
known
for
their
rich
user
interface
and
design,
the
best
looking
product
in
the
industry.
Though
they
have
a
solid
looking
product,
when
9. taking
into
account
the
value
of
both
their
product
and
Tableau
as
a
vendor,
we
soon
realize
that
beauty
is
only
skin
deep.
Referencing
Exhibit
K
from
the
Analytics
x
Tableau
Competitive
Array,
both
Tableau
and
Analytics
Cloud
offers
great
products
and
services.
In
the
Product
Evaluation
table,
Features,
Usability,
Affordability,
and
Architecture
were
taken
into
consideration.
Tableau
scored
very
high
in
Usability
but
lacked
in
Affordability
and
Architecture.
Analytics
Cloud
exploits
these
weaknesses,
as
these
categories
are
its
strengths.
Salesforce.com
is
a
multi-‐billion
dollar
company
that
has
not
only
the
technological
and
financial
resources,
but
is
also
the
market
leader
of
Software
as
a
Service
(SaaS)
in
Sales,
Marketing,
Service,
and
Community
Industries.
By
being
the
provider
of
SaaS,
it
makes
integrating
their
front-‐
end
UI
product,
Analytics
Cloud,
seamless
for
customers
already
using
existing
Salesforce
SaaS
services.
This
is
a
huge
advantage
for
Analytics
Clouds
for
one
of
the
main
considerations
in
selecting
a
Business
Intelligence
product
is
system
compatibility,
integration
complexity,
and
cost.
Another
valuable
feature
that
Analytics
Cloud
offers
is
predictive
analytics,
a
highly
sought
after
feature
that
can
only
be
achieved
through
scientific
and
technological
competence
(ref:
Business
Intelligence
Technologies
Spectrum).
The
categories
covered
in
the
Vendor
Evaluation
are
Viability,
Strategy,
Reach,
&
Channel.
Salesforce’s
stronghold
of
the
SaaS
industry
explains
their
9.1
score
in
the
Vendor
Evaluation
segment.
Tableau
as
a
vendor
remains
mainly
as
a
front-‐end
graphical
user
interface
of
data.
Analytics
Cloud
offers
not
only
a
solution
for
Business
Intelligence,
but
is
built
upon
the
largest
SaaS
platform
in
the
world,
Salesforce.
10. Risk
Acknowledgements
Risk
The
main
risk
involved
with
launching
this
product
would
be
the
costs
associated
with
the
development,
staffing,
and
marketing.
Product
Development
Costs
Since
this
is
a
simplified
derivative
of
the
full
Analytics
Cloud
software,
the
product
development
costs
will
be
very
little.
We
have
estimated
that
the
total
costs
to
run
the
operation
is
approximately
$10.5mm
(see
exhibit
H).
New
Hires
Associated
With
Product:
The
most
that
the
team
would
have
is
14
people
–
Eight
account
executives
(Average
Salary:
$95,000),
two
sales
engineers
(Average
Salary:
$80,000),
2
analysts
(Average
Salary:
$75,000),
and
two
software
engineers
(Average
Salary:
$100,000).
The
total
cost
of
paying
this
team
would
be:
$1,270,000
per
year.
Marketing
Expenditures
Since
we
are
tapping
into
a
new
market,
we
estimate
that
we
will
spend
approximately
$6.2mm
million
over
the
course
of
five
years,
until
our
product
becomes
well
known
in
the
market
that
we
are
penetrating.
It
is
presumable
and
estimated
that
these
costs
will
drop
as
the
product
gains
traction.
Overall
Estimated
Risk
If
this
project
were
to
fail,
we
will
incur
over
$10.5mm
in
fixed
costs.
If
the
project
gets
no
traction
after
implementation
and
launch,
the
company
11. would
eat
almost
all
of
the
costs
accounted
for
here.
It
may
be
a
couple
years
for
this
product
to
be
profitable
since
we
would
increase
advertising
at
launch.
Risk
Analysis
This
is
actually
a
very
low
amount
of
risk
for
a
large
company
like
Salesforce.com
to
take.
The
product
itself
may
not
generate
revenue
in
the
short
term
to
cover
the
costs.
If
the
product
fails,
the
max
loss
with
no
sales
will
be
$10.5mm.
Not
only
is
this
solution
a
product
that
can
generate
cash
flow
by
itself,
it
will
also
be
an
investment
in
other
solutions
by
acting
as
a
gateway
into
our
services
and
solutions;
customers
that
are
experiencing
growth
could
turn
into
larger
wins.
For
a
rapid
growing
company
like
salesforce.com,
the
risk
is
not
all
that
large.
Implications
1. Many
of
the
costs
associated
with
this
product
were
already
incurred
when
the
Analytics
Cloud
Software
was
created
to
target
larger
companies.
Outside
of
marketing
expenses,
all
other
incremental
costs
on
top
those
already
spent
on
the
parent
software
will
be
small.
If
we
can
be
successful
in
tapping
the
new
market,
our
new
version
of
Analytics
Cloud
could
help
pad
our
bottom
line
effectively.
2. There
is
also
a
strong
desire
to
get
into
this
market
because
of
growth
potential
of
the
customers.
If
a
customer
begins
to
grow,
we
can
use
the
small
to
medium
sized
business
software
to
segue
them
into
our
more
premium
and
more
expensive
offering.
This
is
a
win-‐win
for
our
customer
and
us
because
the
only
learning
curve
will
be
with
the
added
12. features.
This
will
also
be
a
gateway
for
our
customers
to
purchase
other
company
offerings.
3. This
could
be
an
area
for
company
growth.
These
smaller
businesses
and
companies
could
have
a
legitimate
need
for
a
simplified
version
of
another
current
product
offering
or
a
future
product
offering.
4. If
the
project
does
flop
in
the
United
States,
we
would
not
roll
it
out
in
other
countries.
The
US
releases
can
be
used
to
test
the
effectiveness
of
our
product.
Conclusion/Recommendation
In
conclusion,
we
recommend
the
use
of
a
stripped
down
version
of
Analytics
Cloud
to
penetrate
the
market
for
ESMB-‐MM
companies.
Adding
AC
to
CRM
customers
should
be
a
primary
goal.
A
secondary
goal
should
be
to
capture
all
other
customers
who
could
use
CRM,
perhaps
by
introducing
them
to
the
basic
version
of
AC,
and
using
the
basic
version
to
hook
customers
into
the
variety
of
products
available
from
Salesforce.
We
believe
the
market
size
and
customer
lifetime
value
justify
the
implementation
of
our
proposed
strategy
when
compared
to
the
cost
of
implementing
and
maintaining
the
team
needed
to
execute.
13. Appendix
Exhibit
A:
Itemization
of
Each
Market
Segment
Exhibit
B:
Percentage
Change
in
Total
Businesses
YOY.
SBA.gov
Exhibit
C:
SWOT
Analysis
14. Exhibit
D:
Top
Five
CRM
systems
for
1-‐100
employees
Exhibit
E:
Market
Overview
Projected
#
Firms
-‐
Deal
Closed
Revenue
Projections
Market
(1)
18,806
$974,174,973.44
Market
(2)
17,591
$937,623,865.89
36,398
$1,911,798,839.33
15. Exhibit
F:
Average
Revenue
Per
Firm
Exhibit
G:
Customer
Lifetime
Value
for
Target
Markets
16. Exhibit
H:
Costs
of
Running
Operation
Cost
of
Running
Program
Product
Development
Number
of
Employees
Salary
Account
Executives
8
$95,000.00
$760,000.00
Sales
Engineers
2
$80,000.00
$160,000.00
Analyst
2
$75,000.00
$150,000.00
Software
Engineer
2
$100,000.00
$200,000.00
Total
Cost
of
Annual
Salary
$1,270,000
Research
&
Development
Total
R&D
in
2014
$623,698,000
Percentage
Allocated
for
SMB
AC
.5%
$3,118,490
Total
Cost
of
R&D
(5
Yr.
Period
–
Max
Contribution)
$3,118,490
Marketing
10%
of
Gross
Profit
($3,102,575)
Gross
Profit
$3,102,575,000
Percentage
allocated
for
SMB
AC
.2%
Total
Cost
of
Marketing
Campaigns
(Max
Contribution)
$6,205,150
Estimated
Initial
Cost
of
SMB
AC
Program
$10,593,640
17. Exhibit
I:
Costs
of
Running
Operation
Marketing
Expenditures
Breakdown
Total
Dollars
Allocated
(.5%
of
2014
Gross
Profit)
$15,512,875
Percentage
allocated
for
Existing
CRM
Users
(#1)
of
the
10%
SMB
AC
Budget
30%
$4,653,862
Percentage
allocated
for
New
CRM
Users
(#2)
of
the
10%
SMB
AC
Budget
70%
$10,859,012
Exhibit
J:
Cost
of
Customer
Acquisition
5 Year Market Penetration Forecast *
Y1 Y2 Y3 Y4 Y5
(#1) Existing CRM Users +AC 3761 7522 11283 15044 18805
(CA#1), Change per Year (delta) 3761 3761 3761 3761 3761
(#2) New CRM Users + AC 3518 7036 10554 14072 17590
(CA#2) Change per Year (delta) 3518 3518 3518 3518 3518
CAC Existing Users (MCC#1/CA#1) $1,237 " " " "
CAC New Users (MCC#2/CA#2) $3,087 " " " "
* 5 Year Projection: Assuming that we achieve 20% of our projected
penetration
