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Project OccamProject OccamExecutive Offsite OverviewExecutive Offsite Overview
January, 2003January, 2003
Motivation for OccamMotivation for Occam
Competitive Threats in SMB Market Current: salesforce.com — aggressively targeting Siebel Imminent: Microsoft CRM — history of starting in the SMB space and then
expanding into larger enterprises If left unchecked, they can continue to gain strength
Market Opportunities in SMB Market Validation: Salesforce.com — $100M run-rate in 2003
Gartner: SMB CRM spend will be as large as the enterprise market by 2006
US Census: Companies with 10 – 1500 employees comprise 40% of total employees in the US.
% of CRM Spend
Employees Revenue 2002 2006
< 100 < $50M 2% 6%
100 – 2500 $50M - $1B 31% 47%
> 2500 > $1B 67% 47%
Occam stops a real threat and addresses a real market
Salesforce.com Revenue HistorySalesforce.com Revenue History
1999 (1) 2000 2001 2002 2003 (est)
Revenue
(% growth)
$0.1M
—
$5M
n/a
$16M
220%
$44M
175%
$82M
86%Accounts (cumulative)
90 820 2,200 5,300 8,900
Users (cumulative)
1,100 9,800 30,000 72,000 122,000
Annualized Revenue Run Rate ($M)
$0.8 $8 $20 $60 $100
SFDC is expected to grow to $100M in 2003• 3 years to get to $60M – 5,300 accounts/72,000 users (by end of 2002)
• 4 years to get to $100M – 8,900 accounts/122,000 users (by end of 2003)
(1) Began selling in Q4 ‘99
Salesforce.com Sales Strategies and TacticsSalesforce.com Sales Strategies and Tactics
Strategies: Tactics: Occam Implication:
Pricing/Contracting
Make pricing very attractive for the SMB market – adopt subscription pricing model
Avoid high, upfront pricing Avoid cost to implement
$65/user /month for Professional Edition
$125/user/month for Enterprise Edition
36% discount given for 2 year contract
Leverage SFDC pricing model - proven attractive to SMB market
Sales Organization/Structure
Drop cost of Sales – shorten sales cycle and sell over the phone where possible
Organize Sales to meet needs of SMB Market
Prepare to move “up-market”
Sell predominantly via Telesales and Direct Sales
Major Accounts: >$300M Rev accounts ; 40 Outside sales reps
Mid-market: <$300M Rev accounts; ~75 Inside sales
Use Telemarketing for cold calling; Inside/Outside Sales to close deals
For 2003: Hire & train approx. 110 – 140 Sales staff
For 2003: Invest in EMEA Telesales
Dedicated Occam Telesales unit needed
Issue: potential conflict with existing Siebel Sales Force & Accounts; second team needed for enterprise telesales?
Sales Compensation& Quota
Motivate Sales reps to drive rapid account adds
Tie-in commissions to reasonable account retention period
Drive high morale
Pay reps immediately as if account had paid for 12 months up front
Reps keep commission if account remains for 6 months.
11% - 20% commissions based on contract length
Monthly quota is $80K for 120 users at $65/user for 12 months
Evaluate similar as feasible for Occam
Salesforce.com Sales Strategies and Tactics (cont’d)Salesforce.com Sales Strategies and Tactics (cont’d)
Strategies: Tactics: Occam Implication:
Lead Generation & Qualification
Target business contacts and avoid IT groups – leverage salesforce.com business benefits
Maintain focus of Sales Reps Maximize trial / minimize
barriers to purchase
Compelling offer: Free trial - 30 days for 5 users
Leverage SDR’s to do cold-calling; Sales Reps to close deals
SDR’s pass off qualified leads to Reps – who conduct discovery call
Evaluate similar as feasible for Occam
Dedicated SDR’s needed to support Occam
Product Demonstration
Demo product “real time” over the phone
Target business users
Target: CFO and other non-IT decision makers
Show: Reports and queries, Outlook sync, .pdf views, Forecasts
Demo positioning: discredit value of IT organization; depict IT as the business users’ opposition
Evaluate similar as feasible for Occam
Closed Deals Close deal without need for customer visit
Close deal in 4-5 calls after demo
Final closure occurs when prospect goes online, enters customer information, # of users
All online: agree to terms, license agreement and signs up for training
Evaluate similar as feasible for Occam
Salesforce.com Marketing Strategies and TacticsSalesforce.com Marketing Strategies and Tactics
Strategies: Tactics: Occam Implication:
Positioning/Messaging
Tap unmet needs of the SMB market – straightforward, easy to use application
Leverage negative perception of Enterprise SW in SMB Market – expensive and slow
Create a unique value proposition versus the market leader (Siebel)
SFDC messaging themes: Position SFDC as #1 in CRM in SMB Simple, easy to use & adopt Low TCO and rapid speed to deploy Credible: over 5,000 accounts and
numerous customer success stories Strong negative mention of Siebel in
outbound messaging (e.g. reference Nucleus Report in WSJ add)
Some of SFDC positioning also applies to Occam
See proposed Occam positioning in Appendix
Awareness Build SFDC brand as antithesis of Siebel - “No software!” tagline
Leverage the brand equity of Siebel – build high SFDC mind share as better CRM alternative
Establish SFDC competitive position as appropriate for any sized business (not just SMB market)
Leverage Advertising and PR to drive leads
Advertising: Frequently compare self to Siebel –
exploit Siebel disadvantages to software; promote SFDC advantages
E.g. “I will not spend my summer vacation installing Siebel”
Invest in high profile print campaign directly targeting Siebel by name 75% of the time - targeting key pubs: (Business Week, Fortune, Forbes, Fast Company, etc.)
High profile Wall Street Journal Ads Total Ad spend $1M - $2M/Qtr.
PR: Aggressively leverage “PR
personality” of Founder to attract prospect interest/drive leads
Dedicated Occam advertising needed to create unique value proposition – different from Siebel Enterprise
Issue: need to leverage strengths of Siebel brand equity - while at the same time - create Occam unique value proposition
Salesforce.com Marketing Strategies and Tactics (cont’d)Salesforce.com Marketing Strategies and Tactics (cont’d)
Strategy: Tactic: Occam Implication:
Lead Generation
Leverage Advertising and PR activities as primary lead source
Source of Leads: 50% - Advertising 15% - PR 15% - Online 15% - DM 5% - Referral
Advertising: leverage “call 1-800 No Software” call-to-action to drive inbound leads to Telemarketing
PR: Create strong perception of SFDC account add momentum. Reinforce messaging/positioning.
Online/Other: Drive leads primarily from website and regional events to SDR’s
DM: Not fully leveraging this channel
Dedicated Occam Advertising needed to drive leads via direct response
Issue: Siebel typically leverages Advertising/PR for overall brand awareness vs. lead generation
Targeted DM a viable tactic to consider for Occam
Occam Growth Options — ScenariosOccam Growth Options — Scenarios
SFDC revenue run rate provides a baseline• SFDC grew by investing in Sales/Marketing activities
• 110 - 140 Inside/Outside sales reps added by Year 3; expanding into EMEA• Approx. $1M - $2M in Advertising investment per Qtr. by Year 3• >4 years to achieve $100M run rate due to pace of investment
Occam pace to $100M business size also depends on level of Siebel investment• Varying investment level in Sales/Marketing drives pace of growth• Four scenarios make sense to look at prior to establishing Occam plan:
Occam Growth Options:(1 = conservative; 4 = aggressive)
Time to $100M Run Rate
(1) Grow same rate as SFDC 45 months
(2) Grow 100% Faster Pace 35 months
(3) Grow 200% Faster pace 30 months
(4) Grow to $100M Run Rate in 24 months 24 months
Occam Growth Options — Revenue and Accounts/UsersOccam Growth Options — Revenue and Accounts/Users
2003 assumes
7/03 launch
2004 2005 2006 2007 Time to $100M Run
Rate
(1) Grow same rate as SFDC
Rev ($M):
Users:
$1
3,675
$7
12,272
$22
37,908
$64
99,196
$151
207,197
45 months
(2) Grow 100% Faster Pace
Rev ($M):
Users:
$2
7,351
$14
24,543
$44
75,816
$128
198,391
$303
414,394
35 months
(3) Grow 200% Faster pace
Rev ($M):
Users:
$3
11,230
$21
37,019
$66
113,928
$192
297,791
$454
621,795
30 months
(4) Grow to $100M Run Rate in 24 months
Rev ($M):
Users:
$4
15,125
$32
56,975
$104
181,175
$268
397,175
$592
802,175
24 months
Achieving rapid revenue growth requires substantial customer volume:• Conservative scenario: adds 250 accounts in 2003; 45 months to $100M run rate• Aggressive scenario: adds 1,040 accounts in 2003; 24 months to $100M run rate
Occam Growth Options — RevenueOccam Growth Options — Revenue
$0
$50
$100
$150
$200
$250
$300
2003 2004 2005 2006
Reve
nue
$M
Same Growth rate asSFDC100% Faster Growth
200% Faster Growth
Grow to $100M run ratein 24 mo's.
Occam Revenue Growth ($M) Scenarios
Occam Growth Options – AccountsOccam Growth Options – Accounts
0
5,000
10,000
15,000
20,000
25,000
30,000
2003 2004 2005 2006
Acco
unts
Same as SFDC
100% Faster
200% Faster
Grow to $100M run rate in 24mo's.
Corresponding account volume required to drive revenue growth
Occam Sales & Marketing Resource Requirements — AssumptionsOccam Sales & Marketing Resource Requirements — Assumptions
Telesales Close rate: 10% Avg # calls per closed account: 10 Calls per rep per day: 8
Marketing # leads needed to generate 1 qualified lead: 10 % leads by source:
Direct Mail Response rate: 2% Cost per piece: $1.50
Advertising Response rate: 0.5% Print Ad cost ($ per 1000): $650
Direct/Online Mktg Advertising & PR Telemarketing Word of Mouth20% 50% 20% 10%
Occam Sales & Marketing Resource Requirements — SummaryOccam Sales & Marketing Resource Requirements — Summary
Occam pace to $100M run rate size depends on several factors:• Level of investment in Telesales (headcount)• Level of investment in Marketing driving Lead Generation (budget)• 2003 resource requirements: see below• Resources needed beyond 2003: see following slides
Occam Growth Options: (1 = conservative; 4 = aggressive) 2003 Resource Requirements by Option
Time to $100M Run
Rate(1) Grow same rate as SFDC 25 Telesales/Telemarketing reps
$1M Marketing spend / qtr45 months
(2) Grow 100% Faster Pace 50 Telesales/Telemarketing reps$2M in Marketing spend / qtr
35 months
(3) Grow 200% Faster pace 75 Telesales/Telemarketing reps$3M in Marketing spend / qtr
30 months
(4) Grow to $100M Run Rate in 24 months
100 Telesales/Telemarketing reps$4M in Marketing spend / qtr
24 months
Occam Headcount Requirements — Telesales/TelemarketingOccam Headcount Requirements — Telesales/Telemarketing
0
50
100
150
200
250
300
350
400
450
2003 2004 2005
Head
coun
t
Same as SFDC
100% Faster
200% Faster
$100M run rate in 24mo's.
Occam Marketing Spend ($M) RequirementsOccam Marketing Spend ($M) Requirements
$0
$5$10
$15
$20$25
$30
$35
$40$45
$50
2003 2004 2005 2006
$M /
Year
Same as SFDC
100% Faster
200% Faster
$100M run rate in 24mo's.
Hosting Operations Headcount and Capital RequirementsHosting Operations Headcount and Capital Requirements
Initial Resource Requirements
Subsequent Resource Requirements
Infrastructure For up to 50K users:
$16M expense (servers, bandwidth, security, etc)
15 operational staff
Each additional 50K users:
$8M expense
7-10 operational staff
Application Management
For up to 15K users:
3 operational staff
To support up to 200K users:
4 additional operational staff
Customer Support
For up to 15K users:
9 support analysts
To support up to 50K users:
15 additional support analysts
Acquisition AlternativeAcquisition Alternative
Upshot $71M in funding. (HQ in Mountain View)
VC: ABN AMRO, Advanced Technology Ventures, others Individuals: Bob Finocchio (ex-Pres 3COM), Tom Proulx (Intuit co-founder),
others Sample customers: Xerox, Rodel, Imaginit, Virtual Source, Recovered Capital,
Extensity, Jamcracker, Morrisey Hospitality, and eGain Revenues, # customers/users, # employees: Unknown Claims to beat Salesforce.com in two out of three sales situations
Salesnet Founded in 1997. (HQ in Boston) Claims to have customers with over 1,000 users (customer names not given). Other
sources say Salesnet has customers with between 650-1000 users. Sample customers: British Telecom, Charter Communications, Software AG,
Sovereign Bank, Staples, American Express and Tellabs Funding, revenues, # customers/users, # employees: Unknown Focuses its value proposition on building and enforcing sales methodologies within an
organization. Has an easy to use "Process Builder" for companies to build their own sales
methodologies.
Key DecisionsKey Decisions
Occam Revenue Pace and Goals Next steps: Select revenue growth and investment scenario desired
Sales Ops Plan – when & how many Telesales Reps to be hired Hire as early as 6/03 Reporting relationship (PM vs Sales) Plan to avoid channel conflict Next steps: hire a Telesales VP to build Sales Operations plan
Marketing Plan – finalize budget and commit resources Initiate Marketing Planning team ASAP Set Q2 budget and resources Finalize Messaging/Positioning Initiate Marketing timeline Next steps: Dedicate/Hire headcount to manage Occam marketing activities
Activate Corp. Marketing Resources to work w/ PM to build plan Finalize 2003 Occam Marketing Launch
Key IssuesKey Issues
Headcount PM Headcount
Currently have 3 PM’s and one manager. Need two more PM’s. Need a dedicated UE resource
Marketing Headcount Need two dedicated resources
Alliances Headcount Need a dedicated resource
AppendicesAppendices
Product PlanProduct Plan
Version 0.5 Beta targeted for March 2003 “Soft” launch to industry analysts and press Sign up non-paying beta accounts Base sales application Includes contacts, accounts, opportunities, and calendar/activities Includes architectural framework with field customization and CSV import
Version 1.0 Targeted for June 2003 “Hard” launch to customers Sign up paying accounts Fully functional sales application Adds reporting, Outlook/Palm sync, and lead management
Version 1.5 Targeted for September 2003 Functionally match SFDC Adds forecasting, service, campaign management, offline client
Architectural RoadmapArchitectural Roadmap
Aligned with Big Sky design Dan Kearns is involved with Occam discussions
Have also discussed this with Peter Lim and Matt Malden Big Sky team will be kept aware of Occam’s requirements Occam team will be kept aware of Big Sky’s plans
Will leverage Big Sky when it’s available Will act as a “Reach” (i.e. Customer Facing) architecture client
Proposed Marketing MilestonesProposed Marketing Milestones
1. Define target market, messaging, & value proposition by 1/15/03.
2. Establish 2003 budget and headcount by 1/31/03.
3. Establish Working Copy of Marketing Plan by 1/31/03, including draft: FUD campaign strategy Q103 Soft Launch Q203 Full Launch Q303
4. Finalize Strategic Marketing Plan by 2/15/03. Launch Plan Brand & Awareness Strategy and Tactics Demand Generation Strategy and Tactics Identify and commit internal marketing support resource
Occam Marketing Resource Requirement TimingOccam Marketing Resource Requirement Timing
Marketing Launch Phase Jan/Feb March April/May/June July
FUD Campaign
Soft Launch
Hard Launch
Marketing Resources needed well in advance of 7/03 Launch• FUD Campaign - PR Resources needed ASAP thru 3/15• Soft Launch - PR/AR resources needed 2/1 thru 6/31• Hard Launch - Multi-function Marketing resources needed as early as 2/1
ActivityResources: (PR)
Activity
Resources: (AR/PR)
ActivityResources: (AR/PR/DM/Tele/Adv/Online)
Proposed Profile of Target SegmentsProposed Profile of Target Segments
Unsophisticated SMB
Enterprise Division Conservative Enterprise
Company Unsophisticated small and medium sized businesses <$300M in revenues <1500 employees
Unsophisticated divisions of enterprise businesses >$1B in revenues total <4000 employees total
Conservative Enterprise Businesses >$300M in revenues >1500 employees
Buyers Enterprise-wide sale Target CxOs, VPs of
sales, marketing, service Avoid IT
Departmental sale Target GMs, department
Mgrs Avoid IT
Enterprise-wide sale Target CxOs, VPs of sales,
marketing, service Neutralize IT w/ upgrade path
Key Barrier to Software Purchase
Unable to make upfront commitment for software– Just too expensive
Unable to get IT to provide timely or adequate support– No deployment support
Unwilling to make upfront commitment for software – Budget stalled
Siebel Branding Does not resonate – too big, too complex, too slow, too expensive
Resonates well at strategic level
Resonates well at strategic level
Willing to outsource? High Moderate Moderate
Absorb upfront costs? Very low Very low Low
Customization needs Low Low Low Initially
Integration needs Low Low Low Initially
Level of IT involvement Low Low Moderate
Upgrade to on-premise S/W?
Low High High
Salesforce.com’s High Level PositioningSalesforce.com’s High Level Positioning
Elements Salesforce.comLeadership in SMB: #1 Small Biz Sales
Solution
Credibility: Track Record- 5,000 accounts and multiple references
Trustworthy/Reliable: Hosting / Operational expertise and reliability
Affordability/ROI: Low TCO and speed to deploy
Ease of Use Simple & easy to adopt
Preliminary Occam PositioningPreliminary Occam Positioning
Siebel Positioning SFDC ResponseNOW
Get immediate results Deploy in hours or days, not months No software or hardware to install Industry-specific solutions accelerate deployment Lowest total cost of ownership It’s simple math - Limited risk with ROI in just weeks
Immediate CRM Solution, immediate results
Avg. implementation of 30 days No software to install No hardware to purchase ROI in two months
INTUITIVE
Drive user adoption Intuitive, easy to use interface Productivity tools designed for users, not just managers Online or offline access Unmatched MSFT Integration and Partnership Embedded best practices
High user adoption rates Easy to use Web interface Adoption rates top 90%
COMPLETE
Enable Real CRM Not just SFA with token service and marketing Marketing and service designed for marketing & service
professionals Robust PRM delivers leads and improves sales effectiveness
Award-winning CRM solutions with integrated online sales service, and marketing applications
Includes Analysis and Reporting PRM through CRM
Smart. Intuitive. Now.
Occam Positioning (cont’d)Occam Positioning (cont’d)
Siebel Positioning SFDC ResponseSMARTER
Promote smarter sales decisions Powerful interactive analytics with alerts, not static reports Intuitive role based dashboards Embedded best practices Integrated sales methodologies Leading business process intelligence Siebel vs “Dot com” vendor choice
Robust, yet easy-to-use reporting and analysis tool and sales method support
Reporting is analytics
RELIABLE
Partner with the CRM market leader Universally recognized leader in CRM Leverage proven best practices from over 3,500 successful deployments,
ranging from 10 to 10,000 users Over 1,000,000 production users Fiscally disciplined business, profitable and cash-flow positive since 1995 Fanatical focus on customer satisfaction and traditional core values.
Highest levels of satisfaction for any software company. Over $2.1 billion in cash
A proven solution Ranked as #1 Online CRM
solution provider and #2 overall provider of CRM Solutions
More than 5,000 companies worldwide rely on salesforce.com
Why would you trust Siebel for a hosted solution- backup, security, service risks.