Mark Smith's Analyst Perspectives

Salesforce has begun to toot its marketing horn about its new capabilities for performance management through its acquisition of Rypple, a provider of software designed for social collaboration for improving employee engagement. I have already discussed this acquisition (See: Salesforce.com looking for a Successful Rypple in Human Capital Management) and have actually signed up for and used the software. Rypple has introduced some great innovations to promote feedback and dialogue between employees and managers. Salesforce has expanded what this software can be used for in an organization with its latest announcement, as it discussed at its Cloudforce conference and posted on YouTube. Rypple has many cutting-edge customers, including Facebook, that are looking for a different approach to talent management processes than that of the traditional HR organizations in well-established industries. However, anyone expecting to use the application to replace existing performance management software will find Salesforce’s announcement to be a little premature based on the state of the application and capabilities.

At Cloudforce, Salesforce Chief Operating Officer George Hu talked about using Salesforce Rypple for performance management as a first step to revolutionize HR for the social enterprise. Unfortunately, the picture he painted in his diatribe about work and organizational structures is not representative of the existing methods that the majority of organizations use to manage and engage workforces. His understanding of the dynamics of performance management is completely inaccurate. If he spent some time reviewing the reality he would gain better credibility with the HR organizations that he wants to adopt the application. I would agree with Hu that many aspects of performance reviews need to be improved, but organizations will need a lot more than what Rypple offers to replace the performance management applications and processes in use today. Our research has found that over three quarters of organizations do performance appraisals to more than 80 percent of their workforce and they are definitely not done very often as 60 percent of organizations do them annually.

Salesforce did demonstrate some newer capabilities in Rypple, such as integration with Chatter and the ability to easily give thanks to employees publicly across the organization. You can also create and publish goals and objectives that can be easily seen by others. Aligning the workforce to business goals on a more frequent basis is the most important benefit according to 81 percent of organizations in our performance management for talent management benchmark research.  In addition providing visibility into progress towards performance goals and targets was the most important management capability for performance management. If your organization uses Salesforce Chatter, you can use Rypple to help promote many tasks and information including your organization’s recruitment needs as Salesforce promoted at Cloudforce through social networking – but you could already do this with Chatter. Rypple engages employees through a Facebook wall-type environment and lets employees earn electronic badges and achievements that others can see, much like what you can do in Foursquare by checking into a variety of locations. These capabilities are part of the future of employee engagement and providing a better daily and weekly task based environment that can be shared and provide recognition for accomplishments.

The challenge for those evaluating Salesforce for talent management is whether the company is really ready to address the full range of most organizations’ existing performance management processes, let alone begin to step into the larger portfolio of human capital-related processes that must be managed by software. Our benchmark research confirms that performance management is very important for talent management in 63 percent of organizations. But Salesforce has not even integrated the Rypple website into its own yet, but it is already claiming it can replace existing applications and revolutionize performance management. Salesforce is great at marketing but traditionally has lacked in understanding buyers’ environments and helping them bridge into a new approach or complement existing efforts.

At Cloudforce, Salesforce used Living Social, a mid-sized organization, as a Rypple customer reference. That company’s spokesperson, the senior vice president of human resources, was previously an HR executive at Salesforce, according to LinkedIn, which might suggest some bias in the credibility of the deployment and claims. Salesforce should have disclosed her previous role.

Salesforce could gain more credibility by promoting one of its loyal partners that delivers human capital management applications. Jobscience, which I just assessed, provides recruiting, onboarding, human resources and even learning capabilities built on the Salesforce cloud computing-based platform and tools. I found a lot more to Jobscience than meets the eye, and I’m surprised by Salesforce’s lack of promotion of a partner that has proven its platform can work for HR managers. Salesforce could easily take a more credible position if it embraced its partner and showed how Rypple and Jobscience fulfill organizations’ needs in human capital management. Especially since the integration of performance management with the rest of talent management is very important in over half (54%) of organizations and having a single and unified platform for doing so is very important to 40 percent of organizations.

Salesforce positions itself as an enterprise cloud computing company that enables the social enterprise. Its flagship CRM solution is used by marketing, sales and customer service professionals. I am not sure Salesforce is ready to expand into broader human capital management yet, even though it has hired some industry folks who have experience in enterprise applications. Gaining credibility with buyers, consultants and industry influencers requires a lot more work than what the company has shown so far. Salesforce has encountered this credibility issue before, when it positioned its marketing application to be a lot more than it was, and it proved to be lacking for those that really engage in marketing, from demand generation to web content management.

Salesforce has seen its CRM applications successfully adopted for sales and service areas, and it’s now advancing into social collaboration and applications in the cloud. Salesforce Rypple offers a social collaboration based employee engagement application that helps recognize employee achievements and lets managers better interact with employees. If Salesforce had properly positioned the application and its capabilities in this area, it would have gained better credibility with organizations and departments where it already has credibility, such as sales and customer service. Salesforce has tough competition in this area of social collaboration for the workforce; providers that are a lot further along include Saba Social Enterprise application for social collaboration and SuccessFactors Jam.

Despite Salesforce’s shortfalls in the way it is communicating Rypple’s capabilities and its failure to promote partners that could better meet customer needs, the Rypple application has some worthwhile advancements to embrace employee engagement that are worth examining. As I pointed out in our 2012 research agenda for human capital management, it will be important to empower the mobile and social workforce to best retain your talent efficiently. Businesses that are looking to adopt a social collaboration and recognition approach as a component of their overall performance management effort should examine Salesforce Rypple.

Regards,

Mark Smith – CEO and Chief Research Officer