Thought Leaders in Mobile and Social: Penny Herscher, CEO of FirstRain (Part 6)

Sramana Mitra: What is Salesforce’s reaction to what you are doing, or Jive’s reaction to what you are doing?

Penny Herscher: I believe it’s positive.

SM: Do you have relationships with them?

PH: Yes. We talk to them.

SM: Do they bring you into opportunities?

PH: Not yet. I believe that’s emerging because there are a number of major accounts where we’re playing a central role in the Salesforce CRM roll-out. So, I think it’s only a matter of time now. So far, they’ve been collaborative with us. We’re good for them.

SM: If you are drawing people to use Salesforce.com, there is a strategic relationship there, potentially. And Salesforce is extremely social friendly. Social is a big part of their strategy.

PH: Yes, because the social enterprise is the major platform they’re talking about right now. Our integration with Chatter is important. Our integration with the communication mechanisms behind CRM is important. So, we collaborate with them. We integrate with them for some of their largest accounts. We’re integrated into their systems.

SM: Switching topics, where would you point entrepreneurs to look for open problems today? If you were starting a third company today, where would you look?

PH: Well, you’re asking an enterprise person. So, I couldn’t answer the question for B2C. For B2B, I think there’s a huge opportunity to move traditional applications into the cloud. It’s amazing how many applications are still on premises, whether it’s your accounting systems, you know, the old Oracle systems, the complexity of integrating Oracle and SAP. I think there’s a tremendous opportunity for those companies to reinvent themselves in simplifying what it takes to use their systems. SAPs putting a huge focus on the iPad … you know betting the company on mobility. I’m not sure Oracle really understands it yet. They talk a good game about cloud, but it’s not evident that do it yet. So, there’s a huge opportunity to take the traditional systems, finance and manufacturing systems, and put them into the cloud.

In fact, Sandy Kurtzig is doing this right now. She did ASK Computing. She’s just done a new company. It’s Kleiner [Perkins Caulfield & Byers] backed. She’s taking on the PLM problem, the manufacturing problem, but she’s got to move up the chain into the accounting behind manufacturing because nobody’s doing it in the cloud.

SM: A lot of the large companies don’t want to put their finance and accounting systems on the public cloud. They would put them on a private cloud, but they don’t want to put it on a public cloud. That’s one of the areas where, for instance, NetSuite does have a public cloud solution. But adoption of public cloud …

PH: I think it’s only a matter of time. If you look at the security, you can put on a public cloud, it’s significantly greater than the security you can put on your private systems.

SM: Not if you’re a very large company. IBM is doing a whole private cloud stack. Private cloud is a big trend.

PH: IBM may be, but if you look at the middle of the market, the market that is $1 billion to $20 billion revenue. Look at that market. They cannot afford the level of security that Amazon could put on its cloud.

SM: That’s what I’m saying. IBM is doing a private cloud stack. IBM as a vendor, not as a customer. IBM is the farthest along right now with creating a private cloud stack to put applications on top of their stack for companies that want to implement major functions on the private cloud. In the large enterprises, private cloud is a big trend. And finance and accounting, they don’t want to put on the public cloud. There’s a distinct reservation about putting that on the public cloud. CRM, on the other hand, they’re comfortable with.

PH: I believe what you’re saying. I just don’t think that’s the future. I think it’s a matter of time. There are so many levels of efficiency if you don’t have to run your own system.

SM: That’s what’s driving the adoption of public cloud solutions.

PH: In terms of power and support and cost, you can do a much better job if you don’t have to run it yourself.

SM: Yes, but with Diane Bryant, the former CIO of Intel, I think she quoted something like … their cost savings, based on the current game plan by moving major functions to the cloud is like $600 million.

PH: Yes. That’s extraordinary. There’s so much greater efficiency if you don’t have to run it yourself. And it’s all dimensions, physical dimension, and intellectual property and the level of training and maintenance of staff. That’s why I don’t understand businesses trying to do a mixed model of half on-premises, half on cloud. It kills your support costs, just kills your P&L. I actually have religion about it.

SM: The place where we’re seeing the maximum adoption of the cloud is in the mid-market and SMB area.

PH: Well, definitely in SMB but also in the mid-markets you’ll see it.

SM: We’re seeing it across the board. And we’re seeing tons of startups developing solutions for SMB and mid-market, company functions, technologies that were just not affordable at one point because there was no delivery model, no pricing model, no sales model to cater to the small businesses with these full knowledge base, full customer support solutions for the smallest companies, Zoho included. All that was not available then. All of that is available now. That’s very exciting.

PH: If you ask me where I think the future is, I can’t speak on the consumer side. I’m not going to tell you what the latest hot app is, but on the enterprise side, it’s the efficiency and vertical integrations that are going to become possible by going to the cloud. I think we just have to scratch the surface of it. It’s going to unleash so much value.

SM: Well, thank you, Penny for talking with me.

PH: Thank you, Sramana.

This segment is part 6 in the series : Thought Leaders in Mobile and Social: Penny Herscher, CEO of FirstRain
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