More problems for Salesforce. Veeva Salesforce Potential Break up!

This video provides an in-depth analysis of the strategic tension between major enterprise software platforms and their specialized Independent Software Vendors (ISVs), focusing specifically on the evolving and potentially fracturing relationship between Salesforce and Veeva. The speaker frames this conflict within the context of the "platform play," where successful platforms must define clear boundaries and avoid competing directly with the partners that build specialized solutions on top of their core technology. The analysis suggests that Salesforce’s inconsistent strategy—characterized by acquiring some ISVs while leaving others like Veeva untouched—has created uncertainty and potential market instability, particularly in highly regulated sectors like life sciences.

The core argument centers on the necessity of deep subject matter expertise (SME) required for certain verticals. Companies like Veeva, nCino, Rootstock, and FinancialForce built successful, multi-billion dollar offerings on the Salesforce platform precisely because they possessed the specialized knowledge (e.g., biotech, financial services) that Salesforce lacked or chose not to develop. The video draws a parallel to the historical challenges faced by Microsoft and Oracle. Both companies initially fostered open platform ecosystems but later entered the market with their own competing ERP systems, directly challenging their customers and partners, which ultimately led to market friction and political challenges in maintaining market share.

Salesforce’s acquisition of Vlocity, an ISV focused on the insurance market, is highlighted as an example of their inconsistent approach, contrasting sharply with their hands-off relationship with Veeva, which operates in the significantly more complex and regulated biotech space. The speaker posits that the sheer size and success of Veeva, coupled with Salesforce's current challenges, might tempt Salesforce to develop competing offerings. This potential move would force a head-to-head competition in the biotech sector, raising critical questions about intellectual property, the replicability of Veeva’s specialized experience, and the future viability of other large ISVs. The overall prediction is that the enterprise software world is poised for significant change, mirroring the market shifts Oracle and SAP experienced a decade ago, where sustaining market share becomes difficult due to internal politics and strategic missteps regarding the platform ecosystem.

Key Takeaways: • Strategic Risk of Platform Inconsistency: Salesforce’s lack of a clear, consistent "platform play" strategy—evidenced by selectively acquiring ISVs (like Vlocity) while maintaining a complex relationship with others (like Veeva)—creates significant instability for the entire ecosystem, particularly for companies relying on these platforms. • Veeva’s Unique Value Proposition: Veeva’s success is attributed to its deep subject matter expertise (SME) in the highly regulated life sciences and biotech sectors, an expertise that Salesforce historically avoided building internally due to its complexity. This SME is the primary defense against direct platform competition. • Potential for Head-to-Head Competition: The video raises the critical possibility that Salesforce may attempt to compete directly with Veeva in the biotech space, driven by Veeva’s substantial valuation and Salesforce’s need for growth, which would fundamentally alter the landscape of pharmaceutical commercial operations technology. • IP and Replication Concerns: If Salesforce enters the life sciences CRM market, questions surrounding intellectual property and feature replication will arise. Veeva would need to clearly justify that its specialized offering is not merely a copycat of the underlying Salesforce platform experience, emphasizing its proprietary regulatory and workflow features. • Historical Precedent of Platform Conflict: The situation is analogized to Microsoft and Oracle’s past decisions to enter the ERP market, competing with their own customers and ISVs. This history serves as a warning that platform providers often struggle to maintain market share once they prioritize internal competition over ecosystem enablement. • Importance of Platform Clarity for Customers: Customers (including pharmaceutical companies) must thoroughly vet a platform’s long-term strategy and commitment to its ISV ecosystem before making significant investment decisions, as platform instability can lead to costly migrations or feature stagnation. • Challenges in Regulated Markets: The biotech and life sciences sectors demand specialized compliance features (e.g., GxP, 21 CFR Part 11). Any platform attempting to compete with Veeva must demonstrate an equivalent level of regulatory adherence and industry-specific workflow design, which is a high barrier to entry. • Impact on Other Large ISVs: The strategic decisions made regarding Veeva will set a precedent for other large, vertical-specific ISVs built on Salesforce, such as nCino (financial services), Rootstock (manufacturing), and FinancialForce (ERP), signaling the platform’s future commitment to its partners. • Market Shift Prediction: The speaker predicts a significant change in the enterprise software world, suggesting that the political and strategic difficulties of sustaining market share will force major platform realignments, similar to the challenges faced by SAP and Oracle 10-15 years prior.

Key Concepts:

• Platform Play: A business strategy where a core technology provider (the platform) creates an open ecosystem for third-party developers (ISVs) to build specialized applications, requiring the platform to maintain clear boundaries and avoid competing with its partners.
• ISV (Independent Software Vendor): A company that creates and sells software products that run on another company's platform (e.g., Veeva running on Salesforce).
• Subject Matter Expertise (SME): Deep, specialized knowledge required to build solutions for complex, regulated verticals (e.g., the specific compliance and workflow requirements of pharmaceutical commercial operations).

Examples/Case Studies:

• Veeva: Cited as a highly successful, multi-billion dollar ISV built on Salesforce, specializing in the biotech and life sciences space, requiring deep regulatory SME.
• Vlocity: An ISV focused on the insurance vertical that Salesforce acquired, illustrating the platform’s willingness to compete in some specialized markets.
• Microsoft and Oracle: Used as historical examples of platform providers that damaged their ecosystems by entering the ERP market, competing directly with their own customers and partners.