Freshworks officially cool now in the club of platform vendors
A few days ago, together with a group of fellow analysts, I was invited to attend the 2020 Freshworks analyst days that covered a lot of ground from corporate vision through strategy and of course, some announcements for the Freshworks Refresh 2020 Global Virtual Conference. These announcements came shortly after the company appeared in the fourth Gartner Magic Quadrant for 2020 and after being ranked #16 in the 2020 Forbes Cloud 100 list.
All this clearly shows some ambition — and success.
As you may be aware by now, these announcements included Neo, the new Freshworks platform and the new Freshworks CRM product. These two topics created the most discussion points between the Freshworks executives and the analysts.
Of course, these two announcements were supported by statements on the corporate vision, mission and current standing as well as product vision. Impressive customer testimonials were not missing, too.
This I need to divide into three sections, one about the event itself, one about strategy and one about the new products. Let me start with the analyst day itself.
The Analyst Day
Of course it was a fully virtual event, thanks to Covid-19. The “day” was split into two sessions of four hours each across two days. Each day was closed with a social gathering after the content sessions, where we could talk shop or just banter, having a drink. This was akin t the lobby talk that one has during breaks or after a day full of information.
All sessions were live. There haven’t been any canned statements. Questions that were asked via the chat during the various presentations were either answered immediately or taken up by Alan Berkson and his team towards the end of the presentations, to allow for the need for clarification. Even some comments or the analyst discussions in the chat channel were sometimes taken up.
All this made the event very intense, so the four hour per day schedule was a good choice.
Corporate identity was catered for by Freshworks personnel using a Freshworks virtual background.
As to the content of the various sessions, there wasn’t too much depth. To accommodate for this, Freshworks offered the possibility for 1:1s after the event, something that in normal circumstances would have happened on site. Some possibilities to make the event even better would be to distribute some more detailed information beforehand for our preparation, using Zooms breakout sessions for 1:1s or smaller group discussions with the execs, and possibly adding more room for discussion, but then a lot of this already happened in the chat.
Having said all that: Kudos to the Freshworks team for pulling off an engaging distributed event like this. There are certainly some things to learn for other companies.
The Freshworks strategy revolves around three main topics:
- Customer for life
- Customer and employee experience
- Enterprise scale
Starting with the last one, as it shows the ambition, for which the other two are main vehicles.
Freshworks wants to extend its reach beyond the SMB market and become enterprise ready, also to support growing and large organizations; albeit the company’s sweet spot still is in the midsize company market. This mandates keeping existing customers, making them customers for life — and advocates who help acquiring new customers, because they can get customers for life. Providing a superior employee experience helps further keeping existing and gaining new customers.
To support this ambition, Freshworks has diligently hired executives from renowned companies, like Jose Morales from Atlassian (Chief Revenue Officer), Prakash Ramamurthy from Oracle (Chief Product Officer), Tyler Sloat from Zuora (CFO) or Pradeep Rathinam from AnswerIQ, a Q1/2020 acquisition (Chief Customer Officer). Pradeep also worked for twelve years at Microsoft earlier in his career.
All in all this is a predictable move that extends the trajectory of broadening the offering via own innovation and acquisitions. It is also a necessary move which major competitors have already made or are currently making.
The opportunity with this move is becoming more attractive for companies that are looking for a comprehensive and integrated suite of solutions to run their business. The challenge is that, with the existing suite of solutions, Freshworks is set up similar to a smaller Salesforce, concentrating on customer facing processes from customer acquisition via closing a transaction through supporting and retaining a customer. This will require a careful messaging, strong products and seamless integration not only within the own product suite and partner products but also into other ecosystems.
As I have tweeted already during the event, Freshworks has now officially joined the club of platform players by offering a technology platform, insight, (some) productivity tools and, most important of all, an ecosystem. For a start, only the new Freshworks CRM is built on top of this platform, with more products to come.
The Building Blocks of enabling Customer Experience
The weakest part here is the productivity portion, where Freshworks mostly relies on partner capabilities. This is not necessarily a problem, as it is where an ecosystem is helpful, if approached strategically.
Figure 1: Freshworks Neo platform; source Freshworks
The Neo platform itself shall offer the services that are needed to efficiently and easily manage, extend, and use Freshworks applications. Part of it is providing cross application services. Other parts include development support from high code to low code. On top of it, it provides access to marketplace apps for their easy integration.
Neos most prominent function is its holding the Unified Customer Record that captures and shares customer data across touch points. Along with the Neo analytics engine and the AI system this has the potential to become a powerful CDP. Still, it might be beneficial to put some emphasis on customer consents. While the statement “engage with full context” might be read as including incoming consents, and being aware that Freshworks does not offer a CIAM nor an e-commerce, it is far more powerful to be able to argue with GDPR, CCPA or the upcoming California proposition 24 or to at least include this into the messaging.
Another topic that is important for becoming enterprise ready are the extensibility of standard objects via Neo in a way that all deployed apps and services can readily use the changes and the availability of ready-made process-oriented interfaces into ERP solutions.
Freshworks CRM, for time being, supports marketing and sales functions only, while the service solution Freshdesk stays out of scope. This is a new notion of the term CRM. CRM for me and many others includes marketing, sales, and service functions. Too often CRM is also incorrectly used as a synonym for SFA. Since with Freshdesk, Freshworks owns a customer service solution that is not yet fully integrated, but will be so in the near future, it would be important to include customer service into the messaging right away instead of creating another interpretation.
The solution is built around the notions of “UI/UX first”, a “native 360 degree view” on the customer and an “AI that works”.
The idea is to get simplicity, yet have a powerful application that makes the users’ lives easier, while being able to gather good and sufficient data to train the embedded AI/ML system. So UI/UX first in order to enable a good AI, which is the third objective. This message is more grounded than the upcoming word of “AI first” and acknowledges that machine learning provides better results when based on better training data. Still, it leads into the same direction.
To be sure, not everything is in place, yet, but there is a credible roadmap to get there.
Another little detail lies in the messaging again: While Neo holds the Unified Customer Record, CRM sports a CDP, similarly the AI/ML system as well as the analytics engine.
Figure 2: Freshworks CRM Capabilities; source Freshworks
I get it that these topics need to be mentioned in the context of a CRM solution, still I’d like to understand the underlying architecture somewhat better, as the diagram above might be misleading. Maybe it is just a matter of formulating this diagram with customer benefit in mind.
All in All
It is good to see that Freshworks integrates its offerings and starts to put it on one stack and into a coherent offering, albeit not too early. It surely is too early to say how well things work together and how deep the offered functionality is, but Freshworks is on the right way here. The presented roadmap makes good sense and will surely be adjusted based upon emerging needs and changing customer priorities.
Applications are getting more and more commoditized and are becoming part of an integrated whole. This mandates putting them on top of a platform.
With Freshworks having taken this step, there is one more player who acts on this realization.
The Clash of Titans just got more interesting.