I have been watching the concept of Chatter for a while now. On the one hand, I could kick myself for not making more hype out of Sugar Feeds, the exact same functionality Sugar has had in its product for more than a year prior to availability of Chatter. My bad.

On the other hand, I think Chatter has been over-hyped in a dangerous way, one that will lead to failure for Chatter as a product line for Salesforce.com.

And since I’m feeling particularly snarky on this pre-Labor Day Friday, I thought I’d jot down a “top 5″ list of reasons why I think Chatter will prove yet another one of Salesforce.com’s interesting, but ultimately unprofitable ventures.

Here we go…

  1. Chatter is only an internal collaboration tool. There are many of these available, but more important is the fact that if Chatter is the lynch pin of Salesforce.com’s “social” strategy it is missing one very important thing – customer engagement. Unless Chatter “opens up” and becomes a true community/social engagement tools for users to collabroate and engage with real customers in real time, it is going nowhere in my opinion.
  2. Chatter is not enough to unite departments and override data and people silos. I get that millions of users are on salesforce – but they are all ONE department inside an organization. To really benefit from the tenets of Enterprise 2.0 – all departments need to be on the same page – and I simply do not feel Chatter is equipped at this stage to be a unifying app to make an externally hosted system THE main collaboration platform. Not yet at least.
  3. Chatter (and Salesforce.com) costs too much to have wide appeal. At $15 per non-CRM user, Chatter’s pricing will creep on a large organization. And smaller firms can simply collaborate in person or using IM or other tools – and resist adding even more fees to an overpriced CRM bill. I think Salesforce.com has some cool ideas around Jigsaw and adding data updates to the CRM and alerts to new data changes via Chatter – but at that rate we are looking at $45 per user, per month for someone using Chatter with Jigsaw alerts – and they get ZERO CRM capabilities to boot! If a user was using Salesforce’s Enterprise edition and Jigsaw they could be paying nearly $2000 per user per year!!!! Compare this with SugarCRM which gives you all this stuff for $30 per user. Yes, there really is the opportunity to cut your CRM and collaboration costs SEVEN TIMES with SugarCRM versus Salesforce.
  4. (Do I really need to keep going after pointing out how ridiculously expensive this stuff will be for a company? Ok, I’ll go on…) Salesforce.com’s outdated multi-tenant model will hold Chatter back. Look, Salesforce has a lot of cool ideas for Chatter and its web site shows some suggestions for use – document sharing, etc. But is there a Chatter developer kit? can there be one? Will salesforce.com let people really take Chatter and run with it to create collaboration engines that integrate between applications, departments, inside and outside multiple firewalls, leverage Oauth to activate engagements through multiple social networks? I don’t know, but I doubt it. Chatter seems like a great idea locked inside a limiting architecture – yearning to break free.
  5. Adoption will be underwhelming. CRM vendors sell into sales and marketing and support departments. These guys have a lot on their plates, and most have no “social agenda.” Salesforce.com in my opinion would be better off simply selling the value of its core solutions, which are solid well-built apps, instead of branching off into these new areas where it has no domain expertise. I toyed with #5 being “Salesforce has lost its focus” but I think that happened years ago. But seriously, as noted in #2, I think there are way too many barriers to success for a concept like Chatter as a paid-for tool. I am not saying Chatter doesn’t do what it says it does 9for the most part it does) but I think that Salesforce.com must leverage Chatter as a “cool add-on” or value-add rather than expecting this to be a profit center, because I think they are too far ahead of the pace considering their true target market.

…OK, those are just a few of my thoughts around Chatter. Ultimately, I think Chatter is cool, but underwhelming as a standalone product line. Being asked to pay extra for these kinds of features must feel like a slap in the face.

Maybe I’m wrong. I mean, the Jigsaw capabilities could be really hot for Salesforce. Or, maybe the majority of small businesses are still learning to walk with CRM and getting social…paying a ton of additional money with no clear ROI path to start running with social and CRM might not make sense for a lot of companies right now.