Salesforce's $20 billion challenge: to go deep, deep, deep

Next chapter is a balance of neutrality and integration

Salesforce last month announced another quarter of growth, up 23 per cent, year on year. Only this time, there was also profit — the first in 18 quarters.

Thirty per cent of “top” deals for the quarter were new customers – Bank of America, John Deere, Western Union and Zurich Insurance, the toast of Wall St. Not just that, but Salesforce is the kind of IT supplier customers love.

Talk to customers — and partners, actually — and they display a strong emotional reaction towards Salesforce. The company’s CEO Marc Benioff is now boasting about having become the fastest “software” company to $6bn in revenue, and is set on becoming fastest to $10bn.

Salesforce has been making hay: a fresh breath in a stayed market. It's taken advantage of the flatfootness of the competition: Oracle, SAP and Microsoft have been permanently on the back foot against cloud CRM.

Yes, so what better time for a second, valedictory “world tour.” Salesforce last month descended on London on the British leg of that tour, the day after announcing first-quarter results.

On the GB leg, British heavyweight names paraded in a theater in the round at Dockland’s Excel: John Lewis, Barclays Bank, Vodafone, British Airways.

And yet, change is in the air. Salesforce has in fact become an acquisition target: Microsoft expressed an interest, according to reports, but the move scuppered by Benioff (on price).

It is within Salesforce’s power to continue growing by singing up new customers, net new and expanding within the customer base – selling what it has.

Salesforce now has six clouds to peddle: wave, sales, service, marketing, community and mobile applications. However, if it’s not bought, Salesforce’s challenge in next phase will come not in simply adding more corporate and public sector scalps to its belt – but going deep.

That means more than simply signing more departments with existing customers, it means more integration in core systems and more niche verticals.

And that’s not just challenge of technology; it presents a philosophical dilemma for a firm that’s started life as CRM-as-a-service. If tackled incorrectly, then that could see Salesforce turn into the kind of enterprise software firm it’s cast itself against: complex and difficult to implement, and treading on the toes of partners.

For the bravado of fastest-to-$6bn talk, Salesforce remains small compared with SAP and Oracle. Salesforce has 150,000 customers – but it doesn’t own entire companies.

Take Barclays: it’s not the whole of Barclays that’s using Salesforce – just mortgagees. John Lewis’s Salesforce has to talk to Oracle ERP.

President and vice chairman Keith Block hosted the London leg of world tour and prowled the Excel audience exhorting customers to buy more Salesforce.

Block, ex Oracle head of North America, wants Salesforce revenue of $20bn. Hailing from SAP, he’s imported his former employer’s taste for using SAP as target practice – his goal being to supplant SAP as world’s largest maker of business software.

Next page: Going vertical

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