Salesforce woes continue as Twitter slashes spending with SaaS supermonster
Performance improvement plans and prompt exit packages in the offing
Salesforce's woes continue as the once-mighty standard bearer for SaaS faces customer Twitter cutting 75 percent of its spending.
The loss of revenue at such a high-profile customer comes as the CRM giant struggles to implement new engineer productivity metrics, seemingly in the face of demands from a band of activist investors seeking to influence corporate strategy.
The Information has reported that the troubled social media platform – bought by car and rocket maker Elon Musk, who promptly laid off around half of its workforce – last month cut its contract with Salesforce from $20 million to around $5 million, in line with the headcount haircut.
Other firms are struggling to "right-size" their tech stacks in line with the economic environment, said Ryan Neu, CEO and co-founder of Vendr, a company that helps businesses manage SaaS spending.
"Hands are often tied with the headache of contracts and multi-year deals, causing businesses to make suboptimal decisions – like letting go of labor or making cuts on other components of the company because their tech stack is inflexible. We're encouraging suppliers to expand and contract with the needs of enterprises for this reason," he told The Register.
But these are not the only challenges facing Salesforce. Business Insider has claimed workers are bracing themselves for another round of layoffs, which could hit 10 percent of the company.
Third Point Capital became the fifth activist investor to declare its interest in Salesforce last week, following Mason Morfit's ValueAct, Jeff Ubben's Inclusive Capital, Dan Loeb's Third Point LLC and Elliott Management, which broke cover in January.
Activist investors often push for higher margins and Salesforce seems to be responding with a push for improving productivity, placing developers and engineers in its crosshairs.
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Salesforce is shaping up to roll out new performance metrics for engineers while some salespeople have been offered the choice between a 30-day performance improvement plan (PIP) or a severance option called a "Prompt Exit Package," Business Insider said.
"The company is pushing hard for productivity tracking and metrics on all facets," one employee told the publication.
It was also claimed that Salesforce plans to measure software engineer productivity with so-called "code check-ins." However, many argue lines of code produced per day may not a be a good measure.
A Salesforce spokesperson said: "Our performance management process drives accountability and rewards excellence."
The company declined the opportunity to comment on Twitter's cuts to its Salesforce contracts.
Marc Benioff, Salesforce's ebullient CEO and co-founder, has become a media emblem of the struggles in the tech sector and took a lot of flak this week for apparently decamping to one of his "favorite places, French Polynesia, for a 10-day digital detox" after a "rough month" of layoff announcements.
Joshua Greenbaum, a software industry analyst with Enterprise Applications Consulting, told the New York Times Benioff had become a target for criticism "by positioning himself as much more than a rampant capitalist tech bro."
Commenting on the SaaS company's alleged minimal tax bill, Greenbaum said: "But if you don't want your company to pay taxes, what right do you have to lecture people on how to make the world better?"
Whether Benioff will be able to finance his many charitable and environmental concerns, as well as maintain Salesforce's famous "Ohana" family values, might depend on how he performs in business over the next six months. ®