While every Salesforce earnings call is a superlative-loaded celebration of unbridled enthusiasm and buoyant celebration for cofounder and co-CEO Marc Benioff, the one last week announcing the company’s first $4-billion quarter approached messianic rapture.
“We’re at the beginning of an enormous wave of digital transformation… And Salesforce is at the center of this massive shift because every digital transformation of every single one of these companies that we’re talking to begins and ends with the customer,” Benioff exhorted in his opening remarks on the Aug. 22 earnings call.
Indeed, with IDC estimating that global spending on digital transformation will reach $1.18 trillion this year, there’s a lot for Benioff to be excited about. And true to form, Benioff held nothing back as he interlaced that global phenomenon with Salesforce’s New Strategy: All-In on ‘Customer 360,’ Powered by MuleSoft.
Spotlight on Customer 360 During Earnings Call
“We have been very strategic in building out our Customer 360 platform, and this is our vision that’s truly at the very heart of what’s happening in the Fourth Industrial Revolution,” said Benioff as he set the stage for the call.
“Everybody knows the Fourth Industrial Revolution is underway and everyone and everything is getting connected.”
And exactly how, in the gospel according to Benioff, will those digital businesses engage with those connected customers? You guessed it: Salesforce’s Customer 360.
“For our customers, this is their aspirational goal: they’re all trying to create a Customer 360,” Benioff said.
“They want Customer 360 to be able to see what’s happening with their customers in this time of incredible change. And they want to understand their customers and connect with them like never before.”
Customer 360 as an Answer to Competition from SAP
So what’s the SAP angle that I noted in the headline?
Simply put, I believe that SAP’s plan to challenge Salesforce for leadership in CRM—a plan first made public 18 months ago by CEO Bill McDermott at a financial-analysts’ meeting—either triggered Benioff to develop his Customer 360 vision or greatly accelerated the kernel of that nascent idea.
In my analysis of that challenge from SAP delivered in February of 2018 (story link above), I wrote the following:
Betting it can expand and elevate the CRM market as digital business is reshaping the global economy, SAP is taking direct aim at SaaS powerhouse Salesforce.com and its market leadership in CRM with SAP CEO Bill McDermott promising to deliver “next-generation business modeling for the perfect customer experience.”
While that plan from SAP was initially built around the realignment of some of its home-grown applications plus some recent acquisitions, the big differentiator at that time was SAP’s promise to infuse customer-facing CRM apps with data and insights from SAP’s market-leading ERP apps.
That additional context from the operational side, McDermott argued, would give SAP a significant advantage over Salesforce because Benioff’s company has no presence in the ERP field.
After McDermott’s early challenge—“We want CRM!”—things immediately began to intensify.
SAP and Salesforce Pursue Leadership Position Thru Acquisitions
In March 2018, Salesforce bought MuleSoft, an API powerhouse that would give Benioff the much-needed ability to interconnect his market-leading CRM apps with data from non-CRM apps from other vendors.
And then late last year, SAP redefined the traditional CRM market by acquiring customer-experience specialist Qualtrics for $8 billion. My first analysis of that deal—a bit breathless, I must admit—was I Have Seen the Future of Enterprise Software, and It Is SAP Qualtrics. But everything’s that happened since seems to be justifying that claim.
Because with that acquisition, SAP flipped the orientation of CRM from helping businesses manage their relationships with their customers to giving businesses insights into the behaviors and experiences of those customers, so that those businesses could then adapt and innovate around what customers want and need.
Benioff clearly acknowledged the new reality 3 months ago in Salesforce’s fiscal first-quarter earnings call when he said the following:
“We’ve pivoted our entire company into something that we call Customer 360,” he said in reply to that first question.
“It’s a pretty hard pivot for a company. And we’re so excited about this opportunity because of the tremendous momentum we’ve seen over the last year with MuleSoft [an API specialist that helps businesses integrate data and applications]. Because our customers want us to help them take everything they’re doing in regards to their customers—data from their sales systems, service, marketing, customer journeys, commerce, customer-engagement systems, apps they’re building, APIs for developers, all the analytics, the custom applications by industry, the communities, the learning and the reskilling and the employee experience as well—and bring it all together for them,” said Benioff in citing a laundry list of silos whose fragmented reality has prevented businesses from getting that 360-degree view.
SAP and Salesforce Play in the “Experience Economy”
That wholesale pivot also brings Salesforce dead-center into the “experience economy” that SAP has been championing since its acquisition of Qualtrics. In fact, Benioff used that big pivot to announce that Salesforce would, for the first time, begin weaving employee experience into its applications.
I explored the implications for that in early June in a piece called Attention Workday, SAP and Oracle: Is Salesforce Jumping into HCM?.
But it was in last week’s earnings call that Benioff embraced this big new “customer experience” thing wholeheartedly and unabashedly.
Noting that IDC is predicting that global spending on customer-experience outcomes will reach $640 billion by 2022, Benioff said businesses today are eager to gain 360-degree views of their customers so they can “personalize every customer experience.”
Said Benioff: “They need to personalize every customer experience, they need to predict customer behavior, anticipate customer needs, build modern mobile apps quickly, and deliver the right services at the right time on any device. Well, that’s our Customer 360: our vision for how to bring companies and their customers together.”
The Competition in its Larger Context
I have two thoughts to share on that. First of all, it makes perfect sense in every respect. It matches up perfectly with what’s going on in today’s high-speed global economy that’s driven by people whose lifestyles are increasingly digital or at are at least digitally enhanced.
Second, it sounds a lot like what SAP’s been saying since its blockbuster acquisition of Qualtrics 10 months ago. To give you a look into what SAP’s doing, and how those innovative moves have without question helped to shape Salesforce’s bold new direction, please check out the following pieces from the past four months:
Business customers would stand to benefit greatly from what SAP is doing and from what Salesforce is doing even if that were happening in two separate and isolated vacuums.
But the breadth and depth of that rising value will truly soar as Salesforce and SAP compete ferociously in the marketplace for the hearts, minds and wallets of business customers, who are the ultimate winners in the Cloud Wars. And deservedly so.
Disclosure: at the time of this writing, SAP was a client of Cloud Wars Media LLC.
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