If it’s true that your enemies are a good reflection of who you are, then it’s clear that Salesforce is a customer-company dynamo. Three of the world’s most-powerful companies have high hopes of carving into the huge market shares and growth rates that Salesforce has earned over the past decade as the undisputed king of CRM.
While Salesforce over that time has rung up incredibly consistent growth rates of about 25% quarter after quarter and year after year, the company has stayed within the broadly defined and traditional “customer-relationship management” category even as it’s expanded within that sector to have market-leading clouds for sales, marketing, service, commerce and more.
And the three software-industry powerhouses looking to cut into Salesforce’s hard-earned dominance have no intention of doing that via playing by Salesforce’s rules and on Salesforce’s turf.
The Strategy for Overcoming Salesforce in CRM
Rather, SAP on its own and the combination of Microsoft and Adobe look to turn the traditional CRM marketplace upside-down. The plan is to redefine the entire category and reset the norms for what business customers should expect from customer-facing apps, and reframe the landscape by inserting the world’s largest business network, LinkedIn, into the fray.
As they do so, the three big challengers hope to turn the tables on Salesforce by positioning it as the behind-the-times “legacy” vendor while positioning themselves as the modern innovators driving fresh approaches, fresh thinking, and fresh solutions to a 20-year-old model.
After all, that’s an approach that Salesforce founder and co-CEO Marc Benioff used unflinchingly for many years. He pooh-poohed SAP, Oracle and Microsoft as the “legacy” workhorses fit for plowing in the back office but hardly suited for engaging with customers.
Here’s how the two assaults on Salesforce’s leadership position are likely to play out.
SAP Into CRM: Shifting from “Customer-Relationship Management” to “Customer Experience”
We’ve covered SAP’s reinvigorated strategy and approach extensively here at Cloud Wars. Check out I Have Seen the Future of Enterprise Software, And It Is SAP Qualtrics and SAP Puts Bullseye on Salesforce, Launches Plan To Be #1 in CRM. Here are the key points:
- SAP has assembled several customer-facing apps into a fully integrated suite called C4HANA. C4HANA is growing at triple-digit rates under the direction of Alex Atzberger, who has formally shifted the category away from CRM and over to the broader and more customer-oriented CX for customer experience.
- C4HANA is able to tap into companies’ ERP and operational data to interconnect supply chain and demand chain, an unfulfilled goal of the enterprise-software industry for many years. SAP has this capability in its wheelhouse, because it is the inventor of the ERP category and has an incredible installed base of ERP customers across the globe and in every industry. Salesforce has no such presence in ERP.
- Several months ago, SAP rocked the software world by snatching up Qualtrics for $8 billion on the eve of its IPO, giving SAP an entirely new and potentially game-changing presence in the booming category of customer-experience management (for more on that: SAP CEO Bill McDermott: Qualtrics Is “Biggest Growth Opportunity I’ve Ever Seen”). And with a chance to drive close to $1 billion in revenue for SAP in calendar 2019 in a space where Salesforce, at least currently, has no presence, McDermott is clearly looking to revolutionize the space that Salesforce has ruled over for many years (please see SAP’s Stunning Transformation: Qualtrics Already “Crown Jewel of Company”).
Microsoft and Adobe Into CRM: Leveraging the Power of LinkedIn
As reported by Reuters, Microsoft and Adobe used the occasion of the big Adobe Summit in San Francisco this week to announce their plans:
“Adobe and Microsoft hope to make it easier for users of Adobe’s marketing software to find and target teams of potential customers for business goods on LinkedIn, the social network owned by Microsoft,” the Reuters article said.
Reuters also offered this perspective on the significance of the deal from one of Adobe’s top executives:
“The LinkedIn network is one of those clear holy grails” for business marketers, Steve Lucas, senior vice president of digital experience at Adobe and former chief executive officer of Marketo, a business-to-business marketing software firm that Adobe acquired last year for $4.75 billion, told Reuters. “It has just become such a huge lever for B-to-B marketers that it would be impossible for us to ignore it.”
This is an approach Microsoft first explored more than a year ago, which I analyzed in a piece called How Microsoft Is Using LinkedIn To Take On Microsoft and Transform the Science of Sales.
Now, with the addition of Adobe and its customer-experience applications and installed base, the Microsoft plus Adobe plus LinkedIn (owned by Microsoft) trifecta should be able to provide Salesforce with some pretty stiff competition.
The Bottom Line
And as we always point out here on Cloud Wars, the ferocious competition in the enterprise-software business—which is about to get even more ferocious—is fantastic for business customers. It forces the competing vendors to create relentlessly superior products, services and experiences for companies racing to keep up with the escalating demands of their own customers.
Disclosure: at the time of this writing, SAP and Microsoft are clients of Evans Strategic Communications.
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