With or Without Slack, Salesforce Will Remain #1 in Cloud Applications

With or Without Slack, Salesforce Will Remain #1 in Cloud Applications

CLOUD WARS RANKING

#3

CEO

Marc Benioff

QUARTERLY CLOUD REVENUE
AS OF NOV. 30, 2020

$5.42 billion

You could make the case that the single individual who has done more to promote the viability, credibility and power of the cloud is Marc Benioff. A relentless and charismatic evangelist for not only the cloud and AI and the customer economy but also his social beliefs such as stakeholder capitalism, Benioff has established himself as one of world’s most-visible and most-respected business leaders.

One of the ways that recognition manifests itself to the very great benefit of Salesforce is that, according to Benioff, CEOs often want to speak with him about Salesforce’s culture: how he built it, how he advances it, and how they might be able to infuse some of that magic into their own companies.

Now, I’ve never been an enterprise-software salesperson, but I would bet serious parts of my anatomy that if the prospect’s CEO has requested my CEO to come in and tutor her/him on the power of culture, then the software sale is in the bag.

If that seems like some rarified atmosphere to be operating in, consider this chart showing the unprecedented growth Salesforce has achieved over its 20-year history relative to all publicly traded companies in history:

One year ago, I included that slide in a detailed analysis called How Salesforce Plans to Defeat Oracle and SAP While Scaling to $35 Billion.

And it is exactly that combination of a past history of unprecedented growth plus a strikingly ambitious plan for future achievement that has, for two years, kept Salesforce near the very top of the Cloud Wars Top 10, topped only by trillion-dollar titans Microsoft and Amazon.

Let’s explore whether Benioff and Salesforce, in the face of rapidly intensifying competition, can hold that spot.

Salesforce’s Opportunities

Salesforce

In Salesforce’s late-summer earnings call, Benioff at one point emphasized the significance of his company’s laser-like focus on the CRM market and nothing else. By contrast, Benioff said, other enterprise-software companies were stretching themselves thin across multiple categories, while Salesforce, in spite of its surging growth, was remaining wholly committed to the CRM space.

So while other big applications vendors have sought growth through market expansion and multi-market breadth, Salesforce has achieved higher cloud revenue and comparable if not higher growth rates by staying narrowly focused.

And that, paradoxically, is Salesforce’s big opportunity: applying every bit of its massive capabilities to being the customer company, the digital-transformation company, the Customer 360 company.

The CRM company.

While that approach might seem to defy the laws of physics—and, in some ways, to defy the desire of customers to reduce the number of strategic tech vendors they buy from—Salesforce’s ongoing success clearly disproves that conventional wisdom. How can that be?

First of all, the CRM category is the largest of enterprise-software segments, which also include ERP and HCM—so Benioff and Salesforce are fishing in the biggest lake.

Second—and I believe this is even more important than that first point—Benioff has continually pushed out and extended the boundaries of what CRM is to take in more territory and more opportunity for his “customer-facing” applications.

Already, that includes the well-known functions such as sales, service, marketing, e-commerce, CPQ and the like.

But what happens when customers begin to go beyond e-commerce and begin co-creating products and services with sellers? Won’t those become digitalized into customer-facing apps as well?

What happens when B2B companies begin expanding aggressively into direct-to-consumer strategies and operations? How do those new relationships become digitalized as businesses that used to sell through intermediaries want to have and demand to have direct relationships with customers?

What happens as employee experiences take on greater significance and require greater flexibility and fluidity than ever before as we’re witnessing in our COVID-driven world? Salesforce got into the employee experience business last year, and plunged more deeply into it this year with the release of its Work.com suite to help businesses redeploy post-COVID.

What happens as the old-world notions of “front office” and “back office” fade away as the escalating demands and needs of customers force business to knock down those vestigial silos? As that happens, and to extend the “office” analogy, I think front office and back office will merge into a single entity: the Customer Office. If that comes to pass, won’t that put huge new opportunities in front of Salesforce?

I’m not saying ERP and HCM go away—that’s just silly. But I am saying that the traditional software-category concepts of CRM, ERP, and HCM are becoming increasingly antiquated in a digital-business world in which those one sharply defined and distinct operational areas are giving way to whole new models of engagements with customers and employees.

And for Salesforce, that turns a very big opportunity into a staggeringly huge one.

Salesforce’s Challenges

Amazon

Salesforce has two primary challenges, and while the two are about as different as could be, they present equally serious scenarios that have the potential to derail Salesforce’s massive momentum:

 

  • The threat from without: the ability of SAP and Oracle to give businesses access to ERP data and HCM data, as well as CRM data, will tilt more business toward them and away from Salesforce.
  • The threat from within: what if Marc Benioff decides to run for governor, or the Senate, or for president?

 

Let’s take the second one first. I admit it’s a bit crazy—but, at the same time, Benioff has injected himself and his views purposefully and aggressively into national discussions about social and political issues in ways no other major CEO has done. He’s been the unabashed leader of the call for a new type of capitalism called “stakeholder capitalism”, and on that and all other major causes he has embraced, Benioff has pulled no punches: he says what he means and means what he says.

For many CEOs, every public utterance is a carefully calibrated Kabuki exercise in which they expect to be taken deadly seriously yet speak in vapor-laden generalities and steer rigorously clear of anything that might carry even a whiff of controversy.

Not Benioff. He proudly and passionately says exactly what he wants to say and puts himself and his reputation—and that of his company—on the line in uncompromising ways. Whether one agrees with Benioff’s positions or not, we are never in any doubt whatsoever about what they are. That is not a trait common among CEOs. In April, I tried to capture the many facets of this CEO-statesman with a piece called Marc Benioff: the Extraordinary Ascendancy of a Global Leader.

50 million pieces of PPE

So clearly Benioff has the stomach and the penchant for politics. He’s also been in charge of Salesforce for more than two decades, turning the software industry upside-down and writing books and celebrating causes and even, earlier this year, becoming a PPE-procurement expert when he secured 50 million pieces of protective gear for a San Francisco medical center.

How many founder-CEOs have been able to keep the fire alive for that long?

How many burn as hot as Benioff does, and have delivered the extraordinary financial and reputational results for their companies as Benioff has?

The answer is very, very few.

In 2040, Marc Benioff will be 76 years old, which is old as Larry Ellison is today. And Larry Ellison is into his fifth decade of running Oracle—so indeed, anything’s possible. In either direction.

The threat from without

Oracle and SAP both have extremely deep and essential relationships with the world’s largest corporations. They have helped those companies and tens of thousands of others manage operations, manage data, and automate processes. They both are hoping that as the world has now pivoted to and is rushing to the cloud, they can not only maintain those ERP and database-centered relationships but extend them with new cloud applications in the area of Customer Experience or CX.

Both are positioning CX as the modern version of CRM, and are attempting to do to Salesforce what Salesforce did to them for 20 years: position the competitor as outdated, beyond its prime, and incapable of handling the challenging business requirements of the future.

Can ERP+CX topple Salesforce?

In addition, both SAP and Oracle are saying the in the new world of end-to-end digital business, companies must be able to view, interpret, analyze and act on not only CRM data or only ERP data, but both—simultaneously and in real time.

And SAP and Oracle will do everything in their considerable power to position themselves as indispensable in this new era because they can offer both ERP and CX, while Salesforce is blinkered in the past with CRM and nothing but.

Benioff has very successfully fended off both SAP and Oracle when they attempted to take him on with incomplete or inadequate or out-of-date CRM solutions. Will he be able to do so when they come at him with modern solutions carefully integrated together and fully paired with modern ERP solutions as well?

Salesforce

Salesforce’s Opportunities

In Salesforce’s late-summer earnings call, Benioff at one point emphasized the significance of his company’s laser-like focus on the CRM market and nothing else. By contrast, Benioff said, other enterprise-software companies were stretching themselves thin across multiple categories, while Salesforce, in spite of its surging growth, was remaining wholly committed to the CRM space.

So while other big applications vendors have sought growth through market expansion and multi-market breadth, Salesforce has achieved higher cloud revenue and comparable if not higher growth rates by staying narrowly focused.

And that, paradoxically, is Salesforce’s big opportunity: applying every bit of its massive capabilities to being the customer company, the digital-transformation company, the Customer 360 company.

The CRM company.

While that approach might seem to defy the laws of physics—and, in some ways, to defy the desire of customers to reduce the number of strategic tech vendors they buy from—Salesforce’s ongoing success clearly disproves that conventional wisdom. How can that be?

First of all, the CRM category is the largest of enterprise-software segments, which also include ERP and HCM—so Benioff and Salesforce are fishing in the biggest lake.

Second—and I believe this is even more important than that first point—Benioff has continually pushed out and extended the boundaries of what CRM is to take in more territory and more opportunity for his “customer-facing” applications.

Already, that includes the well-known functions such as sales, service, marketing, e-commerce, CPQ and the like.

But what happens when customers begin to go beyond e-commerce and begin co-creating products and services with sellers? Won’t those become digitalized into customer-facing apps as well?

What happens when B2B companies begin expanding aggressively into direct-to-consumer strategies and operations? How do those new relationships become digitalized as businesses that used to sell through intermediaries want to have and demand to have direct relationships with customers?

What happens as employee experiences take on greater significance and require greater flexibility and fluidity than ever before as we’re witnessing in our COVID-driven world? Salesforce got into the employee experience business last year, and plunged more deeply into it this year with the release of its Work.com suite to help businesses redeploy post-COVID.

What happens as the old-world notions of “front office” and “back office” fade away as the escalating demands and needs of customers force business to knock down those vestigial silos? As that happens, and to extend the “office” analogy, I think front office and back office will merge into a single entity: the Customer Office. If that comes to pass, won’t that put huge new opportunities in front of Salesforce?

I’m not saying ERP and HCM go away—that’s just silly. But I am saying that the traditional software-category concepts of CRM, ERP, and HCM are becoming increasingly antiquated in a digital-business world in which those one sharply defined and distinct operational areas are giving way to whole new models of engagements with customers and employees.

And for Salesforce, that turns a very big opportunity into a staggeringly huge one.

Salesforce’s Challenges

Salesforce has two primary challenges, and while the two are about as different as could be, they present equally serious scenarios that have the potential to derail Salesforce’s massive momentum:

 

  • The threat from without: the ability of SAP and Oracle to give businesses access to ERP data and HCM data, as well as CRM data, will tilt more business toward them and away from Salesforce.
  • The threat from within: what if Marc Benioff decides to run for governor, or the Senate, or for president?

 

Let’s take the second one first. I admit it’s a bit crazy—but, at the same time, Benioff has injected himself and his views purposefully and aggressively into national discussions about social and political issues in ways no other major CEO has done. He’s been the unabashed leader of the call for a new type of capitalism called “stakeholder capitalism”, and on that and all other major causes he has embraced, Benioff has pulled no punches: he says what he means and means what he says.

Amazon

For many CEOs, every public utterance is a carefully calibrated Kabuki exercise in which they expect to be taken deadly seriously yet speak in vapor-laden generalities and steer rigorously clear of anything that might carry even a whiff of controversy.

Not Benioff. He proudly and passionately says exactly what he wants to say and puts himself and his reputation—and that of his company—on the line in uncompromising ways. Whether one agrees with Benioff’s positions or not, we are never in any doubt whatsoever about what they are. That is not a trait common among CEOs. In April, I tried to capture the many facets of this CEO-statesman with a piece called Marc Benioff: the Extraordinary Ascendancy of a Global Leader.

50 million pieces of PPE

So clearly Benioff has the stomach and the penchant for politics. He’s also been in charge of Salesforce for more than two decades, turning the software industry upside-down and writing books and celebrating causes and even, earlier this year, becoming a PPE-procurement expert when he secured 50 million pieces of protective gear for a San Francisco medical center.

How many founder-CEOs have been able to keep the fire alive for that long?

How many burn as hot as Benioff does, and have delivered the extraordinary financial and reputational results for their companies as Benioff has?

The answer is very, very few.

In 2040, Marc Benioff will be 76 years old, which is old as Larry Ellison is today. And Larry Ellison is into his fifth decade of running Oracle—so indeed, anything’s possible. In either direction.

The threat from without

Oracle and SAP both have extremely deep and essential relationships with the world’s largest corporations. They have helped those companies and tens of thousands of others manage operations, manage data, and automate processes. They both are hoping that as the world has now pivoted to and is rushing to the cloud, they can not only maintain those ERP and database-centered relationships but extend them with new cloud applications in the area of Customer Experience or CX.

Both are positioning CX as the modern version of CRM, and are attempting to do to Salesforce what Salesforce did to them for 20 years: position the competitor as outdated, beyond its prime, and incapable of handling the challenging business requirements of the future.

Can ERP+CX topple Salesforce?

In addition, both SAP and Oracle are saying the in the new world of end-to-end digital business, companies must be able to view, interpret, analyze and act on not only CRM data or only ERP data, but both—simultaneously and in real time.

And SAP and Oracle will do everything in their considerable power to position themselves as indispensable in this new era because they can offer both ERP and CX, while Salesforce is blinkered in the past with CRM and nothing but.

Benioff has very successfully fended off both SAP and Oracle when they attempted to take him on with incomplete or inadequate or out-of-date CRM solutions. Will he be able to do so when they come at him with modern solutions carefully integrated together and fully paired with modern ERP solutions as well?

Unique Differentiation

There might be no better way to showcase just how different Salesforce is than by sharing this image from a Cloud Wars article in August called Salesforce Beats SAP, Oracle, Microsoft, Adobe—Combined!—in 2019 CRM Share:

Behind that massive lead in market share, here are 7 distinct reasons that flesh out that differentiation.

 

  1. Marc Benioff. The guy’s completely unique—and either Salesforce was purpose-built for him, or he purpose-built Salesforce for his specific set of talents. And who else might say this to customers and potential customers: Salesforce’s Marc Benioff Dishes Tough Love to Passive CEOs: ‘Get Out of Paralysis!’
  2. Sure, the guy’s subjective, but Best Software Acquisition of All Time Was Salesforce Buying Tableau: Marc Benioff
  3. Customer 360. It’s not perfect but it’s a rallying cry for the company and for customers—and it’s an agenda-setter that competitors must try to match.
  4. The magic behind Customer 360, and the integration tool that will be Salesforce’s biggest defense against the coming ERP+CX battles with SAP and Oracle.
  5. SaaS no longer rules. Don’t forget: Salesforce Shocker: Its #1 Revenue Business Is “Platform and Other”
  6. Yes, it was virtualized here in the never-never land of 2020, but Benioff turned it into a global phenomenon that made customers proud to be part of the Salesforce community. That’s just not the case with most of the events put on by others in the Cloud Wars Top 10.
  7. “Skill up for the future” says it all.

Unique Differentiation

There might be no better way to showcase just how different Salesforce is than by sharing this image from a Cloud Wars article in August called Salesforce Beats SAP, Oracle, Microsoft, Adobe—Combined!—in 2019 CRM Share.

Behind that massive lead in market share, here are 7 distinct reasons that flesh out that differentiation.

  1. Marc Benioff. The guy’s completely unique—and either Salesforce was purpose-built for him, or he purpose-built Salesforce for his specific set of talents. And who else might say this to customers and potential customers: Salesforce’s Marc Benioff Dishes Tough Love to Passive CEOs: ‘Get Out of Paralysis!’
  2. Sure, the guy’s subjective, but Best Software Acquisition of All Time Was Salesforce Buying Tableau: Marc Benioff
  3. Customer 360. It’s not perfect but it’s a rallying cry for the company and for customers—and it’s an agenda-setter that competitors must try to match.
  4. The magic behind Customer 360, and the integration tool that will be Salesforce’s biggest defense against the coming ERP+CX battles with SAP and Oracle.
  5. SaaS no longer rules. Don’t forget: Salesforce Shocker: Its #1 Revenue Business Is “Platform and Other”
  6. Yes, it was virtualized here in the never-never land of 2020, but Benioff turned it into a global phenomenon that made customers proud to be part of the Salesforce community. That’s just not the case with most of the events put on by others in the Cloud Wars Top 10.
  7. “Skill up for the future” says it all.

Leadership

While I’ve said plenty about the big guy already, this excerpt from The Magic of Marc Benioff: 10 Key Drivers Behind Salesforce Q2 Surge captures some of the operational brilliance and hands-on leadership for which Benioff does not, I believe, receive enough credit.

After the market cap of Salesforce experienced a single-day surge of $50 billion after it announced blowout financial results despite the global pandemic, the most obvious question is this: how in the world did they do that?

To offer some perspective, that $50 billion jump—generated in a single day—is bigger than the entire market cap of some corporate giants you probably know well: General Motors, eBay, DuPont, MetLife, Biogen, Kraft Heinz, Charles Schwab, and ConocoPhillips among many others.

How did Marc Benioff do that?

Here at Cloud Wars, we’ve been bullish on Salesforce ever since we launched the site, with Benioff’s company having held the #3 spot on the Cloud Wars Top 10 for the past 2 years. But this latest achievement—and while it was reflected in quarterly results, there is nothing short-term about it—dispels any doubts anyone might have about Salesforce being one of the world’s most-influential tech companies.

Bret Taylor
Bret Taylor

Again, how did Marc Benioff achieve this? 

And how did he do it in the midst of a pandemic?

In a massive gift to the business world, Benioff answered that question with great clarity and conviction during Salesforce’s Aug. 25 earnings call that he turned into a global forum on digital strategy, leadership, courage, and customer-centric vision.

And, from that article, here are the 10 headlines I created to capture the major themes I felt Benioff delivered with passion and eloquence:

 

  1. Are you going to change, or bury your head under the pillow?
  2. Don’t just reimagine your business—reimagine your relevance.
  3. “We’re not the same as we were before.”
  4. The incredible importance of speed.
  5. As the future arrives more rapidly, relentless relevance is essential.
  6. Business as a platform for change.
  7. Customer 360: MuleSoft has become the “anchor tenant.”
  8. Tableau’s data-analytics capabilities have transformed Salesforce.
  9. Is a relatively narrow product focus good or bad in the enterprise-software business?
  10. Beyond “business value” to “company values.”

Leadership

Bret Taylor
Bret Taylor

While I’ve said plenty about the big guy already, this excerpt from The Magic of Marc Benioff: 10 Key Drivers Behind Salesforce Q2 Surge captures some of the operational brilliance and hands-on leadership for which Benioff does not, I believe, receive enough credit.

After the market cap of Salesforce experienced a single-day surge of $50 billion after it announced blowout financial results despite the global pandemic, the most obvious question is this: how in the world did they do that?

To offer some perspective, that $50 billion jump—generated in a single day—is bigger than the entire market cap of some corporate giants you probably know well: General Motors, eBay, DuPont, MetLife, Biogen, Kraft Heinz, Charles Schwab, and ConocoPhillips among many others.

How did Marc Benioff do that?

Here at Cloud Wars, we’ve been bullish on Salesforce ever since we launched the site, with Benioff’s company having held the #3 spot on the Cloud Wars Top 10 for the past 2 years. But this latest achievement—and while it was reflected in quarterly results, there is nothing short-term about it—dispels any doubts anyone might have about Salesforce being one of the world’s most-influential tech companies.

Again, how did Marc Benioff achieve this? 

And how did he do it in the midst of a pandemic?

In a massive gift to the business world, Benioff answered that question with great clarity and conviction during Salesforce’s Aug. 25 earnings call that he turned into a global forum on digital strategy, leadership, courage, and customer-centric vision.

And, from that article, here are the 10 headlines I created to capture the major themes I felt Benioff delivered with passion and eloquence:

 

  1. Are you going to change, or bury your head under the pillow?
  2. Don’t just reimagine your business—reimagine your relevance.
  3. “We’re not the same as we were before.”
  4. The incredible importance of speed.
  5. As the future arrives more rapidly, relentless relevance is essential.
  6. Business as a platform for change.
  7. Customer 360: MuleSoft has become the “anchor tenant.”
  8. Tableau’s data-analytics capabilities have transformed Salesforce.
  9. Is a relatively narrow product focus good or bad in the enterprise-software business?
  10. Beyond “business value” to “company values.”

The Big Questions for Salesforce

  • How long will Marc Benioff choose to remain as CEO? I’ll admit that when Benioff made Keith Block co-CEO a couple of years ago, I thought that was the beginning of the end for Benioff’s full-time tenure at Salesforce. But that was a short-lived arrangement, and Benioff seems even more confident, capable, and determined than ever before.

  • Can Salesforce forge deep-foundation partnerships with a growing number of customers? Microsoft appears to have mastered the art of the megadeal that transcends transactions and fuses the IP and operational technology of the customer with the IP and digital technology of Microsoft. Can Salesforce make this one of its core capabilities to help ward off Oracle and SAP?

  • Will Salesforce form a partnership with high-flying ServiceNow? Both are in customer service but from very different perspectives. Can ServiceNow’s workflow expertise drive new value for Salesforce’s customers as the digital economy takes hold?

  • Can Benioff orchestrate the A-list of leaders he’s assembled? He tried the co-CEO thing and that didn’t work, so now Benioff’s got several presidents reporting to him, led (in my opinion) by Products leader Bret Taylor and CRO Gavin Patterson. That rarified air we’ve mentioned gets even thinner and more precious when you have a lot of A-types all looking to breathe deeply along with Benioff. Every company faces this, but it’s uniquely challenging at Salesforce in this upcoming pivotal year of 2021.

  • Can Benioff keep Salesforce laser-focused on CRM while also pushing its boundaries ever-outward? You could say that Work.com is the ultimate customer-facing product extension, but you could also ask, “Is Work.com part of a CRM suite?” And if it’s not, does that mean Benioff’s ready to expand into more new areas? Either way is okay—but Benioff’s got to be sure his large and fast-growing company and his large and fast-growing customer base know exactly what to expect and why.

About The Author

I’ve analyzed the enterprise-tech business for more than 25 years as an editorial executive and more recently as Chief Communications Officer at Oracle. I’ve written thousands of articles and columns about business innovation, strategy, leadership, disruptive technology, digital transformation, cloud computing, AI and more. In late 2016, I resigned from Oracle to launch the Cloud Wars franchise. It began with the Cloud Wars Top 10 ranking and weekly articles, and has since expanded into daily articles, a weekly newsletter, a podcast with more than 200 episodes, and now this one-of-a-kind Special Report.

About The Author

About The Author

I’ve analyzed the enterprise-tech business for more than 25 years as an editorial executive and more recently as Chief Communications Officer at Oracle. I’ve written thousands of articles and columns about business innovation, strategy, leadership, disruptive technology, digital transformation, cloud computing, AI and more. In late 2016, I resigned from Oracle to launch the Cloud Wars franchise. It began with the Cloud Wars Top 10 ranking and weekly articles, and has since expanded into daily articles, a weekly newsletter, a podcast with more than 200 episodes, and now this one-of-a-kind Special Report.

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