Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
This episode is sponsored by Acceleration Economy’s AI Ecosystem Course, December 14. Discover how AI has created a new ecosystem of partnerships with a fresh spirit of customer-centric cocreation and renewed focus on reimagining what is possible.
In today’s Cloud Wars Minute, I examine Salesforce’s recent performance and what that says about its current strategy.
Highlights
00:41 — A year ago, CEO Marc Benioff determined he was going to put aside the high growth philosophy and strategy that guided Salesforce through its first 23-24 years and instead was going to focus on high margins.
01:16 — For 23 years, it had grown at 20% or higher. Now it’s in the very low double digits. It’s dead last. If you look at Microsoft’s overall budget for Microsoft Dynamics 365 enterprise applications, those grew 28%; SAP’s most recent quarter, the growth rate was 23% for cloud apps; Workday, 18%; Oracle’s enterprise apps, 17%; and Salesforce came in at 11%. Salesforce is way behind the others.
02:19 — Now I also want to point out, Salesforce is much larger than all these companies in the app space except SAP. It continues to edge out SAP as the largest apps vendor.
03:25 — So my point here is not so much to criticize what Salesforce is doing, but to highlight that it’s taking a dramatically different tack. All of these are publicly traded companies, all have to answer to investors. So it’s not that Salesforce is an outlier in that regard.
04:00 — What does that mean for customers if you’re so focused on margins? Can you continue to innovate on the R&D side, especially in these times with generative AI (GenAI) coming up?
04:31— In a longer article that will appear later today, I list a bunch of questions such as: Is the customer relationship management (CRM) category becoming less relevant? Is it shifting over more towards CX? Are other companies now becoming more favored by customers rather than Salesforce because they can address a broader range of issues?
05:05 — Fascinating story. It has a lot of repercussions for customers and the future of the competitive side of this business.
