It’s been a good 15 years for Marc Benioff. Before the turn of the millennium the chief executive of Salesforce was working out of a rented apartment with three software programmers, on the strength of the simple idea: that software be delivered as a service, in a pay as you go model.
Roll forward a few years and Software-as-a-Service (SaaS) is booming, so much so that Juniper Research predicts it will be worth $53.5bn by 2018. As for Salesforce, the company has gone from strength to strength, with its hands now in many pies.
But 15 years after being formed, where does the company go from here?
Shooting for number one
Sitting in the keynote hall of Dreamforce 2014 it is impressive how far the company has come from its beginnings in that flat. These days the guestlist does not merely include several musicians pimping their tech projects (Neil Young and will.i.am), but presidential candidates past and future in the form of Al Gore and Hillary Clinton.
But not everyone is so taken in by the glitz of the conference. Sitting in the press lounge a group of analysts from 451 Research questioned whether Salesforce would be able to ascend to the lofty heights of SAP and Oracle, a company whose name is studiously avoided by Salesforce employees, many of whom have a history with the firm of Larry Ellison, who invested $2m in Benioff’s idea at its inception.
Keith Block, president of Salesforce, told a media roundtable that "SAP is absolutely a company that we target. And the reason why we focus on SAP is that they’re the largest applications company in the world. They’re number one in applications – on premise, legacy applications just to be clear – and you always shoot for number one."
The difficulties that 451 predict for Salesforce revolve around the company’s vertical strategy. "They have relied so long on just selling some new licenses," Alan Pelz-Sharpe, research director of social business at the firm, told CBR. "The reality is that’s not how an SAP or an Oracle does it. When you get into very complex, big deals you need to be offering more than a software license."
Salesforce has long considered itself a platform company, and has thus far left industry customisation to those who know their fields best. As Adam Seligman, vice president of developer relations at the company said, they could have created a "narrowly defined, constrained" suite of products, but they prefer to be highly modular.
"That’s the business strategy," he said. "We want to have great apps that our customers use, but we also want to be an amazing platform that people want to go and extend and build whatever apps they need."
Lightning, the new development tool from the company, goes some way to fulfilling that ambition, further the extendability of the company’s platform. Charlotte Dunlap, senior analyst of application platforms at research firm Current Analysis, said: "Salesforce is pinning a lot of hopes on the Salesforce1 Platform for helping partners go after new markets, including verticals, and cloud competitors including SAP and Oracle are extremely threatened by the evolving platform."
A wave of innovation
Alongside Lightning, the other big announcement at Dreamforce is an analytics cloud, namely Wave. It was inevitable that Salesforce would eventually look to exploit the huge amount of information that their enterprise resource planning (ERP) generates, and the lack of third-party competition over the firm’s data has allowed Salesforce to enter the market relatively late.
As Alys Woodward, a research director covering analytics at IDC, told CBR, Wave is not merely a big step for the firm, but for cloud analytics overall, which until now has largely been the domain of small vendors. She reckons the focus on pretty transitions is also likely to attract more consumers into the market.
"To make business intelligence (BI) apps look appealing is quite a challenge because a pie chart is a pie chart, a bar chart is a bar chart," she said. "They’ve an interesting challenge now as the 24 customers they have currently using Wave are large enterprises and they’re people familiar with analytics."
She argues that Salesforce’s keynote belied the sophistication of the product, which as she said is now mostly use by large vendors, many of whom have reams of legacy data. In her view it "a shame" that Salesforce did not brag about the integration potential of Wave, which will be a major selling point to the larger customers. Perhaps that omisson is telling.
A new stage for Salesforce?
Many of the older hacks at Dreamforce recalled it was not so long ago that Salesforce could barely fill a theatre full of customers. Many on stage said likewise. Bragging seems to come naturally to the firm, which may reflect its good fortune, good judgement, or merely the character of its board, but this year seemed a particular triumph.
The firm is no longer the nifty start-up disrupting industries and flouting expectations. Since it helped popularise the SaaS market many of its old rivals have been forced to follow the firm’s lead. Speaking to Microsoft’s Tony Prophet, Benioff was flattering to his competitor, besides the odd gag about the Windows Start Menu debacle.
Salesforce, it seems, is making peace with the IT establishment. It may even be that the company has already joined it. Listening to the woman who may be the next president of the United States, it certainly felt like it.