Salesforce.com: Innovating from inside the cloud

By Edwin Yapp October 14, 2014

Early cloud innovator continues to strut its stuff amid challenges
Announces Wave, new SaaS designed to stave off competition

Salesforce.com: Innovating from inside the cloud THIS week, I find myself back in San Francisco where it’s time for one of the world’s largest cloud computing companies, Salesforce.com Inc, to host the latest edition of its annual tech extravaganza, Dreamforce 14.

The event has been described as its chairman and chief executive Marc Benioff’s personal playground to showcase the innovation that comes out of the company he cofounded in 1999 with three others.

Luminaries attending include a 'who's who' of not just the tech world. Names like Sir Richard Branson and retired general and former US Secretary of State Colin Powell have in the past graced the event.

This year is no different with the line-up including former Secretary of State and former Senator of New York, Hillary Rodham-Clinton, as well as former US vice president Al Gore.

Considered one of the most successful dotcom survivors along with Google Inc and Amazon.com Inc, Salesforce.com has gone from strength to strength, starting out as a company peddling basic customer relationship management (CRM) software to clients that used it to manage sales inventory and customer databases, and to forecast revenue.

Much of this success is attributed to Benioff, who started out in an apartment in San Francisco to steer his creation from a humble dotcom into a company with US$5 billion in revenue and US$35 billion in market capitalisation today.

The man has been described with many different labels: A Silicon Valley rock star of the software world; a consummate salesman; a technology visionary; a bedrock of innovation; a generous philanthropist; and even a tech executive who is an inspiration for others. There is even a poll about the up-coming Dreamforce 14 event and why people love Benioff.

I’ve not seen him in person before, but two things strike me about Benioff and his company that have shone through over the years.

The first is the amazing consistency and tenacity with which he set out to deliver his products and services. No matter what Salesforce.com introduces, it’s always only based on one model of delivery: Software-as-a-Service (SaaS).

Before the advent of terms like grid computing and real-application clusters, pioneered by Larry Ellison and Oracle Corp; or utility computing by Hewlett-Packard; or how Google and Facebook deliver software over the browser for that matter; Benioff introduced us to a world where software would be used and consumed over an Internet connection rather than over the age-old model of on-premise delivery.

Mind you, he did this at a time the Internet was still in it what some would call its Web 1.0 stage, when accessing applications via the Web was relatively unheard of, and SaaS' precursor of sorts – the Application Service Provider (ASP) model – was struggling to find traction.
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Broadband infrastructure was also much poorer then. Smartphones, at least real ones, weren’t invented yet;, and wireless and mobility were designed for voice and text.

That to me is true innovation – introducing something that was truly ahead of its time and having the perseverance to stick it out over 15 years, and to push the same message over all those years.

And it wasn’t all innovation and only talk as after only three years of being in business, Salesforce.com claimed to have raked in a revenue of US$50 million and counted amongst its clients Nokia Corp, Cigna Corp, General Electric Inc, and 6,000 others, according to one report.

The second thing about Benioff is the fact that he didn’t fear the competition and in fact, challenged it head-on. In delivering SaaS, Benioff knew he would be taking on incumbents such as IBM Corp, Microsoft Corp, and even fromer employer Oracle Corp where he was the youngest vice president.

In particular, Benioff went up against Ellison, the iconic Oracle cofounder who himself was an early investor in Salesforce.com, and has for the most part succeeded in winning over clients from these competitors.

And while doing so, he also had the bonus of getting under his mentor’s skin.

Doing well, but …

Salesforce.com: Innovating from inside the cloud

Dreamforce 2013 keynotes. Photo by Jakub Mosur Photography

The San Francisco, California-based cloud vendor has done remarkably well, especially in the past five years, proving that the SaaS model for delivery is here to stay even as cloud computing begins to take hold in enterprises and become more mainstream.

Reuters noted last month that Salesforce.com reported a better-than-expected quarterly revenue, aided by a demand in its SaaS offerings.

Meanwhile, Gartner noted that it has adjusted its corporate branding from “social enterprise to being a ‘customer company’ recently.” The research firm said this would help it continue its CRM momentum and future growth.

To illustrate this point further, Gartner has consistently ranked Salesforce.com as a leader and visionary in its core sales force automation (SFA) segment of the market that it tracks.

In its yearly Magic Quadrant for SFA dated July, Gartner pointed out that Salesforce.com continues to lead the market with new business and live customer deployments.

“Salesforce.com has proven quality and reliability although the vendor is coming up on its 15th anniversary. [But] the real value continues to be Force.com, which is the vendor's flagship platform-as-a-service (PaaS) for extending and configuring its Sales Cloud.

“It also leverages its platforms well to foster its ecosystem and many AppExchange (its business app store) partners are built natively on Force.com, which provides integration benefits to customers.”

Still of late, some analysts feel there are chinks within its armour, especially in the way it uses its stock to compensate its employees, arguments made by The New York Times and TechInsider.

Also Gartner in a research note in September last year said, “Salesforce.com continues to generate healthy cash flow from operations and has a strong balance sheet…

“Acquisitions have enabled Salesforce.com to enter new and synergistic markets, and they will remain a critical component of its business strategy. The acquisitions have caused only minimal disruption to its business, which is characterised by consistently strong revenue and bookings growth.

“[However] Salesforce.com's strategic reliance on acquisitions and its equity could jeopardise the company if its stock price were to fall dramatically and remain at lower prices for a sustained period of time.”

An analytics play

Salesforce.com may be the sales and marketing software vendor to catch, but its rivals aren’t sitting still either. One of the major complaints customers have had of Salesforce.com is that it’s pricey, an area that Microsoft has begun to attack.

Just a week before Dreamforce 14, the Redmond, Washington-based company fired a salvo by creating an aggressively priced CRM Online product bundle that includes both Office 365 and its Power BI tool, in a bid to steal customers away from rival Salesforce.com, reports PC World.

And whilst its flagship Sales and Service Cloud CRM software, Force.com PaaS, and marketing cloud bundles comprising packages such as Radian6, Buddy Media and ExactTarget continue to be leaders in the field, one area the industry believes Salesforce.com has yet to capture is in the cloud-based advanced analytics sector.

In this respect, all its rivals have recently upped the ante and have announced various offerings: Microsoft with its Azure Learning Machine; IBM with its Watson Analytics Tool; Oracle with its Analytics Cloud; and SAP SE’s HANA platform and its tie-up with Birst Inc.

Speculation has been rife in the past few weeks though that at Dreamforce 14, Benioff would be making an important announcement that Saleforce.com will join the cloud-based advanced analytics game with an offering, especially after he inadvertently ‘leaked’ a confidential draft (right, click to enlarge pic) of a Dreamforce 14 programme, which was aptly noticed by Wells Fargo analyst Jason Maynard.

“We have long thought that the company would eventually be adding an Analytics Cloud, given some of the strategic acquisitions that it has made,” Venture Beat quoted Maynard as saying.

“We are assuming that the analytics capabilities will feature more comprehensive reporting functionality with visual analytics, and drill-down features. We think that this is based on the June 2013 acquisition of EdgeSpring. We believe that the relateIQ functionality will complement this nicely.”

As of Oct 12, it was no longer speculation as Benioff did indeed tweet that Salesforce.com will be offering an analytics cloud app called Wave. [Digital News Asia will be on hand to bring you more on this.]

However, Doug Henschen, executive editor at InformationWeek, noted last year at Dreamforce 13 that Benioff said Salesforce.com “does not intend to move into the traditional, horizontal analytics market, in which he lumped vendors including SAP BusinessObjects, IBM Cognos, Oracle Hyperion, and other broad-based solutions.”

“It's very likely that Salesforce.com will stick to Benioff’s stated plan and steer clear of offering a standalone business intelligence and analytics platform.

“The focus of a Salesforce.com Analytics Cloud, assuming one is announced, will be on better reporting on Salesforce.com-managed sales, service, and marketing activities,” Henschen ventured.

Corroborating this fact too is that Salesforce.com was looking for a chief operating officer (COO) for its analytics division.

So why the inadvertent ‘slip’ from a man who is feverishly meticulous in planning his every move, especially a month before his big announcement moment?

It’s hard to say but perhaps what Business Insider speculates makes sense: “Benioff wouldn't want his customers to rush off to Watson Analytics [and other competitors] before they knew that he has something on tap for them too.”