Last week we attended the Salesforce World Tour London, with 14.000 registrants one of the largest software events in the UK. As in previous years it was a very savvy marketed and slick show. Though the event lacked major announcements there were some newsworthy items:
Financials – Coincidently Salesforce announced its fiscal 2016 First Quarter Results ending April 30 2015, the night before the event. Salesforce continues to grow very fast, and has been able to reach $6 billion in revenue. Marc Benioff announced the target for the years to come: the goal is to be the first company ever to reach $10 billion in cloud revenue run rate. Ambitious, but reachable. Up to now Salesforce has been investing heavily in sales and marketing. Checking the figures since 2011 the company spends 70% (!) of its EBITDA on sales & marketing making the company one of the big tech marketing spenders. The real challenge will be to achieve this goal and report a profit. Q1 2016 was the first quarter since 2011 that the company was profitable. Though profits were limited, $4 million, they were a large improvement to last year when Salesforce lost $97million in the first quarter.
In Europe the company has reached the $1billion revenue mark. According to Steve Garnett, EMEA Chairman Salesforce, EMEA shows significant growth and the UK is the European hub for Salesforce. In the UK, Salesforce has its own datacenter. The company plans to open datacenters in Germany and France later this year. No particular roadmaps for Europe were disclosed, Europe will follow global guidelines on strategy.
Partner Momentum – Salesforce also released the results of a study on the Salesforce ecosystem, highlighting the economic impact of the company on its partners. In an additional break out headed by Steve Bradford, Vice President, Alliances & Channels EMEA, this was further confirmed with SI’s in EMEA showing an 80% increase in year on year growth of joint sales. The number of certified consultants has grown by almost 40%, compared to last year.
Salesforce segments its partner base to ISVs, Service Providers, Consulting Partners, Resellers and Digital Agencies. Especially with digital agencies partners it is distinguishing itself from the usual suspects, although they did not further specify how they partner with digital agencies, or how they support them. Partner focus for 2016 will be:
- Partner Readiness & Development – the biggest challenge is that the partner is fully enabled to support clients in their digital transformation. Salesforce wants their partners to fully understand what they sell, and how they sell it. Focused training sessions and partner sales aid are the largest investment areas at the moment.
- Industry & Product Specialization – Salesforce globally introduced the ‘Fullforce’ solutions mid 2014. These are so-called ‘high impact solution accelerators’ with strategic partners. According to Steve Bradford, this program will become increasingly important in EMEA in 2015, where they are reviewing a substantial number of high impact solutions for the European market.
- Partner Community Hub – This is the former partner portal, now making use of the Salesforce Next Generation Community Cloud.
Salesforce partner team seems to have made a huge leap forward compared to three years ago. IN 2012 Salesforce’s partner strategy was still very much opportunity driven. Now it is morphing into a joint selling proposition, with commitment for the long term.
Product Expansion – Salesforce launched the Next-Generation Community Cloud. ´Next Generation´ points to the community cloud now also offering intelligence (read analytics), templates (so-called lightning components) and the possibility to connect with files on your Google drive. The main message is that Community Cloud ties into the overall vision that customer experience is key. The lines between sales, service and marketing are blurring. According to Salesforce 70% of the sale is fuelled by the service provided. Building communities with knowhow, easy access to information, and local support only makes it easier to improve the customer experience. As a result Salesforce believes it can strengthen and expand on its Customer Success Platform Message.
Though not in the limelight during the conference, Salesforce Analytics needs mentioning as well. With the addition of Analytics (in 2014) Salesforce has made a large step to enhance its data proposition in the CRM offering. Salesforce´s Analytic Cloud messaging is very much focused on ease of use (mobility) and increasing business value, targeted at single business users. This messaging again underlines the value of the customer experience. Salesforce also has high expectations for the Analytics AppExchange, creating opportunity for analytic partners such as ISVs, consulting partners, content partners (D&B), planning and predictive partners. Combined with the recently announced Big Data partnerships we expect Salesforce to solidify its already significant market and mind share in the CRM space. Maybe that is worth $15 billion.