Congrats to Marc Benioff and team for twenty glorious years. $1 billion in annual revenues by end of first decade, $ 16 billion forecast bt the end of the second – what a rocket ship! He is also one heck of a generous, big hug kind of leader. I have enjoyed cataloging him and the company in many of my books and blogs
Someone asked me recently about how I saw Salesforce’s third decade. I started with its history and I told them their biggest innovation was collapsing what used to be four contracts. You used to buy software from one vendor. You would get hosting from a data center vendor. You would get application management from an offshore firm. You’d do upgrades with the help of systems integrators. Salesforce and other SaaS vendors packaged all that into one buy and delivered SLAs across those previously disparate contracts. That was a massive leap forward for the software industry.
I then told them how Salesforce and other SaaS vendor need to evolve. When you give a vendor a five-year contract, you are entitled to see continuous improvement. It’s called Six Sigma benchmarking. In the auto, aerospace and other industries, they’re constantly expecting 2%, 5% improvements a year from their suppliers. In outsourcing, we have seen CMM Level 5 performances. That is something SaaS vendors will increasingly be expected to deliver.
I recently wrote about Zoho One – the bundle priced at $30 a month an employee, or $75 a month on per-user basis. It was launched in 2017 with 35 applications, it now has over 40. I also talked about Amazon pricing. Prime started off free 2 day shipping, then added free movies and has since bundled countless new features. Amazon Web Services has delivered 60+ price cuts in its first decade.
I see an opportunity for Salesforce to lead the industry again with this continuous improvement mindset.
I also pointed out the SaaS model is increasingly looking like the on-premise model as large systems integrators burden customer costs with their implementation and on-going budgets. In its first decade, the Salesforce ecosystem had many of the smaller “born in the cloud” SIs like Appirio and Model Metrics. It still has a few like Slalom, but the bigger SIs have muscled in. Nothing wrong with that, if Salesforce can make them bring plenty of automation, remote delivery and other innovations. . Between their costs and that of the Trailblazer community, Salesforce has to increasingly focus on customer economics. It cannot just talk impactful low code tools; it has to show their impact in the outcomes.
Finally, I mentioned I would like to see the Force.com platform start to deliver significant new functionality. After a decade, it has shown nowhere near the vibrancy of marketplaces like the Amazon iOS store or Amazon Fulfillment launched at the same time. The SaaS model desperately needs variety. If you draw a grid with country-by-country availability and industry-by-industry availability of applications, it’s shocking how little is available in the cloud – only about 20% on that grid. There are plenty of customers who say they are “cloud first” but are frustrated because while they can find plenty of CX, accounting and HCM functionality there is very little in the way of operational functionality. And even in the CX and HCM spaces there are plenty of holes when it comes to regional coverage around the world. In my new book, I profile case studies across 20 industries in over 10 countries discussing a wide range of business processes. Across its over 400,000 customers, SAP is gradually filling up the white spaces in that grid. Oracle and others will do the same over the next few years. You can continue to sell point solutions, but suites often have an unfair advantage.
Look forward to the third decade. I hope to see Salesforce mature into an even more impactful industry player.
(Cross-posted @ Deal Architect)