Salesforce's growth has been meteoric by any standards, breaking the $10bn annual revenue barrier in its last full-year results, announced February 28, 2018. It consistently hits an annual growth rate of 25% and has its sights firmly set on being the fastest enterprise software company to hit the $20bn mark in the next few years. So how is it going to achieve this?
Salesforce grabs the tail of the digital transformation tiger
Salesforce has never been backward at self-promotion and has consistently reinvested cash to support its ambitious growth projections. While at some stage one might expect the rate to tail off, the company continues its trajectory, both organically and through timely strategic acquisitions, to strengthen its integrated portfolio beyond traditional CRM.
The firm has long since won the battle to be the No. 1 CRM solution provider, and if it stuck with adding new bells and whistles to its CRM offering, its growth would have tailed off years ago. The digital transformation tiger is rampant across every industry and region and is fueling Salesforce's growth, and that is behind the two most recent acquisitions:
- CloudCraze, which provides a B2B commerce platform developed natively on Salesforce's cloud platform (announced March 12)
- MuleSoft, which has developed a platform for application networks to connect enterprise applications, data, and devices (announced March 20)
The acquisition of CloudCraze balances out Salesforce's commerce capabilities, complementing the acquisition of Demandware, a B2C commerce platform provider, completed July 2016. Ovum's Software Market Forecasts: 2016–21 shows investment in SaaS commerce applications almost doubling from $1.7bn in 2018 to $3.3bn in 2021. This provides a useful growth engine for Salesforce, as does the ability to connect back-end systems, data, and applications (through MuleSoft) to enable enterprises to move from fragmented and siloed organizations into highly connected, coherent, and above all customer-relevant enterprises (customer-adaptive).
As Chairman and CEO Marc Benioff said at Salesforce's 4Q18 earnings call, most digital transformations start with the customer, where Salesforce has focused its entire history. There is therefore ample headroom for continued growth. These two acquisitions will not just open up new territory for growth, but also strengthen its ability to support enterprises seeking an end-to-end digital transformation.
The only word of caution is that the battle for CRM supremacy is yesterday's story. A new battle has emerged, a battle of highly unified platforms that not only support CRM functions but also enable enterprises to orchestrate customer interactions intelligently with any part of the value chain and across any customer journey and channel, digital or otherwise. Gaining supremacy in what Ovum has termed the "customer engagement management platform" space is a much higher-stakes and order-of-magnitude-more-complex game, and Salesforce has some worthy competitors, with their eyes fixed on the transformational prize. Competition over the next five years will be white hot.
Watch this space. This will keep us all busy for many years to come.