"We feel pretty good about our ability to compete against Oracle CRM and the Siebel business unit. We, of course, follow SAP and Microsoft very closely. We just don't see the traction and the adoption or the customer base. Maybe one day we will, but I think that if they got as much code as they had rhetoric, they could actually maybe be doing something out there."
Marc Benioff, CEO of Salesforce.com, is on typically ebullient form, fuelled by the return to the black in the second quarter of the SaaS market leader. For the quarter ended July 31, the company earned $3.7m (£1.86m), up from a loss of $145,000 (£73,066) in the same period last year with revenue up $176.6m (£89m) from $118.1m (£59.5m).
During the quarter, the firm passed the 800,000-subscriber mark. “After taking roughly seven years to achieve our first 400,000 subscribers, we have more than doubled that total in the past six quarters,” said Benioff. “Not only are we adding record customer numbers in all areas of our business, but our customers are getting larger, too. A year ago, our largest customer had roughly 7,500 subscribers.
"Today, our installed base includes two customers with more than 30,000 subscribers, four customers with 20,000 or more subscribers and five customers over 10,000 and a remarkable 68 customers with more than 1,000 subscribers. That last number represents an increase of more than 40% over the number of customers with 1,000 or more subscribers that we reported just six months ago. Nothing says more about enterprise adoption than this explosive growth."
Benioff cites the approval of analyst firms as evidence of Salesforce.com’s status as a serious competitor to established enterprise players. In particular he points to a recent Magic Quadrant from Gartner Group which say Salesforce.com in the top right hand above Siebel.
"When I saw that, I was shocked; I couldn’t believe it,” says Benioff with what seems suspiciously false modesty. “Only two years ago, we weren’t even on the Magic Quadrant, and now we're in the top right hand above Siebel. I think what that really says is a couple things: number one, that on-demand is going mainstream. This is the big time and the big leagues, and customers don't want to buy software anymore. So you either offer on-demand or you're not a player.
"The second thing I think it really speaks to is the way Gartner does that survey is you have to produce a lot of referenceable customers of size and scale, and we were able to do that very easily. I think that that has really impacted our ability to move into the Leader Quadrant. That means if you are not in on-demand, and if you are not producing those kind of customers, you're not going to play.
“Competitors have to respond, saying, sure, we have on-demand, too. We’re just like Salesforce.com. We're a big German software company, but we’re just like Salesforce. Or we deliver it on a CD, but we're just like Salesforce. The reality is they are not. As evidence to that, the customers.
“When I meet analysts, I like to play a little game with them, and I say look, can you tell me the names of two or three or more Salesforce.com customers off the top of your head?' Then I ask them, now tell me, who’s the top SAP CRM customer? Who's the top Oracle CRM customer? Who’s the top Microsoft CRM customer, on-demand? Because you don't hear those names."
On the other hand, Benioff is only too willing to trot out Salesforce.com customer names. “The platform edition customer list now includes Saber, Celerant Consulting, Panasonic, Allianz, Bank of Oklahoma, Robert Half and Procter & Gamble. In the second quarter, we also saw large enterprise deals for our more traditional CRM service. In the US, it’s at large accounts like IMS Health and Wells Fargo. Internationally, we also saw continued growth with new wins at Fortis, Arriva, Asia Netcom and Air Liquide.
“After growing their Salesforce deployment to more than 15,000 salespeople around the globe, Cisco has selected Salesforce.com to manage approximately 15,000 PRM subscribers at roughly 3,000 resellers around the globe. This brings their total deployment to more than 30,000 subscribers. Equally exciting, we also booked a 15,000-partner opportunity with Sprint Nextel, bringing their total subscriber deployment to more than 20,000 subscribers. We also saw exciting new PRM wins at Standard & Poor’s, Sun, EMC and Sony."
Benioff is quick to note that Salesforce.com is winning business away from rivals. “SAP’s largest European customer, Siemens, selected Salesforce for CRM in the second quarter” he says. “Of course, we already have SAP's largest global customer, DuPont. We also won IMS Health, Mercedes-Benz and Corning against SAP. These new accounts join a long list of legacy SAP accounts that are now using Salesforce.com, including Motorola, Symbol Technologies, Air Products, Ashland, Shell Energy, Chevron and many others.
“We continue to see similar success against Oracle. In the US, we doubled our subscriber deployment at Cisco, a legacy Siebel account, by adding our PRM offering. We won an exciting opportunity at American Express in another head-to-head battle with Oracle.
“Microsoft also returned to its summer pastime, announcing its intention to one day deliver a centralised multi-tenant on-demand service. But after a flurry of announcements and PR hype, there are no customers on this mythical service and no URL where you can try out the service for free. That's why Microsoft customers like Dialogic, Bracco Imaging, Standard Duplicating Machines, International Turnkey Systems all selected Salesforce.com over Microsoft CRM this quarter. Microsoft's strategy of an inferior product at an inferior price promises to do for on-demand what Zune has done for music players.”
But it works the other way around, doesn’t it? After all, Oracle won ADP away according to its last conference call. Er, not exactly according to Benioff. “It turns out that they bought a company in Atlanta, Georgia called Sterling Tax or something like this that had 10 users,” he sneered. “They felt that was material enough to put it on their earnings call. I think that's evidence of where Oracle is in on-demand CRM. They have to somehow position that they won ADP when they have a little Sterling Tax division in Atlanta that ADP bought recently with 10 users. I think that speaks to their success.”
With enterprise deployments on the rise, are enterprise CIOs finally sitting up and paying attention? “There has never been a time in our history that we've spoken to more CIOs than right now. We are in conversations with the top CIOs in the world. It's amazing to me,” admits Benioff.
“We're able to have more strategic discussions with CIOs of the world's largest companies because of our Platform as a Service strategy and how it's integrated with our Software as a Service offering. What makes the Software as a Service great is the Platform as a Service offering. What makes the Platform as a service offering great is the software service capabilities built into it and the dynamic nature of that.”