One of the announcements that came out of Salesforce’s recent Dreamforce conference is that the Internet of Things (IoT) is its latest area of focus. As the poster child for the SaaS model, Salesforce has already changed the application software business. It has racked up a market capitalization nudging ever closer to $50bn, and revenue that will hit an estimated $6.6bn this fiscal year (ending January 2016), and perhaps $8bn in fiscal 2017. But that’s a long way from the $20bn target that company president and vice chairman Keith Block talked about in recent months, and even $10bn could take until fiscal 2019 to reach organically.
Still, there’s a very large addressable market out there in application software, way beyond the company’s original focus of sales force automation (SFA) – the company’s first application and the one with which most people still associate it. And it sees major opportunities in taking share from Oracle and SAP, in particular, as they gradually make their tricky transitions to the SaaS model. The question is whether Salesforce can expand beyond its base into more complex areas of application software where business processes and business rules are codified in often deeply entrenched application suites that are hard to displace.
Dreamforce – held last week in San Francisco and each year since 2003 – is not your usual software company customer conference. First, it’s bigger than most – 170,000 people registered and about 150,000 were rumored to have attended, of which about 40,000 were paid attendees. To put that into perspective, the company currently has about 17,000 employees, so 10-times that registered for the event, and the company said 10 million people watched it online at some point during the week. It’s also easy to be cynical about Salesforce CEO Marc Benioff’s preternaturally excitable style, but the presentations were thoroughly rehearsed and slickly delivered, so even the spontaneous amazement comes across as genuine. From conversations during the week, and taking into account the large number of customers running sessions in the various rooms and halls, we got a clear impression of a company in touch with those that ultimately pay the bills.
Uber was front and center this year, thanks to CEO Travis Kalanick’s fireside chat with Benioff on day two – the main keynote day – and the fact that, well, this is San Francisco, where using and talking about Uber is about as popular as bemoaning the eye-watering property prices. Kalanick didn’t say anything new, but he made his case for Uber helping facilitate the freelance economy, which is an important megatrend that will affect us all in the coming decade. Not everyone was convinced by Kalanick’s utopian vision: what if there were no traffic and no traffic accidents? Kalanick wondered aloud – Uber can apparently help (somewhat paradoxically) bring both about. But utopia goes down well at Salesforce, and Benioff is keen for others to dream big dreams.
This is an extract from my recent 451 Research report, which 451 clients can access here. For trial access to 451 Research, click here.
