Welcome to Cloud Wars Minute, your daily cloud news and commentary show. Each episode provides insight and perspective on the “reimagination machine” that is the cloud.
This episode is sponsored by Acceleration Economy’s AI Ecosystem course on December 14th. See how AI is creating a new ecosystem of partnerships with a new ethos of customer-centric co-creation and a renewed focus on reimagining what’s possible.
In today’s Cloud Wars Minute, we examine Salesforce’s recent performance and what it tells us about its current strategy.
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00:41 — A year ago, CEO Marc Benioff decided to set aside the high-growth philosophy and strategy that guided Salesforce for its first 23 to 24 years and focus instead on high profit margins.
01:16 –For 23 years, we have continued to grow at over 20%. It’s now in the low double digits. You’re dead in the end. If you look at Microsoft’s overall budget for Microsoft Dynamics 365 enterprise applications, they increased by 28%. SAP’s cloud app growth rate was 23% in its most recent quarter. Weekdays, 18%. Oracle enterprise apps, 17%. Salesforce was at 11%. Salesforce is far behind other companies.
02:19 — I would also like to point out here that Salesforce is much bigger than every company in the app space except SAP. It continues to overtake SAP as the largest app vendor.
03:25 — So my point here is not to criticize what Salesforce is doing, but to emphasize that Salesforce is taking a dramatically different tack. These are all publicly traded companies and must answer to investors. So Salesforce is not an outlier in this regard.
04:00 — What does focusing on margins mean for your customers? Can you continue to innovate on the R&D side, especially in this era of generative AI (GenAI)?
04:31— In a longer article later today, we will list many questions, including: Is the customer relationship management (CRM) category becoming less relevant? Is there a shift toward CX? Are other companies now becoming more popular with customers than Salesforce because they can address a broader range of problems?
05:05 — That’s an interesting story. This has huge implications for customers and the competitive future of this business.