by Jillian Mirandi, Analyst
Salesforce.com’s social enterprise strategy is driving its second wave of market disruption, sustaining Salesforce.com’s high revenue growth
Salesforce.com’s social enterprise portfolio is the company’s second wave of market disruption (the first major disruption was SaaS-based CRM), and it enables Salesforce.com to expand into its existing customer base and target an increased number of potential customers. Salesforce.com’s business platform group, which consists of the sales cloud, services cloud, marketing cloud, chatter, business platforms, and Work.com (Work.com is the rebranded Rypple), showed the highest growth rate as customers adopt solutions with built-in social and collaboration capabilities. Although Salesforce.com’s development platforms are not the company’s major focus, with 300,000 apps running on Force.com and 2 million on Heroku, these platforms continue to lead the PaaS market.
Salesforce.com’s social enterprise strategy is paying off, driving 34% year-to-year growth to $731 million. 2Q12 marked the company’s eighth consecutive quarter of revenue growth over 25%, but its seventh consecutive quarter of negative operating income, indicating the company is still focused on growing its footprint over growing its profitability.
The close of Salesforce.com’s Buddy Media acquisition, along with its prior acquisition of Radian6, will drive revenue as customers seek an end-to-end marketing platform
TBR believes Salesforce.com’s dedicated focus on the social enterprise — with the acquisitions of Radian6, to drive “listening” functionality, and Buddy Media, to bring “marketing” platform capabilities — positions Salesforce.com to seize early market share with rapid portfolio and customer base expansion, taking momentum ahead of competitors. The launch of the Radian6 Social Marketing Cloud provided Salesforce.com with analytics tools across social monitoring, social insights, social engagement, social workflow and social websites.
With Buddy Media’s install base of more than 1,000 customers, including enterprise vendors such as Ford and Mattel, Salesforce.com is moving into a position to use its Marketing Cloud to deliver not only insights into customer behavior, but also platform and transaction capabilities that let customers monetize user insights through marketing campaigns. We see Salesforce.com in the initial stages of successfully monetizing its evolving portfolio, as the company currently generates approximately 40% of its new business outside of core CRM offerings, signaling successful sales of new products such as ServiceCloud and Radian6.
Salesforce.com, despite its “no software” mantra, is quietly offering private cloud versions of its public cloud solutions
TBR believes that the recent and quiet release of private cloud deployment options will help Salesforce.com more quickly expand into enterprise, financial and government segments. Salesforce.com’s success is based on the public Software as a Service delivery model and the company has been adamant about marketing its public cloud approach with its “no software” logos.
However, ongoing TBR research leads us to believe the company is offering private cloud deployed versions of their software to certain clients, especially to those in the financial services and government sectors. TBR believes that the company is strategic in offering private cloud deployment options (run by Salesforce.com) as many companies have concerns over data security and protection. According to the company’s customer community blog, the private pod will follow the same release and iteration schedule as the public cloud offerings, which enables all customers to best leverage the products.
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