The big news in the financial world last week was Salesforce’s surprising quarter. Just looking at revenue alone, Salesforce earned $1.81 billion against a guidance of $1.79 billion. This during a time when the market as a whole, and the tech industry in particular, has been struggling.
This big quarter may come as a surprise to stock pickers, but not to people in the IT business. Salesforce is successful because of basic business fundamentals. First of all, they have a great product. Of course, Salesforce is not perfect (no software product is), but there are few comparable offerings to Salesforce in the market. Secondly, Salesforce has an amazing sales and marketing team. Finally, Salesforce has built a huge ecosystem of partners. These partners range from small one-person companies to global consulting giants. To sum it all up: starting with a great product, adding a great marketing and sales team, and building a large network of innovative partners, is a winning formula.
So Salesforce having a big quarter in the midst of a bad market is not that surprising. But the significant news from last week is that Salesforce is making sales directly to CEOs. Traditionally, IT departments purchase enterprise software. As Salesforce came into the market, software purchases began to be led by the business (with IT support and influence.) For example, a sales manager or a customer service leader would look to Salesforce to provide a better tool for their teams. The new change is that CEOs are now the end buyers of Salesforce.
The reason to sell to CEOs is obvious: they have a bigger budget. But no matter how good Marc Benioff and Keith Block are at selling, CEOs are not buying unless they believe Salesforce can transform their business. And that is the new reality for Salesforce; it’s no longer just a tool to upgrade sales and service, but a platform of business transformation. That sounds fancy, but really means:
- Standardizing on Salesforce gives organizations flexibility and the ability to change quickly. It has never been possible for IT systems to change as fast as business does. Salesforce is not magic, but when governed properly, it can meet changing business needs. This gives CEOs the ability to adapt to take advantage of new markets and opportunities faster than ever.
- With Salesforce, organizations can provide a better Worker Experience and increase employee engagement. The new generation of employees grew up with applications in their personal life that are social, mobile, and connected. When they enter the corporate world, they face siloed data and out-of-date interfaces.
Of course, Salesforce doesn’t solve every business problem, and it’s only as successful as its implementation and usage. But CEOs are recognizing that Salesforce is more than just a solid CRM tool. Salesforce can be the centerpiece to an agile, dynamic organization.