Salesforce.com reignites as a platform game changer with mobile and API-first Salesforce 3
T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
TBR EVENT PERSPECTIVE
Salesforce.com reignites as a platform
game changer with mobile and APIfirst Salesforce1
Salesforce.com: Dreamforce 2013
San Francisco; Nov. 18–22, 2013
Jillian Mirandi (firstname.lastname@example.org), Software and Cloud Practice Analyst
Dreamforce 2013 marks Salesforce.com’s 11th annual customer, partner, developer and analyst conference. The
conference continues to grow into one of the largest global tech conferences, with 110,000 registrants in 2013,
nearly 100 times more than the number at its inaugural event in 2003. Salesforce.com uses Dreamforce to
showcase product launches and to highlight Salesforce.com’s marketing messaging and strategy as well as how
marquis customers are innovating with and on Salesforce.com technology.
Salesforce.com’s new mobile-first platform, Salesforce1, has the opportunity to trump the
growing number of competitors — if it delivers on its promises
Dreamforce 2013 focused more on outlining Salesforce.com’s corporate strategy than making major product
announcements. The most notable shift in strategy was the increased focus on platform and mobile. After years of
minor investments in the Force.com and Heroku platforms, an increased focus on platform in 2H13 marks a
turning point for Salesforce.com that places PaaS at the center of its strategy.
The major product announcement that occurred was the launch of Salesforce1, the company’s new platform layer
that sits between the traditional development platforms and applications. Salesforce1 will include customers’
applications and additional mobile capabilities and APIs. Salesforce1 is a mobile and API-first platform that runs all
of Salesforce.com’s major applications, including Sales Cloud, Marketing Cloud and Services Cloud. The focus on
the platform is expected to elevate Salesforce.com’s value proposition based on improved mobile app
development and deployment capabilities. Another value-add from Salesforce1 is that customers’ acquisitions will
systematically update across all devices to create a seamless and integrated customer experience.
Salesforce.com undertook these actions because it faces threats from increasing competition. On the applications
side, competitors SAP and Oracle bought into the cloud market through cloud-delivered acquisitions,
reorganizations and an influx of resources to promote and sell their evolving portfolios. On the platform front,
Microsoft, open-source players such as OpenStack and ServiceNow, and most recently VMware and EMC spinoff
Pivotal expressed intent to evolve into an enterprise platform vendor and have the portfolios to back it up.
Additionally, Saleforce.com is no longer the agile game changer it was even just a few years ago. However, if
Salesforce1 delivers on its promises to fully integrate products and populate across all devices, it has the potential
to become the application platform of choice for enterprise; it will also scale quickly and ahead of competitors due
to the breadth of the Salesforce.com customer base.
Salesforce.com’s continued expansion into the mobile world, where it was trailing, will leap frog it ahead of
competitors. However, TBR has some doubts as to how seamless the transition and the platform really are; similar
platform Salesforce Touch was announced at Dreamforce 2012 and was later scrapped due to its lack of technical
TBR believes Salesforce is lacking in analytics capabilities. Although CEO Marc Benioff claims the company has
robust analytics capabilities (i.e., Dashboards), customers see this as an area in need of improvement. TBR
expected an analytics acquisition or partner announcement during Dreamforce 2013 and would not be surprised if
there is one in the near future. However, continued operational losses are stalling the company’s decision of
another multibillion-dollar acquisition.
Benioff asserts that business models matter and pledges to improve on operating losses by
evolving bundling and GTM strategies
During Salesforce.com’s CY3Q13 earnings call that helped kick off Dreamforce 2013, Benioff emphasized that
Salesforce.com’s continued operational losses were a problem. TBR believes that while cloud vendors need to
build technology, personnel and scalability ahead of customer growth, this type of business model is unsustainable
for a company of Salesforce.com’s size. TBR believes that while Salesforce.com’s portfolio is expanding and
maturing, the company has not adequately evolved its business model to reflect this maturity. To right this issue,
Salesforce.com is lessening its focus on direct sales and marketing and the high costs associated with it, bundling
and integrating products at a premium, and expanding partnerships with large ISVs such as HP to improve its
appeal among the largest enterprises and most-regulated industries.
The high cost of S&M expenses, at nearly 50% of revenue, is Salesforce.com’s business model’s biggest flaw.
Salesforce.com made quite a name for itself in the SaaS market through aggressive S&M tactics, and we believe
that a de-emphasis on direct focus will help the company improve margins, as this approach is no longer
necessary. Utilizing ISVs, SIs, MSPs and developers to create value and sell will drive revenue gains at lower costs.
A newly formed relationship with HP, announced at Dreamforce 2013, will help Salesforce.com improve operating
margins. Salesforce.com and HP plan to combine Salesforce.com’s software with HP’s Converged Infrastructure
and run it in Salesforce.com’s data center to create Superpods. A Superpod will give customers who require private
cloud an option to use Salesforce.com. Although the Salesforce.com technology will run exactly as it does on
Salesforce.com Pods, Superpods will be dedicated to specific customers; the first customer is HP. We believe this