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WIKI ANALYSIS
Salesforce.com (NYSE:CRM) offers customer relationship management (CRM) application services in the Software as a Service (SaaS) Industry. In particular, Salesforce.com is involved in offering Cloud Computing services to industries and businesses of all sizes. The company uses Cloud Computing to give its customers access to online software, with minor implementation and no on-premise installation or maintenance of software or physical servers.
Salesforce.com makes money through subscription and support fees associated with its customers using Salesforce's applications. These applications give Salesforce.com's customers access to systems which can systematically record, store, and act upon business data. These applications are used to optimize different aspects of a company's business including sales, marketing, partnerships and customer service. The company’s CRM services primarily focus on sales-force automation, marketing automation, and customer service and support automation. In addition, it provides consulting and implementation services and training. In 2008, the company was geographically based in the Americas (72% of its revenue), followed by the Europe (17% of revenue).
Salesforce.com is heavily invested in cloud computing application services and derived 91.4% of its 2008 revenue from subscription and support fees associated with cloud services.[1] Cloud computing has grown rapidly since 2007 and is set to capture 25% of all Information Technology growth spending by 2012.[2] However, there is significant uncertainty as companies and users are often reluctant in using largely undefined cloud services with no central database. In particular, a 2009 report found that 75% of large companies feared cloud computing security breaches.[3]
Company Overview
Business Model:
Salesforce.com has experienced a significant rise in customers with its 2009 customer base at 55,400 or a 35% increase from 41,000 in 2008. In addition, Salesforce.com customers are relatively evenly split across small business (less than 200 employees), medium sized businesses (200 employees to $1B in revenue) and large businesses (greater than $1B in revenues).[4]
Product Offerings
Salesforce.Com services mainly focus on the following functional areas. Each of them is focused on improving the quality and organization of data to improve the efficiency of its customers. Salesforce.com allows its customers to access data anywhere without having to rely on servers that the company owns. In addition, each of the applications can be adopted to improve the workflow and efficiency of the customers.
- Sales force automation, marketed under the brand Salesforce CRM SFA, enables salespeople to automate manual and repetitive tasks and provides them with data in a more organized manner and about current and prospective customers. Salesforce SFA also provides a repeatable system which helps salespeople manage sales opportunities, leads, forecasts, process, and closed business by territories. In addition, it provides a way for unstructured information on sales collateral, presentations, price lists and video assets to be organized and managed.[5]
- Partner relationship management, marketed under the brand Salesforce CRM Partner Networks, provides channel managers with complete visibility into their company’s entire sales pipeline for direct and indirect channels. Salesforce PRM allows partners to access leads, collaborate on deals, and house information centrally.[6]
- Marketing automation, marketed under the brand Salesforce CRM Marketing, enables companies to manage marketing campaigns from initiation to lead development to sales. The application can measure the effectiveness of each campaign by quantifying the revenue generated as a result of specific marketing activities. The application is integrated with Google Adwords to allow marketers to measure their returns, rate of clicks, and the overall effectiveness of their ad campaign.[7]
- Customer service and support automation, marketed under the brand Salesforce Service & Support, allows companies to interact with existing customers for a variety of service and support needs, such as requests for repairs, advice about products and services, complaints about faulty goods, and the need for additional goods and services. Using this product, customers can create a virtual contact center to support a wide range of customer interactions through voice, chat, email, and in-person interactions.[8]
Trends and Forces
Salesforce is based on Cloud Computing which still is volatile
In 2008, Salesforce.com spend $63.8 million, or 8% of its revenue, on Research and development, much of which went towards expanding the Salesforce.com's cloud computing abilities. In addition, 91% of Salesforce's revenue comes from subscription and support fees from their cloud computing services. As of 2009, the cloud computing market was approximatley $11B with a 33% annual growth rate. Despite this rapid growth, a 2009 Cloud Computing Trends Report found that 75% of large companies named that their biggest concern with cloud computing was its security.[10] If companies prove to be too reluctant to continue to switch to cloud computing Salesforce.com will be negatively impacted.
Competition
Salesforce.com competes against numerous software and applications companies including:
- NetSuite (N): which offers a broad array of on-demand and integrated services to small and medium businesses. In particular, NetSuite offers Accounting, Enterprise Resource Planning, and Customer Relationship Management applications. NetSuite competes most closely in the Customer Relationship Management (CRM) business with Salesforce.com.
- SAP AG (SAP): which offers software solutions and support services. Like Salesforce.com, SAP AG offers applications which improve support, reporting, and analytics of all data involved in a company's business operations.[11]
- Oracle (ORCL): Oracle is historically, one of the largest software companies. In 2009, Oracle announced its intention to become one of the largest on-demand business application company. Depending on how much resources Oracle puts into business applications, this shift will increase Salesforce.com competition drastically.[12]
- Microsoft (MSFT) is the largest global software company, has not entered the Software as a Service (SaaS) industry. However, in 2008, Microsoft announced that it will be offering business applications along with desktop applications.
- SYBASE the Proven Enterprise Mobility Leader.
References
- ↑ CRM 10-K 2009 "Consolidated Statements of Operations"
- ↑ Apache "IDC Finds Cloud Computing Poised to Capture IT Spending Growth Over Next Five Years" 21 Oct 2008
- ↑ [CRM 10-K 2009 Item 7 "Overview"]
- ↑ CRM 10-K 2009 "Customers" p11
- ↑ CRM 10-K 2009 The Salesforce CRM Service "Sales force automation" p.6
- ↑ CRM 10-K 2009 The Salesforce CRM Service "Partner relationship management" p.6
- ↑ CRM 10-K 2009 The Salesforce CRM Service "Marketing automation" p.7
- ↑ CRM 10-K 2009 The Salesforce CRM Service "Customer service and support automation" p.6-7
- ↑ CRM FY2007 10-K, Selected Financial Data, p. 41
- ↑ Hosting.com "2009 Cloud Computing Trends Report"
- ↑ Google Finance "SAP AG" Description"
- ↑ Motley Fool "Oracle's Next Conquest: The Cloud" 24 June 2009
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