In the medium term, it’s tough to bet against Salesforce.
At $10b+ in ARR, Salesforce has conquered its biggest short-term challenge: the maturity of its original, core CRM market. It tackled that by very successful expanding into service, marketing, e-commerce and platform revenue streams (and “clouds”):
So even though the “old” Salesforce is growing somewhat more slowly at 17% a year, the overall business remains on fire at $10b+ ARR with 25%+ growing in bookings. Salesforce has done an impressive job of growing both organically here (Service Cloud) and via M&A (Demandware, ExactTarget, etc).
New initiatives also seem to be performing well, e.g. Field Services crossing $100m in record time.
So what will displace Salesforce? Well, paradigms do change every decade or so.
The first big threat was mobile. Many of us thought mobile would completely change CRM and threaten Salesforce a few years back. Why sit in front of a computer all day tediously entering data, when mobile would obviously change the paradigm in CRM? In the end — nope. Salesforce CRM is a workflow application and mobile in the end “just” became an extension of the application. No new vendor changed the CRM paradigm via mobile, unlike the way gaming (Zynga decline), document sharing (rise of Dropbox), video, and so much of the rest of the world changed so dramatically post-iPhone. Instead, mobile just advanced and extended the existing paradigm.
The next threat is/was AI/ML. You can see this in how Salesforce leaned in very early on “Einstein”, before it really was anything. If AI+ML can automate customer management, and data entry becomes obsolete, that could complete change the entire nature of what CRM and related workflows are. So far, the threat has fizzled. You can also see this in how aggressively Salesforce tried to buy LinkedIn, an acquisition so large Salesforce could barely even afford to attempt it. They wanted to own the data … before automation around that data could render CRM somewhat obsolete. LinkedIn+Microsoft Dynamics CRM+some ML/AI in theory could produce and structure an incredibly rich CRM without the tedious need to gather and structure all the critical data necessary to make it work. Again, why enter and manage data if you can automate the structuring of that data from the get-go?
But while there are many cool CRM, SFA, sales and service products that automate data entry, data management, data analysis, etc. … again, they haven’t really automated the workflow that is core to Salesforce CRM. Instead, they’ve mostly added to it. For now, automation via AI+ML seems like it will be subsumed by Salesforce, rather than a true threat to it.
The third wave threat is unclear. Blockchain? Seems highly unlikely. Maybe I guess. Voice (i.e., Alexa for Enterprise)? It’s possible. But at the moment, voice feels more than a paradigm that will be subsumed like mobile, rather than a threat. We may need to wait and see. It may be another decade before a mega-trend emerges that might change the paradigm.
It will come. But by then, Salesforce will be closing in on $100 billion in revenue. If the existential threat does completely change the paradigm, Salesforce’s decline will be slow. Look at Oracle, SAP and Microsoft. Their declines are so slow you actually can’t even really see them in the numbers yet.
Benioff is pretty good.
