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Salesforce Embraces Social Media and the Cloud

By basing its operations in the cloud, Salesforce is quick to integrate new services for the "social enterprise"


Salesforce (NYSE:CRM) released its Q4 and full-year earnings for 2011, beating most analysts’ estimates with quarterly revenue of $632 million and full-year revenue of $2.27 billion. This represented year-over-year growth of 38% and 37%, respectively.

The company added nearly 2,000 employees to its U.S. operations in 2011 and is predicting 2013 revenue to exceed $3 billion. Salesforce is on a roll, but the company today is much different from the CRM (client relationship management) provider it was in 1999.

Where most business software providers at the time followed the model of selling clients a per-seat license for their solutions, which were then installed on corporate networks, Salesforce.com offered a new approach: a Web browser-based product where users paid per user/per month. This approach was far less expensive, faster to deploy and more easily scalable. In 1999, Saleforce’s slogan was “The end of software.” Today it’s “Welcome to the social enterprise.” The change in strategy has become apparent. The cloud remains key, but Salesforce has embraced Web 2.0 and social media, while increasing its scope from CRM to wider-scale enterprise management solutions.

New tools for collaboration

The company has undertaken a string of over a dozen acquisitions since late 2009, including GroupSwim (Web 2.0 interface on intelligent collaboration technology), Heroku (an early cloud application platform), Assistly (a cloud-based customer service platform incorporating real-time tools such as chat and Twitter), and, most recently, Rypple (management of corporate goal-setting, recognition and feedback).

As the acquisitions have been integrated into Salesforce’s suite of products (for example, Assistly was used to help Salesforce offer powerful customer support analytics, automation and integration with social media tools to smaller businesses through its own Desk.com customer support product), Salesforce has continued to expand beyond the traditional CRM market.

Its AppExchange introduced a mobile app market with solutions developed specifically to integrate with Salesforce solutions such as LinkedIn for Salesforce, PowerDialer for SalesForce, and Zendesk for Salesforce. Currently there are almost 800 free and paid apps available through AppExchange. With the acquisition of Rypple, Salesforce is posed to move into the human resources arena. According to Reuters, Salesforce EVP John Wookey is leading a new HR division that is developing software aimed at corporate recruitment and training.

Competing in the cloud

This continued expansion puts Salesforce into direct competition with established enterprise management giants like Oracle (NASDAQ:ORCL) and SAP (NYSE:SAP)—and not just in the CRM market, where the three have been battling for dominance for years. One key difference is that while Salesforce is working to expand its support for all enterprise management functions (such as HR capability) while operating from a firmly established cloud base, Oracle and SAP already have fully functional product suites and the customer base, but are faced with clients who are increasingly turning to cloud-based solutions instead of locally installed and maintained software suites.

Salesforce has also battled Microsoft (NASDAQ:MSFT) for customers in the marketplace and in the courts, after Microsoft incorporated cloud-based CRM and app market functionality in its CRM 2011 product.

With the rapidly growing popularity of social media—not just for personal use, but as a corporate communication tool both internally and for customer interaction—and a growing appreciation for the IT cost savings associated with cloud computing, Salesforce appears to be on track to leverage both into increased market share and a broader customer base.

Article printed from InvestorPlace Media, http://investorplace.com/2012/02/salesforce-embraces-social-media-and-the-cloud-crm-orcl-sap/.

©2017 InvestorPlace Media, LLC