Make no mistake: Saleforce.com's ambition is to become the next Oracle. But given that the company just reached an annual revenue run rate of $3 billion, it has a long way to go before it will catch Oracle's $37 billion in annual revenue. That said, here's a look at how it might get to $10 billion within the next few years.
Saleforce.com gets outsized attention compared with similarly sized software vendors (CA has a $4.6 billion run rate, for example) in part because it's easy to lose perspective when you're at a massive event like Dreamforce. Last week's conference in San Francisco was attended by more than 85,000 people, according to Salesforce, which CEO Marc Benioff clams makes it "the largest vendor-led event in the technology industry." That means it has arguably surpassed Oracle Open World, although we'll see if Oracle succeeds in scaling up that event, which is set for next week in San Francisco.
It's tough to say just how much both of these vendors are padding their event numbers with cheap passes that also get attendees into headliner evening rock shows by the Red Hot Chili Peppers (Dreamforce) or Pearl Jam (next week's Oracle Open World). Salesforce, for example, distributed such passes at San Francisco area college campuses.
[ Want more Dreamforce news and analysis? Read Salesforce.com's Benioff Preaches To New Flock: CMOs. ]
As for the real content of the event, Dreamforce presenters kept up a steady stream of the words amazing, fantastic, incredible, and awesome to describe the company's various announcements and customer stories. And to emphasize the generational difference between Salesforce and incumbents like Oracle, Salesforce execs also talked incessantly about how business is changing and, with it, sales, service, marketing, and software development practices. It's only natural, went the logic, that technologies and technology providers must change for the cloud, mobile, and social era.
Oracle and others can certainly attempt to acquire and organically grow their way into cloud and mobile delivery, but Salesforce has succeeded in setting itself apart as the leader of the "social revolution" for the enterprise. It certainly helps that Facebook is a big Salesforce customer and partner. During a marketing keynote, a Facebook exec announced that Salesforce.com is at the top of a list of new "Preferred Marketing Developer" partners. That status will give Salesforce early access to new Facebook social marketing and social advertising features.
Salesforce played the "next generation" card to the hilt. At one point a youthful Facebook executive opined during a keynote video that the company is "building a next-generation enterprise for a next-generation workforce with next-generation tools." And customer presenters from Burberry, Coca-Cola, Ford, GE, Virgin and other companies chimed in as well, mostly because they, too, want to be and be seen as being social savvy.
To emphasize the changing of the guard among tech vendors, Benioff said during his keynote that Salesforce is "standing on the shoulders of giants, the leaders of our industry who have come before us." The list included "the incredible leadership of Bill Gates and Larry Ellison in creating client-server computing." How's that for a back-handed compliment painting Oracle CEO Ellison into the past?
There's no doubt that Benioff will keep mining the contrast between Salesforce.com and decades-old tech giants. Just as Larry Ellison can't change the fact that he's 68 years old, Oracle can't change the fact that at $37 billion in revenue, it's nearly impossible to achieve double-digit organic growth (which is why it pursues acquisitions aggressively). As evidence, Oracle last week reported a 2% decline in revenue for it's latest quarter ended Aug. 31. Sales of new software, including cloud services, surpassed expectations and grew 5%, but Salesforce.com, meanwhile, keeps racking up 30%-plus revenue gains. The latter has a much smaller base, but double-digit gains get people excited.
Now that Salesforce has six product lines--sales force automation, customer service, marketing, collaboration, human capital management, and cloud development platforms--there are plenty of avenues for more fast growth. The sales and service applications both lead their respective cloud categories, but they can continue to gain overall CRM market share by replacing Oracle Siebel, SAP, and other on-premises systems. Oracle held 11.0% of the CRM market in 2011 versus 9.9% for SAP and 9.5% for Salesforce.com, according to IDC. The total CRM market grew 11.2% in 2011, according to IDC, so Salesforce.com's 30%+ sales growth is clearly translating into market share gains.