Salesforce-native cloud ERP vendor FinancialForce has started 2017 with a new CEO. Tod Nielsen, who joined this week, has held leading roles at VMware, Borland, BEA and Microsoft, and was most recently EVP of Platform at Salesforce. He succeeds founding CEO Jeremy Roche, who will remain as an advisor while taking a new executive role at Unit4, which spun out FinancialForce as a joint venture with Salesforce in 2009.
Nielsen joins as FinancialForce approaches the $100 million mark in annual revenue run rate, after a year of around 40% revenue growth. While that’s a point where some companies might contemplate an IPO, Nielsen told diginomica yesterday in an exclusive interview that he’s not focusing on exit goals right now:
It’s day three [in the job]. I’m not really focused on the exit game as much as how do we go from a hundred million to a billion or beyond.
I’m looking at success metrics around how do we scale, product development, unique values and so on.
Massive move to cloud ERP
With a career that’s been entirely on the platform side of the software business until now, Nielsen says that his move into the application layer is motivated by a belief that enterprise adoption of cloud applications, and cloud ERP in particular, is about to surge.
I think we’re at a tipping point with the cloud. We’re at this milestone where the next wave of apps are going to make a move.
When you look at the addressable market of ERP, I think the cloud adoption of back office ERP applications is still early days. I think there will be a massive move as the cloud goes into ERP.
A critical factor, he explains, has been a recognition among enterprises that it’s no longer possible to fend off cyber security threats without relying on the resources of a large-scale cloud provider.
What had kept customers away from the cloud has been trust.
What’s happened is, the bad actors have become so sophisticated and so talented, unless a company is going to spend millions of dollars to keep their security measures up to date, not putting your data in the cloud is kind of like putting your money under the mattress.
Combined with the need for agile, integrated business systems, that will drive enterprises towards solutions on the Salesforce platform, he argues:
There will be a massive opportunity for Salesforce to be a safe harbor.
In this market, speed is the new currency. When you look at the need to have back office systems run well and be cost-effective, they’ll be looking to make those solutions native to their workflows.
That’s consistent with FinancialForce’s messaging in recent years, which emphasizes the ability to mesh data and processes across CRM, finance, project management, billing and spend management.
But Nielsen believes FinancialForce may have over-emphasized its Salesforce credentials at the expense of building a more distinctive brand image for itself. Comparing it to other leading Salesforce-native ISVs, he says:
When I look at the ecosystem of Salesforce ISVs, FinancialForce leads strong with the Salesforce platform card. If you compare that to Veeva or ServiceMax, they lead with, ‘Here’s our identity and our value prop to our customer’ — and in the course of the conversation, the platform comes out as a value-add.
I think establishing the FinancialForce identity above and beyond the Salesforce platform is something we need to do.
FinancialForce grew out of Coda2go, which was one of the first tranche of native applications to launch on the Salesforce platform back in 2008. Initially part of the Coda family of financials applications, it was spun out and renamed as FinancialForce in 2009 as a joint venture by Unit4 — which by that time had acquired Coda — with Salesforce.
Unit4 has since been acquired by private equity investor Advent International and still owns a majority stake in FinancialForce, which has amassed close to $200 million in venture finance from Advent and other investors, including a $110 million round led by Technology Crossover Ventures.
Roche, who was CEO of Coda prior to its acquisition by Unit4 and sits on the Unit4 board, is set to return to Unit4 in a new executive role to be announced next week. He will continue to have the title of Founder at FinancialForce and act as special advisor to the management team. Nielsen says:
Jeremy’s a friend of mine and we’ll have a very peaceful handover between Jeremy and I. He’s still my ‘phone-a-friend’.
Nielsen became CEO of Salesforce PaaS unit Heroku in 2013 and subsequently Executive Vice President of Platform at Salesforce before stepping down in March last year. Previously, he was Co-president of the Applications Platform Group and Chief Operating Officer at VMware. He has also served as CEO of Borland, held senior roles at Oracle and BEA Systems, and spent 12 years with Microsoft in various executive roles, including GM of Database and Developer Tools and VP of Microsoft’s Platform group.
In a press statement, Salesforce EVP of CRM Applications and FinancialForce board member Mike Rosenbaum gives Nielsen a glowing endorsement:
Tod has the knowledge, business acumen, and management skills that will help FinancialForce scale.
He’s grown organizations to billions in revenue and I’m thrilled to have an executive of his caliber at the helm during this pivotal stage of growth.
This is an interesting choice by FinancialForce, given Nielsen’s platform-centric experience. He evidently has the connections to forge stronger alliances within Salesforce and across the ecosystem, but will also have to prove he can listen to enterprise application buyers and persuade them of the merits of FinancialForce.
It will also be interesting to see Roche’s next move at Unit4, to which FinancialForce still has strong ties, and where he will be able to apply the rich experience learned in the cloud-native applications world.
Nielsen wasn’t saying much about market strategy in our conversation yesterday beyond talking about brand-building. I suspect it will be a few months before we start to understand the full impact of his arrival on future strategy. But whatever choices he makes, he will have his work cut out. Cloud ERP may be about to surge, but there are plenty of contenders out there looking to grab a slice of the market. It’s a tough one to take on.
Image credit - via FinancialForce
Disclosure - FinancialForce, Oracle, Salesforce and ServiceMax are diginomica premier partners. FinancialForce is an occasional consulting client of the author.