Public sector cloud spend is back, says Salesforce CEO Benioff

SUMMARY:

Public sector IT spend is coming back, argues Salesforce senior management, at least in the US.

$20 billion here we come

US government spending on cloud is coming back, reckons Salesforce CEO Marc Benioff, as the firm boasts about becoming the first enterprise cloud firm to pass the $10 billion run rate.

That boast is important to Salesforce both corporately as a sign of achievement and ongoing growth, and on a more personal level after Benioff’s rival/mentor Larry Ellison of Oracle laid claim to his firm being the first to hit that milestone.

So it was with some glee that Benioff insisted yesterday that it was Salesforce that had won the day, telling Wall Street analysts:

Salesforce is the first enterprise cloud software company in the history of the industry to reach the $10 billion run rate. No competitor has pierced $10 billion this fast, not Oracle, not Microsoft, not SAP…We now set our sights on $20 billion.

Officially Salesforce is predicting a full year growth rate of 24%, although Benioff admitted he’s hoping for a bit more:

I have personal dreams of 25%. I think that would be amazing. No software company went through the $10.4 billion number at these rates. And so, when we had a chart a couple of weeks ago, Microsoft’s growth over 30 years, Salesforce’s growth, Oracle’s growth, SAP growth and wow, we really separated ourselves from those traditional growth trajectories. And I feel that that’s going to continue to happen.

In the overall Salesforce revenue mix, public sector spending, certainly in the US, is coming back into play, he argued,  citing a win with the Department of Veteran Affairs to expand its use of Service Cloud, Wave Analytics and Salesforce’s Platform Cloud. Benioff said:

We’re so excited to be able to align with the agency to go to build these next generation systems for them. I think we started to see government spending come back on line this quarter, really for the first time. And so, we’re very excited about what the future could mean, as the government looks to build next generation systems, looks to move to the cloud and provide better service and support to its customers.

Transformation

His comments were backed up by Salesforce President Keith Block who noted:

It’s clear that the government is really trying to accelerate digital transformation, and that’s why the Veterans Administration is yet again another example of trying to drive that transformation, leveraging our technology.

Block emphasised the importance of the public sector as a key vertical for Salesforce:

Our public sector team is one of our highest performing organizations of the company. Over the last four years, tthey have done incredibly well in terms of expanding their capabilities in all branches of the government, both federal and state and local. And that has been very, very exciting for us.

I think we all know that the government is trying to undertake some sort of digital transformation. This is nothing new. It actually started under the Obama administration. And the CIO under the Obama administration was one of our former employees [Vivek Kundra]. And he was very keen on introducing the cloud to the Federal Government. So, we’ve just picked that up and continued.

Since the election of Donald Trump as President of the United States, the technology industry’s relationship with the White House has been subject to a great deal of scrutiny. Many tech vendors turned up to support the new technology council set up to improve government IT.

But following the rioting in Charlottesville and controversy over Trump’s later comments, attributing blame to both Nazis/KKK/White Supremacists and anti-fascist protestors, many business leaders have quit a number of the administration’s various taskforces, including IBM’s Ginny Rometty, a key Salesforce ally of late.

For his part, Benioff took time yesterday to articulate Salesforce’s stance, stating:

As the world has watched with all of us the horrors of the last week taking place in the United States and Spain. The pure hatred that we have seen displayed is everything we all want to end. And I’ve been especially disheartened to see the display of symbols of hatred including Nazi flags and salutes to KKK hoods. The horrible tragic death of Heather Heyer was a senseless act of terror and this hatred must end now.

Salesforce is a company that is built on the values of love, equality and generosity. We work hard every day to improve the state of the world through our own work and promote our Company’s mission to others. We all have to recommit to our own personal acts of love and kindness as this is the only way to fight this pure hatred. We can all make our own choices between love and hate, and we can all love more. Now is the time for all of us to remember, ‘Love thy neighbor as thyself’.

Outside of the US, Salesforce is seeing benefits from its partnership with Amazon Web Services, now running its offerings in AWS data centres in Canada from last month and with plans to do the same in Australia later this year.

In the 2nd quarter, Europe accounted for 18% of total revenue, with the firm now having expanded presence in the UK, France and Germany. Block said that with the forthcoming General Data Protection Regulation (GDPR) coming from the European Commission, Salesforce would be delivering specific services around this:

We’re committed to helping our customers comply with the forthcoming GDPR, including a GDPR website, a new Trailhead module and the contractual addendum to assist our customers with compliance. This fall, we will be publishing product-specific best practices and we will have several sessions at [the] Dreamforce [conference in San Francisco].

 

Image credit - WEF/Salesforce

Disclosure - At time of writing, Oracle and Salesforce are partners of diginomica/government

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