Marc Benioff – why Microsoft is Salesforce’s new BFF

SUMMARY:

Microsoft is Salesforce’s new BFF and it’s all down to CEO Satya Nadella flipping the switch on partnerships.

BFFs
BFFs

As CEO Marc Benioff noted drily yesterday when we met up, there’s been quite a lot written this year about Salesforce’s relationship with new-found BFF Microsoft.

That is of course in no small part due to those rumours that Microsoft offered $55 billion to buy Salesforce, a sum reportedly turned down by Benioff (who sources claim was after $70 billion as a better asking-price).

That whole episode is now seemingly in the past – and obviously off-limits for public discussion – but one thing is certain: the two firms now have a genuine partnership in place that is delivering for both sides.

Phil’s covered off CEO Satya Nadella’s keynote session at Dreamforce, but there was a surprise earlier in the day when, during Benioff’s own keynote, Microsoft was revealed as the surprise first customer for the Salesforce IoT Cloud.

Microsoft will use the platform to combine application log files across its Office suite, alongside point of sale, device installation and customer support data, in order to get a complete view of the customer. This data will then be used to target individuals across the whole customer life-cycle, from acquisition and on-boarding through servicw and support to renewal and churn management.

It’s a perfect example of the changed nature of the relationship between Salesforce and Microsoft, who have been, and still are, competitors in the CRM marketplace.

It’s all a far cry from the Dreamforce in 2010 when Microsoft did a spot of guerrilla marketing at the conference, plastering the surrounding streets with posters of a CRM user called Bernard who’d turned to Microsoft to break him free of Salesforce. ‘I didn’t get forced,’ was the strapline for Bernard.

The bad old days
The bad old days

Benioff’s response was to get his team to find the model used in the adverts, wheel him out on stage in front of the assembled Dreamforce audience the next day and get ‘Bernard’ to renounce Microsoft and return to the Salesforce congregation. It was something of a marketing coup du grace that totally undermined Microsoft’s attack.

Brave new world

But that was then, this is now and it’s a brave new world. I spoke to Benioff yesterday about the new dynamic that’s been in place since May 2014 and asked what’s so special about this relationship with Microsoft. He told me:

It’s a multi-dimensional relationship where they’re a customer, they’re a competitor and we’re their competitor, and we’re their partner and they’re our partner.

It’s an aggressive move, but it’s worth it. It’s also positioned us. We’re not afraid of Microsoft. We want to embrace that energy. We want to bring it in. No-one else is doing that. Who else is doing that? Oracle? SAP? Nobody else is doing that.

Echoing his argument that Dreamforce itself must pivot around the customers and what they want, he added that the same is true of the tie-up with Microsoft:

We do it in the name of the customer. Customers want us to work with Microsoft. They have a lot of Microsoft technology. They have legacy Microsoft technology and they’re interested in some of the new stuff that Microsoft is doing. We have to work with Microsoft.

It’s a two-way street with benefit for both sides, he added :

There’s an ebb and flow of course and there’s a high level of reciprocity that is important to Microsoft. There’s tit for tat. We have also been embedded in their keynotes. Salesforce has been featured in all the Microsoft keynote this year in the first 15-30 minutes. They are pitching to all their customers and all their developers about the relationship also. It’s not one sided by any means.

At the core of all this is of course the emergence of Nadella as CEO. In London last year, Benioff told me that there was no way the alliance with Microsoft would have happened under former CEO Steve Ballmer. It’s a point he made again to me yesterday:

Ballmer was just anti-partnership. So Satya flipping that switch has been super powerful for us. Steve was just so fixated that he had to be number one in CRM, which obviously they’re not, that it took out any other opportunity to partner, which is silly. We can compete. We can win some deals, we can lose some deals and we can still be partners.

My take

The new world order in action.