Earlier in the week as part of a panel session, I asked Salesforce President Keith Block about the impact of the macro-economic and political uncertainties in the world on buying decisions and whether this was slowing down progress in adoption of new tech.
Block gave a customarily thoughtful response then, but it was a point I picked up with him later when I had a chance to sit down with him on his own in order to drill down into a bit more detail. He told me that that while there are clearly those uncertainties out there, there’s been no slowdown in investment:
There is a very healthy appetite to continue to spend around this whole notion of digital transformation. I visited a major US bank. The statistic used to be that 90% plus of the IT budget was spent on regulatory issues and maintaining the legacy systems. This bank said that this has eased off. They believe in the promise of what the current [Trump] administration is talking about in terms of lightning up the regulations, so they’re starting to shift their IT spend more towards innovation, without that stuff even passing yet.
If you at the propensity of customers to spend, if you look at current spend and historical spend v future spend, you look at the legacy players who are the historical spend, but the future spend is companies like us and Google and Amazon. So there is definitely a shift away from maintaining the legacy and into a world of innovation.
Depending on what your risk profile is and what industry you’re in and how much money you have to spend, you’re going to take a different approach. So people are in different places. Some are rip and replace. Some are looking to do this very gradually and rap something around [what they have] and do it very very carefully. It really depends on the type of company and the commitment of the CEO and their appetite for risk. But in either case, there’s definitely been a shift towards spending on the future.
One of the things that Salesforce has done to encourage greater and quicker adoption of new tech is to launch its Success Cloud this week. This is pitched by Block as “a big deal” in terms of enabling and encouraging take-up of new solutions:
In our model the customer success is everything. In a perpetual licence model, you can sell it and leave it on the shelf and the deployment risk is all on the customer. In our model, everything is about customer success and adoption. Attrition is a very bad word for us.
And despite some speculation among commentators, this isn’t a move into the services business to take on the likes of Accenture or IBM Bluewolf. Block said:
In the services industry over the next few years, we believe there’s going to be a 33% CAGR, so that’s a lot of room for everybody. At the end of the day, whether it’s us doing it or our partners doing it, we have to make sure that this mutual ecosysytem is driving customer success. We’re not doing anything that’s disproportionate to the market place. We’re not growing faster than anyone else in the services marketplace. But it’s important for us to have the capabilties so that any customer who wants to have a relationship with us based around design thinking, we have those skills.
It is interesting to note that while 10 years ago the big Systems Integrators (SI) would not have graced Dreamforce, this year the main sponsors are Accenture, Deloitte and IBM. There’s money on both side to be made out of partnering, but it doesn’t work the way it did when Accenture opened the US boardroom doors to SAP in its earlier days, said Block:
We get a lot of leads; they get a lot of leads. It’s a two way street. That model has changed a bit. We’re in the board room just like [the SIs] are in the board room. Sometimes we bring them in, sometimes they bring us in, sometimes we go together. It’s a healthy relationship. But it’s a different model [to the SAP] one.
For its part, Salesforce has been expanding its in-house domain expertise in order to open its own doors in specific industry verticals. Block noted:
For example, we hired someone who ran technology and operations for the New York Stock Exchange. I was with him in Japan and went from one Japanese financial customer to another. Just the credibility of ‘I’ve been in your shoes, I understand, let me talk to you about the good, the bad and the ugly, things you need to think about’, just that level of bonding and credibility is very very powerful. We now have a lot of domain expertise. Probably by 2020, 80% of our field organization will be organized by vertical market.
One vertical that is proving healthy is the public sector. Block has recently been the Salesforce ambassador to the White House as part of President Trump’s initiative to transform US government technology strategy. Block believes that this is a genuine endeavor:
The good news there is that they are looking for the oportunity to transform government technology. You have to applaud that – as long it’s done in the right way. The design intent is good as long as the policy is executed correctly. That business, public sector, is very strong for us. The message we’re getting is still Cloud First. I think it’s very real.
Meanwhile there has to be enormous potential for an uptick in business in the UK as Brexit approaches and the realisation dawns on ministers and officials of the scale of the systems rewriting that’s going to have to be done before the Brexit cut-off. The agility and speed-to-deployment of cloud technologies has to come to the fore here.
That said, Block says he’s seen no signs of outreach from the UK authorities to date on that front, but adds:
There’s a parallel in the US in that there’s an incredible amount of legacy code. There’s an ageing population and they’re the only ones who know that technology. We’re talking about Cobol! So there’s a bit of a burning platform. There’s only two paths here. One is you need to accelerate transformation, because there is that burning platform. Or you can go backwards and say, ‘This is your problem’. Personally I think going forward as quickly as you can is the right answer because you’re never going to get out of this if you just keep perpetuating this.
As for post-Brexit Britain, Salesforce has made a significant investment in the UK, as well as in France and Germany, and there will inevitably be an impact on how it conducts business whatever form of EU exit occurs. For now, Block isn’t in a position to have a firm point of view:
It’s hard to tell. We have to follow the lead of what this thing turns out to be, if it really is a year from now or if it gets postponed. We’ve got a healthy business in the UK. We’ve got a strong business in Europe. We’ve got great customers, we’ve got great people. We have our eye on the ball, but at the end of the day we have to see what happens. Somehow we would find a way to work within the constraints of whatever comes out of this thing.
All of which brings us back to those damned uncertainties…
A good conversation to close off my personal Dreamforce agenda.
Image credit - Saleforce