Dreamforce 2019 - Salesforce and Microsoft are 'frenemies with benefits'...again!

Profile picture for user slauchlan By Stuart Lauchlan November 19, 2019
Summary:
It's been an on again, off again 'love story' for the cloud age, but Salesforce and Microsoft have come to a mutually beneficial understanding that should be good news for customers in the '"awkward adolescence" of moving to the public cloud.

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A variable that’s run across the 17 years of the Dreamforce conference has been the shifting nature of Salesforce’s relationship with Microsoft. It’s no different this year with a backdrop of the former announcing it will move parts of its Marketing Cloud offering over to the latter’s Azure public cloud platform. Peace, harmony and - brace yourselves - co-opetition have broken out…for now at any rate.

Back in the early days, the tension between the two firms was tangible. At its most nakedly exposed, this led to Microsoft sending in guerrilla marketers armed with advertisements showing a helpless Salesforce customer, ‘Bernard’, who’d been forced - see what they did there? - to use a CRM system he didn’t like instead of being a happy Microsoft customer as his heart desired.

Of courses sending in shock troops to crash the Dreamforce party was exactly the kind of PR stunt that Salesforce CEO Marc Benioff had used so effectively on Siebel to raise his own firm’s profile so this was never likely to end well. Nor did it.

Microsoft’s efforts to steal some attention backfired horribly when Benioff used his keynote to express his concern for the plight of 'Bernard', before summoning the poor man - in reality a stock image male model who’d been tracked down overnight and flown in - out on stage where to the cheers of thousands of conference delegates, ‘Bernard’ agreed that life was better with Salesforce after all. (Check out the video below for an example of marketing chutzpah on a grand scale!)

But there was ultimately glasnost and the cloudy Berlin Wall came down when Satya Nadella became CEO at Microsoft and found himself keynoting and feted over at Dreamforce as the two firms struck up a new understanding. At the time, I asked Benioff if like the rise of Gorbachev in Russia, this rapprochement was only made possible because of the new regime at Redmond. He affirmed that it would not have happened under the auspices of Nadella’s predecessor, Steve Ballmer.

It wasn’t to last. Less than 2 years later, Benioff was to tell me:

Turns out that ‘new Microsoft’ is pretty much the same as ‘old Microsoft’.

Shortly after Nadella made an abortive bid to buy Salesforce, a gambit that crashed on the rocks of an inflated asking price from the acquisition target. Then tensions rose again around Microsoft’s purchase of LinkedIn which attracted the ire of Benioff, who’d wanted a slice of that action himself, and led to Salesforce lodging anti-trust complaints with regulators.

Pragmatism

But flash forward to 2019 and pragmatism rules the day on all sides and Salesforce has added Azure to its list of preferred cloud platform providers, taking its place alongside Amazon Web Services (AWS) and Google Cloud Platform (GCP) ( as well as Alibaba Cloud in China).

And the new understanding goes further than Azure. Salesforce will also develop technology to integrate its Sales Cloud and Service cloud products with Microsoft’s Teams collaboration offering so that users can search, view, and share Salesforce records directly within the Microsoft product.

So everything is now on an even keel, even though Microsoft has its own competitive CRM products. But in a world where Microsoft can ally itself with Oracle and no-one bats an eyelid, anything is surely possible and so Nadella is quoted as saying:

In a world where every company is becoming a digital company, we want to enable every customer and partner to build experiences on our leading platforms. By bringing together the power of Azure and Microsoft Teams with Salesforce, our aim is to help businesses harness the power of the Microsoft Cloud to better serve customers.

Having a multi-cloud mindset is a pragmatic move in Salesforce’s part, not least because being able to offer different platforms is a help when it comes to international expansion. It’s also about beefing up the options for customers engaged on public cloud migration and transformation, says Ryan Atay, Salesforce EVP Strategic Partnerships:

We listen to our customers. But we have to continually hear what they're saying. And we have to also think through the scenario of, 'We're all in this digital transformation journey’. All of our customers, all of our partners, in fact even Salesforce, we're all going through this journey together and having an inclusive partnership strategy is very important.

As to what he means by that, he elaborates:

If you just take the public cloud for example, think about a scenario where companies are making this big bet and they're spending a lot of money to bring on premise workloads to the public cloud. That's a ‘big spend’ category for any CIO or CEO. So how do they deal with a scenario where they have Salesforce as the world's number one CRM, and needing that to be unified with a public cloud provider. That's a good example of why we partner with the likes of the Amazons the Googles etc.

And those partnerships vary in nature on a case-by-case basis, Atay adds:

That is a part of our strategy. If you think about this scenario where we are really focused on listening [to our customers], it also means that with each partner, ultimately there's some level of, we'll call it somewhat of being unique in terms of what every partner is created for. We talked about Microsoft. Microsoft has been a longtime partner of Salesforce technology partner for years with things like Outlook and Exchange and Office integration. Well, at this Dreamforce we're also talking a little bit more about that in the sense that our relationship is now focused on Azure for certain parts of the Marketing Cloud, as well as integration to things like Sales Cloud Service Cloud and then of course Microsoft Teams, where we hear a lot of asks and requests from customers.

This has been an evolving story, he admits:

We have an inclusive strategy and it’s always been that way. I worked on the very first Microsoft partnership! We've always had a long term relationship with them focused on technology, Outlook Integration, Exchange integration. So it's really natural for us to kind of continue forward and that I based on how the market has continued to change. I think the digital transformation point is very relevant because everyone's going through that stage.  Most of the folks we talk to, they're all Salesforce customers, but they're all choosing a public cloud - some are multi cloud, some are singe cloud - and so we have to be there. I think that's ultimately how we look and how we listen and it has to be part of our strategy.

My take

Microsoft and Salesforce - BFFs? BAEs? Maybe we don’t go quite that far, but certainly ‘frenemies’ and ‘frenemies with benefits’ at that. What was welcome in my engagement with both Atay and later Bret Taylor, Salesforce’s Chief Product Officer, was that the dreaded cliche of ‘co-opetition’ wasn’t thrown into the conversation as some catch-all justification for this latest twist in the tale.

Instead, to use the term one more time, there was pragmatism about the multi-cloud realities and needs of end users. Taylor summed the situation up thus:

Not all data is in Salesforce. Every single business I talk to has a public cloud transformation strategy, to Amazon Web Services to Azure to GCP. A lot of data is moving to a lot of the big data systems out there. A lot of customers are in this awkward adolescence of public cloud transformation. They've got these on premises systems, they've got Software-as-a_Service like Salesforce, and they have this move to the public cloud. So in that world how do you build a single view of your customer? How do you create that single source of truth and customer data?

It has to be all of these pieces of technology working together...we don't exist in a vacuum, we work with every technology vendor. That means when we go to a customer we can have a simple conversation which is, ‘What is the customer experience you want to create, and how can we help you craft that?'.

And the past is the past, he added:

We're not going to put any sort of historical things in the way of driving the success of our customers.

That’s good news for existing and future customers of both Salesforce and Microsoft.

But you know, as Dreamforce 2019 gets underway today, I can’t help but wonder whatever happened to 'Bernard'…