In my preview to this week’s Dreamforce conference I posited that an awful lot has happened to Salesforce over the past year, so much so in fact that the question might reasonably be asked, ‘Is this a different company to the one it was at the time of the last Dreamforce?’.
An ideal person to answer that question is Brian Millham, the firm’s Chief Operating Officer and a man who’s been with the company since 1999 when he was employee 13. If anyone’s in a position to comment on how things have changed over the past year, it’s him. His response is refreshingly candid:
From Dreamforce to Dreamforce, we’re always a different company in terms of the innovation that we're delivering for our customers, how we organize around our customers, what we're doing to deliver value anchored on our customer success. We've certainly had some changes, there's no doubt about it. We've been through some shifts in the business, as everyone knows. So yeah, we're a different company.
But change is a constant, he adds:
Twelve months ago at Dreamforce, we weren’t talking about generative AI. When we kicked off our [fiscal] year in February, it wasn’t really part of our consciousness. That's the pace of innovation that's happening. Whenever you see that sort of acceleration in the pace of innovation, I think the company changes - where you invest, how you're investing, making the appropriate investments we make in the AI world.
Of, course, running alongside that pace of change are the headwinds from the macro-economic climate against which no company is immune. Millham says:
Tech has obviously been hit hard over the last 12 months and I think many many companies went through a difficult time. But I think you're seeing companies settle down and start to invest in the future and to make investments in areas like AI. Using us as an example, we've had tough times, but we're through them. Our results are outstanding in terms of the way we were able to deliver great margins for the quarter. So now we're back to investment areas. Where are the investments for growth, where are we going to go put our dollars that we've done a very good job of freeing up?
We work very hard to make sure we're delivering results. We are also investing in other areas of the business [than AI]. We think about growth. It’s all about growth for products and markets that are really growing fast. As an example, our MuleSoft business is really performing exceptionally. So as we shape our business going forward, we're going make those investments to drive growth along with the innovation that we've seen.
Spend, spend, spend?
But are customers ready to dig deeper into their corporate wallets or is the macro-climate still making them nervous? Millham argues that the appetite is still there:
People are still driving transformation. They want to do that work. In the second half of the pandemic, they wanted to do big projects or transform their entire companies. We've seen a compression on those large transformation deals. They still want to do them, but they're taking smaller bites, [doing] smaller, faster time-to-value projects that they can prove out to show ROI and then come back and do more.
I hope to see IT spending increase. I think it really will. I think people will have to make trades over IT spend and what's important. What are the critical things that they need to spend on? We do the same thing internally - what are we going to spend more on? We're certainly in a measured buying environment in technology right now. It's not the easiest time when selling software. But I do believe that as the pressure comes from board to CEO down to the executive teams, they have to find a way to find ways to free up budgets. I hope to see spending increase, but even within the existing envelope of spend, we will see people moving dollars around to spend on what is important.
That being so, I wondered about how helpful Salesforce’s recent decision to hike prices is in terms of encouraging more spending. On the latest earnings analyst call, Millham said:
We're going to see the impact of our price increases really hit the customer base over the next one to two to three years.
So will we see a lot of grumpy users at next year’s Dreamforce? Millham doesn’t think so:
It's actually been a very neutral [reaction]. Customers recognize that we've innovated quite a bit over seven years. We have not raised our prices in seven years. It has been well-received as much as any price increase can be well-received. It's been a somewhat non-event [in terms of] our customers talking to us about the price increases right now. Now, we will stay close to them, as we always do from a customer success perspective, and ensure that we're bringing value.This will be a multi-year process as has been described. We think it's appropriate.
The AI bit
In terms of what customers will be spending on, AI is the obvious candidate given the hype cycle of the past six months. Millham says that in his engagements with CEOs, AI is indeed the main topic of conversation:
I think it's coming from the board to CEOs to employees, all saying, 'What is our AI strategy? What are we doing with it? How come we don't have a strategy yet?'. What we want to help our customers do is iterate to get there, to show them how they can leverage our technology so they can start to see the benefits. In many ways they've looked at us and they're asking for our guidance. We've done a huge enablement within our own organization to make sure that we can have effective conversations with our customers as they come over to AI.
We've been leveraging AI for quite some time for really great insights into our forecasting, customer usage, and where we see opportunities to help our customers get more value from our technology. So it's been part of who we are. We get one trillion predictions a week right now on our predictive AI. As we move into this new [generative] world, we’ve built our own Large Language Models [LLMs], I think we have four of them right now. We have an opportunity to continue to do that work with an incredible research team. They're incredible developers who are out building these.
But we also recognize that people are going to bring their own LLMs that are industry specific, region specific, product specific. We want to make sure that we're supporting the open nature [of these] so that we have the ability to snap in these models [on top of our platform]. What we want to do is put the customer at the center of everything.
A confident, articulate positioning of Salesforce and its strategy from an executive who has pretty much seen it all over nearly a quarter of a century with the firm. That last thought prompts one last question - what is it that makes Millham stick around? It’s a question that visibly cheers him as he concludes:
I'm deeply loyal to the business. I love it. We're doing good and doing well at the same time. That's something that really matters to me, that it's not just about building this great company with great revenues. It's also about giving back. The culture that we build around our people, that's really important to me. I love the people aspect of this business. I stay because I love working with great people and I love what we do for our customers. The value we get being at Dreamforce is just validation for why I want to be at Salesforce. I love being here. It's great. It's really fun.
See you same time, same place, next year, Brian!