Salesforce opens new front against SAP/Oracle as it ups forecast

Arriving at Dreamforce, the general consensus among my colleagues was that we were about to join the mother of all vendor parties that would leave (some of) us with monster hangovers but little of substance to soak up the excess alcohol. And so it seemed as the first day's press releases dribbled through.

Salesforce1 (mostly rebranding) combined with a slew of APIs drew a semi snarky tweet from me.

By lunchtime I was kinda bored and looking forward to partner and customer meetings. But then came the latest earnings announcement accompanied by a foretaste of the big keynote which is slated to start at 9am PT tomorrow.

Aside from the eye catching 36% rise in revenue and (near matching) 34% deferred revenue, Marc Benioff, CEO Salesforce.com slipped the following into his prepared remarks:

The Salesforce1 platform is the number one platform for developing next-generation cloud apps and the only solution rated by Forrester as a leader in every single public cloud platform category that's why the growth of our developer and ISV communities been nothing short of spectacular and you are going to see just an increase in that as you see our new Salesforce1 platform now with 10 times more APIs than ever before. We now have more than 1.4 million developers on our platform, an increase 75% from last year ISV community grew more than 70% since the third quarter of last year and we have already had more than 250 major ISVs including DocuSign and Evernote; and LinkedIn who signed up to build next-generation of apps on the Salesforce1 app exchange...

...Now, first, I am delighted to announce, we have extended our relationship dramatically with Hewlett Packard in the quarter. HP started sales transformation with the Sales Cloud, and now with the addition of the Service Cloud and the Salesforce platform, HP plans to transform the way they connect with their entire ecosystem of customers and partners. Just moments ago, Salesforce and HP also announced a new strategic partnership in cloud computing to jointly develop and market the Salesforce HP Superpod.

There are two big things here: platform and enterprise cloud.

It's all about the platform stoopid

In the pre-cloud world, most analysts I know concurred that the integrated suite always wins. That's been evidenced time and again, and especially at SAP where it remains the world's largest ERP player. Until it recently stalled on Business ByDesign, SAP was the only cloud vendor with a comprehensive integrated suite play. Now, I am of the opinion that going forward, the platform wins.

Don't get me wrong, cloud does not do away with integration but as we are starting to see, vendors like Workday in tandem with partners like Appirio and Deloitte, are showing that it is reasonable to think about assembling a suite from best in class components. ISVs like FinancialForce have shown that you can build a class of application that companies need (financials) inside the Force.com platform. Others like Rootstock in manufacturing have demonstrated that you can build outside the Salesforce.com platform and still get a good integration to other back office solutions.

So yeah - more APIs sounds dull at first blush. But then when you start seeing how Salesforce.com is facilitating a platform it claims has driven transactions of over $1 billion a year into the partner ecosystem and you also see how the platform becomes a force multiplier. In short, Saleforce.com is building a self operating money printing press. It's working.

The enterprise cloud

Salesforce.com still has a lot of runway ahead of it with its bread and butter offerings. Customers I meet are increasing investments, some consider Salesforce.com to be core to their business. You never hear that from other vendors' customers. Even so, Saleforce.com has always had the problem of adequately satisfying the needs of global customers. The HP announcement changes that.

Apart from giving HP a much needed cloud shot in the arm and assuming Salesforce.com engineers listen to HP engineers, Salesforce.com could well be positioning itself to do a serious end run around both SAP and Oracle. How.

Most companies at the top of the food chain - the Global 2000 are eschewing cloud for the moment. With a handful exceptions, none of them are prepared to run apps at scale in the cloud. Add in the NSA shenanigans and there is every reason to keep cloud apps out.

And while the Salesforce.com spin doctors have done an excellent job of reminding us that this is 'single instance multi-tenant' what they REALLY mean is that global companies can have a private cloud version of Salesforce applications.

If you're Oracle and SAP reading this then that's got to hurt but then they should have already realized this. Oracle has for sure. I'm less certain about SAP, which clings to client/server. Its argument in deals that the Salesforce.com public cloud is inherently less private is no longer valid. And if you factor in that Salesforce has long signalled the opening of a data center in SAP's backyard and you see where this goes.

In short, Benioff used the earnings call to prime the inquiring pump about how Salesforce.com will launch its next attack against its big competitors.

Verdict

None of this gets away from the fact that Salesforce.com/Force.com has significant weaknesses that SAP/Oracle can exploit. But...with a growing portfolio of top global brands, customers who are deepening their engagement and the weapons to attract an army of developers you've go to believe that Salesforce.com's stated trajectory of $5.2 billion revenue in 2014 is achievable.

We will learn more tomorrow as Benioff cracks the whip in his version of PT Barnum's three ring circus and brings Meg Whitman, CEO HP on stage to dig into the detail. Most of the audience won't care. Those of us who concentrate on big enterprise will be glued to our seats, ears straining to catch every nuance.

Disclosure: SAP, Oracle, Workday, FinancialForce.com and Salesforce.com are premier partners. Salesforce.com met some of my T&E to attend Dreamforce

Bonus update: Alan Lepofsky is positively upbeat about Saleforce1. Video at top of post.

Spoiler alert: Phil Wainewright thinks the HP element is...ummm...bunk. Watch for his story...coming very soon.