With the Dreamforce jamboree around the corner, the timing of HP Inc’s announcement that it’s signed a six year CRM deal with Microsoft could have been better for Salesforce.
On the other hand, it could have been a damn sight worse - if it’d been Oracle that had won the gig, the announcement might have come on the morning of the main Dreamforce keynote!
Oracle also loses out here as it has been HP’s main service software provider, but it’s the Salesforce angle that has caught attention.
It was in 2014 that Salesforce flagged up HP as one of its largest deals, an Oracle/Siebel kick-out that came on the back of the rapidly festering relationship between HP and Oracle.
Such was the importance of HP as a customer that Salesforce even created the Superpod, allowing the former to run Salesforce on HP’s own servers in the Salesforce data center.
Since then, of course, HP has split into Hewlett Packard Enterprise and Hewlett Packard Inc. It’s the latter of the two that has opted to sign up with Microsoft for Dynamics CRM. HP Inc's 6,500 sales people and 20,000 service employees worldwide will in future be using Microsoft’s sales and service software, with the shift taking place over the coming 18 months.
As of last night, Salesforce’s only official comment was an unattributed emailed one liner:
Salesforce remains committed to the success of HP Inc as a customer and partner.
Whether that means that HP Inc intends to keep using some Salesforce offerings or refers to the migration period was not clear, but HP COO Jon Flaxman said in his own statement:
We have chosen Microsoft Dynamics as our CRM solution for our direct selling, partners and services. This brings us a cloud-based solution that delivers a more effective and efficient collaboration engine across our business.
With HP Inc’s core business being selling printers and PCs, it’s inevitably had a close relationship with Microsoft, so the decision may not be that surprising to Salesforce. HP Inc had already invested in Office 365 and Azure, so the Dynamics defection can’t have been entirely unexpected.
Microsoft’s been notably non-triumphalist in its announcement, although in July at its Worldwide Partner Conference it had flagged up what it said would be one of its largest ever CRM wins.
Microsoft beating Salesforce?
In a further pre-Dreamforce irritant for Salesforce, Synergy Research Group put out its Q2 market report with the claim that Microsoft is now the largest provider of Software as a Service (SaaS). This is based on the firm’s observation that Microsoft had a 15% share of worldwide SaaS revenues in Q2, ahead of Salesforce on 14%.
However, on closer examination, the devil's in the detail. Without downplaying Microsoft’s success in growing its SaaS revenues, its proclaimed leadership here is based largely on ERP and Collaboration sector growth, so we’re not exactly talking an apples and apples comparison with Salesforce's offerings here.
While it’s possible to squeeze an opportunistic headline out of the findings - and the 'Microsoft-beating-Salesforce' spin is the lazy one that’s been largely followed by many who should know better - the reality is somewhat different. Synergy itself admits:
The [SaaS] market remains somewhat fragmented with each major segment featuring a different leader. Microsoft is dominant in collaboration while Salesforce dominates the CRM segment. Other leading SaaS providers include SAP, Oracle, Adobe, ADP, IBM, Workday, Intuit and Cisco. Among the top ten companies Oracle achieved the highest growth rate followed by Microsoft.
On a more upbeat note for Salesforce, the firm chose yesterday to flag up this year’s Salesforce Economy report from IDC, which is predicting that the worldwide Salesforce ecosystem will enable 1.9 million new jobs within its customer base, a further 2.8 million jobs indirectly and $389 billion of new revenue over the next five years.
(The research firm defines the Salesforce ecosystem as including providers selling additional cloud services (such as storage or security); services, consulting, implementation, integration and training providers; hardware and networking firm involved in supporting Salesforce roll-outs. Not all ecosystem companies are formally registered partners of Salesforce.)
IDC reckons that by 2020, every $1 made by Salesforce will results in $4.14 somewhere across the ecosystem. That in turn would mean that between 2015 and 2020, the ecosystem would pull in north of $100 billion in new revenue.
Who benefits from that? Well, the US picks up two thirds of the financial benefit, while two thirds of the new jobs will come in so-called emerging, low labor costs markets. The UK comes in second in terms of business revenue created, well ahead of France and Germany where Salesforce has also been heavily investing in growth.
However, as the data was compiled prior to the 23 June Brexit vote, IDC adds a caveat that its predictions represent “the upper bound of forecasts” for both the UK and the rest of Western Europe.
Three bits of Salesforce-centric news in the closing run-up to Dreamforce - the good, the bad and the don’t-look-too-closely.
The HP Inc defection is, as I say above, quite a logical development when the context of the firm’s business model is taken into consideration, but nonetheless it doesn’t send out a great message given the flagship status accorded the ‘old’ HP as a Salesforce customer.
The Salesforce Economy research is a nice piece of promotional material that makes for interesting reading, but which, thanks to Brexit, may not ultimately be as accurate as IDC might hope.
As for the Synergy Research, good work on grabbing some easy PR, but the market’s a far more complicated beast than a few lazy headlines would suggest.
(Still two weeks to go before Dreamforce kicks off - and I’m exhausted already!)