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Marc Benioff: "There are a lot of ignorant people out there"

20th Aug 2010
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The CEO is bullish after a 25% increase in revenues - but is lamenting the number of people ignorantly behind enterprise software. 

"I'm very bullish on Cloud Computing." Coming from CEO Marc Benioff that is what might justifiably be called an understatement. "I'm definitely so bullish about social networking, I'm so bullish on Cloud, I'm so bullish on mobile."
OK, so Marc Benioff is pretty bullish across the board. Still, he has much to be bullish about this week as the share price shot up on the back of a 25% increase in revenues for the latest financial quarter. While profits took a tumble on expenses, Wall Street looked at the revenue growth and declared them a validation of the power of Cloud Computing.
"Cloud Computing is so exciting to customers because certainly for our customers it's a CapEx free environment," says Benioff. "They are not buying hardware, they are not buying the kind of traditional capital expenditures necessary and taking on the risk to deliver automation into their companies. We have to really look at Cloud Computing as where the action is in our industry."
Certainly's revenue run rate is impressive, approaching $1.6bn and with a 25% increase year on year in the second quarter, growing at its fastest rate in six quarters. During the most recent quarter says it added roughly 4,600 net new customers organically as well as gaining 500 unique customers through the addition of data integration firm Jigsaw.
Forced into upgrades?
So where's this momentum coming from? Actually the heartland sales force automation market is still the happiest hunting ground for, if not the fastest growing. The Sales Cloud offering represents roughly two-thirds of's new business and is clocking up "surprisingly strong" growth rates.
It's the Service Cloud business that sees the highest growth rate right now, although Benioff reckons that fewer than 10,000 of total 82,000 customers currently use it. "Where we really see the growth is you've got a lot of customers out there on old products, really old technology like Siebel," he says. "They are being forced into upgrade situations, which are massive IT projects and companies do not have the money. They don't have the IT budgets. They don't have the people to do these new deployments of Siebel upgrades. That's just not going to happen.
"So they are being forced into making a decision which is what do they do next. The easy decision is go with the Service Cloud, because we can move you from your Siebel call centre or contact centre into a Cloud Computing modern approach and you're not going to have to buy any plastic to do it."
The third spoke is the Platform as a Service offering which delivered 21 billion transactions during the second quarter, an increase of 44% year-over-year. "To date, our developer community of more than 280,000 developers has created more than 600 million lines of code, up more than 7 times from a year ago and more than 1.6 million custom VisualForce pages, up more than 5 times from a year ago, and more than 170,000 custom apps up roughly 50,000 from a year ago," says Benioff.
The secret sauce
The most recent addition to the stable is the Chatter social networking offering. It's clear that Chatter is seen as the 'secret sauce' to give the necessary added flavour to existing offerings, particularly "A larger and more diverse community of users makes the platform more attractive to both CIOs, our core customers and ISVs as the best place to build their next generation enterprise Cloud apps, natively right on our platform," explains Benioff.
Chatter is about transparency, he argues. "Email does not give you transparency. When you're in Outlook, you don't really know what's going on in the company. You're seeing these email messages flying by," he explains. "With Chatter, you're able to really see what's happening and you can make better decisions.
"[A client CEO] had a major deal that was working on in a telecommunications' company that he didn't know about. He was able with Chatter [to see] all of his employees, what they are doing, watching their collaboration, going through all the slides. All of a sudden he saw that they were having a hard time working with the manufacturing department of his company. So he called the manufacturing department and said 'you need to help these guys who are working solely with this telecom company'. He said that was the greatest thing for him that he could relieve the organisational friction."
While the firm pitches its four Cloud approach – sales, service, collaboration and platform - there's a fifth element now with the acquisition of Jigsaw. "Jigsaw is super exciting for our company because it's all about data," says Benioff. "Getting data into very high value apps to make them even more valuable. Cleaning up our customers' data, just giving them access to the data they need to make decisions, being able to really transform the apps into instant volume. By the time we get to Dreamforce [in December], you'll see some really great and exciting announcements in terms of where we are going with Jigsaw."
How to label
With all that going on, it does raise the question of how to label as it's moved considerably beyond its sales force automation roots. Cloud rival RightNow recently declared that it was moving away from being seen as a CRM company. Benioff doesn't go quite so far, but does say: "Are we a CRM platform company instead of a CRM applications company? Yes, I think so. But, there are also a lot of other apps that are non-CRM apps that are on the platform as well.
"So, are we a platform company? Absolutely. Are we a Cloud platform an apps company? Absolutely. Our long-term vision for our company is that we are really the leaders in this Cloud platform, in Cloud apps and in Cloud data. That's very much the direction that we continue to move."
There's still a lot of work to be done, he concludes. "There are still a lot of people out there ignorantly behind enterprise software when they shouldn't be," he laments. "[It's] only because they don't know and we can't bring them the good news and the enlightenment that the world has changed and that they can have a better thing. That's why there is still a lot of plastic being sold and shipped."
"We need to let millions of potential customers out there know that they don't need to buy software anymore; that you can consumer it directly over the internet. We only have 80,000 customers. Michael Dell at Dell was telling me he's got 10 million customers. I am like 'how are we going to get to 10 million customers?'. He has got the benefit of being in business for multiple decades; we're only in the business for one decade. The demand is there and just needs to continue to execute."

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