What Sales­force means for the fu­ture of busi­ness

Financial Mirror (Cyprus) - - FRONT PAGE -

CNBC’s David Faber re­ported last week that Sales­force re­jected a $55 bln takeover bid from Mi­crosoft. Founded in 1999, Sales­force has built a vast net­work of clients for its in­for­ma­tion man­age­ment soft­ware sys­tems. As we en­ter a new era, where com­put­ers han­dle most of our an­a­lyt­i­cal think­ing, it is cru­cial to take a step back, and con­sider what the Sales­force phe­nom­e­non means to the fu­ture of busi­ness.

Sales­force CEO, Marc Be­nioff, has been dubbed “the King of Cloud.” Af­ter 13 years of work­ing for Or­a­cle, Be­nioff be­gan Sales­force at age 34. “My goal is just to fo­cus on my cus­tomers, and make them suc­cess­ful,” says Be­nioff. To­day, Sales­force has be­come a lead­ing dig­i­tal con­sult­ing com­pany for global brands like Coca-Cola, Com­cast, L’Oreal, Voda­fone, Home De­pot, and many more.

The idea be­hind Sales­force is sim­ple: to rev­o­lu­tionise the way com­pa­nies han­dle their enor­mous quan­ti­ties of data. It was not long ago that most data was stored away in nondig­i­tal files. To­day, Sales­force is a world leader in cus­tomer re­la­tion­ship man­age­ment (CRM), even sur­pass­ing Mi­crosoft and Or­a­cle. Their se­cret is util­is­ing tech­nol­ogy to help com­pa­nies be more ef­fi­cient. The Sales­force soft­ware is de­signed to op­ti­mise sales, mar­ket­ing, and cus­tomer ser­vice.

In its most re­cent earn­ings re­port, the com­pany re­ported $1.51 bln in sales. Most an­a­lysts are valu­ing the com­pany at $49 bln, but that num­ber seems to keep grow­ing. Sales­force owns 18% of the mar­ket, and has seen rev­enue rise at a whop­ping 28.2%.

So, will CEO Marc Be­nioff ever sell?

The ru­mours in Sil­i­con Val­ley are that Be­nioff gave Mi­crosoft a min­i­mum of­fer of $70 bln for his com­pany. When Mi­crosoft CEO Satya Nadella de­clined, the ne­go­ti­a­tions broke down. Nadella said that he would need some more time to con­sider whether such an enor­mous deal would be worth­while for Mi­crosoft in the long run.

But, let’s put things in per­spec­tive for a mo­ment. Peo­ple who fol­low the news might re­mem­ber how in 2009, the Walt Dis­ney Com­pany ac­quired Marvel En­ter­tain­ment Inc. for $4 bln. Within the fol­low­ing six years, Dis­ney used its ex­ist­ing as­sets to su­per­charge the Marvel movie pro­duc­tions. Since be­ing ac­quired by Dis­ney, Marvel has cre­ated four out of the world’s top ten high­est-gross­ing films of all time, gross­ing a com­bined $5.12 bln.

Now, let’s take a step back and con­sider the num­ber Be­nioff is ask­ing for: $70 bln. In a rapid­ly­chang­ing world, Sales­force will have to con­tinue to in­no­vate to re­main rel­e­vant, and de­spite Sales­force’s great rep­u­ta­tion, Nadella would surely be tak­ing a big risk.

Ac­cord­ing to Gart­ner, a tech­nol­ogy re­search firm, the CRM mar­ket is worth $23 bln an­nu­ally. Dan Ives, an an­a­lyst for FBR Cap­i­tal Mar­kets, be­lieves Nadella is still con­sid­er­ing the takeover bid.

“Sales­force is the golden jewel in the cloud,” says Ives. “Given its lead­er­ship po­si­tion and stel­lar brand and dis­tri­bu­tion, all that would have fit well within the Mi­crosoft ecosys­tem in our opin­ion.” Nadella’s dilemma ex­presses a new re­al­ity in the world of busi­ness. In­for­ma­tion will con­tinue to be shared in ev­erin­no­vate ways, and those at the heart of the trend, will make a buck or two.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.