Salesforce.com's Benioff lays out future strategies

Benioff: Salesforce.com will focus on vertical markets, marketing software and an expanded partnership with SAP

Salesforce.com's second-quarter earnings conference call featured the usual dose of chest-thumping by CEO Marc Benioff as the company posted US$957 million in revenue and raised its full fiscal year forecast to at least $4 billion.

But the call also revealed some telling details about the company's strategic direction and growth. Here's a look at the highlights.

Going vertical, Oracle style: Salesforce.com recently brought aboard former Oracle sales executive Keith Block, who left that company last year after instant messages in which he was critical of Oracle co-president Mark Hurd surfaced as part of a lawsuit with Hewlett-Packard.

While Block's departure was inevitable, he was considered a key to Oracle's growth and success. And he's currently filling an important hole in Salesforce.com's strategy, Benioff said on Thursday's call.

"One thing Salesforce.com has never fully optimized for is enterprise distribution and the ability to reach the largest customers in the world with highly customized solutions for their industries and their verticals," he said. "You saw how Keith executed that strategy extremely well at Oracle over the last 26 years, and we look forward to seeing him execute a very similar strategy enhanced for Salesforce."

As a bonus, Block has poached Oracle sales executive Tony Fernicola, who Benioff claimed is "perhaps the most successful sales executive from Oracle of all time."

Siding with SAP: Salesforce.com has long used Oracle's technology under the hood of its platform, despite the fact that Benioff and Oracle CEO Larry Ellison have butted heads publicly for years.

While it's not clear how much of their banter has been competitive theater versus rooted in true animosity, it was still shocking to see the companies' recent announcement of Salesforce.com's long-term commitment to Oracle products, as well as the subsequent warm-and-fuzzy conference call between Benioff and Ellison.

As part of the deal, Oracle will also integrate Salesforce.com's CRM (customer relationship management) with its own cloud-based HCM (human capital management) and financials software.

Now Benioff wants to do it again, in a sense.

"It's my hope and I believe that we will be able to develop and create a similar alliance with SAP," Benioff said on Thursday. "I believe it's in the interest of their customers and our customers that Salesforce works well with Oracle, works well with SAP, and even works well with Microsoft, because our customers have these existing investments that we want to leverage."

In 2011, Salesforce.com announced a set of consulting and integration services SAP customers could use to "unlock" data from their back-end systems and build social connections between employees and customers.

To this end, Salesforce.com signed one of the "largest platform transactions in our history" in the quarter with food distributor Sysco, which was already implementing Salesforce.com CRM, Benioff said.

"We're able to take their huge investment in SAP back-office and put on a customer-facing capability that they badly needed but SAP was not able to deliver for them," he said. "I believe there's a lot of SAP customers that are in a similar position."

Benioff also alluded to Salesforce.com putting its software on top of implementations of HANA, SAP's in-memory database.

Targeting ExactTarget: Earlier this year, Salesforce.com acquired marketing software vendor ExactTarget, dropping $2.5 billion on the deal in its largest-ever purchase. Marketing will become a $1 billion annual revenue stream for Salesforce.com, Benioff has said.

Work is underway to make that prediction a reality, according to Benioff.

For one thing, ExactTarget has had a "rather boutique" sales organization, he said. For Salesforce.com to get the most out of ExactTarget, sales representatives need to act as if "there is no difference between selling the ExactTarget Marketing Cloud, the Sales Cloud, the Service Cloud, or the Platform," Benioff said.

Combining the marketing products sales teams is "one of the most important things that I work on every day," Benioff added.

Over time, customers can expect a "comprehensive application" encompassing ExactTarget as well as Salesforce.com's Radian6 social analytics product and its Buddy Media and Social.com advertising platforms, Benioff said.

Deluge at Dreamforce: Salesforce.com's Dreamforce event in San Francisco this November will be its biggest yet. More than 120,000 are registered to attend it so far, according to Benioff. Last year, the total was around 90,000.

While Salesforce.com has offered keynote and expo passes at no charge, which certainly helps inflate those numbers, the year-over-year growth is nonetheless significant.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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