AI, Integration and Digital Transformation Drive Salesforce Strategy

Analyst Event Highlights European Growth

On 20 June, Salesforce held its analyst summit for Europe, the Middle East and Africa (EMEA) in London. It shared its perspective on the company’s European business, as well as an update on its strategic priorities and engineering investments. Although no official news was announced at the event, the day provided an interesting snapshot of how the company positions itself, and the bigger picture of how Salesforce sees its development beyond its core market for customer relationship management (CRM).

Europe is Salesforce’s Biggest Growth Market

Salesforce’s Executive Vice President of EMEA, Paul Smith, kicked off the event with an overview of Salesforce’s business in the region, which has been very strong in recent quarters. The company reported global revenue growth of 25% in its 2018 financial year, but the European region boasted impressive 39% growth in the year and built on that trend in the first quarter of its new financial year with year-on-year revenue growth of 44%.

Some of this growth can be attributed to acquisitions made by Salesforce over the past couple of years: its Commerce Cloud product (from its acquisition of Demandware in June 2016) has been opening up new customer opportunities in EMEA. In addition, the recently launched Integration Cloud, which incorporates the MuleSoft technology acquired in May 2018, has helped to accelerate some sales engagements.

Salesforce EMEA is also seeing increasing CEO-level involvement in the sales conversation with potential customers; it claimed that seven in every 10 first-quarter sales wins involved the customer’s CEO. Although Mr Smith would not be drawn on country-specific details of overall growth in EMEA, he did point to particularly strong growth in the Central and Southern European regions, although admittedly from lower bases, and noted that the region as a whole has one of the lowest customer attrition rates across the company.

Salesforce is keen to capitalise and build on this growth, and recently announced plans to invest $2.5 billion into the UK business over the next five years. This will be used to further increase staff numbers and office space, as well as building data centre capacity in the UK.

Integration Cloud and MuleSoft

The most anticipated topic among the analyst audience at the event was the strategy for Salesforce’s newest offering, Integration Cloud, following completion of the acquisition of integration company MuleSoft in May 2018. Bret Taylor, Salesforce’s Chief Product Officer (and former CEO and founder of Quip, which Salesforce acquired for $750 million in August 2016), explained that customers are increasingly investing in multiple Salesforce products, which is driving demand for them to work together in new ways. This is in turn driving the company’s focus on enabling a “360-degree view of your customer”, connecting the processes enabled by its Marketing, Commerce, Sales and Service Cloud products.

The MuleSoft AnyPoint Platform creates the concept of an application network, enabling an organisation to connect its applications to that network through the creation of application programming interfaces (APIs) that expose data for use in other systems. A key advantage of MuleSoft’s approach is that the APIs are designed to enable reusability; this aims to minimise the development effort as more systems are integrated and so improve the return on investment in subsequent integration projects.

The acquisition of MuleSoft was an interesting move: as an independent integration provider, MuleSoft appeals to customers because of its ability to connect any type of technology. Some customers were — perhaps unsurprisingly — concerned when Salesforce announced plans to acquire the company.

Salesforce insists it is committed to retaining the neutrality of the platform for clients, and will continue to work with other integration providers where appropriate, running MuleSoft as an independent business unit. For Salesforce, the acquisition makes a lot of sense: the two companies already had several common customers, such as Unilever and Asics, and MuleSoft’s capabilities will help to grow the company’s customer accounts through a more connected portfolio.

Investment in Artificial Intelligence Gains Pace with Einstein

Since its launch in September 2016, Salesforce’s foray into artificial intelligence, Einstein, has been a central focus for the company’s development and marketing strategies, and was again a major theme at this week’s event (see Dreamforce 2017 Shows Progress in Salesforce’s Push into AI).

Marco Casalaina, head of product management for Einstein, highlighted some recent additions such as Einstein Forecasting, which predicts the probability that a sales deal will close and for how much, and Einstein Prediction Builder, which allows customers to create custom predictions using yes/no questions, numeric predictions and rules.

Salesforce sees Einstein’s biggest opportunity in Commerce Cloud and Marketing Cloud, which are generating the bulk of the more than 2 billion predictions created each day on the Einstein platform. The company acknowledges that it’s still early days in terms of adoption and identifying applications for artificial intelligence, but highlighted customers already using Einstein in full production environments. A good example is Irish recruitment provider CPL, which showed off its application of Einstein artificial intelligence that predicts the job placement success of candidates based on historical data and offers suggestions on how to improve the conversion rate for candidates.

Growing Opportunities in Digital Transformation

As organisations in all market sectors start to explore the opportunities that digital transformation brings, it’s not surprising that this is a growing focus within Salesforce’s strategy. Although its stronghold — in terms of revenue, market positioning and primary software development focus — remains the sales and marketing division of an organisation, Salesforce is increasingly seeing customers viewing improved CRM as the first step in a broader digital transformation.

This presents considerable opportunities for Salesforce, particularly to sell its other products to customers, and is a major reason behind the increased number of CEOs engaging in the sales process, as outlined earlier.

Salesforce is addressing these opportunities in a number of ways, most notably through its Salesforce Ignite customer innovation programme, which helps customers identify ways to transform their organisation, enabled by Salesforce technology. This helps dramatically grow the customer account for Salesforce and strengthens the relationship with the customer, and for this reason the engagement is offered to customers for free. Salesforce admits that it is just scratching the surface with digital transformation, but it’s clear that investments such as MuleSoft play a major role in enabling this in future.

Little Emphasis on Engagement and Collaboration

Two areas of Salesforce’s portfolio and strategy were conspicuous by their absence: from the event: Community Cloud, the company’s platform for employee, customer and partner engagement, and Quip, its collaborative productivity tool. Community Cloud was a headline product in the Salesforce portfolio just a couple of years ago, but it is increasingly being sold as an add-on to other products, particularly Marketing Cloud and Commerce Cloud, where it adds online communities to customer and partner engagement activities.

Even though it’s not part of the headline story for Salesforce, the employee-focused side of Community Cloud still plays a role in the company’s offerings in employee engagement and digital skills, particularly in the UK, where Quip is also an important aspect of the offering.

As Salesforce’s focus on enabling digital transformation and supporting the digital workplace grows, engagement and collaboration tools will need to be critical parts of the company’s overall positioning. Although, realistically, it is unlikely to escape the shadows of Salesforce’s CRM business in the near term.