Salesforce's Q3—the highlights: During an abbreviated U.S. holiday workweek, Salesforce released its third-quarter financial report, beating analyst estimates for revenue and profits on a non-GAAP basis. As the industry's largest pure SaaS vendor, Salesforce is an important bellwether regarding broader technology trends and the buying appetites of customers. To that end, CEO Marc Benioff and other executives provided more color and insight during a conference call with analysts. Here are some of the key highlights.
- Salesforce has promoted Bret Taylor to president and chief product officer, and Alex Dayon to president and chief strategy officer. Taylor is former CTO at Facebook and the founder of Quip, a collaboration application startup Salesforce acquired in 2016. Dayon is a longtime executive at Salesforce, coming aboard in 2008 when Salesforce bought his company, call center tech provider Instranet, which became the core of Salesforce's Service Cloud offering.
Taylor takes over the CPO job from Dayon, which seems like a desire by Salesforce to put someone with the most serious and up-to-date technical chops in charge of product direction and marketing (both will report directly to Benioff). Thus, Taylor's ascension may prove to be significantly more than an executive deckchair move with respect to Salesforce's product strategy going forward.
Salesforce's initial user experience, referred to as "Aloha" internally, has been succeeded by Lightning, which was introduced a few years ago. While Lightning's uptake has "far exceeded our expectations," Salesforce sill has "a huge amount of work to do" before getting all users on Lightning, Benioff conceded on the call.
Lightning should be viewed not just as a new interface but as a "decoded platform," Taylor said:
This means that people are experts in their business who are not necessarily experts at computer programming can make meaningful business applications that transform their companies and transform their relationship with their customers. So, it's truly an enabler.
- Salesforce is landing more "wall-to-wall" deals with large companies as they start with CRM and then add the rest of Salesforce's clouds for support, marketing and other areas, but the process tends to be evolutionary rather than big-bang, president Keith Block said.
The appetite to digest a full wall-to-wall digital transformation from the first interaction with the CEO is actually very, very rare. Typically it is, 'we love the vision, we understand what the future brings, whether it's a B2C platform or B2B platform, what artificial intelligence and Einstein can bring, but let's start off incrementally and prove the value and then we can go wall-to-wall.
- The channel is becoming much more crucial for Salesforce all the time. Partners now account for more than 50 percent of Salesforce's new business, Block said. The world's biggest systems integrators are in turn making plenty of money with their Salesforce practices, and have the relationships to pull together deals Salesforce couldn't necessarily complete on their own:
In my trip to Europe last week I was with the CEOs of two of the five global firms. They have incredible reach. They are in the boardroom. They are able to paint a vision alongside with us many times we go into the boardroom or with the sea levels we together. Just as important is our ability to drive the success of the customer and that's where we need these very close relationships with the SIs.
What Whitman leaves for Neri at HPE: Hewlett-Packard Enterprise also released earnings this holiday week, and along with them a piece of news that was at once a surprise yet not entirely unexpected save for the timing. HPE CEO Meg Whitman will leave her post in February, after more than six years on the job.
During Whitman's tenure, she oversaw a historic breakup of the former Hewlett-Packard into the consumer-centric HP and HPE. Whitman made another series of changes at HPE, selling off its services business and much of its software catalog, while investing billions in companies such as storage vendors SimpliVity and Nimble as part of a push into "hyperconverged" infrastructure products.
Neri is a longtime HP employee who began in 1995 as a customer service engineer for the EMEA region. He worked his way up the executive ranks in both consumer and enterprise-oriented roles, and has served as HPE's president since June, when Whitman launched a new strategic plan called Next. As such, Neri has obviously been groomed to be Whitman's successor for some time.
He was also the architect behind many of HPE's recent acquisitions, which are driving its hyperconvergence strategy. As incoming CEO, Neri seems to have a wide-open runway to test it out at scale. Moreover, Whitman's HPE Next plan was finalized in time for the start of its new fiscal year on November 1; Neri will need to continue executing on it, but the big decisions about operational efficiency—cost-cutting, in other words—have already been made.
While HPE has undergone the transformation into a smaller, more focused company Whitman said it would, what it does seem to lack is some sizzle in its public identity. Whitman brought the star power that Neri has yet to develop on his own.
But there are parallels to draw between his ascencion and that of Microsoft CEO Satya Nadella, who took over from the larger-than-life Steve Ballmer and like Neri, has engineering in his roots. Microsoft today is a much different company in tone and approach than under Ballmer's leadership; assuming Neri maintains the support of his board, shareholders and employees, significant changes could be afoot at HPE over the next couple of years.