Microsoft, Oracle, SAP, and 100,000 Missed Sales Opportunities

On a third-quarter earnings call last Tuesday, salesforce.com founder and CEO Marc Benioff announced that his company had reached 67,900 net paying cloud customers. Presumably, this doesn’t include the 7,500 nonprofits and non-government organizations that are using it for free.

The updated tally represents an addition of 4,700 net new customers in the quarter, and an increase of 16,100 customers over the last four quarters. The new business helped fuel a 20% revenue jump over the year earlier period. This is a nice contrast to the weak application license results reported by Oracle and SAP in their latest earnings calls.

If you take the 67,900 figure and add Concur’s 9,000 customers, NetSuite’s 5,000 or so, Taleo’s 4,200, and SuccessFactors’s 2,850, you end up close to 90,000. If you add Ariba, Kenaxa, Intuit, RightNow, Saba, and all of the others who are busy crafting e-mails to admonish me for excluding them, we might end up with a universe of 100,000 unique companies using SaaS or cloud applications.

While not all of these companies would make good Oracle or SAP customers because of their size or software needs, my point is that their lack of a strong cloud offering has caused them to miss out on  a lot of sales opportunities and seats. At the Dreamforce luncheon, Marc mentioned that his company currently supports 2 million subscribers. On its website, SuccessFactors brags about touching 5.4 million users.

It’s worse for Microsoft. In addition to missing out on CRM and ERP licenses, the delay of the long-promised Azure offering has allowed Google to attract more than 2 million companies to Google Apps. Some 3,000 businesses sign up for Google Apps every day.

And these aren’t just startups. The roster of Office and/or Outlook defectors include Avago (5,600 users), City of Los Angeles (30,000), District of Columbia (38,000), Genentech (17,000) Mead Westvaco (17,000), and Valeo (32,000).

If you believe the old adage that “the trend is your friend,” salesforce.com’s strong results in a crappy economy prove that people will find money for software they value. If you talk to CIOs who are salesforce.com customers, they are shifting more of their current/future applications to the cloud.

Maybe there’s no one left in Redmond that remembers the impact that Microsoft (and Lotus indirectly) had on Wang and the other word processing companies. Wang refused to be commoditized by being in the software-only business. Instead, it hung on too long to the high margin hardware business until lower cost PCs killed that market.

Microsoft is scheduled to have Azure offerings ready early in the new year. Oracle has CRM On Demand, but little else. The new Fusion applications are at least a year, maybe two, from shipping. SAP has a smorgasbord of offerings—including single-tenant CRM, the multi-tenant Frictionless Commerce platform, and the third-party HCM software from NorthgateArinso. If I’m Marc Benioff or the CEOs of the cloud/SaaS companies mentioned above, I continue to be thankful for the head start that Microsoft, Oracle, and SAP keep extending.

Comments?

Comments

[Greytip Online]

"...people will find money for software they value" well said.
If you look at in domestic market in India, there is a positive trend among small business promoters towards process automation. I think SaaS made intelligent software solutions, affordable for all. The success of SaaS HR & Payroll, CRM, Project Collaboration tools etc proves this.

[lora cecere]

Hi Bruce

On the road last week, I met an executive that is saving 1000$ an employee using google applications. I agree that Microsoft is losing out.

Safe travels.

Lora

[fallen earth chips]

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