I don’t have any shares in Salesforce but if I did I’d be dumping them.
We’re rapidly approaching peak CRM as far as Salesforce are concerned. They are making a huge investment in Europe. They hope this will give them new momentum. As they will discover, Europe is a different market to the USA. Culture, privacy and security are approached very differently in Munich and Amsterdam than they are in New York and Chicago. If they are looking at Europe as the new frontier to maintain their stellar growth, they’re likely to be disappointed.
In Europe they are also faced with the world’s most popular open source CRM. SuiteCRM is a European based project. The project’s people spend a lot of time in the airport lounges of the major European cities between visits to the ever increasing customer base of globally-scaled, enterprise-class organisations who have opted for SuiteCRM in preference to Salesforce.
Functionally, SuiteCRM is as rich as Salesforce Enterprise. That it costs a fraction to deploy and maintain goes without saying. That there is no vendor lock-in is a major attraction. That the consulting and implementation services meet the needs of the enterprise helps. Big business has a simple choice – expensive and proprietary or reasonable and open source. Increasingly the big beasts of business in Europe are declining to engage with the big beast in CRM. They’re choosing open source.
Increasingly the big beasts in Salesforce’s home market are reaching the same conclusion and questioning the value that they get from a very expensive application.
The glory days are over for Salesforce. CRM is commoditised business logic and the market is starting to understand that.
In 10 years, open source will dominate the application stack in the same way that it does the infrastructure stack and where does that leave Salesforce? They have bet the bank on continued 30-40% year-on-year growth and eventual world domination at an unfortunate time. They’re prepared to tolerate continual losses in order to achieve the goal. The timing isn’t great and the stars aren’t aligned.
Anecdotally, we hear of cannibalisation of the existing customer base. Faced with a sluggish growth market, one of the available methods is to turn up the heat on the existing customers in order to keep revenue growth on forecast.
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