Friday, February 27, 2009

Salesforce announces fourth quarter results

This past Wednesday,’s announced that revenue for the quarter (that ended January 31, 2009) increased by 34% over the same period a year earlier. Even deferred revenue, which is a good barometer of new sales made by the company, was up by more than 26% quarter over quarter -- from $470 million in the previous quarter (ended Oct 31, 2008) to $594 million.

Obviously, the dramatically lower up-front costs of a Software-as-a-Service (SaaS) make that model very attractive to firms who are looking for ways to minimize large capital expenditures. And just as obviously, CEO Marc Benioff will take every opportunity he can to remind listeners of this point....

" is proud to be the first billion dollar cloud computing company," said Marc Benioff, chairman and CEO, "At a time when capital is precious, big-ticket software purchases just don't make sense."

Does this mean that your firm should pursue a SaaS strategy for your Customer Relationship Management system?
Not necessarily.

The fundamentals of your decision haven't changed. Sometimes, a SaaS solution makes perfect sense... especially if you have a highly mobile field salesforce. At the same time, however, making a switch to a SaaS model isn't the best option ... especially if your current CRM solution isn't hurting your business. And of course, it's absolutely critical to remember that the only way a CRM will help your business if it actually and really helps the salesperson on the street.

Nevertheless, I see this as relatively good news for the economy in general. Salesforce claims to have signed up 3,400 new clients in the quarter, bringing them to more than over 55,000 total clients and more than 1.5 billion subscribers. This tells me that firms are still willing to invest in improving their business. And that can only lead to good things, in the long run., Inc.: CRM (NYSE)
Earnings announcement from Salesforce: Announces Record Fiscal Fourth Quarter Results

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