Sunday 21 January 2018

'I wanted a deeper relationship with SAP but I think they're scared of Salesforce'

Interview with Marc Benioff, Chief Executive,

Marc Benioff, chief executive officer of In
Marc Benioff, chief executive officer of In
Bill McDermott, CEO of SAP, one of the largest Business Software Companies
Oracle CEO Larry Ellison delivering the keynote address at the 29th Oracle OpenWorld in San Francisco

As the technology industry undergoes a once-in-a-decade shift in how companies buy computing power, takeover rumours among the biggest players are rife and pot shots are flying, writes Aaron Ricadela chief executive  Marc Benioff said his counterpart at rival SAP SE rebuffed an offer to have the business-software makers work more closely together after customers asked for greater technical compatibility.

SAP's Bill McDermott resisted the overtures, Benioff said in an interview at a customer conference in Munich.

He noted that Salesforce has struck technology and data sharing deals with Oracle, Microsoft and VMware.

"We offered an olive branch to them," Benioff (50) said.

"I've told Bill I've wanted to have a deeper relationship with them. Yes we're competitors, we should also be partners. He's scared of Salesforce."

As the technology industry undergoes a once-a-decade shift in how companies buy computing power, Benioff's company has attracted takeover interest, fueling a 19pc rise in San Francisco-based Salesforce's market value this year.

Microsoft, Oracle and SAP are sacrificing traditional business-software licences to book sales of cloud-computing tools delivered via the internet. Salesforce's rapidly growing customer base has become a coveted asset.

An SAP spokesman declined to comment and referred to remarks McDermott made in May, in which he said Salesforce's "prices are going to drop and revenues will be under pressure".

Benioff has spent the past weeks in Europe, pitching to customers in Germany, Paris and London and even meeting the Pope in the Vatican. During a recent speech, he said Salesforce plans to invest more than $1bn in Germany over the next five years as the company seeks to add customers in industries including carmaking and machinery. Its first German data centre, operated by Deutsche Telekom, is set to open near Frankfurt.

Bloomberg reported in April that Salesforce was working with bankers to field takeover offers. Microsoft evaluated a possible bid for Salesforce, and Benioff and McDermott held strategy talks last year that included a potential acquisition of Salesforce, according to people with knowledge of the matter. Benioff "is in the pole position", said Brent Thill, an analyst at UBS Group in San Francisco who has a buy rating on Salesforce. "The other companies need him way more than he needs to sell."

As sales of traditional software licences slow or decline, Benioff, Oracle chairman Larry Ellison and McDermott are increasingly taking potshots at one another.

Ellison is predicting he'll outpace Salesforce in new cloud sales this year. McDermott has said he has "zero interest" in acquiring Salesforce and Benioff said in the interview his goal is "to replace SAP as the third-largest software company."

Salesforce has been on a tear. The company in May raised its fiscal full-year revenue forecast to as much as $6.55bn, or as much as 22pc growth on top of last year's 32pc rise. There's also about $9bn in deferred revenue from software subscriptions to be booked as sales in coming years.

Benioff is also thinking about his future and advocates greater philanthropy from companies and business leaders. He's donated money to healthcare projects and aligned Salesforce with various charities.

"That's what gets me excited every day," he said. "I don't think I'll be running another technology company" in 10 years. And he's not considering running for office. "I'm not at all interested in politics. This is kind of a perversion. If a CEO starts talking about issues - women, gay rights, racism - all of a sudden they're a politician." (Bloomberg)

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