Transmutation in the C Suite
My sources tell me that Salesforce.com will be handling its major Dreamforce announcements differently this year. Rather than letting us drink from a firehose at the event, they promise to tell us much of their news beforehand so that they can spend the keynotes (I assume) drilling down into more of the substance of their announcements.
So far, I've only been briefed under NDA, so there's not much I can report. But the earnings call from last week gave some insight into what might be on the table in September. During the call with analysts, President, CEO, Chairman and cofounder Marc Benioff talked about some of the product lines and his interest in making the Marketing Cloud no. 1 in its space. You can read the whole transcript here.
The Service Cloud has passed the $500 million run rate and is well on the way to being a billion-dollar revenue generator for the company, according to Benioff. That's important because the company is very keen to show it is more than an SFA vendor, and half a billion bucks draws some attention.
Giving CMOs 'Their Own Fighter Jets'
But Benioff's major focus was on the Marketing Cloud, which was first announced last year with the acquisition of Radian6 for US$300 million and enhanced by the purchase of Buddy Media.
At the earnings call Benioff said, "We believe that CMOs are going to want their own cockpit to fly, their own fighter jets, because honestly, CMOs are going to start spending much more than CIOs in technology." You can't argue with that.
But more interestingly, he went on to say "IBM has said that, a lot of companies have said that. We agree with that, and we want to invest so that we can take advantage of that spend."
All right then.
But this raises some interesting questions. In any company there are pockets of power. The CEO has the most, but each of the C-level officers has a turf to defend. If the CEO is king, then the others are dukes and princes. So the thing I want to know, which is unknowable now, is whether the CIO will become more like the CMO or if the CMO will become more like the CIO? Will both positions survive?
These are interesting questions. Over the last 30 years, each of these titles has evolved out of almost nothing and, believe it or not, each has traversed roughly the same path from geeky silo to strategic thinker. CIOs came out of MIS, which at one time was focused on keeping all the green lights flashing and writing programs for reports. But the CIO became a player when he or she got an MBA and began contributing strategic ideas about how IT could help the company save, and especially make, money.
The CMO has a similar founding myth. Marketing became captive of the CFO when computer-based financial systems began to show the truth of the old maxim, "Half my marketing budget is wasted. I just don't know which half." Over time, according to friend and CMO consultant extraordinaire Thor Johnson, CMOs have also taken the MBA route and begun talking less in the board room about mailings and hit rates and more about revenue, costs and benefits.
The glue that keeps the CIO and CMO inextricably bound is IT, but IT isn't what it was when this all started. IT today, as Benioff's company has been positioning it over time, is positioned more at the line of business. The marketer has less need for IT in a world that is increasingly socialized through products that can be manipulated almost as easily as an iPad.
Also, with products like those from Salesforce and other cloud providers, costs are lower, and therefore budgets can shrink somewhat. This is not to say that IT and the CIO are becoming relics or that there are no big technology hurdles left to overcome. Just the opposite. But when we start to look at budgets, money is power, and the dukes and princes all want more.
So that's the genesis of my question -- will the CMO become more like the CIO or the reverse? This kind of quandary is rarely Boolean, and so a dark horse like the CRO (chief revenue officer) becomes very interesting. Of course, this is all way ahead of things. Right now we're trying to figure out if the Marketing Cloud can generate billion-dollar revenues for Salesforce as Benioff is predicting, but it's also part of a future we need to discern.
At the earnings call, Salesforce increased its guidance to analysts that it would have revenues in excess of $3 billion in its current fiscal year. Getting service and marketing to contribute at the billion-dollar level gets the company into the $5 billion range and into the Fortune 500 with a comfy margin.
Benioff was also talking up the company's developer platform and internal social network for enterprises of all sizes (Chatter). So far much of what we'll learn at Dreamforce is still under wraps, but one thing being actively discussed is the raft of CEOs attending, which will include Richard Branson (Virgin), Jeff Immelt (General Electric) and Angela Ahrendts (Burberry). Dreamforce has never been dull, but this one is shaping up to be something else.