This paper presents an organizational analysis of Salesforce.com, examining the legal, social, global marketing, and economic factors shaping the company's growth. The analysis covers Salesforce's corporate structure and Sarbanes-Oxley compliance, its pioneering use of social networking tools such as Chatter, and its position as the worldwide leader in cloud-based Customer Relationship Management (CRM) software with approximately 14% market share. It also explores the operational transparency strategies that helped Salesforce build enterprise trust, and identifies customer churn among small and mid-range accounts as the primary long-term business risk. The paper draws on investor relations filings and academic sources to assess Salesforce's competitive positioning on the SaaS platform.
Salesforce.com (NYSE: CRM) has completely redefined the economics of cloud computing by successfully using the Software-as-a-Service (SaaS) platform, which enables enterprises to pay only for the software they use while significantly streamlining the agility and speed of application customization. These are major improvements over how enterprise software has traditionally been sold, where sales cycles were often very long, expensive, and complex — frequently taking nine to twelve months to complete. Being able to pay for enterprise software from an operating expense (OPEX) budget quickly is replacing the more time-consuming and expensive capital expense (CAPEX) budgeting process (Upson, 2011).
Salesforce.com competes in the global Customer Relationship Management (CRM) enterprise software industry, which is a class of software that companies use for better attracting, selling, and serving their customers (Denning, 2011). The intent of this analysis is to evaluate the basic legal, social, global marketing, and economic factors that are affecting Salesforce's ability to grow today and into the future. The potential change factors that will affect Salesforce's growth over the long term are also discussed.
Salesforce.com operates as a corporation with limited liability as defined by its organizational structure. It is, however, a publicly traded company on the New York Stock Exchange (NYSE), and as a result must abide by the Sarbanes-Oxley Act of 2002 reporting requirements, including the disclosure of significant financial events that could affect its overall financial performance.
The social aspects of Salesforce.com are prevalent throughout the many social networks the company participates in. Its CEO and founder Marc Benioff was also recently recognized as one of the most socially active CEOs in the industry (Salesforce.com Investor Relations, 2013). Salesforce.com has also devised a unique and highly differentiated suite of applications entirely based on social networks, the most well-known being Salesforce.com Chatter (Denning, 2011).
Chatter is a product suite that combines the ease of use found on social networks such as Facebook and Twitter with integration into a given company's CRM systems and overall system of record for managing finance, operations, and manufacturing (Denning, 2011). As a result, Salesforce.com is deeply immersed in social networking and leads the enterprise software market in the adoption of these technologies.
"14% global market share and SaaS leadership"
"Trust-building, R&D investment, and agility strategy"
"Low-end customer churn as key long-term risk"
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