CRM Buzz Watch: Salesforce.com Questioned on Revenue, Profits, While Analysts Take a Shine to Microsoft Dynamics CRM 2013

There is an interesting thing happening in CRM-land.  Financial and tech media outlets, such as Business Insider, Fool.com, and Seeking Alpha are questioning the accounting practices, financial health and future direction of Salesforce.com.  Elsewhere, enterprise tech analysts from Gartner, CRM Magazine, and CIO Today are singing the praises of the new and improved Microsoft Dynamics CRM.  While these things are clearly unrelated to one another, to those of us in the trenches of the Microsoft CRM world it reinforces what we have long suspected: that Salesforce spends a ton of resources on sales, marketing, and attrition efforts, and most implementations become cost prohibitive through time.  Microsoft Dynamics, on the other hand, is going through a transformation that positions it as a true leader in service, marketing, and sales.

Salesforce.com, “House of Cards”

houseOne of the most scathing analysis came from Fool.com, which asked if Salesforce was a 'House of Cards'.  “While Salesforce's revenue growth rate has been impressive, the company's operating profit has been negative for the past three years, and the losses have been accelerating.”  It goes on:  “Operating expenses have grown faster than revenue, and each additional dollar of revenue seems to cost the company more than the previous one.”

Seeking Alpha also questioned the accounting practiced in an article titled “Salesforce.com Can’t Tell You Where It’s Revenue Comes From”.  “Responding to an SEC review, Salesforce says they cannot tell what products are growing sales, or whether those sales are coming from new customers, upgrades, or additional subscriptions to existing customers. Perhaps it is not a coincidence that their CFO announced his retirement Feb. 28.”  Seeking Alpha’s James Ryans added “Salesforce said growth came from losing fewer customers.”

Business Insider recently reported on the issue as well.  “It doesn't really know how much money it generates from any of its individual products, it says.  It said it didn't have the "financial controls" in place to figure that out.”

Microsoft Dynamics CRM Rising

The same Fool.com article called out Microsoft as the sole challenger to Salesforce.

“Microsoft's strategy is to combine every functionality companies need into a single product, bringing sales and marketing together with a heavy focus on social media. This allows Dynamics to be potentially less expensive than comparable functionality from Salesforce.  Microsoft's enterprise dominance in other areas, such as productivity software, will give the company a big advantage going forward. Companies that already use Office 365, for example, can adopt Dynamics instead of dealing with an additional vendor, and other Microsoft services like Skype and Yammer are directly integrated. By leveraging its other enterprise services and its huge install base, Microsoft poses a big threat to Salesforce's market-leading position.”

CIO Today noted that with the recent acquisitions, Microsoft is “stealing Salesforce’s thunder”.  The article cites recent acquisitions of MarketingPilot and NetBreeze and key drivers.  “Microsoft is betting chief marketing officers want a marketing solution that helps them plan and execute strong marketing campaigns, gives them insights into the impact of their marketing activities, and provides them with the ability to optimize the marketing mix to deliver the most impact to their businesses.”

CRM Magazine, gave Microsoft Dynamics CRM 2013 the annual award for Best Customer Case Management.  John Ragsdale, VP of Technology Research of the Technology Services Association, noted that Microsoft was "showing up on short lists for large enterprise support deals for the first time.  The acquisition of Parature shows Microsoft is taking service seriously, instead of investing only in sales and marketing, as most cloud CRM vendors tend to do,"  Panelist Paul Greenberg noted that Salesforce.com is “getting expensive over five years”, and Gartner analyst Michael Maoz said “Salesforce.com is not proven in most parts of the world as a scalable B2C case management system.”  Ouch…

by Customer Effective

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