Salesforce COO Keith Block Has SAP On the Brain Again
Salesforce President and COO Keith Block tried to convince investors this morning the software company’s “soft” second quarter for sales in the United States is a minor blip in an otherwise record second quarter that brought in $2.04 billion in revenue.
Block, speaking to investors at Citi’s 2016 Global Technology Conference in New York City, also dished about the San Francisco software giant’s new artificial intelligence (AI) offering, Einstein, and its acquisitions strategy.
‘More Push Than Pull’ for Salesforce in US
In its second-quarter earnings call for fiscal 2017 last week, Block told investors Salesforce “saw some softness at the end of the quarter, primarily in the United States.”
— AllSalesforce.com (@AllSalesforce) September 7, 2016
Salesforce still does most of its business in the Americas — by far. According to its financial reports for the second quarter, the Americas accounted for about $2.91 billion in revenue for the six months ended on July 31, or 74 percent of company revenue. Europe came in at 17 percent, and Asia-Pacific 9 percent.
Asked about its United States sales performance at the Citi conference this morning, Block said Salesforce saw more “push than pull” in the United States market.
Some deals, he said, will be pushed to the third or fourth quarter or even into the first quarter of fiscal 2018. Enterprise buyers are “very smart” and “very sophisticated,” and he expects those deals to resurface later in the year or early next year.
He told investors last week he’s spent time with three of the CEOs and COOs of the top 10 banks in the United States.
Block said the US team is tightening its playbook and making necessary adjustments.
“This is a blip, more or less, a speed bump around execution,” Block said. “I have enormous confidence in our leadership team in the US. We’re tightening processes and adjusting the playbook.”
Gunning for SAP … Again
The moderator of this morning’s talk with Block specifically cited SAP’s e-commerce presence, prompting Block to respond,
- “SAP is entrenched in the back office. They’ve made a wonderful living off the back office. But I don’t think anyone would sit here and say SAP is a company that has vision and innovation. Now I’m sure that (SAP CEO) Bill McDermott would come here and say something differently. Great guy, great CEO, great vision. But this is not a company that is steeped in innovation.”
A SAP corporate media relations official offered a response after CMSWire alerted the company of Block’s comments:
- “Bringing attention to your rivals to deflect from yourself is a strategy as old as competition itself. Consider this: SAP S4/HANA, a new business suite, is years ahead of what competitors offer. S/4 HANA is already the de facto standard for enterprise software, as R/2, R/3 have been in the past. SAP S/4 HANA has changed ERP from a system of record to a system of innovation. In addition, SAP continues to invest in new areas of innovation, such as IoT, Connected Health, artificial intelligence, machine learning, blockchain, to name a few.”
Block also called out large, legacy vendors for being more about integration than innovation.
In head-to-head revenue competition, it’s still not close: SAP’s yearly revenue of $23.7 billion is significantly higher than Salesforce, with revenue of more than $6.7 billion.
Block also discussed Salesforce’s plans for Einstein, its artificial intelligence (AI) offering. The company’s making the big unveil at its Dreamforce Conference in San Francisco next month.
“We’ve been lining up assets for some period of time now to fill out our portfolio for AI,” Block said this morning. “Einstein is our foray into the space in a big way. It’s a classic example of listening to our customers.”
It also made a major acquisition this year with its $2.8 billion purchase of Demandware, marking a move into the e-commerce space. It adds to its cloud platform lineup with the creation of a Salesforce Commerce Cloud.
Block said Salesforce looks for culture and technology fits in its acquisitions, and Demandware represents a “great complement to our space.”
Asked about the missed opportunity to acquire LinkedIn, scooped up by Microsoft in June, Block told this morning’s audience, “I’m looking for Satya to walk in the door to answer that question so I don’t have to.”