A long time ago in a galaxy far, far away, if an organization wanted to streamline its sales pipeline or manage its collective company Rolodex, it purchased a traditional piece of customer relationship management (CRM) software. This software came with an aggressive salesperson, was shipped in a box, installed on a server, and managed by someone whose career it was to keep that server and the software cool, safe, updated, and bug-free -- at least until the next CTO arrived, at which point you repeated the process. This is what we nerds call software as a product or SaaP.
Welcome to Cloud City
The next generation of software is different ... wildly different. It's "SaaS," or "Software as a Service" -- no servers, no installation disks, no hassles. Your company's data resides on a shared server that is managed by the provider and accessed through a browser from almost any computer in the world. The industry leader in the SaaS CRM universe is cloud-computing giant salesforce.com
Use the Force, Luke ... and Dell ... and Starbucks ... and ...
With more than 80,000 customers that include Dell, Starbucks, Kelly Services, and Canon, Salesforce is the undisputed cloud-computing CRM champion. But it's not just the big names that use Salesforce. Their hefty revenues are split evenly between large enterprise clients, midtier companies, and smaller organizations. And it's no wonder: The cost of entry is just an inexpensive single seat license and access to a browser.
The next generation
While Salesforce made its mark with its low-cost, easily implemented CRM sales software, they know that to grow, they need a product suite that grows with their clients. They start their customers on Sales Cloud, their flagship product (think Rolodex with a calendar on steroids). After demonstrating ease, value, and efficiency, they then ask clients to add a service product, an intracompany collaboration product, and a platform to allow for third-party application development (think the Apple app store). While not quite the "give away the razor and sell the blades" model, Salesforce's low-cost entry-level product and subsequent up-sells, combined with their automatic monthly renewal model, allows for a robust customer lifetime value.
Threats from the Death Star
Salesforce stands in stark contrast to traditional providers such as Oracle
Beware of the Dark Side
While getting started with Salesforce software can be inexpensive, its stock price isn't. With a trailing P/E of 205 and a $14.9 billion market cap against $1.46 billion in sales, shares don't come cheap. Buying shares at today's prices is a bet that we are at the forefront of a cloud-computing revolution, and that salesforce will continue to lead that revolution through new products, markets, and clients. Salesforce.com may be a cloud-computing leader, but that leadership doesn't come cheap.
Interested in learning more about salesforce.com? Add it to your watchlist to learn more about the company.
Carl Hendley does not own shares of any of the companies mentioned in this article. He has, however, seen every Star Wars film ever made ... perhaps one too many times. The Motley Fool is a salesforce.com client. Microsoft is a Motley Fool Inside Value pick. Salesforce.com is a Motley Fool Rule Breakers recommendation. Apple and Starbucks are Motley Fool Stock Advisor choices. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Microsoft, and Oracle.
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