Should Salesforce Enter The ERP Market?
Salesforce (NYSE:CRM) has been a market leader in the Customer Relationship Management (CRM) space for some time now, and continues to improve its stronghold in the domain. Per recent reports, Salesforce currently has almost a 20% market share in the CRM space. Its market share has been growing year-on-year, as has its lead over competitors such as SAP and Oracle. Going forward, Salesforce plans to strengthen its lead in the CRM domain by acquiring interesting and innovative companies, investing in new technologies and expanding in markets and verticals such as marketing, healthcare and e-commerce.
Salesforce currently operates primarily in the CRM domain, and doesn’t offer many other Software as a Service (SaaS) offerings, while its competitors such as SAP, Oracle and Microsoft already have diverse offerings. Should Salesforce decide to diversify into other areas, such as Enterprise Resource Planning (ERP), the company could not only see further revenue growth due to the new revenue stream, it could also potentially gain further share in the CRM space by offering bundled subscriptions to customers. Furthermore, diversifying its offerings likely wouldn’t involve a lot of spending, due to the similar infrastructure requirements of CRM and ERP. According to a recent report from Gartner, the SaaS industry as a whole is expected to grow at a rate higher than the CRM industry, as shown in the table below. Therefore, even though we expect Salesforce’s CRM market share to increase by about 40 basis points year-over-year, its share in the overall SaaS market is likely to remain relatively flat.
In order to maintain or grow its share in the global SaaS market, Salesforce could consider expanding into the ERP market currently dominated by SAP and Oracle. Below we take a look at how Salesforce could grow its top line by entering into the ERP market.
While there remains significant growth potential in the CRM domain, entering other SaaS fields would presents new opportunities for Salesforce and could help the company distance itself from its rivals.
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Notes:
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- The three reasons why companies do a poor job
- How you can create more accurate forecasts and plans