Salesforce Launches New Offering To Strengthen Mobile CRM Push

After posting second quarter results that topped revenue and earnings estimates, Customer Relationship Management (CRM) software leader Salesforce.com (NYSE:CRM) launched a service for companies to build online networks that connect them to third parties such as suppliers and consumers in a customized, dedicated and secure environment. ^[1] The company identifies a rapidly growing Community Cloud market it sizes at $3.5 billion.

The latest offering, Salesforce1 Community Cloud, enables customers to build and operate public websites and applications that are similar to online communities such as LinkedIn. ^[1] Salesforce expects this entry into the fast growing enterprise collaboration market to drive incremental top line growth. The Salesforce1 Community Cloud is based on the original technology from Salesforce Chatter, the company’s first venture into the Cloud 2 Enterprise social network market.

In this note, we present a brief overview of the Salesforce1 Community Cloud. We have recently revised our Trefis price estimate to $55 for Salesforce.com, which stands approximately 8% lower than its current market price of $60.

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Salesforce’s Move Towards Mobile CRM Looks To Gain Momentum

Salesforce has been quite aggressive with its push to mobile in fiscal 2015, particularly with the Salesforce1 platform that was launched in November 2013. The new Salesforce1 offering is engineered to connect various apps and a multitude of devices across on a single platform and greatly increases mobility for sales representatives. The platform has been built on an API first philosophy and includes added tools for developers to create and deploy enterprise-level applications across mobile devices.

The rapid shift towards mobile and tablet devices from employees at the workplace bode well with Salesforce’s bet on the mobile CRM platform. The Salesforce1 platform generated sales of about $346 million in H1’15, which represents a fiscal year revenue run rate of about $700 million. Revenues prospects for the platform look bright going forward, with Salesforce turning its attention to the niche mobile CRM market. Additionally, sales for the platform should accelerate further, with the addition of new customers, as Salesforce begins delivering industry specific, tailored solutions through a “New Industries Strategy”.

Synergies from Community Cloud Could Benefit Salesforce1 Users

The Salesforce1 Community Cloud offering has three variants – customer community, partner community and employee community. The customer and partner community editions include common features such as social collaboration and custom branding. Additionally, the partner community edition includes features such as lead and opportunity management, controlled data access and delegated administrative capabilities for senior sales personnel. The employee community edition includes workflow and task scheduling features for mid-level sales personnel.

This three-tier structuring of the community cloud should allow employees across a company’s sales division to interact with customers and other third-parties such as suppliers. This way, we believe the community cloud along with Salesforce’s core CRM offering should create operational synergies for companies and drive revenue growth higher for Salesforce.

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1. Salesforce.com Launches New Cloud–Salesforce1 Community Cloud–Defining the Next Battleground for Customer Engagement, Salesforce Press Release, August 27, 2014 [↩] [↩]