Swot Analysis for Salesforce.com

Salesforce. com is a provider of application services, which allow organizations to share customer information on demand. The company reported healthy customer additions during recent years, which enhances its top line growth and market position. However, the intense competition in the industry may affect the operating performance and profitability of the company. Strengths| Weaknesses| Healthy customer additionsSignificant market positionFocus on research and development| High dependence on the Americas| Opportunities| Threats|

Growing demand for cloud servicesBusiness expansionIncreasing presence in Asia PacificPositive outlook for CRM market| Intense competitionEconomic slowdownPrivacy concerns| Strengths Healthy customer additions Salesforce. com recorded robust customer additions during recent year. The company provides on-demand CRM services, applications and platforms to the customers located worldwide. Its customers include small, medium size, and large businesses. Robust customer additions resulted in the strong growth of subscription, professional service and support revenues, increasing from $497. 1 million to $1,076. million. Healthy customer additions enhance the company’s top line growth and its market position. Significant market position The company delivers integrated, completely customizable enterprise applications to companies of all sizes. Across the industry, the company is recognized as one of the major CRM technology providers for capital markets. Salesforce. com was ranked third on Forbes’ list of 25 fastest growing technology companies, with 40% earnings per share growth and five year sales growth of 72%. Besides, the company is the largest on-demand vendor, making up about 50% of the market.

Focus on research and development Salesforce. com has been investing a significant amount on technology development over a period of years. The company upgraded its major products and introduced new products in the recent times, besides is creating a new set of service to accelerate customer and partner success with buying and selling enterprise cloud computing applications. Focus on research and development helps to the company remain competitive in the market place with significant offerings. Weaknesses High dependence on the Americas Salesforce. om is significantly dependent on the Americas for its revenues. In 2009, the company recorded 72. 1% of its total revenues from the Americas, 17. 7% from Europe and 10. 2% from Asia Pacific. The weak economic outlook for the American economies adds to this business risk. For instance, the company competes with huge technology players such as SAP and Oracle, who provide CRM offerings and have a diversified geographic presence. High dependence on the Americas increases the business and country specific risks to the company and restricts its growth opportunities when compared with competitors.

Opportunities Growing demand for cloud services The worldwide demand for cloud computing services is forecast to record strong growth in coming years. Cloud computing is a computing infrastructure model which enables delivery of software as a service. This reduces the upfront royalty or licensing payments, investments in hardware and other operating services. Salesforce. com has a significant presence in the cloud domain with various offerings including the Sales Cloud, Service Cloud, cloud platform for CRM, and cloud infrastructure for various applications.

Growing demand for cloud and Software as a Service will facilitate the company’s revenue and market share growth in coming years. Business expansion Saleforce. com is focusing on business expansion activities, investing in new operations and entering into various strategic collaborations. The company joined forces with Unit 4 Agresso, parent company of financial software specialist CODA, to from FinancialForce. com, a new company. Besides, the company invested in Practice Fusion, the leader in free, web-based physician practice application, entered into strategic alliances to launch new fferings with Cisco, and partnered with Adobe to integrate Force. com platform. Business expansion through new investments and strategic alliances will enhance the company’s operations and offerings, thereby increasing its customer base and revenues. Increasing presence in Asia Pacific The company has a long-established presence in the Americas and Europe, and is increasing its presence in fast growing markets such as Asia Pacific. The Asia pacific is the company’s fastest growing market, with a revenue growth of about 72% in 2009.

The company’s increasing presence in a growing Asia Pacific market will enhance its revenues and market position. Positive outlook for CRM market The growing investments in technologies, which enhance productivity, provide insight into customer behaviors, and growing online commerce, sales and marketing activities are expected to enhance the CRM market future and increase the company’s top line growth and customer base. Threats Intense competition The company operates in a highly competitive CRM, enterprise business applications, and development platforms market.

The company competes primarily with vendors of packaged CRM software, whose software is installed by the customer directly, and companies offerings on-demand CRM applications. Intense competition may affect the operating performance and profitability of the company. Economic slowdown The worldwide economy is presenting a challenging business environment. The GDP growth rate for the US is expected to drop in coming years, primarily due to the turmoil in the financial markets, very weak housing market indicators and negative consumer opinions.

These weak economic conditions are resulting in the reduction of client’s software and IT budgets, bankruptcies, which could diminish the demand for Salesforce. com’s services. Economic slowdown could impact the company’s operations in future. Privacy Concerns The increasing privacy concerns may reduce the effectiveness of the company’s solutions. Privacy concerns may cause customer’s to resist providing the personal data necessary to allow them to use service effectively, and this could reduce demand for the company’s service.