This Overlooked Asset Is Proof of Salesforce's Future Growth Potential
As anyone who has ever been part of a stepfamily can tell you, merging two households can be difficult. For similar reasons, it's tough to make acquisitions work in the business world. Getting two previously independent companies together, combining their operations, eliminating redundancies, and getting the various parts to play nice with each other can take years.
Yet that is what leading customer relationship management software provider salesforce.com (NYSE: CRM) has managed to do -- dozens of times. Over the years, the company has made numerous acquisitions of high-growth peers, adding new capabilities to its core platform. Once a niche player in the tech stock sector, the company now boasts a whole suite of services all geared toward helping its customers make a successful transition to the digital era.
To help these customers navigate its growing ecosystem of apps and services, Salesforce has created an entirely new type of software developer and built an education system to support them. More than just a gimmick, the Salesforce Developer is a powerful asset that's helping the company become one of the largest technology firms in the world.
What is a Salesforce Developer?
A software developer is a generic term for one of the millions of people around the globe who build the software systems and applications we rely on every day for business and personal use. A Salesforce Developer is one who creates customized applications for businesses using the Salesforce platform of services.
But why create a specific job title for a developer utilizing Salesforce? As mentioned, Salesforce has grown into a huge software company, offering a multitude of features and capabilities that customers can choose from and integrate into their own customized applications. These various software features are organized into four basic segments: the Sales Cloud, Service Cloud, Marketing and Commerce Cloud, and Platform and Other (which comprises the data integration services it picked up from MuleSoft in 2018 and houses the recent Tableau Software acquisition).
Digital transformation is picking up steam around the world, and many businesses are going with Salesforce to help with the transition because of the breadth and depth of its offerings and customer-centric business model. Revenue during the second quarter of the 2020 fiscal year (the three months ended July 31, 2019) grew 22% to $4.0 billion, a huge increase for a company that's already so large.
The torrid pace of growth is creating demand for developers who can navigate the widening and deepening suite of capabilities, and developers are flocking to the banner because of the high demand. According to tech researcher IDC, the "Salesforce Economy" is expected to create 3.3 million new jobs from 2016 to 2022. The relationship between the company, its aggressive acquisition strategy, and the developer network is a powerful self-perpetuating cycle that could keep growth in the double-digits for the foreseeable future -- which just so happens to be management's ambitious goal.
Image source: Getty Images.
New tools of the trade
Through its Trailhead self-education center, the customer relationship management technologist has always been an outspoken supporter of the software developers using its platform. The Salesforce Developer and the Trailhead education portal have also gotten some recent outside recognition -- ever-exuberant co-CEO and founder Marc Benioff had this to say on the last earnings call:
We now have 1.5 million learners changing their careers and changing their lives on Trailhead. It's a 50% increase over the last year. ... Just last week, we announced a partnership with Southern New Hampshire University, one of the fastest-growing universities in the U.S. so that Trailblazers can now earn college credit for free on Trailhead. That's just an incredible lean forward for Trailhead.
Benioff also cited Glassdoor's recent report listing what the labor market researcher views as the 25 jobs with the best career opportunities. No. 2 on the list was "Salesforce Developer." More interesting than the accomplishment itself is the fact that Glassdoor's callout to Salesforce was the only company-specific title mentioned on its top-25 list. The other 24 job titles were generic, like "Tax Manager" and "Scrum Master." The only other position that came close to getting company-specific was number nine on the list, "Java Developer" -- Java being a software programming language originally released by Sun Microsystems, now part of Oracle.
Some investors have taken to attacking the spend-heavy takeover strategy, but the addition of so many interrelated software services -- along with a well-developed education support system for the professionals that use them -- is building momentum at Salesforce. What the kids are doing, and what developers are flocking to, are oft-overlooked but powerful metrics indicating a tech company's growth trajectory. It's another reason I think this software platform will meet its lofty goals and maintain its at-least-20% revenue expansion plan over the next decade.
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Nicholas Rossolillo and his clients own shares of Salesforce.com. The Motley Fool owns shares of and recommends Salesforce.com. The Motley Fool has the following options: long January 2021 $100 calls on Salesforce.com. The Motley Fool has a disclosure policy.
This article was originally published on Fool.com
