Salesforce.com, Workday Keep Cloud Momentum Rolling

Cloud computing heavyweights Salesforce.com and Workday both reported better-than-expected quarterly revenue increases last week, maintaining their impressive growth track records.

It’s fresh evidence that enterprise applications are going in the cloud, with new InformationWeek research showing that the fashion isn’t limited to small- and midsize-businesses or to lightweight “edge” applications like travel and expense management.


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Salesforce.com’s latest quarter ended July 31 was highlighted by a 31% year-over-year increase in revenue to $957 million — well sooner than the $941 million revenue mark expected by analysts at Wells Fargo Securities. The rise was fueled partly by the company’s $2.5 billion acquisition of cloud-based marketing firm ExactTarget. However the bigger story is Salesforce.com’s effort to focus on “the biggest and essential companies on the earth,” as Benioff put it during last week’s conference call with analysts.

[ Want our latest insight on enterprise apps? Download Research: Cloud Software: Where Next?. ]

Salesforce.com’s customer list already included the likes of CocaCola and General Electric. The ExactTarget buy added big companies including Gap and Nike. The corporate reported that the second one quarter saw a multi-million-dollar “mega deal” with food services giant Sysco. These wins show that that old generalization about cloud apps being best-fitted to, and most desired by, small- and midsized-businesses is absolutely not holding up.

Our latest InformationWeek Enterprise Applications Survey finds that giant companies may very well be more inclined than smaller firms to run cloud apps somewhere of their operations. For instance, a few of the 263 respondents to our June survey, 52% of these representing companies with 1,000 to 4,999 employees use SaaS, while only 31% of businesses with 50 to 99 employees do.

What in regards to the nature of these apps? Salesforce.com makes a speciality of front-office, CRM-related applications including sales, marketing and customer support. CRM isn’t exactly a light edge app, but cloud vendors including NetSuite and Workday are busy bringing hard-core back-office ERP into the cloud.

Workday reported last week that its second quarter revenues were up 71% over the identical period last year to $107 million. That was just earlier than NetSuite’s $101 million in 2Q revenue, up 35% year over year. These results don’t compare to the $1.28 billion in software revenue reported by ERP kingpin SAP in its second quarter, but that vendor’s new (on-premises) software sales were down 7% year over year (3% in constant currencies). Oracle, too, has seen flat to declining sales of on-premises application software in recent quarters.

The “cloud is for SMBs” generalization have been accurate where ERP is bothered because there just haven’t been any high-scale ERP options within the cloud. But that’s changing. Workday, for one, is operating on scaling up its financial ERP apps just because it did with Human Capital Management (HCM). Workday HCM is now utilized by global companies including Flextronics and Hewlett-Packard, each with greater than 200,000 employees.

When Workday launched its successful $685 initial public offering late last year, CEO, chairman and co-founder Aneel Bhusri vowed that the company’s Financial ERP apps can be ready for Fortune-1000-scale deployments (and even perhaps Fortune 500-scale deployments) by the top of 2013. To lay that during context, the 2013 Fortune 500 list starts at about $5 billion in annual revenue while the Fortune 1000 starts at about $1.5 billion.