Delco Today, a local web magazine in Delaware County, PA where SAP’s North American headquarters is located, interviewed Jennifer Morgan, SAP’s new co-CEO, and her husband Michael in 2017. It provides a lot more insight into who Jennifer is and where she came from than I’ve seen anywhere else.
One thing I did not know: Morgan came to SAP from Oracle’s Siebel Systems, and that’s where she met Bill McDermott and later followed him to SAP. She’s from Northern Virginia and attended James Madison University. Morgan is 48 and her fellow co-CEO, Christian Klein, is only 39. She is from the client side while Klein is from the tech side.
Morgan joins Safra Catz (Oracle) and Julie Sweet (Accenture) as women leading major enterprise technology companies.
I’ve been wondering for some time whether Salesforce’s (NYSE: CRM) growth would falter, but it really hasn’t yet in a big way. Though a string of acquisitions have had a dilutive effect, investors have rewarded it with a growth premium in terms of a higher Price to Earnings (PE) ratio. Its somewhat akin to what happened last year when Netflix briefly surpassed Comcast in market value. Such a PE advantage, though tenuous, gives Salesforce a strong currency for acquiring others.
Salesforce may be on the verge of becoming a more powerful enterprise player than the possibly capital-constrained SAP, under pressure from an activist investor, in spite of its considerably smaller revenue & profit base.
Comparative share prices: Salesforce (light blue) vs SAP (dark blue) Past 5 years
CRM Mkt cap
SAP SE Mkt cap
In 2018, SAP redesigned & retargeted its CRM, but its way too early to measure how effective that relaunch has been.
SAP CRX ( Qualtrics): The acquisition of Qualtrics opens up an adjacent market to CRM that Salesforce isn’t much of a player in today.
Salesforce could move more into SAP’s space:
Buying WorkDay would appear financially feasible, though WDAY founders control voting stock (they won’t allow another Peoplesoft). WDAY brings Financial ERP as well as HCM.
Continue partnerships or consolidate RootStock & Financial Force (manufacturing & financial ERP)
Buy Zoho if available. Threat to cannibalize Salesforce’s own core business, but could be like Microsoft’s Great Plains acquisition
Salesforce acquisition target list leaked in 2016 – What’s happened since
Adobe Mkt cap 134.91B, essentially the same as CRM
LinkedIn . Acquired by MSFT for $26.2 billion
Workday . Mkt Cap $39.9 billion
ServiceNow . Mkt Cap $50.8 billion
Netsuite . Acquired by Oracle for ~$9.3 billion
Tableau Acquired by Salesforce for $15.7 billion
Pegasystems . Mkt Cap $5.7 billion
Qlik Acquired by Thoma Bravo for $3 billion
Veeva . Mkt Cap $21.7 billion
Box . Mkt Cap $2.6 billion; Recent activist stake
Demandware . Acquired by Salesforce for $2.8 billion
Zendesk Mkt Cap $8.6 billion
Marketo Acquired by Adobe for $4.8 billion
Hubspot . Mkt Cap $6.8 billion
Salesforce’s Mulesoft acquisition last year was totally off the chart. SAP owns no equivalent.
Salesforce needs to decide whether to build a strategy around smaller customers, or double down on larger customers.
Salesforce is also likely looking at ways to accelerate its CRX ambitions.
Another possibility is a dead stop to Salesforce’s organic growth, but that seems unlikely given the size and projected growth of the market
Not discounting Oracle at all, but see it more as a hard engineering company, inconsistent in end user applications.