Editor’s note: Salesforce surpassed $2 billion in quarterly revenue in 2Q16, highlighting the success the company has had in transforming from a CRM vendor to a strategic advisor of digital transformations. The company continues to expand horizontally, evidenced by the acquisition of Demandware, to help customers transform additional business processes while expanding growth opportunities, writes Technology Business Research analyst Kelsey Mason. (Watch an updated video about Salesforce’s offerings at: https://www.youtube.com/watch?v=V3BBZC35ntc )

HAMPTON, N.H. – Salesforce is furthering its reach across customers’ business processes, with intelligence becoming its core differentiator.

Salesforce surpassed $2 billion in quarterly revenue in 2Q16, highlighting the success the company has had in transforming from a CRM vendor to a strategic advisor of digital transformations. The company continues to expand horizontally, evidenced by the acquisition of Demandware, to help customers transform additional business processes while expanding growth opportunities.

Vertical tailoring will remain a core part of Salesforce’s strategic advisory strategy, with a particularly strong quarter in healthcare and financial services, and high potential in retail given the company’s entrance into the e-commerce market.

With these horizontal and vertical investments, Salesforce will differentiate on four key pillars: intelligence (with the launch of Salesforce Einstein coming in October), platform, mobility and productivity, of which recently acquired Quip will be at the core.

Growth potential stemming from these four pillars drove Salesforce to raise its full year revenue guidance for the third time, while maintaining positive operating margin guidance, despite the company’s recent acquisition spree.

Salesforce enters e-commerce with the acquisition of Demandware, pressuring it to find a balance between its CRM strengths and lack of ERP

Salesforce entered the e-commerce market in June with its largest acquisition in company history. The purchase of e-commerce provider Demandware or $2.8 billion will be the basis for Salesforce Commerce Cloud. The combination of e-commerce with Salesforce’s customer engagement, analytics and IoT applications presents a unique value proposition. While most vendors lead e-commerce go-to-market strategies with ties to ERP, Salesforce differentiates by leading with CRM. Salesforce will leverage its expansive front-office customer base to drive e-commerce sales; however the company will be challenged by its lack of ties to back-office ERP functions.

For Salesforce to compete with leading e-commerce vendors such as SAP, IBM and Oracle, its critical to fill the ERP gap, particularly in order fulfillment and inventory management. Oracle in particular strengthened its own e-commerce value proposition with the acquisition of NetSuite which offers integrated ERP, CRM and e-commerce.

Salesforce makes its portfolio stickier with the acquisition of document creation engine Quip

Salesforce intends to extend itself across customers’ business processes, making its portfolio stickier in the process. In the last year the company invested in acquisitions to fill gaps in its ability to address front-office business processes with SteelBrick for configure-price-quote in December 2015, Demandware for e-commerce in June and Quip for document creation in August. Quip’s document creation features enable Salesforce to capture new parts of the sales process including the creation of contracts, product data sheets and support documentation.

While Quip will ultimately expand Salesforce’s addressable market, it also puts it in increasing competition with partner Microsoft, who has also been investing to break down the silos between document creation and customer engagement. While there is an opportunity for Salesforce to broaden its productivity suite, combining Quip and Chatter with features such as presentation creation, for example, TBR does not expect Salesforce will be able to uproot Office as the de-facto productivity suite.

(C) TBR