Salesforce’s Benioff Says SAP Rebuffed His ‘Olive Branch’

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Salesforce.com Inc. Chief Executive Officer Marc Benioff
Salesforce.com Inc. Chief Executive Officer Marc Benioff. Photographer: Christophe Morin/Bloomberg

Salesforce.com Inc. Chief Executive Officer Marc Benioff said his counterpart at rival SAP SE rebuffed an offer to have the business-software makers work more closely together after customers asked for greater technical compatibility.

SAP’s Bill McDermott resisted the overtures, Benioff said in an interview on Thursday at a customer conference in Munich. He noted that Salesforce has struck technology and data sharing deals with Oracle Corp., Microsoft Corp. and VMware Inc.

“We offered an olive branch to them,” Benioff, 50, said. “I’ve told Bill I’ve wanted to have a deeper relationship with them. Yes we’re competitors, we should also be partners. He’s scared of Salesforce.”

As the technology industry undergoes a once-a-decade shift in how companies buy computing power, Benioff’s company has attracted takeover interest, fueling a 19 percent rise in San Francisco-based Salesforce’s market value this year. Microsoft, Oracle and SAP are sacrificing traditional business-software licenses to book sales of cloud-computing tools delivered via the Internet. Salesforce’s rapidly growing customer base has become a coveted asset.

An SAP spokesman declined to comment and referred to remarks McDermott made in May, in which he said Salesforce’s “prices are going to drop and revenues will be under pressure.”

Salesforce shares slipped 0.2 percent to $70.42 at Thursday’s close in New York. SAP’s shares traded in the U.S. declined 0.6 percent to $69.96.

German Center

Benioff has spent the past weeks in Europe, pitching to customers in Germany, Paris and London and even meeting the Pope in the Vatican. During a speech Thursday, he said Salesforce plans to invest more than $1 billion in Germany over the next five years as the company seeks to add customers in industries including automobile and machinery. Its first German data center, operated by Deutsche Telekom AG, will open next month near Frankfurt.

Bloomberg reported in April that Salesforce was working with bankers to field takeover offers. Microsoft evaluated a possible bid for Salesforce, and Benioff and McDermott held strategy talks last year that included a potential acquisition of Salesforce, according to people with knowledge of the matter.

Benioff “is in the pole position,” said Brent Thill, an analyst at UBS Group AG in San Francisco who has a buy rating on Salesforce. “The other companies need him way more than he needs to sell.”

As sales of traditional software licenses slow or decline, Benioff, Oracle Chairman Larry Ellison and McDermott are increasingly taking potshots at one another.

‘Zero Interest’

Ellison is predicting he’ll outpace Salesforce in new cloud sales this year. McDermott has said he has “zero interest” in acquiring Salesforce and Benioff said in the interview his goal is “to replace SAP as the third-largest software company.”

Salesforce has been on a tear. The company in May raised its fiscal full-year revenue forecast to as much as $6.55 billion, or as much as 22 percent growth on top of last year’s 32 percent increase. There’s also about $9 billion in deferred revenue from software subscriptions to be booked as sales in coming years.

Benioff is also thinking about his future and advocates greater philanthropy from companies and business leaders. He’s donated money to health-care projects and aligned Salesforce with various charities.

“That’s what gets me excited every day,” he said. “I don’t think I’ll be running another technology company” in 10 years. And he’s not considering running for office.

“I’m not at all interested in politics. This is kind of a perversion. If a CEO starts talking about issues -- women, gay rights, racism -- all of a sudden they’re a politician.”

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