Saturday, December 28, 2013

Using GIMP and the Iconator for CRM Icons

A while ago I talked about creating icons for Dynamics CRM for CRM 4 and 2011. I thought it was time for an update and some tips on creating those metro-like icons.

Tanguy’s Toolbox

Tanguy Touzard, CRM MVP and tool-maker extraordinaire has a toolbox which any developer or administrator should not be without. Here it is and it makes a whole series of common tasks so much easier. The one that is useful for icons is the Iconator.


Using the Iconator we can get our entities from our organization, see which ones need icons, click the ‘Add Images’ button at add our 16x16 and 32x32 images and then map them to our entities.


The Iconator takes care of creating our web resources for us, publish our changes and even allows us to automatically add the web resources to a pre-existing solution in our organization.

Use it and if it saves you a bit of time, feel free to click the Donate button and keep Tanguy in croissants and champagne.

Creating the Images With GIMP

GIMP (GNU Image Manipulation Program) is an open source image editor comparable to Photoshop and much cheaper (it is free). Here is the link to download it.

Once loaded, you can manipulate images like a pro, once you get used to it.

An Example of Making an Icon

Let us take a picture and convert it into a couple of CRM icons. There are plenty you can get inspiration from on the internet but, to avoid any copyright entanglements, I will use one of my own.


This was a photo I took at the EMP Museum in Seattle where you stand in silhouette and the screen adds horns and tentacles to you. I caught this image before it did me too much damage.

Loading it into GIMP, the first thing I want to do is eliminate the color. I can do this one of two ways; either by selecting Image – Mode – Grayscale or Colors – Hue-Saturation and put the Saturation down to 0. If GIMP complains that you can only adjust RGB images, this is set as part of the Image – Mode settings.


Next I am going to make it black and white. This is done with the Colors – Brightness-Contrast settings. Contrast goes to max and Brightness, as required. Below, I simply put Contrast up to the maximum value.


Next I will isolate the part of the picture I want for my icons with the rectangular select. This is found as the first icon in the toolbox window of GIMP. Once selected, you pick Image – Crop To Selection. Do not worry if your selection is not perfectly square; we can fix this later.


Next we will want the background to be transparent. To do this, we go to Colors – Color to Alpha and hit OK. Our background is now transparent.


We can tweak, as required, possibly invert (Colors - Invert) and when happy we adjust the size. To do this we go to Image – Scale Image and make it 32x32 px. We may need to click on the chain to break the ratio and make it perfectly square.


When adjusted, you will have your first icon ready.


To save this, go to File – Export As and save it as a png (you specify the type by simply typing in the extension e.g. ‘leon.png’). Once done, go back to the image, rescale to 16x16 px and export again. You now have two images ready for CRM.


Using GIMP and these simple techniques, many icons can be created from simple, readily available images. Maximising the contrast will even eliminate gray watermarks if you have an image you can use with such an artefact on it. Once created, you can add these to CRM or any other program needing icons. Their simple, flat design are also compatible with Microsoft’s metro paradigm. Good luck and feel free to explore the many features GIMP offers.

Saturday, December 14, 2013

Microsoft: Giving it the Salesforce Treatment

Regular readers will know I run the Salesforce quarterly numbers to see how Dynamics CRM’s strongest competitor is travelling. I will occasionally get asked what the numbers for Microsoft are like, using the same filters. My response is usually that Microsoft release very little information about their Dynamics CRM business but we can review Microsoft as a whole (and the Microsoft Business Division to a smaller extent).

The Numbers

For Microsoft, we go to the Microsoft Investor Relations Annual Reports site. If there is anything specific on the Dynamics division (called Microsoft Business Division) or Dynamics CRM division, this is where we will find it. This also means the data is yearly, rather than quarterly, but trends will still be apparent. The numbers and information below, unless stated otherwise, comes from the 2013-2009 annual reports.

Here are the numbers for Microsoft as a whole (in millions):

  2009 2010 2011 2012 2013
Revenue 58,437 62,484 69,943 73,723 77,849
Revenue Cost 12,155 12,395 15,577 17,530 20,249
Operating Cost 27,205 25,991 27,205 34,430 30,836
Microsoft Income 14,569 18,760 23,150 16,978 21,863
Revenue Growth # yoy   4,047 7,459 3,780 4,126
Revenue Growth % yoy   7% 12% 5% 6%
Total Cost % yoy   -2% 11% 21% -2%
Staff 93,000 89,000 90,000 94,000 99,000
Staff Growth (yoy)   -4% 1% 4% 5%
Margin 25% 30% 33% 23% 28%

Points of note are:

  • While revenues are steadily growing, costs seem to jump around a bit, specifically operating costs
  • Revenue growth is consistently positive, although much smaller than Salesforce’s
  • Staff growth is also much smaller than Salesforce’s
  • Microsoft makes a profit. Margins are consistently around 20-30% compared to Salesforce whose margin sits around –10%

For the Microsoft Business Division, of which Dynamics CRM belongs, we have:

  2009 2010 2011 2012 2013
Revenue 19,211 19,525 22,407 24,082 24,738
Implied Cost 8,058 7,416 7,940 8,279 8,549
Operating Income 11,153 12,109 14,467 15,803 16,189
Revenue Growth # yoy   314 2,882 1,675 656
Revenue Growth % yoy   2% 15% 7% 3%
Total Cost % yoy   -8% 7% 4% 3%
Margin 58% 62% 65% 66% 65%

As the only numbers in the annual report refer to the Operating Income and Revenue, we imply the cost by working out the difference.

Points of note are:

  • Consistent revenue growth but, again, smaller than Salesforce’s
  • Costs appear to be reasonably fixed which means Operating Income keeps growing and growing
  • The margin for the Microsoft Business Division is 65%. That is huge by any measure

It should be noted that the Microsoft Business Division also includes the Office products so this is obviously going to skew the numbers given the size and ubiquity of the Office suite in the business world.

Earnings Call Buzzword Bingo

Steve Ballmer does not get involved with the earnings calls, leaving it up to Chris Suh, General Manager of Investor Relations and Amy Hood, the CFO.

The latest transcript gives us the following keywords.

  • Revenue (39 times)
  • Windows (25 times)
  • Surface (17 times)
  • Devices (17 times)
  • Office (16 times)
  • Cloud (16 times)
  • Customers (11 times)
  • xbox (11 times)

It is a pity customers do not get a higher mention given they are the main thing Marc talks about in his calls. Revenue is a common theme with the two companies though. Otherwise, the usual peppering of products and services is effectively the rest of the hits.

Insider and Institutional Sales

The results here surprised me. Microsoft executives like selling stock as much as Salesforce ones.

Over the last six months, Microsoft executives have offloaded about 5% of their stock, about ten times of their Salesforce counterparts. However, it is not hard to see where the majority of this is coming from. Almost the entire amount is Bill Gates offloading his shares to raise money for the Bill and Melinda Gates foundation.

It is true that Amy Hood has offloaded about $700,000 in shares in the past six months which is comparable to Salesforce’s CFO who has offloaded about $900,000 in shares over the same period.

Institutions are also selling but not a lot. Over the last six months, institutions sold 0.13% of their holdings.

In terms of long term ownership, after a bit of digging, I found the original 1986 prospectus for Microsoft. The original executive, and their post-prospectus ownership was:

  • William H. Gates III (44.8%)
  • Paul G. Allen (24.9%)
  • Steven A. Ballmer (6.8%)
  • Jon A. Shirley (1.4%)

Of these, Bill Gates and Steve Ballmer are the only ones remaining on the executive. From Yahoo, we know Bill owns 358 million Microsoft shares and there are 8.35B shares outstanding. Therefore his ownership is now about 4%. For Ballmer, the latest transaction I can find is from 2010. At that time he owned 333 million shares which compared to 8.668B shares. Therefore, at that time, Ballmer owned about 4% of the company as well.

So, like Salesforce, the two executives have reduced their ownership of the company they work for. Given Bill is selling for his charity and Steve has resigned this is not as surprising as Salesforce’s co-founders Marc and Parker but it means we cannot cast stones too strongly.

While the executives have been selling, Microsoft has been buying. In 2008, Microsoft announced a share repurchase plan, spending $40b on share repurchases over five years, which is now complete. Share repurchases are what companies do when they have lots of cash, not many places to spend it and their share price is cheap. It demonstrates Microsoft believe in their own business and feel this is the best investment they can make for their shareholders. There is no equivalent plan in place for Salesforce, as far as I know.


In terms of the financials, Microsoft is making a profit and has very healthy margins and is not using non-GAAP reporting to convert losses into profits. Costs seem to be in check and there is no evidence of deterioration of the numbers. Things are not growing as quickly as Salesforce but there is no reckoning coming in terms of reining the costs in, as with Salesforce.

In terms of the buzzwords, it seems the same things that concern Salesforce, also concern Microsoft i.e. customers, revenues and their products/services.

Finally, in terms of executive commitment to the company, while the people themselves are also leaving their baby, Microsoft believes their stock is cheap as evidenced by their repurchase plan. A cynical view of repurchase plans is the company is running out of ideas to invest in but when you have fifty times the current assets of Salesforce and only ten times larger, in terms of market capitalisation, it is feasible that Microsoft may have a few bundles of cash lying around to make use of to buy shares.

Wednesday, December 11, 2013

Salesforce: The Unloved Company

It is that time again when Salesforce put out their quarterly results and I try to find the gold amongst the dirt. The title will be explained when we look at historical ownership.

The Numbers

As usual, straight from the Salesforce web site. As with the last quarterly result, the detailed financial results on their web site are out of date, nine months out of date in fact. So here is the summary, combining the different quarterly reports.

  2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3
Revenue 788,398 834,681 892,633 957,094 1,076,034
Subscription Revenue 740,600 785,495 842,221 902,844 1,004,476
Revenue Cost 186,248 183,362 208,994 217,717 268,187
Operating Cost 656,338 672,126 728,179 779,234 905,778
Salesforce Income -71,150 -20,844 -67,721 76,603 -124,434
Revenue Growth # yoy 204,138 202,768 197,166 225,445 287,636
Revenue Growth % yoy 35% 32% 28% 31% 36%
Total Cost % yoy 42% 34% 31% 34% 39%
Staff 9,319 9,801 10,283 12,571 12,770
Staff Growth (yoy) 34% 26% 23% 43% 37%
Margin -9.02% -2.50% -7.59% 8.00% -11.56%

NB: A miscalculation in the revenue growth at the time of original writing has now been adjusted in the table above. Related commentary below has been lined through.

Specific points of note include revenue has broken through the $1b/quarter barrier, catching up with costs (Revenue Cost + Operating Cost) which was there last quarter. In terms of profit, Salesforce has returned to old form. With no IRS check to offset the losses, Salesforce shows a $124m loss this quarter, double the loss of the first quarter and the largest quarterly loss in the history of the company, both as a raw number and as a percentage of sales (margin).

Revenue growth (as a percentage, year on year) is the lowest it has been in over three years.Cost growth, as can be seen above is the highest since this time last year.

Revenues and Costs

Revenues are always Marc’s ‘good news story’ with Salesforce and making sales of $1b per quarter is a huge achievement. The flipside, which rarely gets Marc’s voice, are the costs. The fact is costs are outgrowing revenues unabated. In terms of the difference between the year on year percentage growth, we are now looking at a 15% 3% difference (39% – 24%36%). This is the rate of acceleration Salesforce’s costs have over its revenues. If this was a car race, not only are both cars travelling at a furious pace, and getting faster, but the costs are sailing away into the distance with revenues struggling to keep up.

That 15% differential has not been seen since the bad old days of 2011 when costs were growing at around 50% year on year.

Salesforce’s Crystal Ball

In my last quarterly report, I mentioned that Salesforce had predicted how much they would lose in this quarter and the next, predicting a loss for the year of just over a quarter of a billion dollars. Salesforce predicted, for this quarter, a loss of $111m. Unfortunately, at just over $124m, the actual loss exceeded expectation. Therefore Salesforce is on track for meeting its predict target of a loss of $257m.


The margin is the difference between what you sell something for and what it cost you to produce. Salesforce continues to struggle with this one.


The ’Salesforce Income’ (margin) is the curve at the bottom. There are two things I do not like about this curve. Firstly, it is heading in the wrong direction. There was a time when Salesforce had profit AND growth, which is a formidable position. These days the growth is there but the profits have gone.

The second thing I do not like about it is the shape. The curve is becoming jagged instead of smooth. The last big bump is because of the IRS check but even removing this we are looking at a sawtooth rather than a steady trend. I see this and think of a tug of war between the drag of the business model and the reactive strategies of the business. For years, the business model was guiding margins on a steady, albeit undesirable, path. Now internal strategies are being used to pull the margins back into the right direction but, like a race car hitting a curve, it is resisting and wants to continue on its path.

The Salesforce apologists will argue the margin decline is not all bad and that profit is being sacrificed for continued growth. If this is the case, and this has always been the game plan, why did Salesforce spend all those years making a profit when they could have been gaining additional market share? This argument that it is ok to gain market share and not manage margin decline is one I do not buy.

Earnings Call Buzzword Bingo

Taking the quarterly transcript of CEO Marc Benioff and CFO Graham Smith we crunch the numbers to see what is on their mind compared to previous quarters.

Here is a the graph for the five most popular words.


The topics of ‘Customer/Customers’, ‘Revenue’ and ‘Cloud’ are, of course, mainstays of Marc and Graham’s speeches. ExactTarget is a recent acquisition, which explains the sudden appearance. ‘Platform’ is an interesting one and shows a shift in the Salesforce paradigm. The platform in this case is Salesforce One, their development platform for business applications. Do not watch the video; it is full of marketing hype and tells you nothing useful. Read the web page instead. You have been warned.

In terms of other terms on the rise or decline, here is the table.

  2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3
Number of words 3000 3800 2800 3500 3700
Customers/Customer 21 40 32 40 39
Revenue 38 45 32 37 37
Cloud 20 22 16 23 31
ExactTarget 0 0 0 24 21
Platform 9 10 12 19 21
Service 9 16 12 14 19
Sales 9 8 9 14 16
Growth 17 17 13 12 14
Marketing 10 9 0 12 12
Cash 9 13 10 10 10
Mobile 7 0 16 11 7
Operating 0 0 9 9 7
Enterprise 7 15 0 6 7
Social 13 9 10 9 6
EPS 0 0 7 10 5

The one that stands out for me is ‘Social’. How the mighty have fallen. Once a foundation of the Salesforce strategy, the ‘Social Enterprise’ term has gone as a result of a backlash from the not-for-profit movements which coined the term well before Salesforce tried to trademark it. ‘Mobile’ is also interesting and it will be one I keep an eye on.

Google Trends

A milestone has been reached.


“Dynamics CRM” as a search term is now more popular than “”. I must admit I have been waiting for this day for quite a while. The significance of this is not straightforward to divine. There is some art to this science in that the search terms are subjective (what about ‘salesforce’ or ‘microsoft crm’, for example).

What I think is noteworthy is that the search trend for Salesforce is not aligned to their revenue growth. Perhaps this suggests significant new revenue is not coming from new business but expanding existing business. Perhaps it suggests people are finding out about Salesforce through new channels, outside of Google. I am not sure.

Insider and Institutional Sales

Again, using Yahoo, we see that insiders have sold 0.5% of their total holdings in Salesforce over the past six months. Institutions have sold off 2.75% of their shares over the same period.

In discussing this with fellow CRM MVP and stock trading wunderkind George Doubinski, he suggested the fact that insiders are selling is neither here nor there. To put it simply, people sell shares all the time for many reasons, which I have stated in the past. He suggested we examine the change in ownership over time.

Thankfully, we have the submissions to the SEC to give us the information. For example, here is the original prospectus for Salesforce, with the original share ownership. Here are the numbers for executives which owned more than 1%.

Executive Officers and Directors: Number of Shares Percentage Ownership Before the Prospectus Percentage Ownership Before the Prospectus
Marc Benioff 28,179,071 30.9 27.8
Parker Harris 2,520,507 2.8 2.5
Magdalena Yesil 2,089,165 2.3 2.1
David Moellenhoff 1,792,005 2 1.8
Jim Steele 1,350,000 1.5 1.3
Craig Ramsey 1,300,000 1.4 1.3
Steve Cakebread 1,000,000 1.1 1

Boards change and the only original members of the board, according to the Salesforce web site, are:

  • Marc Benioff
  • Parker Harris

So how has their ownership changed in the past ten years for these founders and true-believers?

Thanks to Yahoo, we know that the major shareholders are:

Holder Shares Reported
BENIOFF MARC 10,212,500 Dec 28, 2012
RAMSEY CRAIG 1,384,584 Nov 26, 2013
HARRIS PARKER 9,419 Nov 29, 2013
ROBERTSON SANFORD 172,800 Nov 26, 2013
HASSENFELD ALAN G 116,000 Nov 26, 2013

So Marc has gone from 28 million shares down to 10 million shares and Parker has gone from 2.5 million shares down to 9,000. How does this compare to the total number of shares? Well, we know that Marc’s holding of 28,179,071, at the time of the prospectus represented 27.8% of all shares. Therefore, maths tells us the total number of shares was around 101,363,564 (let’s call it 101 million).

Looking at the last annual report (before the recent 4:1 share split) we see that as of January 31, 2013 there were 147m shares outstanding. It is possible the values for all major shareholders, except Marc are in the new split shares but we will err on the side of caution and assume not.

Running the numbers, this means Marc Benioff has gone from being a 28% owner of the company in 2004 to being a 7% owner of the company (10,212,500/146,406,655) today. In the case of Parker Harris, he has gone from owning 2.5% of Salesforce to owning essentially no part of the company.

If Marc and the executive are so positive about Salesforce, why do they own so much less than they did when they floated the company? Why do many of the executive continue to sell their holdings on practically a daily basis? It is for this reason that I refer to Salesforce as unloved. For whatever reason the father(s) of Salesforce are abandoning their baby. This being said, I am sure Salesforce will never be an orphan. With Salesforce and Oracle building closer and closer ties, if Marc sets his baby free, there will be Larry Ellison with open arms to welcome it into the Oracle family.


As is often the case with the quarterly reports, I find myself writing the conclusion with mixed emotions. I like Salesforce and I like the competition is brings to the market. It brought innovation and life to a stagnating CRM industry and it pains me to see dark clouds on the horizon.

Regardless of how Salesforce juggle the numbers for their non-GAAP reporting, eventually the piper must be paid and a real profit must be made. I see no indication that Salesforce plan to do this in the near future and this concerns me greatly. Perhaps this new platform play, emphasizing the development tools over the SaaS offerings will be the key. It seems Salesforce is trying to be the appstore for business applications, which is an interesting play. If they get the adoption, this will make them formidable, in the same way that the sheer volumes of applications for Apple is a sustainable competitive advantage which the others struggle to assail.

The Google trends result is interesting. The graph clearly shows people are not asking about Salesforce via Google as much as they once did. This surprises me in that the revenue growth would suggest increasing popularity, not decreasing. Perhaps Salesforce will, once again, release subscription numbers in the future and we can see how this correlates to these seemingly contradictory results.

Finally, we have the result of the executives and their seemingly waning affection for their creation. Perhaps they are moving on to other things. Perhaps they really need the money. Again, whatever the reason my hope is Salesforce continues with or without their support.