Andrew Willis: If you have a business with sales, customer service, or marketing functions that process, organise and coordinate large amounts of complex information – would you rather build the software yourself for hundreds of thousands of dollars, or pay around a hundred dollars a month and have someone do it for you?

Enter Salesforce (CRM). It started the software-as-a-service format for businesses, allowing clients to simply open up a web browser and access a customizable solution with established economies of scale and expertise. It was among the first digital clouds to form – and now it covers the sky.

Having grown the size, number, and quality of clouds serving different business functions, equity analyst Dan Romanoff says Salesforce is now widely considered a leader in each of its markets. With a wide moat and customer retention topping 90%, we think the company’s assembled an undervalued front-office empire.

We think cross-selling opportunities between products, new features and tight integration between products form a powerful value proposition, and Salesforce has started giving clients the ability to go further by easily creating and distributing custom cloud apps on its AppExchange platform.

Looking ahead, we see improved margins, strong earnings, international expansion and…more clouds. From data analytics with Tableau, and potentially business communications with Slack, Salesforce is moving beyond the front office in what may be one of the best long-term growth stories in software.

For Morningstar, I’m Andrew Willis.

Salesforce snapshot | Morningstar ratings

Salesforce.com

Source: Morningstar