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A Wide Moat in Cloud Computing

Cloud-application provider Salesforce has strengthened its competitive advantages by negotiating long-term contracts and integrating itself more deeply into companies' processes.


Rick Summer: In our technology landscape, one of the most important trends that has been going on has been around cloud computing, and no company has better represented that than Salesforce (CRM). Through our lens, though, we look more importantly at those competitive advantages. Clearly, it has grown quickly, but we've recently upgraded its economic moat rating to wide.

That's primarily dependent upon two factors. Whether companies are adopting sales-force automation technology or marketing technology, these are long-dated decisions--ones where they have to train employees and they have to train their users. They don't want to be renewing contracts on a regular basis.

Rick Summer does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.