Ecosystems versus centralized development
Salesforce.com has just gained an RSS interface to its application without having to do any development work at all. The RSS option is a free service provided by Salesforce partner Spanning Partners. As Dan Farber notes in his blog yesterday, RSS is something every CRM vendor must add to its application. I'm sure development teams at Siebel, SAP and Microsoft Business Solutions are already lumbering into action. With any luck, they'll be ready with working code in time to be scheduled for inclusion in the next planned release. Meanwhile, Salesforce.com users can access this capability today — without the vendor having to lift a finger. That's the power of ecosystems.
I'm reminded of the Cold War struggle that ended in the early 1990s. The command economy of the Soviet Union was finally overcome by its inability to react fast enough to the technological innovation engendered by the West's free market innovation. Free agents acting in unconstrained competition will always outwit centralized hierarchies, even though the anarchy inherent in the former makes the results often unpredictable.
Microsoft is a past master of managing an ecosystem that enhances its product offerings without undermining its market dominance, as John Carrol outlined in a recent posting. Now Salesforce is aiming to pull off a similar trick on behalf of its own platform, aided by the enormous (albeit uncontrollable) creativity of the Web. Although companies like Siebel, SAP, Oracle and Microsoft begin with the advantage of proven code and business logic that they can port from their conventional on-premises products to an on-demand architecture, they lack the rapid innovation that on-demand integration is starting to enable. Anyone can create an add-on to salesforce using its sforce or Multiforce capabilities, and as soon as it's ready it can be available for deployment to any Salesforce customer. I suspect the command-economy software vendors are going to find it tough to stand up to that pace of innovation delivery.