Salesforce.com faces up to integration challenge

In my top five predictions for SaaS last week, I singled out integration with installed software as this year's "major obstacle to enterprise adoption of on-demand applications". This is the reverse of the mashup challenge faced by Microsoft and other established vendors, who must open up their on-premises products to interact with on-demand services. But whereas the latter is an inconvenience their customers might grouch about, the former is a deal-blocker for on-demand vendors. That makes it a much more acute problem to deal with.

No wonder, then, that Salesforce.com recently recruited a high-flierSalesforce [must] solve the integration challenge without sinking back into the old ways with the expertise to address exactly that problem. Cindy Warner joined the company last month as senior vice president of global integration services, having previously led SAP CRM practices at Accenture and before that Capgemini (formerly Ernst & Young). She reports to her former boss at Accenture, John Freeland, who joined Salesforce.com last October as president of worldwide operations. I met her during my visit to San Francisco two weeks ago.

Warner knows all about the integration challenges faced by conventional software vendors. A SAP CRM deployment can take up to three years to complete, even with 80 or more consultants working on it. But she was quick to confess that her erstwhile colleagues may not be much help in her new quest. Although Accenture last year set up a practice to work with Salesforce.com on on-demand deals, the consultancy's relationships with the established vendors are bound to take precedence simply because of the sheer size of the projects on offer. Even a large Salesforce.com project is unlikely to take more than six to seven months to complete, with a much smaller team of consultants involved.

Maybe that will prove to be a blessing in disguise for Salesforce.com, though, which is going to have to solve the integration challenge without sinking back into the old tightly-coupled, labor-intensive ways of the conventional vendors' products and their implementation partners.

Another call on my visit was to composite applications tool vendor Above All Software and its affable CEO, Jon Temple. The company was set up by Informix founder Roger Sippl with the aim of making it easy to build composite applications using web services. But despite developing a compelling product, Above All has made little progress in the SOA market, where most enterprises are too busy building out infrastructure to start worrying about delivering applications to users (What's that all about? Go figure!).

Instead, Above All has been building a customer base among Salesforce.com users, helping them integrate the on-demand application with their existing installed software base (and in some cases with other on-demand services too). Unusually for a software startup, Above All can produce a list of half-a-dozen publicly referenceable customers who are happily using its products as part of their Salesforce.com implementation. (Can SAP produce that many for its CRM product? Somehow I doubt it).

Above All provides the kind of loosely coupled capability that's going to offer the best long-term solution to on-demand integration in the enterprise. But is it going to win the confidence of large enterprises that currently spend millions with the likes of Accenture and Capgemini? Probably not yet, except in those occasional instances where the urgent desperation to implement a working solution overcomes the compulsion to play safe and stick with a trusted vendor, no matter how huge the cost and implementation timescale.

So even while she builds relationships with Salesforce.com's long-term partners that offer those next-generation solutions, Warner is somehow going to have to conjure up a short-term alternative that feels less risky for Fortune 500 buyers — or else lose those deals.

As an analysis just published by BPM expert and CSC strategist Howard Smith shows, the average number of users per Salesforce.com customer is still less than 20, not even a 50% increase on the average achieved by the end of 2003. The only way Salesforce.com will break decisively out of that range is to start winning over larger enterprise deals — and having a persuasive story on integration will be the key to unlocking those deals.