Salesforce: On-demand CRM to flourish in Asia

SINGAPORE--On-demand customer relationship management (CRM) software will see a colossal growth in the Asia-Pacific region, says a senior Salesforce.com official.

Steve Russell, the hosted CRM software provider's newly-appointed Asia-Pacific president and CEO, told ZDNet Asia that Salesforce's revenues from the region grew to US$13.4 million in the first 10 months of 2005, up from US$6.8 million during the same period last year.

"Up till last year, most of Asia-Pacific deployments were in Japan, Australia and New Zealand," he said. "The appetite has been so great that we decided to come into the region in full force."

According to Russell, Salesforce set up its regional office in Singapore last year to tap the growing Asian market for CRM software. He said the company has had customer leads from the region "growing sequentially month after month", adding that other markets poised for growth in the region include Hong Kong, South Korea and Taiwan.

He attributed the stellar growth of Salesforce's CRM software in Asia to the fact that many Asian countries are now putting Internet applications in the reach of both consumers and businesses, through the proliferation of wireless and mobile networks.

"The wireless infrastructure in Asia is so strong now that I get better [signal] reception in the Philippines than in downtown Los Angeles," he said. With some 20 million developers in Asia, he noted, selling software as a service through the Internet is a compelling notion for Salesforce.

Although on-demand CRM software today is not widely used by local companies in the region, Russell contended that over time, case studies of large multinationals using this business model will spur greater interest across Asia. Local small and midsized business will soon see the benefits of quick deployment, and ease of use provided by on-demand software, he added. "People in this [Asia-Pacific] market are very quick to adopt technology," he said.

Other than Salesforce, which helped to spawn the on-demand CRM market seven years ago, business software powerhouses today are also eyeing the same pie. For example, German giant SAP is reportedly launching an on-demand CRM service by year-end, while Oracle already offers similar services through its Oracle On Demand portfolio.

"We view our competitors respectfully, but at the same time, a leopard doesn’t change its spots," Russell said. "On SAP, Oracle and Microsoft entering the on-demand space, I think they're less than visionary. They've missed the innovation in the last seven years."

He added that software giants moving into an on-demand business model will have to grapple with internal conflicts and other issues, as a result of providing both packaged and hosted products.

Doug Farber, Salesforce's Asia-Pacific vice-president of operations, noted that SAP, for instance, may need to completely change its business model of installing, implementing, upgrading and maintaining "big, chunky pieces of software for large organizations".

"For [SAP] to change midstream and do on-demand requires them to eat their young," he said. "They've got to change their model or cannibalize existing customers."

Nonetheless, Farber noted that the move by large enterprise software vendors' to join the fray validates the success of on-demand software. "Five years ago, these people were saying we weren't viable and would never survive. Certainly, they're now trying to figure out how they can build themselves in our image."

Russell also discussed how Salesforce is resolving the limitations of on-demand CRM software.

For instance, on-demand CRM is good at addressing procedures and tasks during the sales cycle. But Michael Maoz, Gartner's vice-president and fellow, noted in a blog post that these systems are "poor at mixing tasks with declarative processes--those 'why will the customer buy, complain, or be successful' types of functions."

Salesforce's recently announced its AppExchange platform which, coupled with a myriad of third-party applications, will provide the analytics and integration points to backoffice systems that are required by large enterprise customers, Farber said.

Through AppExchange, Salesforce can interface with backend processes in an open manner, he said, adding that businesses can create the integration points, linking their Salesforce CRM with order management or supply chain solutions from SAP or Oracle.

While Salesforce has 351,000 users worldwide from a plethora of companies including heavyweights such as Nokia and AMD, at least one enterprise-class customer is reportedly facing hiccups with Salesforce CRM.

According to a report issued by investment bankers JMP Securities, employees of networking giant Cisco are not adopting Salesforce as quickly as originally expected because the CRM vendor's service does not support the tools Cisco's sales staff feel they need to do their jobs.

JMP said Cisco's deployment include Salesforce's sales compensation system for commissions, advanced account hierarchies, territory management, forecasting and quoting, and configuration tools.

Cisco's IT department has "struggled to integrate these tools with a hosted application, and is questioning the logic of having such a heavily customized hosted application", JMP added.

When asked for an update on Cisco's deployment woes, Russell said "the rollout is fine", adding that Cisco was the platinum sponsor and keynote speaker at its recently concluded user and developer conference in the United States in September.