Salesforce says it's not encroaching on partners

Salesforce.com says it is not encroaching on its partners' turf, amidst apprehension regarding the on-demand software vendor's acquisition strategy.

Earlier this month, Salesforce announced that the acquisition of Koral Technologies, which created a Web content management service tied to Salesforce.com. The terms of the deal were not disclosed.

Following the acquisition, Salesforce will release Apex Content, a platform for unstructured data such as office documents, HTML files, multimedia files and e-mail messages, as well as ContentExchange, an application that lets businesses manage all information residing in unstructured data. Pricing and availability of both products will be announced later this year.

Jeff Kaplan, managing director of U.S.-based IT consultancy company ThinkStrategies, noted in a recent blog post that Salesforce's foray into content management will "raise some new questions for its partners who are trying to determine how to successfully dance with the software-as-a-Service (SaaS) industry's 800-pound gorilla".

He added that some of Salesforce's AppExchange partners, who already offer on-demand document management solutions, may be wondering what the new move means to them.

Kaplan said: "With each new initiative that Salesforce.com has unveiled since it rolled out its AppExchange partner platform in 2005, apprehension has quietly but steadily grown among its partners who worry that Salesforce.com's new offerings may be encroaching on their businesses rather than encouraging them."

In past cases, such as last month's AppSpace offering, which added portal capabilities to the Salesforce platform, "everyone rationalized that the threat was offset by the added attention Salesforce.com's moves gave its partners", Kaplan said.

Saleforce's partners would also, in the past, question whether the on-demand vendor was making a significant enough investment to truly compete with its more focused partners, he noted.

Kaplan added: "Although Salesforce.com probably didn't pay a lot for Koral, its acquisition of a SaaS vendor to expand into an area where its established partners already reside is unprecedented.

"No one can fault Salesforce.com for making a smart acquisition and continuing to set an aggressive pace in its expansion efforts. But, while the company plays a corporate version of 'catch me if you can', it will also have to figure out how to continue to play 'nice' with its partners who are becoming increasingly apprehensive about its ambitions," Kaplan said.

In an interview with ZDNet Asia, Tien Tzuo, chief strategy officer at Salesforce.com, said the company is committed to helping its partners succeed.

"We try to be as public as possible with our partners," he said. "We expose all the requests from our customer base, we don't try to shield information and make sure we have better access to what our customers demand than our partners."

Tzuo noted that the Koral acquisition was aimed at adding more functionality to the Salesforce.com platform. "The acquisition was to enable partners, not to encroach on partners," he said.

"We wanted to have a platform for the partner community to manage unstructured data, such as tagging, sharing and publishing," Tzuo explained. "If you've been building an application on our platform for the telecommunications vertical, you now can use the platform to handle unstructured information."

He highlighted the similar strategy that Salesforce took with its acquisition of Sendia in April 2006, where partners could deliver on-demand services to mobile devices. The US$15 million acquisition was the first in the company's history.

On whether Salesforce is now eyeing the business of the likes of EMC Documentum with its content management push, Tzuo said: "We'll welcome EMC if they move toward more robust on-demand offerings to take advantage of our platform."

"A great example of that is Business Objects," he said. "We have reporting and analytics capabilities inside our applications, but our objective is not to compete with Business Objects because they're a strong customer of ours."

Tzuo added: "They're working with us in AppExchange to crystallize and strengthen their on-demand efforts such as Crystalreports.com."