Microsoft partners wondering in the wake of last week's Worldwide Partner Conference how they'll adapt to the vendor's evolving 'Software plus Services' strategy may be enheartened by the experiences of some leading Saleforce.com partners. It seems that the SaaS model really does make it easier to create reusable code, which partners then package up and market to Salesforce.com's user base via its AppExchange directory. Perhaps Microsoft partners will find the same opportunities opening up.
In recent months, I've spoken to three of Salesforce.com's most established systems integrator partners, and I've found it notable that all of them have taken products they've developed in-house and put them on AppExchange, where they've been generating incremental revenue as well as useful extra visibility for their professional services.
Of two companies I've mentioned previously, Bluewolf, for example, offers two MediaTrak applications, which tailor the Salesforce.com application to the needs of media companies, as well as a listings manager for the real estate market called Realty Management. Appirio is a favorite case study for AppExchange marketing folk at the moment because a suggestion that a Salesforce.com customer posted on the company's IdeaExchange bulletin board prompted it to spawn a family of Google Gadgets that hook into Salesforce.com applications. The first went live within six weeks of the original suggestion being posted, which is an impressive timescale for completing the innovation cycle. (Another interesting side-comment: both companies are forging strong relationships as integrators for Google applications these days).
Frank McCracken, co-founder and professional services director of SaaSpoint, which claims to be the leading Salesforce.com partner in EMEA, spelt out the favorable economics of developing for AppExchange at a recent presentation at Enterprise Ireland's SaaS Summit in Dublin, which I also attended as a speaker [disclosure: Enterprise Ireland paid my travel and accommodation costs].
McCracken revealed that SaaSpoint's Mobile Field Scheduler, an on-demand scheduling tool for mobile field service agents that uses a Google Maps mashup, had taken just 40 man-days of effort to complete. That means the company will break even once it has had "between 700 and 900 users" using the application for twelve months. Interestingly, he added that the 40 days included no more than about 10 days' worth of actual software development. He revealed that the bulk of the effort had gone into creating marketing material, such as the descriptions and other elements on the AppExchange listings pages.
"This is how a couple of guys working out of a converted stable in Dalgeny [Co Wicklow] can build a global business," he joked — SaaSpoint in fact has more than 60 employees but McCracken and CEO Colm Mulcahy are the only two based at company headquarters in rural County Wicklow, about 20 miles south of Dublin. SaaSpoint recently established US operations, which are growing fast, and has closed sales of its AppExchange-listed products in locations as far-flung as Dubai and South Africa. "We're starting to go into markets we just didn't think we'd get to," said McCracken.
McCracken also revealed that Salesforce.com's dependence on professional services is somewhat greater than its on-demand image often suggests. In its early days — which McCracken witnessed as an insider, having been the first recruit to Salesforce.com's professional services team in EMEA — the company quickly found that customers need help to get up-and-running with application.
"Salesforce tried it without professional services and they had lots of churn," he explained. "We found that even if customers had professional services just for one day, they didn't leave the service."
He revealed that a vital ingredient when selling the online product — which Salesforce does mainly over the phone and via web conferencing — is to get people to put their data in and start using the system. Once that happens, they're much more likely to continue to subscribe. But some kind of hand-holding always seems to be needed to get them started.