What makes salesforce.com tick

What makes salesforce.com tick

Summary: Yesterday I attended a Salesforce.com event at the tony Four Seaons in San Francisco in which CEO Marc Benioff previewed (again) the forthcoming (June 8) edition of his company's product and showcased sforce 6.

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TOPICS: Salesforce.com
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Yesterday I attended a Salesforce.com event at the tony Four Seaons in San Francisco in which CEO Marc Benioff previewed (again) the forthcoming (June 8) edition of his company's product and showcased sforce 6.0. I have been covering the software-as-a-service, on-demand application space lately, and recently wrote about Salesforce.com vs. Siebel and how the company is moving beyond selling hosted applications by the month to becoming a service-oriented application development platform that will rise or fall on the depth and breadth of its development community.

In a brief on-camera interview, I asked Benioff what he views as his biggest challenges in becoming a developer platform for business and ERP applications, given that it is an area in which companies like Microsoft, Oracle (+PeopleSoft, J.D. Edwards) and SAP have dominated for decades.

He talked about delivering an on-demand platform, including tools, applications and user interfaces to access information. "Our advantage is that we are more likely to make customers successful than any other vendor," Benioff added.

How?will Salesforce.com make customers happier than competitors can? Other vendors--he named Microsoft, IBM and Siebel--are trapped in failed paradigms of the past. Microsoft, he said, is trapped in the client/server model, which was great in the early 1990s, but not appropriate for the 21st century. Salesforce.com represents the future of utility computing, he said.

Later, while chatting with my colleague Charlie Cooper and me, Benioff castigated Microsoft for failing to deliver the next wave of innovation. "The Blackberry, iPod and Salesforce.com exist because Microsoft let us down," Benioff said. I don't know why he isn't thanking Microsoft for being half asleep at the wheel or too busying trying to do too many things at once, including legal battles with large countries and land masses.

Benioff continued on his winding path toward answering my question, now pointing to Bill Gates' competitive streak. Gates, he said, has spoken about taking down Sergey Brin and Larry Page (Google co-founders)?like he took down Phillipe Kahn, founder and CEO of Borland who went up against Microsoft in the business applications space in the 1990s and lost. I haven't been able to locate the source of those remarks, but suffice it to say that Gates & Company will saddle up and try to crush any competitor in a market that Microsoft thinks it should "own."

If you look at how Microsoft addressed the Netscape browser situation with Internet Explorer (we are waiting to see how Microsoft deals with Firefox), Benioff can't get too comfortable thinking that Microsoft has become impotent, lacks the capability to innovate (not as a first mover) and won't turn its heavy weapons and checkbook against Salesforce.com if so moved. Benioff did spend the formative years of his career working for the ultimate high-tech competitor, Oracle CEO Larry Ellison, so he knows about how far his rhetoric can carry him.


Longer term. Salesforce.com is competing with the next generations of Microsoft Office and SAP Netweaver, not against Siebel or Microsoft CRM. Microsoft is trying to turn the rich (or fat) client Office suite into a business application development platform, with custom XML schema, InfoPath, more open APIs and other technology, such as a workflow engine, which is in development. But so far, we haven't heard much about turning Office into a hosted application service, in part because masses of customers aren't demanding it. That is a temporary situation, and Microsoft has to be looking at how to deliver?hybrid Office solutions that allow customers to have rich or thin (Web) clients, hosted applications, modular components and a single, Longhornish data model.


Despite Benioff's competitive jabs, he understands that he may have won the first round, but it's a ten-round (at least) fight. For the next round, however, the Salesforce.com ?No Software? slogan should be retired. It is supposed to mean that you don't buy software--you buy a service. That was fine for the first few years to get some attention, but it's now just a confusing artifact. To the end customer, Salesforce.com, NetSuite, RightNow, Siebel and others are offering hosted software applications and tools over the Internet. No software? Then what is the stuff running in the browser window operating on the data? And, how about a name change. The Salesforce.com name is as retro as Benioff claims Microsoft is. How about simplifying to sforce, which would still be different from the company's CRM stock ticker symbol.

But these are minor marketing issues. Finally answering my question on how to compete as a platform provider, Benioff said that what's important is "adding more subscriptions and growing with customers themselves." That means broadening far beyond out-of-the-box (or server farm) CRM and SFA to build an ecosystem teeming with applications that can be derived from the data, APIs, Web services and tools that Salesforce.com provides. If you are keeping score, it should be easy to see if Salesforce.com achieves success in subsequent rounds. The metrics are transparent--how many subscribers, customers sites, developers, partners and applications...

Topic: Salesforce.com

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  • Blarney

    Dan,

    You appear to be saying that Marc is guilty of being less than clear about where Salesforce is going, and how it will beat the competition to get there.

    Having watched the video I have to say that, yes, Marc is stronger on what is wrong with the competition than he is on what is right about Salesforce. Like many a salesman he picks up and uses his company's tag lines (e.g. "the end of software") as often as possible and, just like many a salesman, his company's strategic road - the road he wants you to travel down with him - therefore gets lost.

    But, and it's a big but, I don't think that Marc is guilty of being wooly about his company's future as far as their goals are concerned. While his frequent use of taglines is a turnoff, and he is certainly guilty of reusing dot-com language (like "disintermediation") too glibly and without proper definition, his message still comes across clearly; The future of the software industry is to provide super flexible environments that can be accessed through standardized clients - as a service. I have no arguement with his vision - but I do question his grasp of his own strategy.

    The industry is going through a transition phase, right now, as we struggle with the many practical challenges of server base access via many device types [including flexible, affordable, models for authentication, service monitoring, etc], standardising business administration practice, writing the soft versions of industries' dictionaries, creating messaging fabrics, and struggling with the new legal, operational and organisational models for hardware, software, people, data, balancing business management with enterprise ICT flexibility, and and and...

    But, once the basic services fabric is in place we can have a World with an " ...ecosystem teeming with applications that can be derived from the data, APIs, Web services and tools... ". So far, so good - Marc is, at least, in tune with the rest of the industry.

    But I do have one big problem with all this. Marc says he can achieve it by "adding more subscriptions and growing with customers themselves". In my cool, professional, unbiased opinion - this is complete hogwash! I know of no company that has made the transition to a new market paradigm by working with its customers. Customers know what they want today, and they should certainly not be ignored when they ask for things to be delivered tomorrow.

    The best analogy I can come up with, if you're reading this Marc, is that when I cook supper my wife is pleased. When I tell her what I'm cooking her for supper tommorow she is delighted. However, that doesn't stop her calling me as I stir the sauce (sometimes) to say; "Sorry darling, I'm working late." or "Sorry dearest, I'm just popping out with the girls this evening - pop it in the freezer for Sunday". Only, of course, in the ICT industry when a customer calls to say sorry, there is no later and there is no Sunday - they ate supper with some other guy!

    What really pleases my wife - what really pleases any customer - is not just your working with them, it's working on something completely new and surprising them with the result. If my wife returns home frazzled, and I surprise her with her favorite chilli, a glass of Californian red, and a daughter ready for bed - now I'm cooking!

    If Marc's message is really about what makes Salesforce tick - then they're making a big mistake. The other ICT vendors may be starting from a different place, but they have just as much of a chance of getting to the finish line first - because no-one has seen the track and no-one knows where the finish line is. Even so, it seems to me that Salesforce have some catching up to do - the other major ICT service vendors (a list which does not, yet, include Microsoft) are starting with broader product portfolios and they're more deeply involved with a broader range of the new services standards. Actually, I struggle to remember the last time I saw a Salesforce employee involved in a standard... It's like that old joke about a tourist in Ireland. Lost, he stops at a cross-roads and asks a local who happens to be passing: "Which way to Dublin?" To which the local yokel replies: "Ahh. If it's Dublin you're wantin', to be sure, I wouldn't start from here." Based on the his message, Marc's logic, when he talks about Salesforce being ahead in this game, is on a par with the logic of that yokel - it makes perfect sense, but is of no use whatsoever.

    At one point, Dan, you decribed Marc as " ...on his winding path toward answering my question... ". In my experience C-level managers start to wander when they are in the process of wondering. Or, to put it another way, when they still don't get it yet. Marc is saying some of the right things, but he needs guidance, and he needs to understand the emerging market much better. Give him my number.
    Stephen Wheeler
  • Blogger leaves it up to Dan

    http://www.siliconvalleywatcher.com/mt/archives/2005/04/tedious_salesfo.php

    Tom Foremski had the right idea; "Figured Dan or someone else will very likely file a good piece about the event; no sense in my reinventing the wheel, I?ll just blog it. Thus, I managed to fit in a pleasant walk in the sun and browsed the MOMA store for 20 minutes."
    chris jablonski
  • Message has been deleted.

    ABSmith
    • Message has been deleted.

      ABSmith