Destroying Oracle and SAP: Show us the Money, Marc

Destroying Oracle and SAP: Show us the Money, Marc

Summary: Marc Benioff promises to "destroy Oracle and SAP", according to a recent Business 2.0 article.


Marc Benioff promises to "destroy Oracle and SAP", according to a recent Business 2.0 article. He's going to get his chance to put his money where his mouth is next week, when the Dreamforce circus opens in San Francisco. The hyperbole of destroying the top-end of the enterprise software market aside, Benioff has a lot to prove in order to show that he's even begun to make good on his boast, much less start to actually do something about it.

Here's the problem: Benioff's SAP/Oracle "killer" is AppExchange, sort of a Web Services meets On-demand marketplace where software companies can display -- and sell -- bolt-on applications and functionality that extends the usefulness of the standard suite. At Benioff's last big AppExchance shindig last May, lots of partners came out to show their wares, and lots of users sung their praises.

It all looked good, except for one thing: no money. That's right, AppExchange wasn't as of last spring making any appreciable revenue for any vendor I spoke to. And no one at Salesforce would deny that this little problem existed. Nor would the customers I talked to acknowledge that they looked towards AppExchange as the place to buy their next piece of functionality -- the ones I talked to largely saw it as a sandbox, albeit a good one, but mostly that. In other words, they kept their credit cards safely tucked inside their wallets. 

Meanwhile, the preponderance of AppExchange partners I talk to are interested mostly in signing on to the Benioff hype machine and doing "proof of concept" development. Translation: we're making money elsewhere, thanks for the ride. 

So, if you're taking Benioff even remotely seriously in his quest to be the undertaker of Enterprise Software, make sure that you look beyond the hype to what really defines success or failure: real revenues for the AppExchange partners. SAP and Oracle partners can and do make millions in their respective ecosystems, "destroying" these two companies will require an ecosystem that is even more robust.

Right now the AppExchange ecosystem seems to be floating mainly on air, hot air at that. Only when some hard dollars are being exchanged in AppExchange will there be even the slightest chance that Benioff could do more than talk about taking market share from his self-proclaimed rivals. Until then, that's what destroying SAP and Oracle is really all about: talk. 



Topic: SAP

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  • Be fair...


    I generally really enjoy your articles for their insight into the enterprise software world, but feel that not only are you way off the mark regarding Salesforce, but that you are being unfair.

    You have consistently warned of impending disaster for Salesforce in your Enterprise Advisor columns (, and yet the company has continued to succeed. In particular, you were scathing about AppExchange when it was released (, describing Marc Benioff as having reached ?a new low?, and opining that the ?cracks are beginning to show?. As the company progresses, you are reduced to conceding that although AppExchange might have attracted huge interest from ISVs and customers, its revenue numbers are still small! What more could you want from a company that is only a few years old, and an initiative that is only a few months old? On any measure, the Salesforce team has done a remarkable job.

    I think you have misunderstood what AppExchange is all about. Yes, Marc Benioff must agree with you that remaining a stand-alone CRM provider is not enough to ensure success, and hence he is trying to turn Salesforce into a platform. For which he needs enthusiastic and entrepreneurial ISVs selling compatible applications. AppExchange is an advanced forum for achieving this. Boiled down to its essentials, it is a market place, and like any market, seeks to attract and retain participants by offering them the lowest transaction costs and highest visibility to potential buyers. SAP has a similar strategy.

    Think of the world of ISVs and platform providers today as resembling that of stock and commodity traders meeting in London coffee houses in the 17th century, that is, people interacting commercially in relatively inefficient ways, meaning high transaction costs (in particular, large information gaps). So, AppExchange is akin to moving such interactions to a formalized Stock Exchange, with clear and transparent pricing and rules. Such a transition will obviously take time, but I agree with their approach, and admire the strategy.

    I don?t have any commercial interest in Salesforce, and I don?t know anyone who works there; in fact, at some level, they are a competitor. However, I felt compelled to write to counter what I thought was an unfair article by you that dismisses the great success Benioff and his team has had to date and the innovative approach they are pursuing to build on that success.

    Okay, that off my chest, here is what I think is a bigger question for Salesforce, and SAP/Microsoft/Oracle, that few people are asking: how do they give ISVs the confidence that they won?t at some time start selling features/applications that directly compete against that of the ISV? Because when that happens, it won?t be a case of fair and open competition and may the best man win: it?s obvious who will have the unfair advantage, and it?s certain that that advantage will be used.

    • Hype versus Reality


      My real beef hasn't been with the real capabilities of AppExchange, or -- it's the quantity and quality of the hype that goes with it that I object to. Marc is the one setting impossible standards for his own success -- destroying Oracle and SAP, becoming the next Ebay/Itunes, trumpeting the "end of software" when he, just like everyone else, is busy creating more. So what I've been doing is trying to put a little reality into hype -- AppExchange is a very interesting idea, but to become a major player in the infrastructure wars against IBM, SAP, Oracle, and Microsoft, will take much more than a lot of bluster. I just want to make sure everyone knows that just because Marc says it's so, doesn't make it so.See today's post for more on the hype machine
      • ok

        Thanks for the reply Josh. Yes, I suspected you had adopted your role of MB's nemesis, a caped-crusader fighting for the "end of hype", for that reason. :) Good luck though, as there's a lot of hype to fight.

        I would be interested in your views on the question I posed at the end of my original message, if and when you get a chance. I think they apply just as clearly to the ISV strategies of SAP/MS/Oracle as well.

        • ISV Be Nimble, ISV Be Quick


          There are no guarantees, other than the well-proven fact that small, hungry companies can find and exploit new opportunities faster than the fat-cats. I think every large ecosystem player acknowledges that they can't fill in all the white space in the short term, and are counting on partners to do so. What the partners have to do is fill in the current white space while looking carefully and diligently for the next opportunity. A good, smart, innovative company can and should invest its R&D in staying ahead of the big ecosystem players in their narrow field of expertise. It's possible, and, considering the focus on verticalization, there's a lot of markets with a lot of white space still to conquer.