, Partners, and Value-Added SaaS, Partners, and Value-Added SaaS

Summary: As the resident basher at ZDNet, it is with some smugness that I am watching the birth of a fellow naysayer on the future of Salesforce.


As the resident basher at ZDNet, it is with some smugness that I am watching the birth of a fellow naysayer on the future of's efforts to break forth from its CRM on-demand origins into its next big thing. The new critic in the camp belongs to Cowboy 2.0, and his post discusses how SFDC is changing the rules -- in the middle of the game -- for existing partners of, SFDC's attempt to build a platform to host third party SaaS add-ins to its CRM product.

We shall see if Cowboy has his facts 100 percent correct, though the scuttlebutt at this writing is that he has: SFDC is pulling the plug on a number of existing partners' efforts to build on, largely in an effort to protect SFDC's turf and stifle interesting new apps that don't fit the development model (ie. our way or the highway) of It's obviously SFDC's prerogative to limit its PaaS play to whomever it likes, but closing the door on potentially worthwhile apps that are not built on native technology (the gist of Cowboy's problem with SFDC) is a move to limit the scope and influence of at a time when SFDC can't really afford more limits on something that is showing very limited results already.

The move looks either foolish or desperate, or both. It showcases one of the kinks in the future plans for SFDC that I've been harping on for some time: SFDC's AppExchange and, its two means for expanding beyond its rapidly commoditizing CRM base, are not happening, and have little prospect of becoming the next big play for SFDC. This basically means that SFDC won't be able to grow organically, and will either need to buy someone (Workday? NetSuite? Somebody?) or get bought (Google, IBM, Somebody else?) to provide some version of a future that coincides with the P-E ratio this company trades at.

Which leads me to a discussion of where the future of SaaS and On-demand is going, and why, so far, SFDC isn't heading there any time soon. The basics of my version of the future of SaaS is this: the next generation of SaaS vendors will be providing value-added services, based on the network effect that they can command as they aggregate data and processes from their customers and partner networks, that are simply impossible to provide on-premise for love nor money. It's the effect you can find at established companies like E2Open and GT Nexus, among others: a value-added collection of services and capabilities that derive from the ability of a SaaS vendor to leverage their network and the connections that network provides to do things that couldn't be done before. I've written a little more about this concept here.

This vision of value-added SaaS is in stark contrast to SFDC's -- and other's -- version of SaaS today, which is basically a lower-TCO, faster time-to-value replacement for on-premise functionality. So exciting ten years ago, so much yesterday's value-add in 2008 and beyond.

So, insofar as Cowboy's assertions have been largely confirmed by at least one source inside SFDC, here's what I see as the innovator's dilemma with respect to SFDC, which, one of its defenders just told me, is merely playing by accepted rules of the industry. If I'm a developer of a hot new app, I can use SFDC's and AppEx, and have what is a typically disadvantageous relationship with my platform vendor, who is, due to their own limited business model, unable to provide me either with a strong marketplace for my apps nor a vision of a value-added SaaS future that I can take to the bank.

Or, I can go with a major platform vendor, who is still going to provide me with a disadvantageous relationship, but will have the massive customer base and economic model that will mean real revenues from my efforts in the near term. And who might, just might, by virtue of their size and influence, provide some value-added SaaS roadmap that makes sense for me.

Sounds like a slam dunk to me.

Topics: Cloud, Emerging Tech, Enterprise Software

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  • Please explain

    "And who might, just might, by virtue of their size and influence, provide some value-added SaaS roadmap that makes sense for me."

    What part of CRM's over 41,000 companies and over 1,000,000 users is small? I still have not seen anything close to a road map for saas from anyone other than CRM. You make some poor statements and then don't back any of them up. Maybe next time you should do your homework...
    YO ME
  • RE:, Partners, and Value-Added SaaS

    Sorry to disappoint you, but compared to the major enterprise software vendors, such as IBM, SAP, Oracle, and Microsoft, is small potatoes in all regards: revenues, customers, users, and profits. And if you haven't seen a road map for SaaS from the anyone else, you've failed to do your own homework.
  • RE: SaaS and PaaS "value add"

    While true, I don't think you've stated anything revolutionary here--"SaaS will grow in areas where premise-based solutions aren't preferable." No one would sell hosted solutions if it didn't . . .

    But I think your larger point about SFDC is correct, in that, until you do SOMETHING with it other than collect and spit out data, SFDC really is just a BDD--Big Damn Database. If SFDC really wants to make the next leap, they have to be the front-runners for all future integrations. You want to build enterprise-level partner integrations, SFDC had better be the "value add" as you state, because otherwise they have no "raison d'etre."

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  • SaaS is alive and well...

    We are an SaaS Provider. To a niche market to be sure.
    We simply provide our service FAR more cost effectively than anyone can do it themselves.

    We also supply a large interactive network running off our database, creating more business for our clients.

    While this is what your discussing above, we've been on line with it for over 6 years now.

    Perhaps, might I suggest you guys start looking where the the action is. The smaller Privately held SaaS's who are carving out the real how-to-get-it-right structure. The publically held companies are slaves to the market, not the servants of their clients. They make choices that are based on stock values, not value to the client. They suffer and we grow.

    SaaS is alive and well!!!
  • RE:, Partners, and Value-Added SaaS

    I fully agree with your view abut the SaaS VAS based on their network strenghts. The user comment about SFDC's BDD is right to the point.

    BTW, you should update Cowboy's link to He UNpublished the previuos one.