CEO Marc Benioff berates Microsoft in internal email CEO Marc Benioff berates Microsoft in internal email

Summary: Today Microsoft re-announced their on-demand CRM solution, Benioff: "The fact is that Microsoft is being out hustled by everyone." Microsoft Dynamics CRM - including a new software-as-a-service offering called Microsoft Dynamics CRM Live.


Today Microsoft re-announced their on-demand CRM solution, Benioff: "The fact is that Microsoft is being out hustled by everyone." Microsoft Dynamics CRM - including a new software-as-a-service offering called Microsoft Dynamics CRM Live. According to CEO Marc Benioff, once again Redmond is reacting to the success of service-based companies like and Google.

In an internal email that was sent to me, Benioff riffs on the state of the online business industry - paying particular attention to Microsoft's position in it. He outlines a theory he calls "The Business Web" and explains why his company, rather than Microsoft, is in the driving seat. Here is the internal email from Benioff:

"Is it the end of software as we know it? 

Just three weeks ago, Bill Gates announced he would leave his day-to-day responsibilities at Microsoft, and turn his title of Chief Software Architect over to Ray Ozzie.  Why did he choose Ozzie, a relative newcomer to Microsoft?  Ozzie had made his views widely known in his October 28, 2005 memo called, “Services Disruption,” where he stated the future would be dominated not by software like that made by Microsoft, but by services offered by companies like Google and who were changing the software game forever by delivering a new paradigm. 

Simultaneously, companies like Google and Yahoo have announced their intention to compete against Microsoft Exchange by offering a version of their consumer email services repurposed for business.  Gmail for Domains ( and Yahoo Business Email ( /email/) are serious competitors to the traditional email server franchise.  And, it’s not stopping there, as competitors to Microsoft Excel spreadsheets ( eadsheets/tour1.html) ( (, and even those taking on Microsoft Word processing ( ( begin to take hold as serious and viable alternatives to Microsoft Office software.  Ozzie was right.  Steve Ballmer has publicly fretted that he would not be “out hustled by anyone,” but the fact is that Microsoft is being out hustled by everyone.

In January, introduced AppExchange (, and already has more than  200 independent software vendors providing more than 300 different software as service applications.  They applications range from sales, service and support, utilities, and tools to health care, education, real estate, and manufacturing.  Thousands of customers have already started using these applications simply by adding them to their existing implementations.

And, many other companies are finally delivering a wide variety of software as service offerings from Business Objects to Adobe to Skype.  And, Oracle and SAP both have announced they would take the software as service market seriously as well with their own on-demand offerings.  And, finally, Microsoft has announced that it will begin hosting its own business software under the Live brand.

The world has changed.   Everyone and everything is becoming a service.

It was not so long ago that most executives and companies disregarded the movement to software as service, claiming it was limited technically, or isolated to a specific market segment such as small business.  Now, everyone agrees that the future of software is no software at all---but rather an industry dominated by tens of thousands of heterogeneous services delivering everything from traditional Office productivity to Verticals to VOIP to ERP and CRM systems.  All companies and executives now agree: no software application will remain standing at the end of this widespread transformation.  Every market segment, geography, and customer will use these services with all of the rich customization and integration they demand-- and much, much more.

Put it all together and what do you have?  The Business Web. And The Business Web-- with all of its innovation, creativity, and most important, customer success—won’t wait for Microsoft.

We have seen the consumer Web dominated by companies like eBay and Amazon.  Now we are seeing a wide variety of new software as service applications ( -20/my-office-20-setup/) emerging to dominate The Business Web.  And, it’s only starting.  We are only at the very beginning of a huge change.

It will not be dominated by any one particular company or application or geography. The reason is that The Business Web will be best known for its ability to easily create composite applications, or what is now popularly known as “mash-ups.”  Made popular on consumer sites such as, a mash-up driven by Google maps and, or, a mash-up driven by and Google maps, the point is simple: the future of business applications is multiple, heterogeneous applications talking to each other and sharing data.

Customers of all sizes are making the decision to choose software as service as evidenced by Cisco’s multi-thousand person worldwide sales organization now running on, or Merrill Lynch’s decision to jettison Siebel.  Just a few years ago, that would have been unheard of.  But, now ask any of’s 22,700 customer or 444,000 subscribers, and you’ll hear the same story.

No one can turn back time, and the Pandora’s box of services is now opened.  New companies being funded on Sand Hill Road are not software companies but services companies.  And, entrepreneurs around the world are starting their own companies to take on this great new opportunity of creating The Business Web.




Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • lets see how long will last.

    "No one can turn back time, and the Pandora?s box of services is now opened. New companies being funded on Sand Hill Road are not software companies but services companies."

    And these service companies are selling energy.

    Services companies develop software, so how can software be dead.
    • EXACTLY!

      Kudos to whoever wrote this post!

      Benioff's "Software is Dead" song is nothing but a PR tactic. (It makes a great soundbite, doens't it?) Make no mistake - Benioff is very good at PR.

      Now let's see how good he'll do when his company continues to slide, as it has already begun to.

      And we'll see how good will fare when businessness start realizing CRM IS DEAD.
      Any company investing in on-demand CRM is foolish. If your CRM system isn't helping you process orders, and it isn't making you money - it's pointless.

      If you are in business, do yourself a favor and look into PCS.
  • Connecting the Silos

    Simply said one must provide Organization, Management, and Connectivity within ONE UNFIFIED VIEW!! It is not about Systems - its about People! Oracle's Siebel/PeopleSoft/JDEdwards/Funded and even NetSUITE go to Mr. Ellison's Camp.... Microsoft is currently immersed in Silo systems of CRM, PROJECT, ACCOUNTING, etc all in the client server environment. Simply said a company called iKnowWare is connecting companies everyday by replacing multiple systems that do not talk to each other. Help the VAR Help the Customer with an easy, simple, connected, secure, and device agnostic way to do business!
  • Taking Control of your On Demand Data

    Extreme statements like "No Software" are pure Benioff over-simplification sales patter. On demand software is very good at centralising functionality with continuous upgrades/maintenance and remote accessiblity, BUT at the cost of centralising all your data...remotely. Ask Salesforce (or any other on-demand application) to give you a copy of all your data "on demand" because you want to look at it, or re-use it, without being locked into the "Business Web" as sole custodian of your data. You will find that Salesforce (and you) are still totally dependent on Microsoft to give you a copy of your data, and 50+ .csv Excel files divided up in relational tables is about the best they can do. What is anyone supposed to do with that?

    Strong new client-side data visualisation and management tools that go beyond Access, Excel and PowerPoint, such as Visokio Omniscope, are integral to avoiding remote data lock-in to the Business Web, and thereby making the best of on demand applications such as Salesforce.

    The client side of on demand is where Microsoft has really dropped the ball. Local relational data marts like Access and flatfile spreadsheets like Lotus123/Excel were all architected 25 years ago when there was less than 1 MB of RAM on a client side machine. Backwards compatibility and a tradition of Microsoft never innovating have left the on-demand world with client side feet of clay, thanks to Microsoft's continuing dominance of the desktop with ancient applications.
    • Re: Taking Control of your On Demand Data do give you all your data, on demand, in various forms:
      1) You can use our SOAP based API to access/manipulate your data. If you're too lazy, you can get a partner app which exports your data using the same API.
      2) You can pay for a Sandbox, which is a clone of all your data and structures isolated from your production instance.
      3) You can use the free Excel Connector to play with parts of the data.
      4) You can use the Dataloader for moving data around, doing integration etc
      • yeah, but....

        can it process an order for you? or connect your crm to your accounting to your ecommerce site or to your marketing programs or offer business intelligence and analytics?

        didn't think so.
    • You can use data integration tools, some of them open source

      Take a look at data extract/load software at AppExchange, some of them are free like Apatar Open Source, some of them are expensive but deliver more connectivity and features.
  • The End Game is Service

    We agree with Marc's comments - the future of software will be delivered via service on the web. It won't be dominated by any one company or service or technology. It will provide customers with choice, freedom, availability and cost savings.

    We applaud large companies such as Microsoft, Google, Yahoo and validating the software as a service market place.

    However, we believe companies like ours - [b][/b], that are smaller, nimbler, more flexible and that provide a higher level of service to its customers will be the deciding factors in who will be successful in the marketplace.
    Nick Bertolino
  • McNeally or Ellison?

    Will Benioff become a successful mouth like Larry, or a has-been like Scott?
    Roger Ramjet
    • Benioff needs to go away a remote island somewhere...for a long, long time.
  • SaaSy Microsoft?

    No doubt the software-as-a-service model is changing the software industry forever. While CRM is the first successful story, most other business solutions will follow route. Many companies such as,, RightNow, and others are experiencing great success by penetrating the small business sector with affordable business solutions, not even Microsoft, Oracle, or SAP offer today.

    The move by these large companies into SaaS has been nothing but a childish Me-Too approach. When SAP released a hosted CRM solution this year it was an incomplete sales-force-automation-only tool costing twice as much as a full hosted CRM product by the other smaller rivals.

    These companies are being forced to adopt software-as-a-service, and without the likes of salesforce and salesboom these companies will not innovate the SaaS space.

    The reason behind this is the financial model of on demand software. In a conventional software world, companies pay upfront for software licenses for years to come, and are force to pay upgrade costs of an average of 20% a year. If SAP or Microsoft collects monthly payments instead; their business model will break and possibly bankrupt!