Apex signals a shift in the software landscape

The software landscape is changing. PeopleSoft founder Dave Duffield is heading up Workday, which is a pure on demand, Web services enterprise software play, following salesforce.
Written by Dan Farber, Inactive

The software landscape is changing. PeopleSoft founder Dave Duffield is heading up Workday, which is a pure on demand, Web services enterprise software play, following salesforce.com's lead, due for official launch on November 6. He was in attendance at Salesforce.com's roll out yesterday of its latest edition and Apex programming language and platform.


AMR Research analyst Bruce Richardson, Workday's Dave Duffield and salesforce.com's Marc Benioff 

I was curious as to why Duffield showed up at the saleforce.com event. Based on what has been revealed so far about Workday, the company is a competitor to salesforce.com. Workday has built a Web services platform for executing core business processes, starting with human resource management and following with financials.

According to the Workday Web site, since the company isn't talking publically about it technology or products, the software "utilizes an object-oriented model of the operational entities in the enterprise (person, organization, location, etc.) and the relationships between these entities (manager, HR partner, compensation analyst, etc.). We capture, store and audit every occurrence of the things, or 'events' that happen to these entities to provide complete visibility into the business process....Instead of summarizing what happens in your business into a data model designed for one particular perspective of the business, we model your business and track what happens. Then we provide access to the information from whatever perspective/role the user has."

It appears that Workday is a SOA platform with a capability to flexibly create and manage business process workflow. That sounds similar to the kind of capabilities that Salesforce.com's Apex platform will provide. A key difference is that Apex will be open to external developers to create a HR or financial application.

I asked Duffield if he would consider developing applications on the Apex platform. At first he said no, but then said he would explore how to take advantage of the Apex platform. He then said that he would have to talk to his development team. I then asked if he would open the Workday platform to developers as salesforce.com has done. He said that during his PeopleSoft days, he went through the same process of opening up the platform with PeopleTools, but it wasn't successful, and said that Apex was "terrific."

It's also possible that Workday could partner with salesforce.com, hooking Workday's applications into saleforce.com's CRM application, and vice versa. It's also possible that salesforce.com would want to develop or acquire AppExchange-based HR or financial applications.

During a press conference after the keynote yesterday, Benioff maintained that his company isn't interested in moving into other major application categories. "Our strategy is to use Web services and our investments made over time and focus on doing what we do really well, to be the best CRM in world and a killer platform," he stated. That said, salesforce.com has already acquired two AppExchange products, including one that integrates Google AdWords management. While Benioff said that enabling the community of developers is at the core of his strategy (salesforce.com gets a per user subscription fee when AppExchange applications are turned on), it will take a lot of discipline to avoid bringing a large category killer application into the fold.

There is definitely a lot of shaking and moving as the on demand, hosted, software-as-a-service industry gets its wings, but salesforce.com seems to have momentum in accelerating the growth of its ecosystem via Apex next year. Duffield may decide that he has to open his platform to compete for developers, rather than trying to build everything internally. In fact, there will be several on-demand platforms over time. At some point Oracle, SAP and Microsoft have to acknowledge this is more than a casual trend that will take a decade to ramp up.

Former Oracle president and now Kleiner Perkins Caulfield Byers venture capitalist Ray Lane said that Microsoft is in the best position to build a competitive on demand platform, but isn't going to mess with the cash cow of its current business. "If you own 98 percent of the desktops are you going to screw with it?," Lane said.  In addition, he said Microsoft is more worried about Google than what salesforce.com or fledgling Workday are doing. On the subject of Oracle, Lane said that his former company has a "DNA problem." Oracle has had on demand applications for many years, but it hasn't been successful in creating a "service," as exemplified by salesforce.com, he said.

SAP is building a developer ecosystem around its NetWeaver platform, but seems to be flying under the radar, which can be attributed to its focus on large, multinational corporations at the top of the food chain. But the market growth is happening underneath the top tier and driving more toward SOA, do-it-yourself composite applications, which is where an open platform and vibrant ecosystem can lead to exponential growth. In effect, salesforce.com isn't competing head-on with SAP or Oracle, but from the bottom up is changing the economics of the business, away from the model of long-term licenses and hefty maintenance fees. 

According to Lane, the software industry has not repriced itself like the hardware industry. "Companies like Oracle and Microsoft are so protected that many never happen," Lane said. "Basically, licensing fees pay for the sales force that sells them the products, and they make their money on maintenance. In the next five years, there will be a major repricing of software." He added that software developers will decide what platform best gives them the opportunity to deliver value to a market quickly. 

Benioff stated that on demand, or what he calls the "Business Web," is still at an early stage. "We are still going up the curve, and there will be laggards. It's early in the industry and businesss have to keep working to get up the curve. For the guys who don’t understand it, there is nothing we can do. We just have to wait for them." I doubt that salesforce.com will just sit back and wait for the market to come to it, or that competing platforms will let salesforce.com march untouched to the apex of the software industry.

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