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 salesforce.com CEO Marc Benioff, once again Redmond is reacting to the success of service-based companies like salesforce.com 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 salesforce.com, 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 salesforce.com 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 (http://www.google.com/hosted) and Yahoo Business Email (http://smallbusiness.yahoo.com
/email/) are serious competitors to the traditional email server franchise. And, it’s not stopping there, as competitors to Microsoft Excel spreadsheets (http://www.google.com/googlespr eadsheets/tour1.html) (www.numsum.com) (www.irows.com), and even those taking on Microsoft Word processing (www.writely.com) (www.writeboard.com) 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, Salesforce.com introduced AppExchange (http://www.appexchange.com), 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 salesforce.com 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 (http://itredux.com/blog/office
-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 http://www.housingmaps.com/, a mash-up driven by Google maps and craigslist.org, or www.bikramfinder.com, a mash-up driven by salesforce.com 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 salesforce.com, or Merrill Lynch’s decision to jettison Siebel. Just a few years ago, that would have been unheard of. But, now ask any of salesforce.com’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.