Salesforce.com wants customers to use the force

Salesforce.com is trying to persuade its customers to use its hosting platform, called force.com, to serve up their online applications, but even the company's leaders admit that most people still view it simply as a hosted CRM platform. Will its rebranding and development strategies help it to turn the corner?
Written by Angus Kidman, Contributor

news analysis Salesforce.com is trying to persuade its customers to use its hosting platform, called force.com, to serve up their online applications, but even the company's leaders admit that most people still view it simply as a hosted CRM platform. Will its rebranding and development strategies help it to turn the corner?

At its Dreamforce user conference in San Francisco this week, Salesforce.com announced a range of new technologies, including Visualforce, a system designed to make it easier to customise application interfaces for use on different devices, and a development platform known as Force.com.

The Force.com platform combines Salesforce.com's existing Application Exchange system, which was launched in January 2006 and designed to allow third-party developers to build applications on top of Salesforce.com's systems, and its Apex development language, launched at last year's Dreamforce event.

Claiming the Force.com brand required some effort. Surprisingly, the domain was not owned by a Star Wars fanatic, but was used until August 2005 by Force Technology, which developed neck-chain holders for Palm Pilot organisers. Since that time, the site has been owned by a domain speculator; Salesforce.com registered the trademark in July this year and now owns the domain, although it simply redirects to Salesforce.com's own homepage.

One major reason for the rebranding was a general lack of awareness of what those services meant amongst the company's customers. "We've introduced a couple of different names, and not all of them worked that well," CEO Marc Benioff explained at a press briefing.

More pressingly, many users remain unaware that Salesforce.com aspires to host their entire infrastructure, not just Salesforce automation and customer relationship management applications. "A lot of customers still think we only have one application," Benioff said. "Ninety percent of our customers are still doing traditional CRM."

That customer base includes a healthy proportion of Australians: around 1,000 of Salesforce.com's global user count of 35,300 companies are Australian. Around two percent of those Aussie users are attending the conference.

"We've had a tremendous surge of growth in Australia over the past two years," Asia Pacific president Steve Russell told ZDNet Australia. Yet translating that existing interest into a platform play will be a challenge, he acknowledged.

"Whether or not anyone in Australia or New Zealand really cares about platform-as-a-service, I'm not so sure yet. We'll have to survey that. They will be interested in the new user interface customisation abilities though," he said.

The company has scored successes in the finance and technology sectors, but is only making gradual progress in the government sector, traditionally one of the larger Australian markets. "They're slow adopters because they're afraid of technology and afraid of making mistakes," Russell said.

Will it work?
The market opportunity represented by software-as-a-service (SaaS) is large. By 2011, Gartner estimates that SaaS will account for 25 percent of the world software market, a prize worth $US55 billion.

Maintaining Salesforce.com's current status as the poster child for SaaS will not be an easy task, as company officials acknowledge. "On the Internet, you've got to be number one, because distant number twos are interesting, but not that compelling," chief financial officer, Steve Cakebread, told analysts at the conference.

The very factor that helped online applications succeed initially -- the ease by which they could be deployed by line-of-business units without IT support -- might also hold them back in a platform environment.

"In general, what we're seeing is there's still a separation of an application purchase mentality and an infrastructure purchase mentality," Gartner research director Brian Prentice told ZDNet Australia. "I think this is the absolute biggest challenge that they have. The strategy is really good, but what they're running into is a whole different world.

"Salesforce.com has primarily gone to the end users. They've been bypassing IT and making the decisions. But when we talk about platforms, sales people aren't going to be writing that code, and marketing people aren't going to be writing that code.

Developers are going to be writing that code and they're going to be sitting there in the application development and maintenance team within the IT department, largely unaware that this thing even exists at all," said Prentice, who pointed out that developers' careers are tied to their skill sets, which are likely to be in a .NET or a Java environment."

"So how successful will [Salesforce.com] be as a platform-oriented company when at the same time they're trying to sell applications? It's going to be a lot of hard work to make it happen."

Concentrating on attracting more independent developers to AppExchange would make more sense than pitching businesses directly, Prentice suggested.

"The real traction is going to occur in the ISV community. There is a very compelling reason to go with what [Salesforce.com] is currently proposing right now; it makes things a lot easier to develop, and you do not have to sell somebody's platform in order to sell your solution. AppExchange also allows you to have a much broader geographic territory to sell your product than you would have otherwise."

Where to next?
Despite the new dual-branding of Salesforce.com for applications and Force.com for the platform, Benioff isn't visualising a wholesale change of name any time soon.

"If at some point we had a name that was appropriate we would do it," he said. "We're not at that point today."

Regardless of whether the platform strategy takes off, the company can rely on a degree of organic growth in its existing customers. "You hear all about the big accounts [we have], but if you do the number of subscriptions per customer, it's still in the 20s," Cakebread said.

One frequently raised concern is that tightly regulated industries such as finance won't allow businesses to access services hosted offshore but Benioff is largely dismissive of such concerns.

"We will have Asian and European data centres, [but] we haven't put timeframes on that," he said.

Despite legal requirements in some EU countries not to send data outside national borders, Benioff argues that resistance is "mostly psychological; it's really not governmental at all."

Benioff has also resisted calls to make Salesforce.com's Apex platform a fully open source environment. "I love open source and I think it's fantastic. I've lowered my costs dramatically using open source. The reality is what we deliver to customers is a solution, and we take responsibility for that solution."

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