Salesforce enters its eBay phase

Salesforce.com CEO Marc Benioff didn't let Oracle's announcement of its Siebel acquisition get in the way of what he called the biggest and most exciting idea he has ever worked on.
Written by Dan Farber, Inactive
Salesforce.com CEO Marc Benioff didn't let Oracle's announcement of its Siebel acquisition get in the way of what he called the biggest and most exciting idea he has ever worked on. He invoked eBay and iPod as models for his company's latest product evolution: Appexchange. "The iPod is to the iTunes music store what Appexchange is to the salesforce.com platform," Benioff said. Currently the Appexchange directory has 70 applications, and Benioff said there would be thousands.
CEO Marc Benioff

CEO Marc Benioff speaks at Salesforce.com's annual user conference in San Francisco.

Lew Tucker, the vice president at salesforce.com in charge of Appexchange, made the extravagant statement: "I think this will be just as big or bigger than Java." Tucker used to work at Sun on Java. Given that salesforce.com is built using Java, I'm not sure what realm of 'bigger' he is referencing. Is he implying more Appexchange developers building applications than Java developers?

Woody Driggs, managing partner of Accenture's CRM business (which does $3.5 billion in CRM engagements) said hearing about Appexchange was the first time he got his head around the open source environment. He must mean around open environments, because there isn't anything open source about salesforce.com and Appexchange. The salesforce.com platform is proprietary software core with open APIs for allowing developers to customize and add functionality to the software.

Actually, Appexchange is following a Microsoft model, creating a software ecosystem of apps and developers based on proprietary software, but adding a marketplace infrastructure. Everything developed in the Appexchange directory requires paid subscriptions to the salesforce.com platform (unless it's a non-profit corp).

Appexhange is a smart way for salesforce.com to extend the footprint of its platform (which Benioff insists on calling an operating system). Having a single database, interface and security model makes it far easier to build and deploy the micro-vertical/Appexchange applications and components than on less holistic systems. The iPod/iTunes and eBay references are good marketing (find analogies that everybody can relate to), and Appexchange is indeed an exchange. Benioff also rang the long tail bell, saying that Appexchange "fills out the missing pieces and reaches the long tail of applications." Like other online marketplaces, Appexchange allows users to test drive and review products.

Benioff also outlined the Winter 06 release (before the end of the year) of the saleforce.com platform. He called it the largest and most significant release, and the 19th in six and a half years. New features include interface enhancements and new CRM functionality, such as territory management, an integrated campaign builder and customizable forecasting. As part of the Winter 06 release, salesforce.com is launching a new the Outlook edition, which integrates with Microsoft's e-mail system. Microsoft is also doing similar integration with its own CRM product. Offline Edition has been upgrade with unlimited data volumes and field-level conflict resolution.

The company is finally getting around to rationalizing its branding. Now the salesforce.com platform will be called Appforce and the Salesforce name will be applied to the applications as well as the overall company. Customforce is now called Appbuilder. It looks like Smashforce (creating mashups of GoogleMaps and salesforce.com, for example) has been thankfully retired as a brand.

I'd give Benioff and company an A- for today's announcements. Some of the marketing and talk about the "death of software" is a nuisance, but the company continues to up the ante for its competitors in the hosted CRM space, which is still in its infancy. With Oracle's acquisition of Siebel, which should wake up SAP from its lethargy around the on-demand, software as a service model, will force salesforce.com to run even harder, which is hard to imagine given the pace they have set over the last few years.

The new race is about who can build the biggest and best business software ecosystem for the mid-market and large enterprises based on a services-oriented architecture. Highly scalable, reliable and secure hosting facilities are also part of the success formula. With the consolidating software industry, and the growth of on demand solutions, the remaining independent hosted CRM players, including salesforce.com, are likely candidates for acquisition. My guess is that SAP is mulling a bid for salesforce.com.

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