Salesforce's unspoken build and buy strategy

At this week's Cloudforce I was keen to understand what is happening on the Force.com platform. Narinder Singh,  Appirio's marketing strategist came on stage to talk about how they used the Force.com platform to set up MyStarbucksidea.com. This is an example of a situational application, built and designed for a specific purpose around Salesforce.com's CRM but one that will likely have a limited life.I understand Appirio built the applicatino in less than three weeks.

The previous day, Dave Turner, CODA's group marketing director made a remark that povoked an ah-ha moment: "We are seeing enterprise demand for CODA2Go from organizations that might be establishing an experimental business unit or where they are setting up a small division. They still need all the back office transactional capabilities that an accounting service provides but don't have the time to go through an implementation."

This was an ah-ha moment because in most similar situations, enterprises have to either establish new configurations in their existing ERP or acquire a package of some kind that then has to be integrated into the main ERP. A classic example is SAP with Microsoft Dynamics or Infor 'surrounding' the core. In this alternative model, organizations simply switch on another company, open up the browser and they're pretty much done.

It struck me that this represents a really smart way to minimize cost while going a considerable distance towards ensuring compliance. Using CODA2Go as an example, this means you could for example simultaneously set up operations in say, Italy, France, Germany and Spain simply by selecting the appropriate lcoalizations from within the service, nominate users and their rights and you're pretty much done. That's a 'buy' option from within the Force.com marketplace. There's a thrid option.

I met with Morrison Utility, a $0.7 billion construction services company. They can best be described as a business that digs holes in the road, puts something in the hole like a mains water pipe and then fills in the hole. In theory it is a very simple business but in practice, there are many complexities around regulation and compliance, planning, execution and coordination. Each contract is also like a seperate business in that it represents a significant amount of work and is much more complex than a project. Graeme Cross, Morrison's business systems manager explained to me that he has been an Salesforce.com user for seven years but has only been with Morrison a couple of years.

He saw a need to rationalize communications between the company, clients and contractors. He also saw an opportunity to consolidate some 25 applications, a plethora of spreadsheets and Access database style 'apps' that had grown up around the business. Morrison used the Force.com platform to develop a works and cost management application that includes SLA and KPi data. The idea was to develop a prototype that would be used to test functionality and then be sent for development in something like C# and .Net.

After about a month's development, the company found that users were sufficiently happy with the results that they could continue to use the application without having to develop outside the Force.com environment. It became apparent that Force.com is a viable platform for further development. As an example of useful functionality, the app can take photos of street works uploaded from a PDA and attach them to a project file. The company then added in CRM functionality that is appropriate to its operations and retired its Salesforce.com CRM.

Tim Knight, senior director, Force.com EMEA said to me the company is seeing demand for businesses wanting to use the Force.com as an internal development environment, citing British Gas but also an opportunity for new styles of ISV and consultants to deliver relatively low cost applications. "There's no shortage of companies coming forward looking for opportunity in what will be a a hybrid style of consulting where they are also fast tracking development - Appirio is a good example." I was curious to understand whether the demand is real and driven by the current economy: "ISVs see this as an opportunity to land grab and provides an alternative way of reaching markets."

It seems that while the main drivers are coming from existing Salesforce.com CRM customers, there is no discernible reason why Force.com could not become a leading driver for delivering custom applications. I heard for example about risk management applications being developed for the financial services industry.

The difficulty comes in understanding where you start and stop with this style of application development. In the Cloudforce keynote, Marc Benioff, Salesforce.com's CEO talked briefly about interoperability among different computing clouds. An example was cited of Salesforce.com and Amazon's EC2 storage cloud being used in the same environment, seamless to the user. But then Simon Wardley is skeptical about how 'open' Salesforce.com really is: "As an industry we have a real opportunity to provide the kind of interoperability that companies have wanted for many years. I'm concerned whether Salesforce.com is really another 'lock-in' vendor - they're too coy for my taste on this issue."

Whether that matters in the short term as organizations continue to develop internally is moot. However, it is not clear whether Force.com has ambitions to represent an alternative development model that takes advantage of cloud computing techniques and the Salesforce.com infrastructure. If true then the interoperability question will figure large in that strategy. Even so, there is plenty of opportunity to offer build and/or buy from what amounts to the same toolset. The question is whether Force.com sees it in those terms. If so then it will represent a significant disruption in the market.

In the market today we have Salesforce.com's SFA and service applications now joined by CODA's accounting app. We don't have an HR example though reference was made to Workday. Taken together, those three core functions represent much of what's needed for service business operations. Tie in custom development with Force.com and you start to see an emerging style of opportunity where business can fast track industry specific functonality. The examples are nascent but it is a tanatalizing prospect. Given the current econmic demands for low cost and sometimes disposable apps, it's an alternative I expect to see grow in importance over the coming months. In one sense, it adds a fresh dimension as to why Benioff is so keen to establish Salesforce.com in large corporate accounts. It's the toehold that leads to fresh oportunity to spread the footprint.