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    The Bungee Line was an audio podcast for web developers, covering web API's, software development, and the creation of richly interactive web applications.

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Salesforce.com: A New Microsoft?

Salesforce.comSalesforce.com’s rapid rise to success has been the subject of much debate and speculation. Is Salesforce.com a complete anomaly, a lone black swan in a software market that remains steadfast in its traditional delivery model? In what other market category than Customer Relationship Management (CRM) has Software-as-a-Service been so wildly successful?

CRM seems an obvious choice for business success in Software as a Service (SaaS). Salesforce.com solidly meets a market need that is crisply defined, enabling companies to eschew the need to host their own CRM applications. I suspect that there is little need for me to explain why the “No Software” value proposition appeals to so many small and mid-sized businesses.

While watching CEO Marc Benioff’s keynote at Salesforce.com’s Dreamforce conference at San Francisco’s Moscone center last fall, I looked back over my shoulder at a vast crowd of thousands who seemed to hang on Benioff’s every word. Salesforce.com has developed what so all technology marketers should covet: a cult following. They have won the SaaS lottery in a huge way.

Salesforce.com’s success does more than merely demonstrate that the SaaS model works for CRM. With their first major success in SaaS already well established, they are well poised to control a significant portion of the growing SaaS market, which goes well beyond CRM. Benioff’s speech was accordingly bullish about this proposition.

A while back, I discussed how the ability to increment features will continually be one of the ways that SaaS asserts its power against both the purchase-and-install model of traditional software, or the download-and-use model of free/open source software. Big companies now have the SaaS/CRM space in their sites: Microsoft with Dynamics, Oracle with Orace CRM On Demand. Will these giants be able to carve into Salesforce’s dominance enough to unseat its leadership? If Salesforce.com keeps its market focus, perhaps they can outpace the new entrants by applying the feature crank-up that their SaaS leadership provides them.

At the same time, Salesforce may be seeking to become to SaaS what its two major assailants are to their own market spaces. Now firmly established as the in-the-cloud CRM platform—and supported by an increasingly sophisticated set of web APIs—is it possible that Salesforce.com has achieved the market power to stifle aspiring SaaS startups from attaining similar success in other markets beside CRM? That is, could they become (or are they already becoming) the Microsoft of SaaS?

Indeed, Benioff declared from the Dreamforce main stage that Salseforce.com now looks to enter into many new SaaS market spaces as to lay the groundwork for the new Force.com to eclipse Salesforce.com itself. The name implies a lot: it sets them up to break free from the CRM cocoon, and emerge something much broader.

As I listened, it occurred to me that any company wanting to win big in a potential SaaS market space would now be required to outmaneuver the emerging Force.com (as well as the entrepreneurs using force.com as a platform). Whether by leveraging it or by out-innovating it, aspiring SaaS entrepreneurs must now consider how Force.com factors into their business plans.

Here is where the rapid pace of innovation through collective collaboration touted by Free Software meets firm competition. The time-to-market advantage gained by using a cloud-based platform is considerable: while roll-your-own start-ups stitch together their data centers, LAMP stacks, etc., those companies that choose to launch from a cloud-based platforms will be delivering actual products. A reasonably priced, readily available platform offers much to the entrepreneur.

By introducing Force.com, Salesforce.com reveals aspirations that some readers might find unsettling. How much will force.com affect and influence innovation in SaaS? What constraints might force.com put upon Freedom—both software freedom and market freedom? To date, Salesforce.com things to get right in their development and pricing models, and they have yet to break out from the “mainly for CRM” association that most people make. Nevertheless, the potential of Salesforce.com becoming an industry monolith raises concern about openness in hosted platforms.

Notes
As I have noted in several earlier posts,
the platform in which I am involved, Bungee Connect, is still a proprietary offering using its own language. I believe Bungee Connect must move toward more openness to become a broadly accepted technology, free from the threat of monopolizing the SaaS platform market.

Nevertheless, even as a proprietary offering, I would assert that Bungee Connect is well-suited as an alternative to force.com for delivering SaaS applications. Yes, the pricing model beats out force.com, But more importantly to the goal of openness, the development model allows developers to create applications that are independent from the company providing it (for example, you own your own user registration, completely independent from that of Bungee Labs).

Updates
June 27, 2008: Salesforce Times picked up this post, somehow gleaning a positive from my comment about outmaneuvering Force.com.

2 Responses

  1. Great post – and yes it raises many questions about whether there is room for more than one MegaPaaS player. I believe there is – and more and more openess is the way of the future so users can mix and match different discrete offerings from different players. To a certain extent salesforce is going down a high risk/high reward strategy – if it wins, it wins bigtime, but if another PaaS player manages to eat a significant proportion of their lunch they could be in trouble…

  2. @Ben Kepes:
    You have my wholehearted agreement. Right now, Salesforce.com is indeed playing for all the marbles. Viable, open contenders could certainly disrupt the play Salesforce is attempting.
    I started this post long before Google AppEngine was announced, and I did not adapt the content in light of the advent of AppEngine. Google’s entry into platform space certainly validates the potential market, and may even counter Salesforce to an extent. While AppEngine is still an incomplete offering, it may help show SaaS entrepreneurs that there are options to investigate.
    Thanks for your comment,
    –Ted

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