Taking The Temperature Of The Hosted Enterprise App Marketplace: Salesforce.com, Google And Microsoft

By Rich Tehrani

Google And Salesforce.com Enhance Relationship

It was over a year and a half ago when I had a chance to listen to Marc Benioff (News - Alert) talk about how his company’s software would be integrating with Google to provide a mashup designed to allow companies to better track their Google advertising. Using the services together, organizations would be able to utilize the CRM portion of the software to track where customers came from: which ad, which keyword, which landing page, etc. The matter was so important, I made the article a High Priority! column in the September 2006 issue of this magazine (see “Salesforce.com: Leading The Way To CRM 2.0” at www.tmcnet.com/2016.1).

The two companies have decided to take the collaboration one step further and, as a result, you will now be able to purchase Google Applications via Salesforce.com, and there will be tighter integration between the two companies. For example, e-mails sent to customers via Google’s mail application will be connected to customer records in Salesforce.com.

While this collaboration is great, there are still companies that worry about how to maintain security when their vital corporate data is stored on the servers of another company.

Perhaps this move will manage to make customers more comfortable with the hosted approach, as Google has a strong reputation and helps boost Salesforce.com’s credibility – not that the company really needed it, but having such a large partner would help anyone.

In my opinion, there are many companies that don’t want to worry about having idle employees if their broadband provider or router fails.

I have to say that I really appreciate Marc Benioff as a spokesperson for Salesforce.com because he calls them as he sees them. No longer having Tom Siebel to go after, Benioff has resorted to blasting Microsoft (News - Alert). If you want a more specific example of what I mean, consider the memo put out by Benioff in November of 2005 in which he had the following to say:

“Last month, our number one competitor surrendered, and decided to take its place beside several former competitors at software’s Shady Pines Rest Home, also known as Oracle (News - Alert). It was a merciful outcome for shareholders, but a time of con”fusion” for customers.”

This is what Benioff now has to say about Microsoft:

“This will make it easier for us to convince more businesses to stop buying Microsoft Office and switch to better services like this that are emerging in the cloud.”

But there is more. In the past, Benioff has stated,

“The enemy of my enemy is my friend, so that makes Google my best friend.”

Microsoft has proven they will not sit back and take it; in fact, it seems to me that the company thrives on the competition. In fact Brad Wilson, the company’s general manager for the CRM unit, had this to say:

“Salesforce has belatedly recognized that it is important to link CRM apps to productivity tools. It has been core to our product since we launched five years ago. It validates our strategy.”

But really, these comments are more icing on the cake – the fun stuff, if you will.

The real meat of this news is that Google and Salesforce.com will collaborate to make their solutions better. They will integrate more effectively and do their best to ensure they have solutions that are very competitive with those sold by not just Microsoft but every other company on the market.

In addition to the obvious synergies between the two companies, the real winner here is Google. Why? Because as this deal strengthens, Google will get an outside spokesman for their applications in Benioff. This man has proven to get under the skin of the competition and he seems to drive them crazy.

Of course, I don’t want to make a mountain out of a molehill, but this sort of news could have the potential to unite more Microsoft competitors. It would be interesting to see Adobe, Apple (News - Alert) and RIM somehow get involved and say they, too, will work with Salesforce.com and Google. This may be a stretch, of course, but there seems to be momentum growing, and perhaps others will see this as a great time to join the party.

Microsoft, for its part, has a big advantage in

the CRM space due to its unified communications push (see “Microsoft Pushes Into Unified Communications And Beyond” at www.tmcnet.com/2018.1) and the mindshare it has in this market. In addition, the company’s close ties with Aspect (News - Alert) (see “Microsoft’s Call Center Push” at www.tmcnet.com/2017.1) are a tremendous help in the CRM space – especially as it relates to contact centers.

The war has gotten a lot more interesting over the past month, and it will be very interesting to see what the next moves are for each of the various players.

Hosted Application Demand
Fuels Salesforce.com

Hosted applications continue to get more press as time goes on. Similar to the e-commerce space, this market saw a slew of new entrants during the bubble times and many of these companies subsequently crashed and burned. Obviously having ASPs (application service providers…remember that term?) drop like flies was not conducive to customer uptake of these solutions. In addition, as an industry, we went from a time when the term ASP was ubiquitous to one where VCs actually told companies to not use these banished initials.

As you might imagine, if you were an ASP in 2001 to 2003 and your financial backers told you to stop identifying the industry in which you played, you had trouble acquiring new customers. This is likely why the term ASP is now gone and we use terms like hosted, on demand and software as a service (SaaS (News - Alert)) instead. (While on the subject, note to self: short stocks of companies where the investors micromanage.)

Over time, companies have gotten more comfortable with e-commerce and the hosted model, and one of the poster children for the latter has certainly become Salesforce.com. Just making it through an ASP, tech and telecom depression speaks volumes about the company. Not to mention, a one-time competitor’s predictions of doom: Tom Siebel, the much-respected brain behind Siebel Systems (News - Alert), once publicly stated that Salesforce.com wouldn’t be around for long.

Salesforce.com seems to thrive as the underdog, but are they still? Salesforce.com founder Marc Benioff has told me in the past that he wants to see his company grow to a billion dollars in annual revenue. Certainly, the hosted CRM leader is no longer small, but this just means they have decided to focus on going after bigger competitors.

Of course, the alliance Salesforce.com has made with Google has focused a huge spotlight on the company. To get a handle on the future of the hosted CRM company and what the Google alliance means to customers, I traveled to downtown Manhattan where I spoke with Bruce Francis, Salesforce.com’s VP of Corporate Strategy. You may recall that I last interviewed Francis in the summer of 2006 (see “Salesforce.com And Contactual (News - Alert)” at www.tmcnet.com/2019.1).

Francis was candid about the Google news. He told me that his customers want to be free of the software burden. Many of them started with hosted CRM and are now yearning for SaaS solutions to replace the rest of their in-house software as well. He continued, “It doesn’t hurt that the incumbent software maker has rolled out the most disastrous upgrade to Windows ever. [referring to Microsoft Vista]. Who wants to deal with this anymore?”

From there, Francis explained how there has been a shift in the market where enterprise users used to be so far ahead of consumers in terms of their technology adoption. He sees a world now where consumers are way ahead of the business market. Now, he says, consumers have Web 2.0 and 3.0 and seem much further along than most businesses. “Businesses are saying what gives?” he added. “Why am I using the greatest [software] hits of the mid-decade of the 20th century when my consumer life is so much better?”

He went on to explain, with much enthusiasm, that this is the opportunity his company, in conjunction with Google, is taking advantage of. From there, he discussed how much easier it is to collaborate on shared documents using hosted services.

Referring to collaborative software, he said, “Traditional vendors like Microsoft do not understand and show no potential to do so.”

I did mention Microsoft’s SharePoint server product as one of the ways Microsoft is addressing this matter. Francis responded, “It is one of those products that millions have but thousands use and no one loves.”

In the past, I have heard some negative comments on SharePoint and I didn’t really have a list of happy (or unhappy, for that matter) customers to bring up during the interview. I have been meaning to test the SharePoint out at TMC and hope to do so in the future. It is worth mentioning that after the interview, I did do some digging and was able to pull up a number of positive comments regarding the latest version of SharePoint. Coincidently I have also been informally testing some of the hosted services Microsoft offers via its Live initiative.

I believe the problem for Microsoft is a lack of a clear SaaS strategy and, moreover, a concise market explanation. They have a number of hosted and collaborative initiatives, but if it is tough for me to rattle them off, one wonders what customers need to do to keep up.

But getting back to SalesForce, I asked Francis what will come of the Google collaboration. He responded, “I don’t know.” Those who know me well know it is challenging to make me speechless. But sure enough, in this instance, I wasn’t sure how to respond. I told Francis this was not the answer I expected.

He said it isn’t him or anyone in the company who necessarily directs them in how they collaborate with Google. He told me the answers I seek are at ideas.salesforce.com, the user portal for the Salesforce.com community. This is users visit to share suggestions and improvements for the company’s services. This technology is not only powering the growth of Salesforce.com, but Dell (News - Alert) and Starbucks too are now taking advantage of Salesforce.com’s services to ensure they, too, can get their customers to collaborate in making them better. I checked this portal out and found a great recommendation to get Salesforce.com working with Google Gears. There were lots of other interesting ideas on the site, as well.

Francis also pointed me to companies like Astadia that built an application that integrates a quote generating service between Salesforce.com and Google applications allowing you to use Gmail to e-mail a custom quote to a customer.

From there, we discussed how the company’s goal is to get as many companies as possible to use their hosted platform to develop applications. He mentioned Coda, an accounting software vendor out of Germany that decided to use the AppExchange as the basis for their hosted offering. He explained that the company is able to utilize one-third of the resources in pulling off their SaaS product as they leverage the database, logic, workflow and other features that Salesforce.com has perfected over the past nine years.

Francis emphasized that he hopes thousands of companies take advantage of their platform-as-a-service model and, moreover, that they are thrilled to allow developers in emerging markets to develop applications without the need for tremendous infrastructure they would likely never have access to.

I left enthused about what Saleforce.com is doing. They seem to have great market position, as the hosted market is exploding with growth and they are so closely tied to it. Of course, their recently enhanced relationship with Google doesn’t hurt.

As always, you can never count Microsoft out, as the company thrives on competition. Their hosted solutions have been under the radar but it is not like the Redmond-based software giant doesn’t have the resources to compete effectively using increased marketing and branding.

In the short term, however, Microsoft may have been very distracted with the attempted Yahoo! acquisition. During this time, I expect Salesforce.com was working as hard (and will continue to do so) to ensure they gain as much traction as possible across the spectrum of hosted services in which they play. CiS

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