Salesforce adds on-demand to CRM tools

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application integration tools.

Winter '05 is the company's latest effort to expand the scope and capabilities of its online services. Earlier this year, Salesforce introduced a new line of customer service programs for call centers, and last year, it released a set of tools for linking its programs to customers' in-house business systems.

The company is also working on letting people access its software from all kinds of machines, including Internet-enabled mobile phones, BlackBerry pagers, handheld personal digital assistants and from within productivity applications such as Microsoft Office.

Salesforce, which launched one of the summer's most successful IPOs, is the poster child for subscription business software--a new model for selling and delivering software that's on the rise among corporate users.

But Salesforce is facing an increasing number of competitors in the software-as-online-service field, including NetSuite, RightNow Technologies and Siebel Systems. Several new contenders have entered the market this fall, including SugarCRM, which is launching a hosted version of its open-source programs, and a new product called SalesCenter from Uptilt.

Unaccustomed to customization
Since application service providers--companies that host applications over the Web--began appearing in the late 1990s, lack of customization has been considered both an advantage and drawback in their products. Smaller companies have traditionally found the lack of complexity helpful in adopting the tools, but larger customers have shied away from the applications, based on their need to integrate CRM with other enterprise systems.

According to Sheryl Kingstone, an analyst at Boston-based research firm The Yankee Group, Salesforce is adding sophistication to its products with the hopes of attracting larger clients. The company has found most of its success among midsize and smaller businesses.

The analyst said that the more Salesforce reaches out to larger customers, the more it will be forced to build Web services "wrappers," or links to legacy software systems, as it has done with Customforce. However, she said, the company needs to deliver a balance of flexibility and simplicity to lure new clients.

"Simplicity can help drive (Salesforce) upstream, because many larger enterprises have applications that they are not using, and they want to decrease cost and complexity and increase users," Kingstone said. "Whether they can attract numbers of larger customers depends all on how well they fit. It is easy to convince people around simplicity, but it will be hard to get other companies to drop their investments in legacy systems."

Matt Hines reported from Cambridge, Mass. Alorie Gilbert reported from the Salesforce customer conference in San Francisco.