While Marc Benioff may rail against the status quo in the enterprise software business, not all software buyers will join in the chorus, according to one of Benioff's chief competitors.
Web-based business software sold by companies such as Benioff's Salesforce.com will likely augment, not replace, large, complex enterprise systems, SAP Chief Executive Henning Kagermann told The Wall Street Journal on Tuesday.
Kagermann said that while some of the main selling points for Salesforce and other Web-based services make sense--namely, better usability and productivity--corporate buyers are a notoriously conservative bunch.
Kagermann: Big software is here to stay.
(Credit: SAP)A slicker user interface and easier access to corporate applications answer only some of the needs of big business. Security, a uniform data model and corporate-wide compliance with regulatory rules are more pressing for C-level executives, he argues.
Clearly, Henning's argument is biased toward his company's product line. But he may have a point: it's more difficult to manage Web-based systems implemented piecemeal at the departmental level. Regulatory compliance is becoming a corporate nightmare, and companies need all of the help they can get.
Still, much of the real innovation is taking place at companies like Salesforce and Google, as well as at many smaller firms hard at work defining the next wave of cloud-based business software. (Microsoft is making strides here, too).
SAP, for its part, is still struggling with its on-demand strategy.
As Rishi Chandra, product manager for Google Enterprise, said earlier this month, technology innovation is being spurred by the consumer market, which will, in turn, drive demand for better business systems.
Some things never change. For decades, CIOs have been a conservative lot. And for decades, end users have demanded more.
Salesforce.com is furthering its alliance with Google through a new toolkit that lets developers tap into Google's services.
The two companies inked an initial deal in April to link Salesforce's CRM (customer relationship management) applications with integrated Google Apps.
Salesforce.com CEO Marc Benioff and Google chief Eric Schmidt.
(Credit: Dan Farber/CNET Networks)On Monday, Salesforce.com said it has launched the Force.com Toolkit for Google Data APIs, which will let developers using its Force.com development platform connect to data in Google Apps.
Force.com is Salesforce.com's cloud computing service for building hosted Web applications.
The companies envision that the toolkit will pave the way for new applications, such as business forecasting and quote generation systems, that combine customer data within Salesforce.com with spreadsheet and other functions within Google Apps.
Salesforce.com said the tool will be posted for free download at its Force.com Web site.
Salesforce.com on Wednesday said it has launched a new tool, Visualforce, that enables its customers to build custom user interfaces for applications running on the company's hosted infrastructure.
The new tool is a key part of the company's platform-as-a-service business line, called Force.com. Salesforce, best known for its software-as-a-service customer relationship management (CRM) applications, is branching out into the business of providing cloud-computing services.
CEO Marc Benioff has said the platform-as-a-service business represents "Salesforce.com's second decade....it's our next area of investment."
Salesforce.com CEO Marc Benioff and Google chief Eric Schmidt.
(Credit: Dan Farber/CNET News.com)Visualforce, which Salesforce calls a "user interface as a service" tool, enables customized user interfaces to be created for any application developed on Force.com. Customers can use the tool to build applications that can be deployed through standard Web browsers or on mobile devices.
One early Visualforce customer, large European financial-software maker Coda, has written an accounting application called Coda2go using the tool that is based entirely on Force.com.
Visualforce uses a concept called components to make application building easier. The company has made available components of the Salesforce user interface so that developers can reassemble them and combine them with new elements in their applications.
The tool is part of the company's Summer '08 release of its applications.
Benioff hopes to expand Salesforce's platform business beyond its existing base of CRM customers to virtually any online business. It's a bold move that puts Salesforce in direct competition with Microsoft, Amazon.com, and many other providers of cloud-computing services.
Salesforce has already partnered with Google, to offer Google Apps integrated into Salesforce's applications, which could lead to a larger platform deal.
However, Benioff acknowledges the challenge of convincing customers, who know Salesforce only as an online CRM provider, that it can also be a trusted platform service. "It's hand-to-hand combat, like the days of client-server computing," he told me last month, while on a promotional tour for Force.com.
"We have a message for IT. We didn't have that when I started Salesforce.com. We had to figure out how to do this and prove that it works. Now we have to get face-to-face (with customers) to explain it," he said.
Before I became a marketing wonk I was a knowledgeable technologist, which is probably why I've never once enjoyed any e-mail system that I have used or implemented. Over the last 15 years, I have tried pretty much everything, from Pine to Zimbra, to MS Exchange to Lotus Notes and several different IMAP and POP options. Every time it's the same thing--the system works within reason but is never great. And there is always something that bites you in the rear.
I first started outsourcing e-mail to managed providers in 2003 when I worked for a CEO who demanded MS Exchange and we only had Linux boxes. It was never great and it was too expensive to boot. But the offerings have gotten much better and at this point I can't see a small- or medium-sized business running its own mail server. It's just not necessary.
Here are my fundamental hopes for e-mail:
- Reliable delivery of mail (dare to dream)
- Reliable delivery of mail on mobile devices (Blackberry and iPhone)
- Shared calendaring with administrator abilities (i.e. admin access)
- Backup and recovery
- Reliable SPAM prevention
- Sync across multiple computers and devices
Only months before Saleforce.com and Google integrated their Web applications, Salesforce.com offered to buy Zoho, a direct competitor of Google Apps.
Sridhar Vembu, the CEO of Zoho parent company AdventNet, divulged that juicy nugget in a blog posting following the much-ballyhooed Google-Salesforce.com tie-up. Zoho makes Web-based productivity and business applications.
Vembu said that the proposed deal was never close to consummation, but it wasn't over the price tag.
He said that the Zoho and Salesforce.com business models are fundamentally at odds because Salesforce.com spends much more proportionately on marketing and sales. He also accused Salesforce.com of being a lousy partner.
Talk of an acquisition grew from an effort to integrate Zoho with Salesforce.com applications through its development platform. But Salesforce.com CEO Marc Benioff decided to pull the plug, Vembu recounts:
We invested in R&D to make the integration work, and we were about a week from launch, when Marc Benioff decided to pull the plug. He invited me for discussions. He offered repeatedly to acquire Zoho outright, which we rejected. I told him there is absolutely no fit between our companies, particularly with his business model (as noted above) and our business model. I told him there is just no cultural fit between our companies and such an acquisition would be miserable for both parties. Finally, he offered to let us integrate Zoho into AppExchange, provided we pull the plug on Zoho CRM. We told him that kind of pre-condition is totally unacceptable, and it also completely negates his claims of openness of their platform. Needless to say, we never did agree on the issue, and we dropped the integration effort.
By contrast, working with Google--its primary competitor--over Google Gears has gone well, Vembu said.
Meanwhile, Salesforce.com has done with Google precisely what it appears to have set out doing with Zoho--close product integration.
It's easy to discount Vembu's comments as sour grapes. After all, it's Google, not Zoho, that now has better access to Salesforce.com customers.
But his comments shed light into how business does, or doesn't, get done among software-as-a-service companies as they compete to build the most vibrant partner ecosystems on their platforms.
With the Salesforce.com-Google collaboration, Microsoft will face yet another competitor in the online enterprise software applications market, analysts say.
But make that enterprise with a little "e."
Google's online applications will be integrated with Salesforce's customer relationship management (CRM) applications, giving it an entry point into Salesforce's customer base of mainly small to midsize customers and department-level groups of large corporations, said Kevin Buttigieg, an analyst at the Stanford Group.
"It expands the distribution of Google Apps," Buttigieg said, noting that the search giant likely views it as a starting point to later drill into large corporate accounts, in which Microsoft is dominant. "I think it will have a significant impact on Microsoft over time, but how soon and how large is hard to say."
Google Apps has a price advantage, but its feature functionality is lagging behind Microsoft in such areas as the detail of its spreadsheets, analysts say. And Buttigieg notes that Google Apps lacks an offline version. This may factor into large enterprise customers' hesitancy to use it, for fear of losing the ability to operate critical parts of their business, should the servers that host the applications crash.
As part of the agreement, Google Apps, Gmail, Calendar, and Google Talk will be tightly integrated with Salesforce, marking a move by Salesforce to offer a wider package of Web-based applications and cutting ties to desktop versions.
Another analyst, meanwhile, characterizes the Salesforce-Google announcement as a defensive move by Salesforce against the launch of Microsoft's hosted CRM service, Microsoft Dynamics CRM 4.
"Microsoft Outlook is ubiquitous. And that gives Microsoft a huge advantage in CRM because almost everyone uses Outlook in the business world. Google is not a threat to Microsoft, but Microsoft is a threat to Salesforce," said Pat Walravens, an analyst at JMP Securities.
Ironically, as Monday becomes the first day the free 30-day trial of Microsoft Dynamics CRM 4 becomes available, Salesforce is announcing its Google deal, Walravens observed.
He also noted that pricing on Microsoft's CRM offering will be competitive to Salesforce. Microsoft is offering two versions, both of which will include core sales, marketing, and service functionalities. But the basic version, with a monthly price of $39 per user, will include 5GB of database storage, while the professional-plus version will be offered at $59 per user, with 20GB of database storage and offline data synching.
Microsoft is also believed to have created an inside sales team to focus exclusively on its on-demand CRM version, Walravens noted, as a further sign of stiffening competition between Salesforce and Microsoft.
The Salesforce-Google deal is not the first between the two companies. Last year, Salesforce and Google announced a partnership in which Salesforce would be a reseller of Google AdWords. At the time, the companies said they hoped that the partnership would drive other development projects between the companies.
Evidently, it is doing just that.
Update: April 14, Monday, 12:20 p.m.
Microsoft, meanwhile, has no plans to change its strategy as a result of the Salesforce-Google deal, said Brad Wilson, general manager of Microsoft Dynamics CRM.
The software giant intends to continue to invest heavily in on-demand services, data centers, and Internet-delivered applications, he noted.
Wilson said the Google-Salesforce partnership validates Microsoft's efforts to integrate CRM applications with personal productivity tools, a step it took five years ago.
Updated April 14, 5:20 AM PDT to reflect official announcement.
It has hardly been a well-kept secret. Now, Salesforce.com and Google have made it official: they're linking up to offer Salesforce's CRM (customer relationship management) applications with integrated Google Apps.
The companies on Monday announced that Salesforce.com's customers now have the option of using versions of Google Apps, Gmail, Calendar, and Google Talk that are tightly linked to Salesforce.com (see Techmeme for more coverage).
What does that mean? An e-mail response from a customer can be appended to the customer information stored within Salesforce.com, meaning that all customer interaction can be accessed from a single place, for instance. That dynamic applies to Google Talk conversations and other applications, too.
Salesforce customers will be able to access Gmail, Google Apps, Calendar, and Google Talk from within Salesforce.com CRM applications.
(Credit: Salesforce.com)This isn't a new function of Salesforce.com. The company has offered integration with Microsoft's Office and Outlook desktop applications for some time. But this is the company's first foray into offering a more wide-ranging Web-based application package, cutting the ties to desktop applications.
Salesforce.com says this isn't some marketing-driven move; its customers, through a Salesforce.com online forum called Idea Exchange, requested integration with Google Apps.
So will Salesforce.com make a similar deal with Microsoft for Office Live, the company's online complement to Office, when that becomes a more capable alternative to desktop apps? "Salesforce.com is open to working with a myriad of office applications. What made this possible is that Salesforce and Google...both deliver native Web applications," said Kraig Swensrud, vice president of Applications at Salesforce.com.
"We're looking to (Idea Exchange) for what people want us to build. People voted for Google Apps," he said. Swensrud expects that a "huge" percentage of Salesforce.com's customer base will be interested in the new feature.
Likewise, Google hasn't ruled out working with other partners. "We're committed to advancing the Web as the platform and partners are key to our growth, whether it's a developer doing custom applications and gadgets, a company like Appirio making calendar sharing even easier, or Salesforce.com deeply integrating Google Apps into their CRM products," said Scott McMullan, Google Apps partner lead, Google Enterprise.
Salesforce.com won't charge for the integration with Google Apps. Existing customers will get it for no additional charge. So far, 10 Salesforce.com customers have tested the integration in a beta test mode, said Swensrud.
There is a profit motive here, however. The company will offer a service called Salesforce for Google Apps Supported that will include telephone support for end users, unified billing and provisioning, and additional application programming interfaces for a fee of $10 per user, per month.
TechCrunch is reporting that Salesforce.com will announce on Monday a deal to resell Google online applications such as Google Docs to its customers.
It's unverified at this point, but TechCrunch points to a Google Operating System blog post that details several bits of evidence that could point to some integration.
Salesforce.com and Google share a vision of transforming computing tasks that today happen on corporate PCs or servers onto services available across the Internet.
Salesforce.com declined to comment on the report. Update 9:09 p.m.: So did Google.
With the appointment of Leo Apotheker to the post of co-CEO, SAP is trying a tag-team, two-in-the-box CEO transition strategy it has used before.
Leo Apotheker
(Credit: SAP)Apotheker's new role had largely been anticipated, following his appointment as deputy CEO more than 12 months ago. Apotheker will assume the co-CEO position immediately and join current CEO Henning Kagermann at the head of the table. Kagermann plans to retire in May 2009.
The enterprise software giant used a similar game plan when grooming Kagermann as the successor to SAP co-founder Hasso Plattner.
"Henning Kagermann requested that the supervisory board appoint Leo Apotheker as co-CEO in order to prepare him as successor in the best possible way during the remainder of Henning's tenure," Plattner said in a statement Wednesday. "After years of massive investments and the successful launch of trendsetting innovations in the areas of service-oriented architecture, new solutions, and business models for the midmarket...SAP now faces the task of boosting the application of these innovations among our customers and end users."
Henning Kagermann
(Credit: SAP)For SAP, naming Apotheker to the co-CEO slot firmly locks in the executive transition plans, which previously had been a distraction at the company when it was a two-horse race between sales chief Apotheker and whiz kid technologist Shai Agassi. Agassi resigned last year from SAP.
Kagermann's contract originally was due to expire at the end of 2007, but partway through that year it was extended to May 2009.
SAP also announced three new members to its executive board: Erwin Gunst, president of SAP's Europe, Middle East and Africa region; Bill McDermott, CEO of SAP Americas and Asia Pacific Japan; and Jim Hagemann Snabe, managing director of the SAP Nordic region and general manager for SAP's global industry solutions development.
The three executives will join the executive board July 1.
After joining the board, Gunst will fill the newly created position of chief operating officer; McDermott will eventually take over SAP's sales efforts worldwide, a role formerly held by Apotheker; and Snabe will oversee development of SAP Business Suite and SAP NetWeaver, two major focuses for the company. NetWeaver serves as the back-end middleware that connects SAP data with other applications and its SAP business suite.
Update: Wednesday, April 2, 10:30 a.m.With the addition of the three new executive board members, SAP's Peter Zencke, who heads SAP's application platform and research will step down this year, when his term expires. Zencke was responsible for SAP's major mid-market on-demand applications effort Business ByDesign, and had only wished to extend his contract long enough to complete the work. Zencke, who wants to send more time on his family and himself, will continue on as a consultant to the company through next year, however.
SAP's chief financial officer and executive board member, Werner Brandt, has a contract with the company that is due to expire next year. The issue of whether Brandt's contract will be extended will be addressed far in advance of its expiration, said Kagermann during a conference call with reporters Wednesday.
Kagermann and Apotheker together addressed the media in the conference call, noting such highlights as:
• Apotheker, in his new role, will be responsible for industry development; and, in the second half of the year, work with his new team to develop SAP's budget. And as Kagermann begins to hand over an increasing number of his duties to Apotheker next year, one of those tasks include serving as the front man to communicate SAP's strategy to the market, customers and industry.
• Apotheker cites execution on SAP's strategy as his top priority and challenge as the new co-CEO. "We want to delight our stakeholders, our customers," he noted. SAP has a growth strategy that includes business intelligence via its mega-acquisition of Business Objects, a revamp of its product line to run on a service-oriented architecture (SOA) , and its on-demand offering via Business ByDesign.
• SAP plans to slightly reduce its spending on research and development, now that it has a number of its major technology efforts winding up. And, the enterprise applications giant plans to put some of that focus on delivering those technologies to customers, a.k.a. sales.
• Henning, as he enters 2009, will begin to consider how he will spend the next chapter of his life, once he retires next spring. For now, he hasn't made any decisions.
See also: Dennis Howlett's take on ZDNet
Oracle on Tuesday announced new on-demand CRM software aimed squarely at Salesforce.com.
The new software, Oracle CRM on Demand 15, is a revised version of a product acquired via Oracle's purchase of Siebel Systems in 2005.
Oracle's on-demand software, designed to help companies manage customer resources, will include a browser-based interface and can be customized to run on mobile devices such as BlackBerrys, and included in personalized Google and Yahoo pages.
Oracle's CRM on Demand 15
(Credit: Oracle Corp.)Another aspect of the release is the inclusion of what Oracle calls "Social CRM" capabilities, including social networking and collaboration tools. ZDNet's Phil Wainewright explained more in a post earlier on Tuesday:
The lead component of Oracle CRM's new social capabilities is a new feature called 'Sticky Notes'. This allows a user to mark any object -- for example an account in a given salesperson's portfolio -- with a comment and then subscribe to the message stream related to that object. Team members can then follow and participate in the conversation around that object, which is all co-ordinated within new functionality called the 'Message Center'.
While Salesforce.com has enjoyed years of leadership in the on-demand business software market, Oracle and others are launching rival products. In Oracle's case, analysts say recent sales wins for Salesforce.com have refocused the company's efforts. "That was a wake-up call. They have come to a realization that there is money to be made from delivery of software as a service," Trip Chowdhry, an analyst with Global Equities Research, told Reuters.
