The media is abuzz about a Google-Salesforce partnership. (Personally, I’m more concerned about whether Paris Hilton will spend any time in the pokey.) The real question: Who will buy salesforce.com?
At salesforce.com’s recent developer conference (May 21 in Santa Clara, California), the company announced “Salesforce SOA,” an on-demand service designed to make it easier to integrate Service Oriented Architecture applications. A nice capability that extends salesforce’s Apex programming language, but the announcement was upstaged that morning by a Wall Street Journal report that a potential alliance is brewing with Google.
In his keynote remarks, Salesforce.com founder/CEO Marc Benioff managed to keep the speculation churning, as only he could do it, by refusing to comment on the news. (And don’t forget to read that Safe Harbor statement.)
Sure, salesforce.com could provide Gmail access to its users, or use Google to search salesforce.com data. Is this worth getting excited about? I don’t think so. It would be far more interesting if salesforce.com became part of Google’s growing arsenal of office productivity tools.
Benioff pooh-poohed the idea of Google getting into business apps, when I posed this question to him more than a year ago. As he rightly pointed out, there’s a world of difference between selling ads and selling business applications to corporations.
Bits is Bits
However, most content (bits) is freely available on the Web, supported by advertising and not paid reader subscriptions. Why not software (bits with logic)?
Google already provides a nice free web analytics solution that works fine for small web sites, and even some not-so-small sites (like this one). There are many other players in this fast-growing space (see Web 2.0 Powers Up People), but they’ve moved up-market to provide more sophisticated reporting and, in some cases, multi-channel capabilities.
After denying it would compete with Microsoft, Google now offers Google Apps, which includes a web-based alternative to Microsoft Office along with Gmail. You can rent it for just $50/user/year if you want a custom domain and 10GB of space per user. Gmail is great, but Google has a long way to go to displace Microsoft for office productivity tools.
Is it too much of a stretch, though, to see Google’s apps push continue into other business applications, like, oh I don’t know, sales force automation? I’ll bet a lot of small businesses would put up with ads to get a free sales automation solution. And maybe some big ones, too.
Web 2.0 Platform Wars
While salesforce.com is a goofy name for a development platform, it doesn’t seem to matter to the 50K developers who have, so far, contributed 595 solutions to AppExchange. No doubt many hope to achieve the success of CRMfusion, a Toronto-based software firm specializing in boring-but-necessary “data quality” solutions that, among other things, handles duplicate record problems in contact databases.
Largely by leveraging AppExchange to reach salesforce.com customers, CRMfusion founder Glenn Wilson claims he’s booking over $2M per year with just six people. Impressive even if Canadian dollars.
I could argue that Oracle and RightNow offer more robust end-to-end front office functionality than salesforce.com. Or that NetSuite offers a full on-demand business suite that includes ERP. That doesn’t matter, either, because salesforce.com is now playing a different game under Web 2.0 rules.
Like Tom Siebel in the last incarnation of the CRM industry, Benioff used SFA as the entry point to build a large customer base as rapidly as possible. In the past year, however, he shifted salesforce.com’s course to a platform strategy, and now claims market leadership in “on-demand business services.”
Salesforce.com has built an impressive developer community and seems hell bent to deliver tools to make it easier to develop applications (Apex) and integrate with other internal and external web services (Salesforce SOA). The company has adopted Web 2.0 thinking far in advance of its conventional software rivals. A shining example is the IdeaExchange, where “salesforce.com customers can suggest new product concepts, promote favorite enhancements, interact with product managers and other customers, and preview what we are planning to deliver.”
Salesforce.com’s value increases with the size of its developer and customer network, even if it doesn’t yet offer, and maybe never will, a “complete” CRM solution with marketing and service automation on a par with its SFA capabilities. These limitations actually create opportunities for third-party developers.
Salesforce.com Buyers: Line Forms to the Right
Where this is heading this year, I believe, is salesforce.com becoming acquisition fodder, what I previously predicted would happen. My money is still on Oracle, because Larry Ellison won’t want to go down in history as missing the Web 2.0 opportunity.
However, Google has deep pockets and boundless ambition. The pending salesforce.com partnership could be just a first date that leads to a hasty marriage, before other suitors come calling with open checkbooks in hand. Corsage optional. Salesforce.com may not want to be acquired, but as a public company, if the price is right the deal will happen.
The wild card could be Cisco, which earlier this year snapped up WebEx, a leader in web collaboration services (web conferencing, intranets and the like), picking up 28,000 customers and over 2 million registered users. With salesforce.com added to the mix (and Cisco is a huge user), imagine the possibilities of going toe-to-toe with Microsoft.
Other buyers could include Microsoft and Yahoo!, both no doubt tired of losing ground to Google. Farther out on the speculative limb, you could make a case for Intuit to expand its solution set to SMB customers already fans of TurboTax and QuickBooks. And finally, let’s not rule out SAP, although without a dramatic change in strategy, it seems unlikely that the Germany company will make an acquisition of this size, not to mention crossing a Grand Canyon-sized cultural chasm.
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