This week, salesforce.com (NYSE:CRM) had their annual conference, Dreamforce 2007, with over 7,000 attendees and 200 partners. They highlighted the next steps in their mission to conquer the enterprise applications and platform computing market. Beginning as a software as a service provider for contact management moving to sales force automation (SFA) and then on to a CRM suite in the last 10 years, salesforce.com and their dyanamic CEO & chairman, Marc Bennioff,  are at it again. They are positioned to take on the vast majority of the broader enterprise applications and platform software market. Directly competing with IBM, Microsoft, Oracle and SAP and others, they are challenging the conventional wisdom of the on-premise approach of purchasing, installing and configuring software across large, medium and small sized organizations. In fact now they are taking on the broader platform market opportunity.

At Dreamforce, salesforce.com formally announced their platform as a service called force.com, which enables any organization to build custom applications. Validated by companies like Disney and Electronic Arts, they are demonstrating their ability to reach new potential for the rapidly growing software company. In addition, they announced Visualforce, a value-added visual development environment to enable design and deployment across any platform including multitude of browsers and devices. Taking significant leap forward, salesforce.com is clearly destined to be a different type of technology provider for your organization in 2008.

Not leaving their existing customers behind, they announced the upcoming release of “Winter 2008” which has incremental features for their marketing, sales and service application. While nothing earth shattering in these releases, salesforce.com has a very large ecosystem of partners who fill the holes in capabilities and applications need like sales compensation and incentives. The upcoming content management application dramatically improves the potential to integrate any document into their suite of applications and platform -  a significant need in order to provide immediate access to information created in Microsoft Office or Adobe Acrobat. The idea or customer facing application called salesforce ideas will provide organizations a systematic approach to gain electronic feedback onproducts and services.

What does this mean for you? salesforce.com is now moving towards a larger market position as a broader platform to help in development of applications in a software as a service approach. While still maturing their CRM applications to meet larger enterprise needs, they are bringing brand name customers as validation of their new capabilities. A threat to the larger application providers like Oracle and SAP, salesforce.com is a force to be reckoned in the market. The question is whether salesforce.com can survive in the larger software market wars and not become stretched into too many software segments leaving their base, while holding their first-to- market advantage in software as a service in SFA and CRM. With SAP announcing their on-demand mid market offering and Microsoft coming forward with a subset of salesforce.com offering today there will be a new wave of technology suppliers looking for your budget dollars.

Salesforce.com has anticpated these larger technology supplier moves and plans on keeping them on the run and leveraging their mometum and partner ecosystem. With brand names like Cisco, Dell, AON, Merrill Lynch and many others in large scale deployments with salesforce.com it will be difficult for the on-premise suppliers like Oracle and SAP to get them to switch to their new offerings. Now what you buy and where you invest will determine the fate of these vendors strategies. Think carefully as your business performance and processes will depend on your decision.

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Regards,

Mark Smith
CEO & EVP Research