Salesforce.com's new gamble

By Matt Hines, Special to ZDNet
27 July 2005 09:41 AM
Tags: salesforce
For several years, Salesforce watchers have wondered whether the company would expand beyond CRM to hosted human resources or financial applications, in essence creating a hosted rival to SAP and Oracle, the two largest makers of enterprise software.

Benioff has been hatching the Multiforce plan for years, said Ovum's Bradshaw. "The first meeting I ever had with Benioff, three years ago -- that was exactly what he said," Bradshaw recalled. "He wanted Salesforce to become a platform provider, and his vision was that rather than just offering CRM, the company could support people's business process from a broader sense."

If Salesforce succeeds in defining a clear business model, Kingstone said, Multiforce is likely to inspire a large number of ISVs and customers to build their own hosted tools, an effort that is almost sure to advance Salesforce's goals. She said that unlike currently available add-on tools for Salesforce, which merely link back into the company's products, the development tools give ISVs the opportunity to create an "ecosystem of services" that merge with the company's tools on a deeper and more streamlined level.

In that sense, Kingstone said, Multiforce is similar to efforts such as rival software maker SAP's NetWeaver program, which also aims to give its partners the ability to build Web services middleware that communicates with its own enterprise systems.

With Multiforce "you can picture partners building an application that has embedded experience in the Salesforce user interface, and with partners mimicking that interface, they essentially become an application within Salesforce for the user," Kingstone said. "That's the way that it's similar to NetWeaver and other Web services efforts, and it allows Salesforce's core products to grow without the company building all this for themselves."

Other industry watchers have noted that at worst, Multiforce could serve as a way for Salesforce to keep customers focused on its existing CRM tools while it works to add new applications. Rebecca Wettemann, analyst with Nucleus Research, said Salesforce cannot depend on the application-development tools alone to generate continued growth, but, she said, the platform will give customers something to focus on while the hosted CRM provider continues to build additional products.

"No one is expecting Salesforce's applications business to stand still. The company is recognising that as more competitors come into the space and more sophisticated customers are looking at on-demand, they need to do something else to stay on top," Wettemann said. "If you look at Microsoft's partners within its Great Plains group, they've been successful because a lot of those companies intimately know their customers' businesses.

"Whether Salesforce is going to find those sorts of very valued partners remains to be seen," said Wettemann. "But that's what they need, someone, or something, to lead the customer to increased value in Salesforce.com."

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