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Salesforce.com = CRM + platform?

Organizations evolve; and that can be an untidy process. Salesforce.com started out as an online application for CRM (Customer Relationship Management), and that remains its core business, as suggested by its name. Seeing its success, observers naturally asked whether the company would break out of that niche to service other needs, such as ERP (Enterprise Resource Planning). Sometimes there were hints that this is indeed the case; I recall being told by one of the executives last year that if the company was still called Salesforce.com in five years’ time it would have failed. However, rather than developing new applications itself, the company has chosen to encourage third parties to do this, by opening its underlying platform. The platform is called Force.com, and supports its own programming language called Apex. Third-party applications are sold on the AppExchange, and either extend the CRM functionality or address new and different areas. According to CEO Marc Benioff this morning, there are now 750 applications on AppExchange.

A question I’ve asked a couple of times is whether Salesforce.com gives any assurance to its 3rd party partners that it will not compete with them by rolling into its core platform features similar to those in an AppExchange offering. I’ve not received a clear answer, though EMEA co-president Lyndsey Armstrong told me last year that it just was not an issue; and Benioff today at Cloudforce told me it has not proved to be a problem so far. It is an interesting question though, since if Salesforce.com did choose to expand into new application areas, this kind of competition would be all-but inevitable. It therefore seems to me that the company is more interested in growing its platform business, and continuing to grow its CRM business, than in addressing new kinds of online applications itself. There were also broad hints today that the company intends to improve its platform as an application server.

Let’s speculate for a moment. What if Salesforce gets acquired, say by Oracle, a move which would not be unexpected? If such a thing happened, it would make sense for existing Oracle applications like the E-business Suite or PeopleSoft Enterprise to get extended or merged or migrated into Force.com. That might be less comfortable for AppExchange 3rd parties.

One thought on “Salesforce.com = CRM + platform?”

  1. I’d agree. They made a big stretch yesterday, and I’m not sure they have thought it through that well. The platform play is almost a form of retrenchment: “we can’t compete on the user apps, so we’ll just provide the platform” – the challenge is that a number of others have taken that position, from Microsoft through to Amazon and Google.

    Perhaps they are hoping to be aquired by someone looking to move into the cloud space?

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