The Salesforce Show

• By John K. Waters
• January 23, 2006

The Academy of Motion Picture Arts and Sciences has already selected its host for this year’s Oscars: my favorite fake news anchor, John Stewart of ''The Daily Show.'' I'm sure Stewart will acquit himself well, but if it doesn't work out, I'd like to throw out a name for next year's hosting duties: salesforce.com's chairman and CEO Marc Benioff.

I'm serious; this guy could keep that notoriously glacial production in third gear. At his company's Winter '06 product-update event in San Francisco last week, Benioff was the host with the most, deftly smoothing lumpy demos and keeping the show rolling apace with bits of self-deprecating humor. (Which really threw me; I thought you weren't allowed to sit in the big chair until the business world had wrung the last drop of humility out of you.) The live video chat with a developer in Chennai, India, would have been excruciating if Benioff hadn't been there, leading the witness, so to speak, and rolling his eyes ever so slightly for his audience.

''Host'' was the operative word, of course, at what was primarily a coming out party for the AppExchange, salesforce.com's Web-based applications marketplace where users can shop till they drop for third-party on-demand apps and add-ons.

The AppExchange consists of two main parts: The AppExchange directory is the online app marketplace that tends to get all the press. This is what the company's PR people have in mind when they say that salesforce.com wants to be the eBay or the iTunes of enterprise apps. Shoppers can browse the directory, test drive applications, and install them into any salesforce.com account.

The second part is what the company calls the AppExchange platform, a Web-services-based foundation for developers who want to offer their applications as hosted services integrated into the salesforce.com on-demand CRM services. This is the technology that grew out of the sforce platform, which the company has been providing for third-party developers since 2003. Sforce 6.0 was introduced with the company's Summer '05 product update, but a Google search for ''sforce'' now takes you to the AppExchange developer blog, where the fate of platform is explained. The AppExchange was first announced last September at salesforce.com’s Dreamforce conference.

(For more on both parts, I highly recommend the new whitepaper, ''Creating Apps with AppExchange.'')

At last week's event, a number of companies announced that they would be developing apps for this new marketing and distribution vehicle, including Adobe Systems, BusinessObjects, Skype, and Trillium Software, among others. By the company's count, more than 160 applications, from real estate apps to marketing solutions, are currently available live on the Internet through the AppExchange.

But if Benioff was a great host, he was the consummate, buzz-phrase-dropping salesman. He talked about the ''business Web,'' the salesforce.com shibboleth for an enterprise version of what the Web has brought to consumers. ''The consumer Web gave rise to business Web,'' he said. ''The consumer Web is really where the action has been. It's how we entertain ourselves. It's how we shop. How do we do that for our business users as well?'' He also refined his company's slogan, ''The Death of Software'' by declaring ''the end of software,'' and chiding organizations that are still delivering applications on CDs.

In this context, he used my favorite neologism of the day, referring to this community-based approach to distributing, reviewing, and acquiring applications as social production. ''Creating applications should be as easy as producing and publishing blogs,'' Benioff said. The company plans to incorporate RSS technology into the AppExhange, which would allow customers to subscribe to virtual software catalogs and monitor them for new programs.

Though salesforce.com is getting most of the ink right now, it's important to keep in mind that there are still competitors in this space. Santa Clara, CA-based Jamcracker, for example, has created the Jamcracker Service Delivery Network (JSDN), which the company bills as an on-demand ecosystem designed to allow service providers to source IT and business services.

Brent Arslaner, Jamcracker's VP of marketing, believes the fact that salefoce.com is itself a software-as-a-service provider with its own growing product line is likely to detract from the success of the AppExchange. In an email, Arslaner wrote: ''eBay and Amazon, who salesforce.com compares AppExchange to, do not develop products that compete with products from members of their communities, but salesforce undoubtedly will.'' He added that salesforce.com is more like the Safeway (a grocery story chain) of on-demand apps than the eBay. Self-serving and a little snotty though it may be, it's a valid criticism, one that has been lodged ritiously against a range of platform companies over the years, from Microsoft to Sun Microsystems.

Siebel Systems was bragging last week about its deal with the German CEREC Sales Division of Sirona Dental Systems GmbH. The dental equipment developer had deployed salesforce.com, but reportedly switched to Siebel CRM OnDemand because user adoption of the salesforce.com solution was poor.

And there have been noteworthy missteps. Benioff called the December 20th salesforce.com site outage an embarrassment for his company, and promised that new infrastructure investments would make the system more resilient.

Nevertheless, salesforce.com is building some wicked momentum in the on-demand space. In fact, I'd say the company is validating—if not defining—the business model.

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