Late yesterday I attended the second Enterprise Irregulars conference call. The Irregulars are a group of bloggers with diverse backgrounds from the software, analyst, venture capital and consulting communities with a common interest in every aspect of technology relating to the Enterprise. They’re a great group to be involved with to get some real “behind the scenes” insight.The call focussed on Salesforce.com’s AppExchange. I’ve blogged about it before, and we are considering the platform as a possible channel to market, and so I was looking to shortcut some of the research I need to do. AppExchange has been described by Marc Benioff, their charismatic and fast talking CEO, as the eBay or iTunes of software. On the call Salesforce was described as the “poster boy” for the Software as a Service topic, and they are best known as a serious CRM contender. Ismael Ghalimi said their average number of users is 19, but they do have some significant large Enterprise users, many low end users and a much greater marketing presence than their actual size would suggest. They’ve done a great job, and they talk about AppExchange as their second killer app.
AppExchange is a hybrid. It is both a marketplace for add-on and complementary applications for the Salesforce customer base, as well as being a technology platform for developers to create new applications using the Salesforce model. It was suggested that this is a great strategy for Benioff, who is creating an ecosystem of developers adding functionality alongside his product. It appears to be a good way of outsourcing development at low cost, and would allow them to cherry pick the better products, partners or development groups. This is no different to the normal practice of a software vendor building a partner/reseller channel, which they slowly take over some time later.
Part of the reason for the “low cost” comment, is that it sounds like the AE platform itself is a much thinner technology base compared to things like Netweaver, or than I expected. This has advantages for the developer, who can get in and make use of the platform at very low cost, and lends itself to lightweight applications. As well as encouraging a portfolio of good add-ons, this will be great for corporate IT departments who want to extend Salesforce in to other application areas. However, the downside appears to be that there are limitations. On the call it was suggested that AE needs real Enterprise Application Integration, significantly enhanced workflow capabilities, and a greater ability to allow development of very customised code before it can really challenge as a platform in its own right.
It was very interesting to hear Charlie Wood, whose company is developing on the platform, give first hand experience and a glowing report on them as a partner. He says they are bending over backwards to be helpful, even for a small company like his.
I had expected, when AE was announced, that part of the strategy was for Salesforce to hook up with other SaaS vendors with major ERP components, for example MyFactory from Germany, to pull together “best of breed” applications and provide a coherent solution to challenge NetSuite, and then the major ERP players head on. However, when you look at the current portfolio most of the applications enhance and extend the CRM topic, with not too much coverage of other major application areas. Part of the reason for this must be to do with the integration deficiencies, and the fact that AE won’t act as a hub. These other applications need to be hosted separately and use the APIs to Salesforce, rather than sit in a multi-tenanted environment. Maybe this will come, and it is something we are considering becoming a part of as it develops.
From our point of view one of the major opportunities in all this is as a marketing channel. There is no doubt about their market presence, and it would be great to jump on the Benioff bandwagon and share the stage with them, as well as the technology.
I’d like to thank Erik Keller who moderated the call so well, and all of the other contributors. It saved me a lot of research time, as well as piecing together the fragments I knew into a coherent picture. The bottom line is that AE may not yet be the killer app, but it positions Salesforce as a major contender.
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