Can Salesforce Become a Platform?

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Can Salesforce Become a Platform?
By Gary Rivlin
November 20, 2007 10:09AM

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Salesforce has started to look less revolutionary as larger, more established companies have adopted its leasing model. As Markc Benioff notes, few companies successfully make the leap to platform status. But making that jump is critical to Salesforce's long-term success, with many counting on Salesforce moving beyond the market for CRM.

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   Marc Benioff has never been modest in his dreams for You are not allowed to view links. Register or Login, the business software company he founded in 1999. Benioff, a brash and voluble man whose appetite for both publicity and growth matches his bulk, declared several years ago that Salesforce would be "the Microsoft Relevant Products/Services of the 21st century." Never mind that his company earned over the previous 12 months what Microsoft makes on a slow morning. Or that another company, Google, seems much more likely to wear that label.

Salesforce promised to revolutionize the way businesses buy software, and to a large extent it has accomplished that in one market niche: customer tracking. Its innovation was in turning software into a service that is leased over the Internet, instead of something bought and installed on company computers.

And yet for Benioff, that is not enough. He wants to turn Salesforce into a platform like Microsoft's Windows operating system, a product so popular that it is the foundation for a veritable ecosystem of software developers.

"In our industry," said Benioff, the company's chief executive, "the only companies that really make it big move from being a 'killer app' to being a platform."

There is a lot riding on this strategy. Salesforce has started to look less revolutionary as larger, more established companies have adopted its leasing model. And as Benioff himself notes, few software companies successfully make the leap to platform status.

Making that jump is critical to Salesforce's long-term success. Its share price has tripled in three years, showing that investors are counting on success beyond the market for customer-tracking software.

"It's been very impressive what Salesforce has pulled off," said J. Bruce Daley, editor of The Enterprise Software Observer, an industry newsletter. "But I think this is a company about to hit a wall."

Like others, Daley declared it "logical" that Benioff would try to use its beachhead in managing customer information to establish itself as a platform, a kind of holy grail of the software world.

The plan is to persuade outside programmers to do what Salesforce cannot afford to do on its own: round out the company's offering of products so that customers can lease a greater range of business tools, like payroll and accounting software.

"But the jury is still out on whether ultimately it will be successful," Daley said.

It does not help Benioff's cause that the subscription model's success has inspired software firms, including Microsoft and SAP, the German business software giant, to offer subscription-based versions of their own products for customer relations management, known as CRM Relevant Products/Services. (continued...)

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