Salesforce.com Upgrades CRM Platform

by Erin Joyce

UPDATED: In its first meeting with Wall Street analysts since its spring IPO, the company spreads its online CRM gospel while explaining why 'IT Doesn't Matter.'

UPDATED Salesforce.com's on-demand CRM customers have upgraded to the enterprise edition 2.0 of its CRM software. This is one reason that the service of Internet-delivered software is accelerating the commoditization of traditional enterprise software, said CEO Marc Benioff Wednesday.

The enterprise edition 2.0 upgrade for customers, which is delivered ASP-style , includes salesforce.com's sforce 4.0, its latest platform for delivering customized CRM apps over the Internet.

During a meeting with Wall Street analysts Wednesday, Benioff and other company officials talked up the latest tools of their trade, while plotting more steps in its quest to hasten the commoditization of software -- at least, in its software corner of the world.

"We're commoditizing the technology" of software delivered as a service, Benioff said, just like an electric company delivers the same commodity to customers big and small.

"That's the nature of our industry," he said. With the maturation of browsers, the Internet is providing its own type of platform, as well and accelerating the shift in how software is delivered, he added.

Despite the new products however, lowered revenue guidance from salesforce.com had investors running for the exits Wednesday. Shares of salesforce.com fell by 27 percent on the day to close at $11.70 after it announced it expected 3 cents per share earnings in its 2005 fiscal year, not the 6 cents per share that analysts had expected.

Salesforce counted 151,000 subscribers to its products, according to Benioff and company officials. During the first two months of the second fiscal quarter alone, the company notched about 14,000 new paying customers.

"So there's a tremendous momentum we're seeing in the marketplace," said Benioff.

Overall, think of salesforce.com as in the early stages of a coming bell curve rate of adoption for networked software.

"We're not in the mainstream" yet, he said. "We're the new guys."

For developers working to integrate ISVs with their own or other companies' database applications, sforce 4.0 features about 100 improvements, officials said.

They include new APIs that enhance new levels of integration between salesforce.com and other companies' software platforms and more extensive Bug Fix tools.

There is also a new Web service API for accessing new objects, as well as previously unavailable objects and related data operations. As a result, the company said, the semantics of the API remain unchanged: the new objects will appear automatically via the Enterprise WSDL (Web Services Description Language) and describe calls. (Complete schema and access information will be available when the 4.0 WSDL is released in mid July.)

For enterprise developers looking to configure access to external applications automatically, the platform's New Objects WebLink (previously called Web Integration) enables that management function (updates, deletes, etc.) straight from the API.

More layers of customization options await developers and customers who use the sforce platform to ready their own CRM apps to be delivered to desktops via the Internet or VPN.

In addition to highlighting some of its customers, the first meeting with Wall Street analysts since its spring IPO was a chance for salesforce.com officials to talk up its on-demand business model. In the process, they shared views about whether IT -- enterprise software packages in particular, such as CRM -- has reached commodity status, or can still deliver a competitive advantage for customers.

During a question and answer session, company officials were asked if they agree with a controversial theme that emerged about IT systems having reached commodity status, a claim raised in "IT Doesn't Matter," Nicholas Carr's "Harvard Business Review" article. Using that theme, an analyst asked Benioff if the software that salesforce.com is selling should not be considered a differentiator in the enterprise as well. In an industry that has loudly rebuked the article's thesis, Benioff took a different position.

"I think enterprise technology companies have sold a lot of companies a bill of goods," he said, noting the argument that, if a customer buys this or that enterprise software package, then they are somehow differentiated. "I think IT is becoming a commodity. I think the Internet drives it to be more of a commodity."

After all, he added, the industry has a high obsolescence rate.

"We are on a technology continuum that is driving costs down so fast, and really has been accelerated by the Internet, and has accelerated even more since browsers started to stabilize in the late 1990s. They're tools," he said of software packages, "but they are like any other commodity."

  This article was originally published on Wednesday Jul 21st 2004
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