TMCnet News

AppExchange: The Promise of Salesforce.com’s Applications Exchange
[October 14, 2005]

AppExchange: The Promise of Salesforce.com’s Applications Exchange


By ROBERT LIU

TMCnet Wireless and Technology Columnist

 

NEW YORK – Salesforce.com clearly sees the opportunity offered by its recently unveiled AppExchange, the applications marketplace Web site that CEO Marc Benioff has dubbed the eBay or iTunes of on-demand programs. Developer community outreach efforts like AppExchange give Salesforce.com the avenue to tap talented independent software vendors and to speed new applications development with the potential of reaching beyond its customer relationship management (CRM) base.



 


But while the innovative on-demand CRM provider has admittedly made significant in-roads in sales force automation, it will likely face more difficulties using AppExchange to branch out into other fields like project management, events marketing, finance, administration or human resources.

 

“We tend to believe there is a certain amount of interest behind this. The proof is going to come in the first 12 months,” explained Pete Weaklend, VP at Sitel, which earlier this week partnered with Salesforce.com to help deploy its new version of Supportforce, now re-branded Salesforce Service & Support.

 

Even though Benioff was cautious with his public statements during press events earlier this week in New York City, Salesforce.com’s feisty chief was still determined to emphasize the new strategy that is empowered by Multiforce and Customforce customization tools released earlier this year. Going forward, the company has refocused its resources around (1) Salesforce and its family of sister applications; (2) Successforce professional services; (3) the Appforce customization platform; (4) and the AppExchange.

 

With two of the four pillars of its corporate strategy now emphasizing non-core competencies away from its CRM roots, Salesforce.com is making big bets based on the potential success of its partners. But while those partners realize the potential of AppExchange to generate new business, they aren’t ready to bank on it.

 

Sitel, a call center outsourcing partner, deploys customized versions of Salesforce through its solutions and service organizations. As part of the service delivery side of the business, Sitel’s own development team may create highly targeted solutions that might be contributed back to AppExchange, Weaklend told TMCnet.

 

The hope is Sitel’s AppExchange presence will lead to new revenue and/or new sales leads as a by-product. But Weaklend describes AppExchange merely as “gravy” and believes only time will tell if that avenue is really successful.

 

“We’re doing the work anyway. So they are going to be there. So why not take those and package them so they can be offered on the AppExchange? I tend to think they may be onto something but for us it’s just another piece of the puzzle,” he said.

 

And, that ambivalence has opened up Salesforce.com once again to its critics.

 

“Every one of the software companies in the AppExchange (and much to the chagrin of Marc Benioff, they are software companies) still has the Herculean challenge of attracting and retaining customers,” said Bruce Cleveland, Senior Vice President & GM of Products at arch-rival Siebel Systems.

 

While Cleveland regularly distributes email memos following highly publicized Salesforce.com events, his latest smear campaign does touch upon AppExchange’s apparent Achilles Heel: for the vendors on the AppExchange, who has marketing ownership?

 

For example, Genesys Telecommunications Laboratories is developing adapters much like the ones it has created for Peoplesoft, SAP or Siebel for Salesforce.com to integrate with Genesys Inbound Voice and Genesys Outbound Voice. But once created, Genesys will hand off marketing responsibility to Salesforce.com and its partners like Accenture.

 

“The difference is that we’re not going to market the adapter. We worked in conjunction with Salesforce.com to come up with a way for them to make that available to our mutual customers,” explained Wes Hayden, President and CEO, Genesys.

 

“We … Genesys … won’t. In the case Siebel, Peoplesoft and SAP, we … Genesys … sells the adapter. In this case, we have a different arrangement with Salesforce.com. Salesforce.com will actually be providing the adapter,” Hayden told TMCnet.

 

For Salesforce.com, the value proposition of the AppExchange is the fact that it is a self-service software delivery model that customers and prospects can turn to.

 

“The whole point of it is to provide that self-service experience to be able to understand:  What is this app?  What is the value?  What do people think of it?  Let me try it,” said Parker Harris, EVP of Technology at Salesforce.com.

 

“Right now they have no self-service. They have no applications out there. They have no applications they can find and install. All we’ve done in terms of the partners is to reduce the friction for our partners to get our customers. They can promote themselves,” Harris said during an interview.

 

But the fact that AppExchange remains a marketing tool primarily for Salesforce.com leaves little motivation for partners step up marketing efforts after product development. And Salesforce.com stated during its most recent Manhattan visit that it won’t allow customers to use other applications on AppExchange without a general license to its CRM platform.

 

“We believe that you’re paying a fee for our platform and you can use our killer applications or you can use other people’s applications but you’re still taking advantage of [Salesforce] … you’re still using the breadth of our platform,” Harris told TMCnet.

 

Of course, AppExchange can serve Salesforce.com in more ways than one. While it provides an avenue for burgeoning new companies to highlight their wares, it can also serve as a convenient one-stop destination for Wall Street advisors to peruse acquisition candidates if ever Salesforce.com goes on an M&A shopping spree.

 

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Robert Liu is Executive Editor at TMCnet. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit Robert Liu's columnist page.

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