Can Salesforce.com Grow Beyond Its CRM Niche?

Opinion: An analyst report by Summit Strategies sets impossibly lofty goals for Salesforce.com when it says the CRM company can become the "Microsoft of the on-demand world."

A research report by Summit Strategies achieved a new high in market-analysis hyperbole in July when it suggested that Salesforce.com has an opportunity to become the "Microsoft of the on-demand software world."

The theory, propounded by Summit analyst Tom Kucharvy, holds that Salesforce.com is becoming a de facto operating environment for on-demand software applications.

The Salesforce.com CRM (customer relationship management) platform, including the Supportforce customer service applications, the Customforce application customization tools and the Multiforce on-demand operating system, will allow the company to become a market-dominating aggregator of complementary hosted applications—its own and those of its partners.

In essence, third-party software vendors in the fields of CRM, ERP (enterprise resource planning) and others will use the Salesforce.com platform because it provides a ready-made hosted data management-data sharing environment, provides the widely touted cost advantages of on-demand software, and can be readily customized to fit their needs.

Salesforce.com is already heading in this direction because other on-demand software applications are linking up with the Salesforce.com platform. The report also says Salesforce.com is claiming that more than 150 add-on applications have been developed for its platform and that it serves an expanding community of more than 8,000 corporate and independent software vendors.

/zimages/4/28571.gifClick here to read about why some software industry executives believe software as a service will become the dominant software-distribution model.

The Summit report clearly notes that Salesforce.com has a long way to go before it demonstrates that it really has a business strategy that can make it market-dominating company. It also says Salesforce.com has to successfully carry out several steps if it is to have any hope of resembling even a pallid shadow of Microsoft in the software-as-a-service space.

The first step involves the most formidable barrier that Salesforce.com has to overcome: It hasnt clearly stated which application segments it intends to develop for itself and which it will let its partners pursue.

Its hard to believe that Salesforce.com could even begin to become as successful in the software industry as Microsoft if it is limited to the CRM niche. Right now Salesforce.com hasnt even achieved the distinction of being the Siebel Systems of CRM, at least in terms of market capitalization.

Salesforce.com will have a hard time becoming a leading application platform provider if its partners suspect that its going to compete with them in specific market segments, the report notes. Salesforce.com should tell the world whether it is going to branch out into other applications

The problem is that Salesforce.com would be competing not only with any potential partners but also with some of the biggest names in the software industry for any of the market segments that are worth considering, including Oracle, SAP and Microsoft itself, to name just a few.

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John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s eWEEK.com since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...