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SAN FRANCISCO—Salesforce.com took the next logical step toward offering a general-purpose Web application platform with the introduction on May 24 of the AppExchange OEM Edition.
The OEM Edition allows independent software developers to build, deploy and market new applications on the Salesforce.com AppExchange platform that are independent of its core CRM (customer relationship management) functionality.
The future of the software industry “is not a set of heterogeneous software but a set of heterogeneous services made available over the Web,” said Salesforce.com CEO Marc Benioff.
Salesforce.com launched AppExchange early in 2006 for ISVs who wanted to build and deploy applications that were linked to the companys CRM functionality.
The company reports that currently there are 250 applications on AppExchange, including products for sales demand generation, sales operations, quoting and ordering, human resources, finance and administration.
In addition to the AppExchange OEM Edition, Salesforce.com introduced the first four OEM Edition customers: DreamFactory Software, MyLoanBiz, Rally Software Development and Remend.
DreamFactory worked with AppExchange to develop DreamTeam, a collaboration application that combines project management, calendaring, document management and team communication.
MyLoanBiz is an on-demand package designed to help loan officers track all aspects of their business, including lead capture, opportunity management, expense tracking, marketing and reporting.
Rally Software Development used the AppExchange OEM Edition to produce on-demand applications for the Agile software development life-cycle management process. Agile is a set of software development practices aimed at speeding up software development to keep projects on time and within budgets.
Remend built the Remend REO Agent, which assists real estate agents by automating the loan application process, post-closing property management and the loan default process.
Benioff said the AppExchange OEM Edition represents the future of software development, particularly for on-demand applications, because it eliminates the upfront investment software companies have to make in network, server and data storage resources. Rather than building their own network infrastructure, ISVs simply build their applications on top of Salesforce.coms on-demand architecture.
The AppExchange platform represents a challenge to long-established software companies, such as Microsoft, Oracle and SAP, which are still selling and distributing products designed to be installed on their customers premises.
Using the AppExchange network infrastructure can greatly reduce both the time and cost of building up a new software company to the break-even point, said Kendall Collins, Salesforce.coms vice president of marketing.
It can typically cost at least $35 million to $40 million to build a software company to that point, Collins said. He estimated that this is 70 to 100 percent more costly than it would be to use the AppExchange infrastructure. The additional expense is typically funded through venture capitalists or private equity investment, he said.
The AppExchange OEM edition is an example of product development platforms that will support the new “garage” technology ventures, said Denis Pombriant, principal analyst with Beagle Research Group, a CRM market research firm based in Stoughton, Mass.
Application hosting platforms like AppExchange will drive down the cost of developing new applications and the cost of buying, deploying and maintaining enterprise application software for customers, Pombriant said. He added that he foresaw more than two years ago that Salesforce.com was moving toward building an application development and deployment platform for ISVs.
AppExchange OEM Edition fulfills Pombriants vision by “delivering a low-frictions environment for the development of new products,” he said.
The platform will also give software developers opportunities to build applications that were too specialized, or served markets that were too small, to support the traditional commercial software development process, he said, adding, “Applications that may not have been affordable before suddenly now have become affordable.”
However, Pombriant predicted that Salesforce.com wont be the only game in town when it comes to providing a platform for developing and deploying on-demand applications. He suggested that companies such as Rearden Commerce, a San Mateo, Calif., company that provides an on-demand purchasing management application, NetSuite, which provides on-demand Enterprise Resource Management applications, and is also based in San Mateo, and on-demand enterprise apps provider nSite, of Pleasanton, Calif., all have the potential to create application platforms in their own right..
ISVs can work with the AppExchange OEM edition for $25 per user per month. The OEM edition provides the common user interface, security and data sharing models. It also gives developers access to the AppExchange API, Database, and the AppExchange Builder for customization and integration.