Salesforce.com Chairman and CEO Marc Benioff sat down for a conversation with eWeek editors just after he introduced the company’s new Force.com platform-as-a-service, or PAAS, offering at the Palace Hotel in San Francisco.
The company widely seen as the standard-bearer for the SAAS (software as a service) movement has continually evolved, to use a word Benioff seems to favor. Moving from its early days as a CRM (customer relationship management) vendor, Salesforce.com has created AppExchange as an on-demand applications marketplace and developed a proprietary language called Apex that allows customers to customize their instances and integrate them with other applications, including on-premises software.
Allowing developers to compile code in its own cloud can be seen as the next logical step for Salesforce.com as it tries to widen adoption of applications delivered on demand in general and its own ecosystem specifically.
Providing ISVs and other partners with the tools and infrastructure to build applications for App??ÃExchange expands Salesforce.com’s growing hegemony over the SAAS universe. It is also an olive branch to enterprise IT departments threatened or locked out by the on-demand model by giving them the ability to create custom integrations that might otherwise be outsourced.
eWEEK Executive News Editor Michael Hickins and Senior Writer Renee Boucher Ferguson interviewed Benioff in San Francisco.
Can you talk about the relative importance to Salesforce.com of the various businesses and revenue streams you’ve developed, from your CRM product through to App??ÃExchange and now PAAS?
We’ve really evolved as a company. … And that is really our vision-to become a multiapplication, multicategory company. We don’t want to be just applications. We want to be in the application business, which we are, and we’re very successful at that. And we want to be in the platform business, and we are, and that’s really an emerging business for us today. But I really believe in the platform-as-a-service concept.
Where do you see your company five years from now? As an application vendor or a platform vendor?
Yes. [Laughter] What we really see five years from now is that Salesforce.com continues to be the leader in software as a service, just as we have been for the last nine years. And we really want to define platform as a service and be in the same leadership position-certainly in the enterprise space.
You know, there will be a lot of platforms as a service. That’s what I love about platform as a service-that it’s another huge category, just as you have software as a service, you have a lot of applications. … I think you’re going to see consumer platforms emerge, and I think you’re going to have enterprise platforms emerge, as well.
How critical to your success is your partners’ success?
I think it’s critical for us to fully embrace the partner community as never before. We’re trying to innovate with partners, we’re trying to build high-fidelity relationships with them, we’re trying to show them what we’re going to do so that we don’t cross swords with them.
Also, there’ll be business and technology models to participate in with them. You saw that we have this new per-log-in pricing-I think that will be very important for partners. We’ve also previously announced OEM-edition pricing. We want to do more with partners-as much as we can. …
[Developers] think you have to buy a server, you have to buy a database, you have to buy an application server, you have to buy your IDE [integrated development environment], you have to buy your visualization technology, and on and on and on. And then you have to run it, you have to host it. We have to kind of show them that there’s an alternative.
Look, for some companies, they’re going to do that-like us. We do that. We have the big data centers and the big servers, the big iron, and we’re doing that-that’s our business. But for a lot of companies, they don’t have to be in that business-they can be in a different business.
Gartner says that 25 percent of the whole enterprise software industry, which is a $250 billion industry, will be software as a service by 2012, and that’s right around the corner. These companies are jumping in to fill that. … You’ve seen even new software-as-a-service companies that recently went public that only have one data center because they can’t afford the second data center, or they don’t have the disaster recovery in place, or they’re saying it’s coming because they’re waiting.
Well, those are relatively good-size companies, but they are startups-they can’t sell to corporations without having backup data centers and disaster recovery and SAS 70 Type II security. We can provide that for them, and I think that’s a tremendous business opportunity for us, and that’s why I really am passionate about this area. And I don’t think we’re going to be the only ones in this area. … I think the stuff we’re doing as platform as a service can really be a supercharger for the whole software-as-a-service industry, and, of course, we’re the leader in that. So, if we can make that bigger, it’s better for us, as well.
We understand you can’t reveal individual revenue numbers, but what can you tell us in the aggregate about how much value your partners derive from being on AppExchange?
We have seen that partners have tracked us at about 10 to 20 percent of our revenue. So, we really think as we move into this $1 billion-a-year revenue next year … we think that 10 to 20 percent of that will be partner revenue. It’s possible that [the number] could be larger than that, but I think that’s a solid, conservative number.
Traditional software vendors such as SAP and Oracle are beginning to push SAAS, as well. Microsoft is about to release Microsoft CRM 4.0 as a hosted, multi??ítenant application, and it has 400,000 feet on the ground. How will you fend off that competition?
What we need is more competition, more companies; what we need is the mainstream providers coming in and saying, “Hey, we’re a multibillion dollar company, and we think the future is software as a service. And it’s the end of software. And Marc Benioff, what does he know anyway?” …
It’s not very interesting if you’re the only company in an industry because you’re not an industry, you’re the only company in it. It’s better to be part of an industry and be part of a huge effort than to be one person on an island. So that’s why we are now part of the mainstream. … Now Microsoft is saying, “We’re software as a service;” and SAP, “We’re software as a service;” Oracle, “We’re software as a service.” And these 2,000 startups, they’re software as a service, and we’re like, “Well, I guess it’s the end of software.”
What you don’t have that some of your competitors do have is CRM integrated with ERP [enterprise resource planning], and your customers seem to want that integration. Doesn’t that pose a competitive threat to you?
We can’t do it all, and we don’t think in this new industry that you should do it all. This is a new industry, a new generation of technology. We’re not going to build mapping technology; we’re going to use Google maps. We’re not going to build VOIP [voice over IP] technology, either; we’re going to use Skype. And in terms of other capabilities, we define what we do really well and then we can bring in these other providers through Web services.
This is not the old monolithic days, where you’re trapped in a stack of code that runs on your PC that’s under your desk and that everything that’s in your company is in that PC. This is a new day, where you’re operating in the cloud, and the cloud has all of these resources and technologies, and you can easily integrate these systems. And that’s the power of Web services. And the power of Web services is simple, easy integration, and our customers have proved it.
We do 1.6 billion integration calls every single month. That is the evidence of this statement that Web services is real-that we’ve done 24 billion calls in our history. Those 1.6 billion calls are calling Oracle at Cisco Systems, and they’re calling SAP at DuPont. But for us to say that we’re going to build ERP so that Cisco can replace Oracle and so that DuPont can replace SAP would be crazy. Instead, we can focus on what we’re really good at and then use the power of Web services and integration to make those calls. …
What are the challenges of running code in the cloud?
One of the most important things is scalability, No. 1: Can you run it for a small company and a large company? Reliability: Can you keep it running 24/7? Can you achieve three-nines or four-nines or five-nines of availability? When we look at these basic ideas-reliability, scalability and interoperability-push it out to Eclipse, pull it back from Eclipse, this is really important, and these are new challenges.
When we started looking at it four or five years ago, we were like, “Whoa, we have to make sure we architect this correctly, that it’s componentized, and that it’s not only all of those things but that a customer can’t break their own implementation, that it’s basically in there and operating on that page or that object. But, if for some reason they didn’t get it exactly right, it doesn’t injure their whole instance or the whole application continues to run.”
So there are a lot of new things to [consider when] running code in the cloud, and I think that we’re doing a lot of smart things in terms of thinking through those things ahead of time.
What are some of the metrics for success that you’re looking for in terms of Force.com?
The key metrics for the developer community are, first and foremost, how many ISVs do we actually have building and delivering applications? How many applications do we have available? And, by market, by language, by geography, that’s extremely important. I think what we talked about earlier-making sure those companies are making money, that they’re successful and that they’re viable organizations, that they’re growing-all of those things are extremely important parts of building the platform ecosystem.
How much of the Force.com platform is already built, and how much more is there to go?
I think we’re looking pretty good. If you look at a lot of the applications that are being developed already, we’re really getting to the heart of the application development space, and I would love to have us benchmarked or reviewed against other tools, even traditional legacy tools. But, of course, there’s always more to do, and we have a lot planned this year for the platform.