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2/28/2007
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New Deals Show Software-As-A-Service More Than A Niche

Salesforce.com and IBM write up new contracts with partners willing to adopt an on-demand software model.

Software as a service may not suit everyone, but two developments this week show why SaaS can hardly be called a niche software delivery model.

While introducing a new offering for the financial services market this week called Salesforce Wealth Management Edition, Salesforce.com let it not-so-coyly slip that it's largest customer, Merrill Lynch, just upped its subscription to 25,000 seats. That pretty much covers Merrill Lynch's workforce serving the financial needs of wealthy clients, says Kendall Collins, Salesforce.com's senior VP of marketing.

Financial services is proving to be one of the best vertical markets for on-demand customer-relationship management, says Collins. He calls banks the original on-demand providers. "They were the first ones over the Internet to enable electronic bill pay and online banking," he says. "They've always been at the cutting edge of the Internet, and have always been able to look to ways to transform their business with this channel."

Merrill Lynch is "completely comfortable" with the delivery model, he adds. "They come in with their security experts, audit experts, hardware and software experts, and do a complete evaluation of Salesforce like you wouldn't imagine."

In a strange testament to Silicon Valley real estate, Collins is calling from the new site for Salesforce.com's AppExchange "incubators," located in the offices formerly occupied my competitor Siebel Systems in Mountain View, Calif., which was acquired by Oracle up the road in Redwood City.

Also last week, supply chain software vendor i2 Technologies tapped IBM to host its FreightMatrix software for transportation management in a SaaS model. Although SaaS isn't new for FreightMatrix, the company decided it needed IBM's big IT services and consulting organization to get the on-demand software in more accounts.

Everyone keeps talking about when the "big" tech companies will get into SaaS, but IBM's global services organization already is in it in a fairly big way, delivery software as a service to the customers of 150 software-vendor partners, says Maia Sisk, the service organization's director of SaaS.

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