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Has Salesforce.com Graduated To The IT Big Leagues?

Potential builds for Benioff's blend of CRM, collaboration, social-savvy marketing, app platform, cloud infrastructure, and services.

Last week's Dreamforce event presented a Salesforce.com in transition. It has clearly moved beyond its sales-force-automation and CRM roots, but its unique collection of assets and capabilities defies easy categorization.

Salesforce.com is now more than an applications company, a development-platform company, or a cloud-computing infrastructure and services provider. CEO Marc Benioff doesn't seem to worry too much about fitting neatly into just one category. Customers, he says, are "looking for transformation and change in their business" driven by "new capabilities that will drive growth." Those customers have been "left at the dock" by traditional enterprise software companies with "old tools, old applications, and old platforms at a time of immense change in IT," he says.

It's one thing to say Salesforce.com is more than a CRM vendor, but is there enough there to count the company as a cornerstone player in IT along with IBM, Microsoft, Oracle, and SAP? The company still has to scale up, diversify, and provide more mission-critical substance, between its own assets and those of partners, before lots of customers think of their enterprises as "Saleforce.com shops." But as long as cloud-computing and social-networking fervor continues, the company will have plenty of CIO mind share.

Given that the company's current annual revenue is about $2 billion -- a far cry from the kingpins of the industry -- it would seem a stretch to think of Salesforce.com as a top-tier IT vendor. But I'm fresh from an event that saw some 40,000 revved-up believers seemingly excited about working with the company, so the story of David and Goliath springs to mind.

Freeing The IT Budget

When Benioff was asked during a press conference last week what share of customer IT spending Salesforce.com currently claims, he demurred, saying it's different for every customer "so you have to ask them." With that, Joe Drouin, CIO at Kelly Services, one of several customers present, sprang to his feet and said it's all about potential future spending.

"I can't tell you the exact percentage for Kelly, but it's modest because I'm still tied up with years and years and years of old-school IT spending," Drouin said.

Kelly has spent the last three years trying to consolidate legacy spending, meaning fewer servers and software suppliers and more reliance on SaaS apps and cloud-computing infrastructure. It's to the point now, Drouin said, where the firm's data center is 60% full where it used to be 100% full. Working with Salesforce "doesn't take seven zeros or eight zeros," he said, so it "completely changes the way we approach our investment and where we spend the money."

As an example, Kelly recently spent "a small number with four zeros after it" and "one to two months" developing an iPad app with the Force.com development platform under the hood, he said.

"As fast as I can unwind from the old world and get the big iron out of my data centers and get off the Teutonic ERP systems, I will do more and more on the Salesforce.com platform," he concluded.

You couldn't ask for a better testament to Saleforce.com's future role in the enterprise. Okay, so Kelly is but one customer, and one coming off the high of delivering a successful, publicity-generating iPad app. But Salesforce.com had plenty of other customers on hand last week talking about using its apps, building on its platform, and exploiting its social-network-savvy technologies. Burberry, Coca-Cola, and Disney were among them, as detailed in this analysis.

Salesforce.com's "social enterprise" vision was front and center last week, and it's a big part of the company's growth opportunity. Saleforce.com is tapping into the corporate interest in social networking with its Chatter collaboration platform and Radian6 social-network monitoring, analysis, and engagement capabilities.

The idea is to listen to customers and employees who are expressing their opinions about brands and products every day on Facebook, Twitter, LinkedIN and the like, and then responding to those opinions. The company promises to plug companies into that world with a middleware-like integration approach that will enable them to gather and filter comments from across various social networks and then "delight customers in new ways" by learning from what's being said online.

This social-enterprise vision has "opened up a huge new addressable market for Salesforce," according to Well Fargo equity analyst Jason Maynard, who I spoke to at last week's event. "They never used to be able to sell to Pepsi or Coke or other big companies, so these are all new opportunities for them."

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