October 11, 2006
Salesforce.com CEO Marc Benioff seemed almost resigned to the question asked by the press this week at the company's Dreamforce '06 user conference: When would the on-demand CRM application vendor expand by offering on-demand ERP apps, such as financial or supply chain management software, through either acquisitions or internal development?
Benioff, with a touch of exasperation in his voice, said it's never been in the company's DNA to offer such apps. Such efforts to "be all things to all people," he said, are doomed to failure. Benioff has never been accused of understating his ambitions for his company, so when the flamboyant CEO says he doesn't want to expand into ERP, it's a pretty good bet he means it.The "When are you expanding into ERP?" question is irrelevant for Salesforce. Given that many businesses implemented ERP systems long ago, it's hardly a big business opportunity for a (relatively speaking) young vendor such as Salesforce. What's more, while there's a debate over just how many corporate applications will be on-demand versus on-premises in the future, ERP apps will be the last to go software-as-a-service--if ever--given that they're the backbone of many corporate IT systems. K/P Corp. CIO Jim Benson, who would happily adopt an all-on-demand IT system if he could, says compliance with Sarbanes-Oxley and other financial regulations could make turning over core financial applications to outside service vendors a dicey proposition. Forget ERP, Benioff is thinking bigger. Salesforce's announcement of its Apex programming language and related SaaS platform this week, combined with its AppExchange application sharing service, show how Benioff has his sights on becoming the operating system of the on-demand and service-oriented architecture worlds. Businesses are already expanding their use of the vendor's CRM apps into new areas--Morgan Stanley uses it for employee recruiting, for example--and tapping into the 400 applications on AppExchange to enhance Salesforce apps with add-ons and creating "mash-up" composite Web applications. Using Apex, businesses can develop custom apps and have Salesforce run them on its platform. Gartner predicts that on-demand apps will account for 25% of all spending for business software by 2011. Triple Tree is even more bullish, forecasting that number at 40% within three years. The IT system of the future may very well consist of a core ERP system surrounded by on-demand apps--custom-built, vendor-built, or a combination. Benioff is perfectly happy to leave ERP to the Oracles and SAPs of the world. The on-demand business will be enough to satisfy even his ambitions.
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