by Judith Hurwitz, CEO
I recently attended a small dinner meeting with salesforce.com CEO and founder, Marc Benioff. The dinner was to announce the company’s latest acquisition: a small company called Kieden Corporation. While this might not be the type of acquisition that stops the presses, it is significant. Kieden Corporation was a four-person company that focused on integrating salesforce.com lead management software with GoogleAds. In essence, the software developed by Kieden is an analytics application that allows customers that post ads on Google to correlate the leads generated by Google with the resulting sales. The product, now called Salesforce for Google Adwords, is intended to help customers determine how effective their Google ads actually are in terms of generating sales. The product is designed to measure exactly which ads and keywords are generating leads and results. What is especially interesting to me is not that salesforce.com would purchase a complementary software company but the fact that the company only started four months ago. The only way that a company this new could possibly have created commercial software in such a short amount of time was the fact that the team was able to leverage salesforce.com’s and Google’s APIs.
Salesforce.com started in 1999 and was a pioneer in what has become known as Software as a Service. While Salesforce.com was not the first company to offer software in a hosted environment, it was among the first to prove that companies would be willing to let someone else take care of the details of running a strategic software environment with no hope of ever getting hold of the source code or running it in-house.
Over the next six years, Salesforce proved not only that small companies are willing to try a hosted CRM model, but also large companies are willing to try and stick with the model. Today, SalesForce.com has more than a half million subscribers and revenue of more than $500 million. Even though the company’s motto has been the “no software” symbol with a slash mark through it, it is following the lead of software companies who understand the value of a partner ecosystem. Salesforce.com’s partner ecosystem is called AppExchange.
AppExchange is intended to provide an infrastructure and a marketplace for complementary products for Salesforce.com. So far, Salesforce.com has built a base of 200 ISVs. While many of them are tiny companies, major software vendors such as Informatica have signed on as partners. (Informatica offers data management services including data cleansing and data integration services.) Kieden Corporation was one of these small partners.
What is interesting about Kieden is that it is not a traditional application model. In fact, it is designed as a mashup or composite service that offers links between salesforce.com and Google. In essence, it is what is being called a “process-oriented mashup”. Since both the salesforce.com sales tracking application and the GoogleAd application already existed, Kieden’s software created a process for linking these two services together. Salesforce intends to offer the Adwords product for $300 per organization per month.
Salesforce.com is the classic example of software as a service. We take many other examples for granted. For example, eBay provides a multi-tenancy platform for buyers and sellers. In fact, eBay is a software infrastructure platform as is Amazon.com. Both companies offer development tools so that customers and vendors can use their platform as a commerce platform. More traditional enterprise vendors such as IBM have started down the SaaS path with its SOA catalog that is intended to provide a certified set of partners that are built on top of its SOA infrastructure.
If you need another compelling case for SaaS, listen to another example Marc Benioff shared. Salesforce.com has a relationship with Cisco that has 7500 salesforce.com subscribers. Mark says that the Cisco CIO told him that to do the same application with Microsoft CRM would have required the company to purchase Exchange, a SQLServer license, Active Directory, Visual Studio, and the .NetFramework. You do the math.