Download the authoritative guide: Cloud Computing 2018: Using the Cloud to Transform Your BusinessI have to admit I like Marc Benioff, the CEO and clown prince of Salesforce.com. His marketing prowess has always been second to none, and his largesse has landed me more than one spectacular meal and some interesting conversation. But Im beginning to think hes reached a new low in his quest to dramatically change the software industry as we know it.
That low is his new endeavor, AppExchange, which Benioff unfortunately likens to an eBay for enterprise applications, according to an interview in BusinessWeek. Benioffs goal is to build an open marketplace for enterprise application, to make buying and installing enterprise software as easy as buying music on iTunes and playing it on your iPod, he further told BusinessWeek.
Benioff couldnt have picked a more unfortunate couple of comparisons if he tried.
eBay is many things, but a secure and safe place to buy reliable products it isnt. One of eBays main problems, one that CEO Meg Whitman seems loathe to deal with, is that eBay has been too easily infiltrated by shysters of every ilk, who fly the Internet equivalent of the Jolly Roger and think quite rightly that the lightly policed eBays buyer beware attitude makes it a great place to run a criminal enterprise. Of course, the very vast majority of transactions are legal, but the ones that arent make it hard to think about eBay as the model for an enterprise software marketplace.
Big Competitors, Big Guns
So, if you buy into Benioffs analogies, AppExchange will let you buy non-functional, low-quality, ear-candy, the buyer-beware eBay way. Sound like a good idea?
Im sure Marc doesnt really mean it when he says these things, but its hard to be sure sometimes. Marc does say the darndest things, and his shoot-from-the-lip style will soon begin to cause him some major problems with some very big competitors. About the only thing that SAP and Oracle agree on these days is that Salesforce.com is a nuisance theyd like to see disappear. With the two of the worlds largest software companies gunning for him, Marc is about to find out what competition is really all about.
Ironically, Marc is finding himself in the same situation that Tom Siebel found himself in: Too focused on standalone CRM functionality in a market that is increasingly interested in linking CRM to everything else in the enterprise. It was this requirement, Siebel acknowledged in his concession speech, that prompted his retreat from the field and into the arms of his rival, Oracle. And this is a requirement that Salesforce.com has even less ability to meet than Siebel did.
AppExchange certainly is one attempt to react to this problem, and the rumor that Marc has hired M&A experts to help acquire some software companies, if it proves true, could be another. The appointment of Craig Conway, the erstwhile former CEO of PeopleSoft, to the Salesforce.com board could help as well. Lord knows Craig understands competition and the M&A market inside and out, however poorly his last experience turned out.
The fate of Salesforce.com is hardly sealed, but the cracks in the veneer are beginning to show. Fundamentally, the problem with taking commodity functionality and offering it in a low-cost, on-demand model is that its too easy to replicate. SAP is poised to do this, Oracle already does, and how Marc will differentiate his offering from these massive and now pissed-off competitors remains to be seen. But using eBay and iPod as his analogies isnt going to cut it. The end of software, as Marc likes to call it, deserves something better.