San Francisco entrepreneur Marc Benioff of Salesforce.com sells hosted applications that he claims are less expensive and easier to install than those offered by Oracle, PeopleSoft, SAP and other makers of customer relationship management (CRM) software.
In the four years of its existence, his firm has signed up over 5,000 companies that have opted for its internet browser-enabled software, marking over 70,000 users in 107 countries using multiple currencies and eight languages.
In the past week, the Irish company has finally delivered on the promises made by its competitors two years ago with the release of a new CRM software for small businesses, entitled Team Edition. The application, which is hosted on Salesforce.com’s servers in San Francisco, is designed for companies with up to five sales people and is aimed at enabling small Irish companies to better manage and share critical customer and prospect information. The damage? A mere €1,050 a year.
There is a school of thought that software provision of the ASP (application service provider) type was unduly hyped and simply happened ahead of its time, ie before the arrival of a digital subscriber line (DSL) service. With the majority of companies outside Dublin accessing the internet through dial-up modems, there was no conceivable way that a rented application would work while people were conscious of the cost of telephone calls.
This factor is readily acknowledged by Fergus Gloster, vice-president of marketing, EMEA, at Salesforce.com’s European headquarters in Dublin, who believes that the rollout of DSL in Ireland and other European countries will mean that hosted applications for SMEs (small to medium-sized enterprises) are finally feasible.
“A lot of people went about the ASP model in a bad way,” Gloster explained. “The core business model was sound, but the issue for a lot of companies was price. Instead of rendering it over the internet, we decided to build the product from the ground up and then tackle the web. In many cases our CRM software now supports thousands of users across an organisation at any one time, 24×7. A lot of ASPs failed to pass on significant savings to the customer. By our calculations we achieve significant savings by factors of 10 over users of traditional enterprise software.”
Like most success stories, Salesforce.com is not immune to raising the hackles of the competition and its model has awakened the interest of software giant Microsoft, which is keen to deploy a CRM solution for SMEs in the fourth quarter this year.
The reason Microsoft has to enter the business applications market and build an ever larger and more enterprise-ready set of customers is simple, say analysts: the company needs to enter new software markets to increase its revenues.
Microsoft plans to ship Microsoft CRM by year’s end, based on technology from the Great Plains unit it acquired in 2000. The software will be tailored for companies with between 25 and 700 employees. Operators such as Salesforce.com seem to avow confidence in the face of potential encroachment by Microsoft, with Salesforce.com’s CEO, Marc Benioff commenting: “If Hasbro had built a CRM product, it would look like Microsoft CRM.”
Gloster likens Salesforce.com’s CRM suite of products, ranging from Professional and Offline suites to the more recent Team Edition suite, to a utility like electricity. “Our model is a service — we can put together a package at a price point that is agreeable to SMEs. For €1,050, they don’t need to buy additional hardware or software. All they need is a browser and they can be connected instantaneously,” he explained.
Gloster added that the company is aiming to broaden its enterprise software product range to include an all-encompassing E-business Suite within the next six months. “It would effectively take on the ERP [enterprise resource planning] vendors and would include modules like supply chain management, order management, billing and cash collection,” he continued.
Gloster said that the company has netted some 15pc of the European CRM market, while its Professional and Offline Editions of CRM software have been augmented by technical innovation at the hands of various corporate customers who favour remote working. “Locally, we have found that customers are increasingly using HSCSD (high speed circuit switch data) cards in their laptops and on wireless devices to access and update CRM information on the move,” he concluded.