Salesforce Adds Development To Hosted Services

Called Sforce, the initiative, which was viewed skeptically by some analysts, looks to expand Salesforce.com beyond its primary use today as a host for software it rents to corporations. The leased applications are designed to help sales people track customer accounts and sales leads. Salesforce.com competes with Microsoft, PeopleSoft, SAP and Siebel Systems.

As part of the new initiative, Salesforce.com is providing extensions to its applications that will enable developers to use their favorite software development tools to customize Salesforce components or build new capabilities. Salesforce.com applications are being exposed through the web services standards of Extensible Markup Language (XML), Web Services Description Language (WSDL) and Simple Object Access Protocol (SOAP).

The San Francisco company announced Tuesday alliances with BEA Systems, Borland, Microsoft and Sun Microsystems, which have all agreed to support Salesforce.com's application environment through their development tools.

Initially, the Salesforce.com expects customers to integrate data stored on its servers with new or existing applications. For example, a company could access a Salesforce.com service through its own corporate portal, or through a handheld device, such as a personal digitial assistant.

In time, however, Salesforce.com officials hope customers will build and deploy new applications on the company's computer systems, connecting those applications to Salesforce.com's software, or the applications of third party companies.

Salesforce.com has long believed that many corporations would prefer to rent software to avoid the costs of licensing, deployment and maintenance. The ideas of offering information technology like a utility, paying only for the processing power you use, has recently been embraced in one form or another by such tech heavyweights as IBM, Sun, Hewlett-Packard Co., Microsoft and others.

"There's no risk, and there's nothing to buy to develop an application," Adam Gross, a product marketing manager for Salesforce.com, said of Sforce. "You can go to Sforce.com right now, sign up for free and get started in building your favorite applications. You're only paying as your end users are successfully using your applications."

Indeed, while Gross is confident corporations can cut costs through Salesforce.com, some analysts weren't so sure.

Having a hosted development environment won't be of much value to companies using Salesforce.com to avoid hiring developers to build and maintain software. "Companies that went with an ASP (application service provider) model and wanted to host their software to begin with, don't usually have any development resources," Wendy Close, analyst for high-tech researcher Gartner Inc., said.

However, those clients larger than the typical Salesforce.com customer, which leases the software for 800 users or less, may appreciate the added flexibility in integrating their own applications with Salesforce.com and customizing the hosted software to meet their needs.

Salesforce.com is also offering to open its software up to independent software vendors, or ISVs, interested in building new capabilities into Salesforce.com's software and sell them as additional features. Among the 25 software makers interested in such an arrangement are AvantGo, Blue Martini, Business Objects and Cape Clear.

But Close wondered whether the package would be worth the cost of licensing the third-party software, along with Salesforce.com's rental price. Also, who would be responsible for servicing the third-party software.

"It doesn't seem like I'm saving that much money, because I still have to buy these third-party add-on products to expand the functionality of Salesforce.com, and then pay Salesforce.com to host them," Close said. "It starts to fall down a little bit for the mid-size company that just wants Salesforce.com to add whatever functionality they need."

In formulating a total cost of ownership for Salesforce.com's offering, corporations should consider the cost of having developers on hand and using third-party add-on software, along with renting the Salesforce.com applications. "I don't think they're putting all of that in the full TCO model," Close said.

Sforce costs $50 per end-user per month, plus $1 per megabyte of data stored online per month.

While the pay-as-you-go concept is gaining in popularity among vendors, it remains to be seen how far its adoption will spread among corporations. Some companies prefer to store and maintain their sensitive information locally and have more control over software that's core to their business.

Nevertheless, while many other companies offering application services over the web have failed, Salesforce.com broke into profitability this year.

This story courtesy of TechWeb .