Salesforce.com Makes Platform Play

Like sharks, companies sink when they stop moving. For wunderkinds like Salesforce.com, the pressure is particularly pronounced: Having dazzled investors with bold visions and rapid growth, the companies face pressure to continue their meteoric assent and keep pulling new rabbits out of the hat. Growth comes easier when you're a start-up than it does when you're an entrenched vendor selling into a saturating market.

Salesforce.com, based in San Francisco, is on the brink of that transition. In February the hosted CRM software company announced that it would stop reporting its subscriber totals at the end of each quarter, switching instead to reporting them twice a year. While Salesforce.com cast the switch as a move to smooth over "quarterly lumpiness" and focus investor attention on long-term trends, most Wall Street analysts took it as a sign of slowing new-user subscriptions.

Salesforce.com put some of those worries to rest with its mid-year update in August, which revealed that its subscriber base has climbed past 800,000, a 24 percent gain on the 646,000 subscribers it had at the end of its last fiscal year in late January and a 60 percent increase from its year-ago user total. But significant swathes of Salesforce.com's new user growth are coming from the lower-priced Platform Edition product launched in April -- a sign of the seriousness with which Salesforce.com is taking its goal of expanding beyond CRM into the broader software-as-a-service (SaaS) infrastructure market.

Salesforce.com has long wanted to be a platform player, but until recently, it didn't have the technology or product positioning to back up that ambition. CEO Marc Benioff fired off an opening shot in early 2005 by introducing "Multiforce," intended to be an on-demand development environment that customers and partners could build atop to create their own custom applications hosted on Salesforce.com's infrastructure. (Multiforce eventually evolved into AppExchange, the company's network of add-on tools.)

But Salesforce.com didn't sell its service as a platform-only offering -- customers still had to buy full CRM subscriptions, even if they didn't want to use that functionality -- and the system's customization features were limited. While Salesforce.com began speaking of itself as an on-demand platform vendor years ago, company executives couldn't point to more than a handful of customers using it for anything other than CRM services.

This year, that changed. Salesforce.com partners say the tipping point had two catalysts: Salesforce.com's introduction of Platform Edition pricing and packaging and its development of the Apex platform, a programming language and toolkit that allow outside developers much greater flexibility in extending Salesforce.com.

Now, Salesforce.com's largest customer is an organization that doesn't use the vendor's eponymous CRM service. The Japan Post, the nation's largest employer and provider of banking and postal services, worked with local solution provider HitachiSoft to create a custom, hosted customer service system used by 45,000 regional branch workers.

"The Japan Post runs on our platform in all of their retail offices -- and they're not using CRM," said Bruce Francis, Salesforce.com's vice president of corporate strategy.

Similar arrangements are popping up all through Salesforce.com's user base. Morgan Stanley has 800 users running a customized recruiting application atop Salesforce.com. Dell's IdeaStorm customer-feedback system runs on Salesforce.com. The Walt Disney Co. began using Salesforce.com as a development platform for homegrown applications after Salesforce.com won a bake-off against Microsoft's .Net development stack -- a tool for scheduling character appearances that took 3,000 hours to build with Microsoft technology took just 96 hours to create on Salesforce.com's system, according to Francis.

Salesforce.com partner Bluewolf, a New York City services firm that specializes in on-demand software deployments, went live this week with one of its first significant Salesforce.com platform engagements. The Hartford Financial Services Group, a Fortune 100-listed investment and insurance firm, chose Salesforce.com as the vendor underpinning its new workflow tracking system. Bluewolf, which previously worked with The Hartford on a departmental Salesforce.com CRM deployment, helped its client build the custom application, which uses Salesforce.com in very unorthodox ways. Atop Salesforce.com's infrastructure, Bluewolf helped build a complex engine for routing and tracking insurance policy approvals.

Done in about seven months, the project would have taken two to three years with traditional software development methodologies, Bluewolf principal and co-founder Eric Berridge estimates -- and a year ago, it might not have been possible. Apex, announced last October and made generally available in Salesforce.com's Summer '07 edition, is a sea change for developers.

"The main difference Apex has delivered is the ability to write procedural code against the platform. That allows our developers to cut a lot of corners," Berridge said. "We spend almost no time worrying about the infrastructure, performance, or the right patch set -- Salesforce takes care of all that. Now we spend our time as a consulting firm, building consensus with the client around what they're looking for."

Although it's working on Apex's bleeding edge, Bluewolf ran into no significant technical obstacles on the Hartford project, Berridge said. The main challenge was the learning curve Bluewolf's developers faced in mastering the new technology.

Next: Salesforce.com gets ready to evangelize