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Salesforce.com Builds Momentum as IPO Day Nears

By Staff Writer
Feb 26, 2004 8:57 AM PT

Hosted CRM software vendor salesforce.com released a spate of announcements Wednesday in advance of its impending IPO. The announcements included its largest implementation yet, a 2,000-seat deal with SunTrust Banks; the release of an sforce toolkit for IBM's WebSphere Web services platform; plans to provide deeper integration between salesforce.com and Sybase analytics technologies; and the company's nine-thousandth customer, label maker Avery Dennison.

Salesforce.com Builds Momentum as IPO Day Nears

"Salesforce.com's latest flurry of activity is serving to build momentum to a crescendo before [the company] goes public," Steve Bonadio, senior program director for CRM at Meta Group, told CRM Buyer. "It isn't a bad thing. It's actually good from a marketing and budgeting standpoint."

For his part, Kaiser Mulla-Feroze, director of product marketing at salesforce.com, told CRM Buyer that the company's deals with both SunTrust and Avery Dennison demonstrate that large firms are no longer looking at salesforce.com as merely an interim or first-step solution to their CRM needs.

"Unlike 18 months ago, we are now right at the center of any large company's CRM evaluation process," Mulla-Feroze said. "It is a significant shift, but they see we offer flexibility and speed, along with all the capabilities of old-world CRM solutions."

Salesforce.com also announced Wednesday that Patricia C. Sueltz, former executive vice president of Sun Services at Sun Microsystems, has been named salesforce.com's new executive vice president and president of technology, marketing and systems.

Big Deal

Salesforce.com's 2,000-subscriber multiyear with SunTrust comes just a week after hosted CRM rival RightNow Technologies announced a comparable 2,000-seat deal with Convergys.

Salesforce.com said it is already in the process of configuring its solution to enhance collaboration, customer service and customer retention within SunTrust, and to provide bidirectional integration with SunTrust's legacy Client Relationship System.

Ernie Megazzini, senior vice president for enterprise information services at SunTrust, said his company evaluated a number of different CRM solutions and concluded that salesforce.com provided a cost-effective, quick-to-market solution with strong functionality, integration and customization capabilities.

Do the Math

However, not all the numbers may be on salesforce.com's side.

"Nine thousand customers -- that seems fabulous on the surface, but [salesforce.com has] 130,000 subscribers?" Meta Group's Bonadio said. "Do the math. Salesforce.com averages 13 to 15 seats per customer. That's very small on average."

According to Bonadio, SunTrust is salesforce.com's biggest announcement times two. Although the company has been trending toward bigger implementations in the last six to nine months, he questioned whether salesforce.com will be tenable in a 2,000-seat environment. Serving a greater number of users means dealing with more complexity and a bigger diversity of requirements -- and salesforce.com does not have experience with such large implementations.

"The deal sounds good on paper. Now let's see it in action," Bonadio said. "Can it scale its service from 15 seats to a customer with 2,000? It's a whole different ballgame. That is not to say salesforce.com cannot do it, but at the same time, it needs to prove it can."

The sforce Irony

On the positive side, Bonadio noted that salesforce.com's partnerships with IBM and others are absolutely necessary and that salesforce.com deserves credit for building sforce and offering organizations more control to customize applications for their specific needs.

For his part, Mulla-Feroze said salesforce.com launched sforce based on a philosophy that its platform should be open to all customers, companies and developers. IBM's toolkit is the latest in a series of sforce toolkits that already include Microsoft, Sun Microsystems, Borland and BEA.

"We want to make sure salesforce.com fits into the universe of enterprise applications," Mulla-Feroze said.

At the same time, the ascension of sforce makes for interesting irony, Bonadio added, given that salesforce.com pushes a "No Software" model.

"It's hard to say 'No Software' when sforce is pushing [salesforce.com] toward application and interface development," he said. "It changes the dynamics of salesforce.com's value proposition from 'No Software' in order to encourage the building of new software."


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