Last month at Tioga Venture’s 4th Annual International Software Summit, Phill Robinson, COO of salesforce.com (NYSE: CRM), keynoted the event, presenting the strategy of the leading Software as a Service company with a focus on its latest big announcement: Appexchange. It is easy to underestimate the changes that Appexchange can bring to the enterprise software market.
The Software as a Service (SaaS) trend started in the late 90’s as the potential of the web to deliver enterprise applications became obvious. However, the take-off was slower than expected in spite of the ease of use for end-users. Among the reasons was the fact that each SaaS vendor was actually an island of proprietary software. Solutions were difficult to merge at customers’ sites. The cost of starting one was very high with most of the financing going into infrastructure investments and channel building. SaaS companies were also very difficulot to merge, each coming with its own proprietary infrastructure, technology and channels.
Appexchange has the power to change all these elements. For the first time, it is possible to start a software vendor relying on an existing platform for production, integration and distribution. This allows budget and bandwidth to be spent on value-creating activities rather than building the foundation of a SaaS. We should expect to see many small but creative vendors emerging in this new ecosystem. Today there are limited alternatives to Appexchange. The questions that remain are whether other SaaS ecosystems will emerge or will salesforce.com will be able to extend its reach beyond CRM.
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