The AppExchange is undoubtedly a significant portion of what makes salesforce.com unique. Pre-integrated solutions dramatically reduce the cost to the customer to extend the capabilities of Salesforce and the fact that it has already gone through growing pains means it will take other providers years to mimic its capability and impact.
~Narinder Singh, co-founder and CSO, Appirio
Nine Years ago I wrote The New Garage. It was a thought piece that tried to peer into the future of Software as a Service (SaaS) and make some predictions from a business and economics perspective. Salesforce had recently started promoting its platform in the making (then called S-Force) and encouraging third parties to develop applications that complemented and extended the basic Salesforce CRM solution so there was reason to speculate about the impact this new approach would have.
But also, the history of business and industry is a long story of better, faster and cheaper and at that moment all three were all in the driver’s seat. Back office software had already demonstrated many business process improvements leveraging automation and the Internet, and I thought it was time to turn some of these techniques on software. SaaS was a good start but it had further to go, I thought.
Early impacts lead to tipping point
I saw S-Force as a tool and an economic system that could revolutionize software, making it possible to create and deploy it in a just in time fashion. At that time you almost had to be nuts to think that. After all, even after the initial success of SaaS, software was still something you installed and slaved over for a long time before you got it right, not something you could just plug in like an appliance. And integration? Don’t ask! What was I thinking?
“We’re at a tipping point,” that’s what I was thinking.
The cold, hard truth of the matter was that you couldn’t expect to sell software subscriptions for a few bucks a month and encumber yourself with all the overhead of a traditional software company because you’d go broke. Something had to give. Either software would forever be something you sculpted from a block of marble or you had to figure out how to stamp out perfect copies that plugged in and just ran — no excuses.
My bet was that we could do the stamping but it wasn’t based on any hard economic data. It was based only the conviction that commoditization would have to continue and that something like what’s now the AppExchange would be the result. In truth, there were predecessors to the AppExchange. Steve Jobs opened an online store at NeXT in 1997 and six years later in 2003 Apple set iTunes in motion and today you can buy tens of thousands of apps at the AppStore for all your Apple devices.
All in a name
It’s hardly remembered today but the AppStore (name and domain) were originally Salesforce properties and that CEO, Marc Benioff, gave them to Apple. According to a 2008 Benioff interview with Bloomberg, Jobs had met with Benioff and his team in 2003 to offer advice on the Salesforce online store and the gift was a gesture of gratitude by Benioff to Jobs.
A store for enterprises
But those were consumer sites; there had never been an online application store for enterprise grade software until salesforce.com launched the AppExchange in January 2006. This year marks the seventh anniversary for AppExchange an odd anniversary to celebrate perhaps, but a good chance to look at the AppExchange to see how well it is living up to the original vision. Here are some of my observations.
- The partners have built a long list of useful solutions including HR systems, field service, accounting systems, sales tools and marketing automation products. These are systems that enrich the Salesforce experience but at the same time represent application areas where Salesforce has decided not to concentrate its resources. Where Salesforce has stepped aside, the partners have stepped in.
- The AppExchange created the opportunity for a very long tail of credible business solutions. In the more than 1,700 applications you can find on the AppExchange, there is a host of small applications that just make life easier for the Salesforce customer; some are strategic and many are exceptional. They are applications that integrate with other applications, distribute incredibly fine-grained information and automate processes in unlikely ways that just happen to work well for populations of users who need those exact solutions.
- The AppExchange is a good place to do business for companies of any size, especially for SMB’s. Many AppExchange vendors tell me that they make their living building and servicing their apps to the point that the permutations of Salesforce CRM with partner applications is, if not infinite, then at least very large (roughly 1700! or 1700 factorial). I had predicted this in The New Garage but I had envisioned problems with revenue splits and single sign-on. Both challenges have been dealt with.
- Perhaps most importantly, enterprises go to the AppExchange to find and buy solutions. One of the constant refrains I hear from AppExchange CEOs is that enterprise buyers find them on the AppExchange and buy solutions through it.
So here we are after seven years and the AppExchange is by all measures a big success. This blog is the first in a short series of posts that report on the AppExchange’s growth and the success of some of its many partners from small boutiques to large businesses. This series pays particular attention to ten AppExchange partners that distinguished themselves last year including in no particular order: TaskRay, TOA Technologies, Contactually, The TAS Group, Tango Card, Zapier, Apttus, KnowWho, nCino and KXEN.
We are rolling out the annual WizKids survey and report building process right now. Due to popular demand, our web site has all of the details and forms you need to enter the contest to see which companies will be selected for 2009.
As in the past, we will review all of the entries submitted by December 30, 2008 and select the most interesting companies and their customers to profile in our report. There is nothing to buy and no way to influence our judges other than to fill out the form which you can get at www.BeagleResearch.com.
We hope you will enter and please, don’t be late!
As I have previously written in a blog post, Sage held its end user summit in Denver this week. It was a large meeting made to look a little small by the cavernous Colorado Convention Center but there were lots of well attended courses for all of the accounting and CRM packages the company rides herd on. There was also a good show floor, which I would equate with the Salesforce.com partner exhibitions.
In this last post on the Summit I want to focus on what I think is the key difference between Sage and its rivals. The company has done pretty well selling through a reseller channel that consists of many entrepreneurs each supporting one or more of the company’s accounting and CRM products. As you know, the company focuses on the SMB space but there is no small supply of customers that exceed that designation at the high end.
I was impressed by the number of people I met at the show who worked in the petrochemical industry and used Sage’s accounting and CRM applications. Maybe it’s me but I don’t usually associate SMB and petrochemicals or global presence and that says a lot about Sage and its partners.
It all came together for me at the first annual customer awards ceremony. Thirteen companies were recognized for excellence in a variety of categories–including the non-profit sector—for using Sage products. Two companies stand out in my mind.
Metrolina Greenhouses, Inc. of Huntsville, NC is 25 years old and grew from almost nothing. Today they employ 425 people with an additional 100 added for the busy spring and fall seasons. The company grows plants that are sold at home improvement stores from Maryland to Alabama.
MRP, ERP and EDI are the major applications that Sage supplies through partner, Practical Software Solutions. This operation is so big that it takes orders through EDI and needs MRP to help track and order things like pots and potting soil. But also, and I don’t understand all the nuts and bolts here, the company has to deal with issues like replenishment, tracking trucks and scheduling. It all used to be done with 200 MB spreadsheets but now it’s a real system integrated with
They say that in 1999 greenhouse and nursery-grown plants surpassed tobacco as the North Carolina’s biggest cash crop with sales now topping over $1 billion. I have no idea what Metrolina’s revenues are but this sure doesn’t look like a typical SMB to me. Congrats to them and to Practical Software.
Rex Moore Electrical Contractors and Engineers, Sacramento, CA, is really a great story. Four generations of the family have run the company dating back to the original Rex Moore who started the business in 1922 in his basement. At the inception the company did electrical maintenance but with a new generation and an electrical engineering degree, they broadened out to all phases of electrical construction and electrical engineering.
Beginning in 1980 the company computerized and it has stayed with the same product, Timberline, for all that time. It has used primarily back office applications to manage the books, create correct invoices and keep its overhead low. Most impressively the company has grown from $2.5 million to over $140 million in revenues in that time.
We tend to focus only on the biggest companies with the best PR departments and sexy products but there are a lot of stories like these all over the industry. They give credence to the notion that small business is the backbone of our economy and they should give inspiration to anyone with a dream of starting a business, regardless of the economic climate.
You can learn more about the Sage Customer Awards here.
I like to find emerging companies that target underserved or unserved sectors with, yes, disruptive innovations. Right now, there are a lot of new or emerging companies – formed by refugees of some of the largest and most successful companies from earlier generations – starting the cycle of innovation all over again. Here’s a sampler:
Just when you think there are no more underserved customers you discover the latent pain many large companies have in provisioning services – everything from printing to travel to parcel delivery services and much more. We tend to think about service provisioning as a string of one-off deals despite the fact that many enterprises put a lot of effort into developing relationships with preferred vendors and negotiating volume pricing agreements. When employees don’t use those agreements, it ends up costing hundreds of thousands of dollars. Sending a package over night? Which delivery service do you use? What time of day should the package arrive? Do you know the cost differences? Is buying an expensive service above your pay grade?
Rearden Commerce does the heavy lifting by encapsulating the business rules that should drive these considerations and interfacing with the service vendors to ensure that employees use the preferred vendors and get the negotiated rates. It’s a simple idea with big implications. To my mind, this company should grow like a weed.
There are a few products on the market for configuration and quoting but that’s not a bad thing given that it takes more than one company to make a market. The interest in this sector, especially by companies joining Salesforce.com’s ecosystem remains high and nSite’s approach – which is to provide its solution as a Web service – should play well with many different SFA and CRM products. I think this company’s challenge is to continue to find underserved customers in order to stay disruptive.
Although I may have written about BlueRoads BlueRoads before, they deserve another look simply because they are further down the track now. Another sales tool, BlueRoads has carved a niche out of the specialized indirect sales channel which some still call partner relationship management or PRM. But unlike PRM, which focuses a lot on the primary relationship between an OEM and the top tier of the channel, BlueRoads is all about following – and managing – the relationships all the way down to the feet on the street. BlueRoads provides channel visibility back to the OEM that other approaches do not. And because it is offered as a hosted service, partners in the channel are less reluctant to share deal information because this third party is perceived as more able to protect confidential information. BlueRoads continues to gather momentum and customers and at this stage there is organized competition from other established SFA products but the bake offs usually favor this emerging company.
Despite the lack of any one "new, new thing" innovation continues and some of the results are very interesting. I guess you could say it’s like baseball and we’re in a "small ball" phase right now. Regardless of whether you hit bunts and base hits or homers, the runs count the same.
This company is a pioneer in helping large enterprises develop and work with customer communities to understand what customers think. The community approach has helped enterprises develop products, refine messages, and zero in on target customers by engaging with them in ways that are both low cost and far more effective than previous outreach attempts. Communispace has shown that involving the customer in processes from developing branding to co-innovation yields positive bottom line results.
Beaking new ground in the call center and enabling companies to realize the dream of generating consistent revenue streams from what was once seen as a pure cost center. In the Knowlagent process, companies maintain high service levels while enabling revenue generation again through better customer engagement.
The complete on demand IP based call center solution. This technology radically redefined the call center and enabled entrepreneurial call centers to better fit their services to their customers’ needs even as those needs changed. Call centers that were once focused on inbound calling only, can now easily configure their businesses to match the demand. As an on demand solution, Five9 removes much of the risk and expense from call center operations thus enabling call center operators to focus on their businesses and their customers.
Adds valuable workflow and document management to on-demand sales force automation (SFA). This simple innovation has enabled services oriented vendors — whose products are often written deliverables — to craft detailed proposals and incorporate them into a workflow that closely follows the sales process. This approach has saved time and effort and has resulted in increased revenue.
Has shown how service can be tightly embedded into Web sites and products resulting in a concierge style of customer care that many authors have been calling for. RightNow’s on-demand solution makes it possible for virtually any business to afford to provide this level of service to its customers.
One of the first of a new generation of full service marketing solutions available on demand. While typical on demand marketing is focused on outbound email generation, Eloqua takes an intelligent look at the customer by helping assemble a profile then intelligently marketing to it. With tight integration to Salesforce.com, Eloqua adds significant value to SFA and creates a closed loop sales and marketing environment that only large companies could once afford.
A familiar name that has contributed several major innovations throughout its short history. The company is being honored this year for AppExchange which we believe is a major turning point for the on demand enterprise software industry. The significance of AppExchange cannot be underestimated. Half of the companies in this year’s WizKids report are engaged with Salesforce.com in its partner ecosystem in which they deliver complementary functionality to the core Salesforce.com service.