Software for Rent

November 15, 2007

Marc Benioff has never been modest in his dreams for, the business software company he founded in 1999.

Mr. Benioff, whose appetite for brash publicity and business growth matches his bulk, declared several years ago that Salesforce would be “the Microsoft of the 21st century.” Never mind that his company brought in over a year what Microsoft garners in a few days. Or that another company, Google, seems more likely to wear that label.

Salesforce promised to revolutionize the way businesses buy software, and to a large extent it has accomplished that in one market niche: customer tracking. Its innovation was in turning software into a service that is leased over the Internet, instead of something bought and installed on company computers.

And yet for Mr. Benioff, the company’s chief executive, that is not enough. He wants to turn Salesforce into a platform like Microsoft’s Windows operating system, a product so popular that it is the foundation for a veritable ecosystem of software developers.

“In our industry,” he said, “the only companies that really make it big move from being a killer app to being a platform.”

But whether he can pull off that strategic leap is unclear. Salesforce has started to look less revolutionary as larger, more established companies have adopted its leasing model. And as Mr. Benioff himself notes, few software companies successfully make the move to platform status.

Yet that jump is critical to Salesforce’s long-term success. Its share price has tripled in three years, showing that investors are counting on success beyond the market for customer-tracking software.

“It’s been very impressive what Salesforce has pulled off,” said J. Bruce Daley, editor of The Enterprise Software Observer, an industry newsletter. “But I think this is a company about to hit a wall.”

Like others, Mr. Daley declared it “logical” that Mr. Benioff would try to use its beachhead in managing customer information to establish itself as a platform, a kind of holy grail of the software world. The plan is to persuade outside programmers to do what Salesforce cannot afford to do on its own: round out the company’s offering of products so that customers can lease a greater range of business tools, like payroll and accounting software.

“But the jury is still out on whether ultimately it will be successful,” Mr. Daley said.

It does not help Mr. Benioff’s cause that the subscription model’s success has inspired software firms, including Microsoft and SAP, the German business software giant, to offer subscription-based versions of their own products for customer relations management, known as C.R.M. That means Salesforce faces increased competition in its core market at a time when it is focusing on selling itself as a platform.

And then there is the competition from smaller companies like NetSuite, which uses the same leasing model to offer a full suite of applications it has built, including billing, accounting and other critical business tools.

Peter Goldmacher, an investment analyst for Cowen & Company, is among those arguing that Mr. Benioff should — at least for the time being — throttle back his wider ambitions and stick to his primary business. Mr. Goldmacher was once among Salesforce’s most prominent Wall Street boosters, but he has tempered that enthusiasm.

“My concern is that this is a company letting itself get distracted,” Mr. Goldmacher said.

In the late 1990s, Salesforce was one of a group of start-ups exploring ways to capture a share of the lucrative business software market using the leasing model, also called “software as a service” and “on-demand computing.”

The leasing model, its supporters say, permits companies to avoid the expense and headache of installing complex software packages that typically require huge outlays of cash for hardware and software upgrades.

“It’s all about letting our customers pay attention to innovation and not infrastructure,” Mr. Benioff said. “Software as a service is about freeing them from having to hook up another computer in another data center to another database to another application server to another security server.”

In the battle for a share of business software dollars, Mr. Benioff chose to focus on customer relationship management tools, a relatively small corner of the market. Such software would help sales representatives track customers and potential customers.

“C.R.M. seemed a perfect place to start and prove our concept,” he said.

By contrast, NetSuite focused on creating an on-demand financial product that handles tasks like billing and accounting precisely because they are so central to a business.

“Our strategy has always been to be the application you run your business on,” said Zachary A. Nelson, chief executive of NetSuite. “Salesforce chose an easier route.”

Though the two companies were started within weeks of each other, Salesforce has 35,000 customers, compared with NetSuite’s 5,300. But Mr. Nelson said he sees a strength in those numbers. “The same reason companies are slow to come makes them slower to leave,” Mr. Nelson said.

In response, Mr. Benioff described NetSuite as “not worth talking about,” given its relatively small size. Instead, he was eager to discuss larger companies like Microsoft and SAP, and he said their moves to on-demand software are a testament to Salesforce’s success.

In September, Microsoft started selling Dynamics CRM Live, an on-demand version of Dynamics CRM, the shrink-wrapped software package the company has been selling for four years. At around the same time, SAP unveiled Business ByDesign, an online version of the company’s array of business software, aimed at medium-size businesses.

At a news conference to promote that product, Henning Kagermann, SAP’s chief executive, declared ByDesign “the most important announcement I’ve made in my career.” But those who follow the business software market are generally skeptical that SAP, a company whose sales staff has thrived on selling multimillion-dollar software packages, will be as aggressive offering a cheaper version of its own product line.

These same analysts, though, tend to be more bullish about Microsoft’s chances against Salesforce.

Mr. Benioff dismissed Microsoft’s offering as “an inferior product,” but analysts said that Microsoft needed only a strong offering, not a superior one.

“If you know how to use any of Microsoft’s desktop tools, you know how to use Microsoft’s C.R.M. product,” said Bruce Richardson, the vice president for research at AMR Research, a technology consulting firm. Microsoft is a minor player in the C.R.M. market, but its Office software suite is installed on hundreds of millions of computers. And the company has priced the on-demand version of its C.R.M. software to be significantly cheaper than Salesforce’s offering.

“That’s classic Microsoft: to aggressively attack from a position of weakness to gain market share,” said Mr. Goldmacher of Cowen & Company.

Mr. Goldmacher had high hopes for Salesforce when the company went public in 2004. But he has cooled on the company since then; he said that over the last 18 months, Salesforce has lost its focus.

“More and more, I see them chasing bigger opportunities that won’t necessarily pay off,” said Mr. Goldmacher, who now has a neutral rating on Salesforce’s stock.

“What they’re telling the Street is, ‘We don’t care about profitability,’” Mr. Goldmacher said. “Their story now is that C.R.M. is just the bait, and the platform the real hook.”

Despite $497 million in sales, Salesforce posted a loss of $3.6 million last year.

Mr. Benioff counters critics by noting that although the platform project is less than two years old, the company is selling more than 700 add-ons, most of them written by third parties. Salesforce, working with a pair of venture firms in Silicon Valley, has created a $25 million fund that will provide seed money to companies seeking to build applications for the Salesforce platform.

Salesforce has also entered into a series of partnerships with Google, hoping to ride whatever success that company has in social networking and office applications, a field now dominated by Microsoft.

Many of the add-ons require customers to download additional software, which waters down Mr. Benioff’s simplicity message but also could make customers more loyal.

“The more our users customize, the more they are tied to our service,” said Steve Fisher, the Salesforce executive overseeing the platform project.

Another issue is that Salesforce is mainly used by sales staff needing to keep track of leads and customer lists. To AMR’s Bruce Richardson, that is not a very large step toward empire building.

“Marc wants to be the Facebook of the enterprise, but he’s missing a key piece,” Mr. Richardson said — a core product so popular that it naturally grows into an environment that attracts hundreds of third-party software vendors.

That is where the company’s partnerships with Google might prove critical.

“Marc is waiting for Google applications to mature,” said one former Salesforce executive, who asked not to be identified. “If it can link with Google applications, then maybe Salesforce can develop into a platform.”


Doing business online – advise from the internet pioneers on what not to do

October 18, 2007

By Jeffrey Gangemi

Marcel Legrand, senior vice-president for strategy and development (Monster, founded in 1999)

Advice: Don’t get burned by user-contributed content. It’s tempting to create viral, open-source information, but there are issues around liability and the truth of the data. If Monster allowed people to create career content, users wouldn’t be getting good, strong info about interviewing and how to write a resume. You have to balance between professional and community content.

As a young company, it’s tempting to allow your brand to go all over the place. Don’t let it happen! Be vigilant about managing your brand, so the blogosphere doesn’t tear you apart. You’ve got one chance to come out of the block, so make sure you’re the voice of the brand. Amy Klement, vice-president for products, Paypal (a division of eBay, founded 1998)

Advice: Focus matters — don’t lose sight of your core capabilities. PayPal has been successful by staying 100 percent focused on payments and carefully building its expertise over the last seven years. [Online] payments is a complicated business, requiring a maniacal focus on risk management and fraud. PayPal has built some of the most sophisticated and world-class fraud systems in the industry.

Neil Hunt, chief product officer, Netflix (founded in 1997)

Advice: Don’t believe that you understand the whole business model from the beginning. Plan to fail inexpensively and early. We built stuff quick and dirty, then left a lot of stuff up to customer service reps on the phone. The lesson here is, don’t be afraid to cut corners. If you spend a lot of time building something and it’s the wrong thing, then you’ve wasted a lot of resources. As we grew, we knew that we’d need Web site components that could scale hugely. We couldn’t be too attached to technology; we had to be prepared to switch and change.

Konstantin Guericke, co-founder and vice-president, LinkedIn, founded in 2003

Advice: Don’t have a bunch of promotion and marketing fluff on your page. Just saying you’re the best doesn’t mean you’re the best. Customers want to know how much it’s going to cost, how long it’s going to take to get to them, and if they’re going to get good service.

Don’t take up screen real estate that’s not actionable, useful information. Don’t make them click too much or make it too hard to find products. If they don’t find what they want from the home page, they’re going to click to the next site. They’re expecting convenience. Make a compelling offer, because customers on the Internet are expecting a deal.

Ben Nelson, general manager, Snapfish (a division of HP, founded in 1999)

Advice: Don’t chase other customer segments before you’ve won your primary. From the day after we launched, we’ve had pressure to go beyond ‘Emily,’ the woman whom we consider to be our core customer. If we solve issues for our busiest, highest-volume user, how likely is it that we’ll get our fair share of the rest of the market? High.
Don’t hire too quickly!

Dwayne Stradlin, president, Hoovers online (a division of Dun & Bradstreet, launched in 1994)

Advice: Avoid anything that doesn’t focus on the unique thing that your company does well. Protect it, invest in it. The other thing is to focus on scaling — small companies sometimes run into a wall. They can’t scale.

Clarence So, senior vice-president for marketing in Europe, the Middle East, and Asia, Salesforce (founded in 1999)

Advice: Don’t let potential investors throw you off what your gut is telling you to do. As the entrepreneur, you’re defining the market. The entrepreneur is the person with the passion and vision that started the company.

Don’t waste time focusing on anything that’s not your company’s core competency, like installing software. I would encourage small companies to adopt business Web applications before installing traditional software. Your technology should support core competency in simple, easy-to-use, easy-to-adopt fashion.

Melissa Payner, chief executive officer, Bluefly (founded in 1998)
Advice: Don’t do something that’s already well covered or already exploited in the marketplace. If you’re the small guy, you’re not going to come in and get noticed unless you have something different. We made sure that we identified our focus from a brand perspective. It wasn’t like any designer could be on Bluefly. There was trust established that it would the “in” designers and [the] “right” designers and would [follow the latest] trend. We were arrogant about who would be on Bluefly. Once you decide, you have to be true to it.

Sally McKenzie, senior vice-president and general manager, Expedia (founded as a division of Microsoft in 1995 and spun off in 1996)

Advice: Don’t assume your customer shops like you do. You need to be sure to look at everything from your customers’ perspective — to understand the consideration factors and the decision process they go through, as well as what tools, information, and services they need along the way. In listening to and observing our customers, we’ve learned that their shopping behavior varies depending on the reason they are traveling and the type of trip they are planning. This is especially true in the early stages of travel planning. A business traveler who knows that they need to be in New York next Thursday by 3 p.m. will shop one way, while a couple planning time off from work to de-stress in a warm, sunny beach destination will go through a very different process.

Mark Floisand, director of worldwide direct commerce, Adobe Systems (founded in 1982)
Advice: Evidence-based decision making is critical to successful ecommerce; avoid rash decisions based on gut feeling alone. E-commerce leaders have the technology, scale, and data available to them to do rapid testing, learn quickly from it, then implement or adjust as necessary. To not take advantage of this powerful, rapid feedback loop, is to miss a major strategic advantage of the online channel itself.

Jeff Glueck, chief marketing officer, Travelocity (founded in 1996)

Advice: Don’t forget your economic engine. Figure out where your margin is coming from, in volume and unit margin. Before Travelocity’s turnaround, we failed to drive revenue growth, because we were addicted to one vulnerable business model — commission from selling airline tickets. We realized that there was more money to be made from other products like trip packages, rental cars, and other things.

Don’t forget the human element. Part of our revival was promising consumers that there are real human beings on the phone, in case they needed help. The human trust and expertise — we layered that onto online software.David Filo, chief “Yahoo” and co-founder, Yahoo (founded in 1994)

Advice: It’s important to never lose sight of your original goal. When Jerry and I founded Yahoo we were focused on making it easier for users to navigate the Web. That’s still our goal today. Our users continue to be at the core of everything we do.

Jim Buckmaster, chief executive officer, Craigslist (founded in 1995)
Advice: Don’t do what users don’t ask you to do. If you want to control your own future, don’t accept outside money, like from VCs. Don’t do marketing or advertising. As a startup company, those are some of the costliest things you can do. Those can chew up an enormous amount of money.

Source: Eyes Data-Sharing Service

October 4, 2007

By James Niccolai, IDG News Service Inc. is preparing a new service that will allow customers to share sales leads and other data directly with other companies that use its on-demand CRM (customer relationship management) software. is asking customers to help it choose a name for the service, candidates for which include Salesforce Data Network, Salesforce to Salesforce (S2S) and Salesforce Partner Network, according to a posting in its blog Tuesday.

The service takes advantage of the fact that hosts sales and customer data for thousands of clients in a common format in its servers, making it relatively easy for it to share information among those who wish to do so. started soliciting feedback from customers earlier this year on the idea of a “Lockbox” that would allow manufacturing companies, for example, to share sales leads with their distributors and resellers, and get real-time updates on those leads, from within the system.

Customers will be able to set up rules that allow them to publish the records they want to share, which other customers could then subscribe to, according to a February posting on the company’s IdeaExchange Web site.

The new service was being planned for the Winter 2008 release, according to the posting. The Winter 2007 release came out in January this year, and the fact that the company is soliciting a name for the service now suggests it could be close to fruition.

Woodson Martin,’s vice president of marketing for Europe, said the customers often ask how they can take better advantage of the company’s CRM service if their distributors and resellers are also customers. “They are asking, If we both have, why can’t we talk to each other so we can better share and coordinate? That’s the inspiration for this service.”

Nicholas Carr, author of the book “Does IT Matter?”, said such a service could represent an untapped opportunity for companies using hosted applications.

“Clearly, the company has something cooking, and I think it points to an as yet under-appreciated advantage of the multitenant systems that Salesforce and other utility-computing firms are running: the ability for companies using the systems to easily exchange data with one another,” he wrote in a blog posting Wednesday.

Companies offering hosted business applications, which also include NetSuite Inc. and Oracle Corp., don’t usually emphasize their ability to share their customers’ data, perhaps because one of the main inhibitors to hosted applications has been concerns about data security. But with hosted applications more widely accepted today, may think the time is right to offer the capability.

The new service would allow customers to share “leads, opportunities and custom objects with each other (assuming both are using,” the company said in its posting.

“If Salesforce’s blog post is any indication, the company is likely prepping a set of tools that will build cross-client data sharing into its applications — in a way that goes well beyond its current ‘partner relationship management’ add-ons,” Carr wrote. already allows customers to buy partner licenses for sharing data with other companies in their supply chain. The new service broadens that from a “one to many” to a “many to many” sharing model, said David Bradshaw, a principal analyst with Ovum Ltd.

Difficulties arise when customers want to share data with companies using a different software system, such as Oracle’s Siebel CRM On Demand, Bradshaw said. may hope the data-sharing service will compel more companies to sign up for its service, or it could act more openly and allow other CRM systems to take part in the data sharing, he said.

Martin said the service is made possible in part by “the growing use of our service across huge swaths of the market.” The company has about 900,000 customers, he said. “We don’t see any one else with that type of advantage today in the market.”


Salesforce Dives Into the Mash Pit

August 22, 2007

by Steve Hamm

One sure-fire way for a tech company to generate excitement is to link up with Web search king Google., the high-profile seller of on-demand services, hardly needs the Google glow, but it’s getting it anyway. On Aug. 22, Chief Executive Marc Benioff is set to announce a new service, Salesforce for Google AdWords, that combines his company’s easy-to-use interface with Google’s powerful advertising engine.

Using the new program, customers can manage their advertising campaigns from beginning to end. They can create advertisements, place bids with Google’s targeted advertising service, monitor the performance of the ads, and track all further interactions with the customers who click on them. “It helps eliminate click fraud,” says Benioff. “Now there’s a closed loop, so you know who clicked on your ad and what they bought”.’s application is part of the so-called mashup phenomenon, where two or more online applications are combined to create something more powerful than either is by itself. Until now, most mashups have been used on consumer Web sites—most of those used by businesses do very simple things, such as combine Google’s maps with business locations. The application thoroughly integrates its core customer-management program with Google’s AdWords service. “Until now, I haven’t seen a lot of business value in mashups,” says analyst Rob Bois of AMR Research. “This is a real business value you couldn’t achieve without it.”

ALL IN THE FAMILY. The new application comes at a time when’s fortunes are soaring. Its most recent quarterly earnings report on Aug. 16 blew the doors off analysts’ expectations. It added 57,000 new subscribers, bringing the total to 501,000. Meanwhile, revenue grew by 64%, to $118 million, putting the company on track to achieve nearly $500 million in revenues this fiscal year. After the earnings report, Credit Suisse upped its revenue estimate for the year to $489 million, from $487 million (see, 8/16/06, “ Posts 2Q Loss, Raises View”).

The new service will carry an initial promotional price of $300 per customer per month. Long-term pricing will be set by the time of the service’s official release in October. Since only subscribers can use the new application, it feeds the company’s core business, as well. “It’s like having our parents become friends with our in-laws,” says Benioff.

For now, only plans a Google version, since Google has an 85% share of the targeted search advertising market. However, Salesforce is evaluating Yahoo!’s upcoming new paid search technology, too. A Google spokesperson says, “We are pleased to see third-party developers using the Google AdWords API to create new applications that extend the reach of Google’s advertising products. Equipped with more information, businesses can make better decisions, create more value out of their marketing efforts, and ultimately reach more customers.”

BETA RUN. The foundation for the company’s new offering is a service introduced in March by Kieden, a small startup that participates in’s AppExchange directory of online applications. bought the smaller company in early August and is beefing up the service before its October relaunch.

“AppExchange has become a viable lead generation and marketing tool, and now is incorporating the very technology that is being built in the ecosystem,” says analyst Erin Traudt of market researcher IDC. “It will be interesting to see what else may look to incorporate from the community in the future.”

Already, about 45 customers have been using the Keiden service in what considers a test version. But even the early version is attracting kudos. Among its fans is Avideon, an online marketing consultancy based in Baltimore. It uses Keiden on behalf of its advertiser customers. “This is a tremendous application,” says Avideon Chief Executive Rich Wiklund. “Marketing has been the last bastion of unaccountable spending in corporations. By having this connection, marketing can at last be held accountable.”

Source:’s New Small-Business Service

July 17, 2007

By Richard Morochove

If your e-commerce site is an important source of new customer leads, a new service could be just what your business needs to streamline the work of turning a new lead into a new customer.

Salesforce Group Edition is the successor to the company’s Team Edition customer relationship management service. The major enhancement in this Web-based CRM service is its tight integration with the Google AdWords pay-per-click advertising service.

Salesforce Group Edition’s integration with Google AdWords is the best I’ve seen. It makes it easy to determine which search engine advertising keywords deliver the most new customers and added revenues to your business. However, you’ll need to modify your Web site to take advantage of this feature.

Complete Google AdWords Integration

I’ve looked at AdWords before. A PPC advertising service such as AdWords can drive more visitors to your Web site. You write text ads that are displayed next to results for specific terms, or keywords, that people enter in search engines. You pay for each visitor who clicks on your ad and is then redirected to your Web site.

It’s always been possible to track the trail of PPC ad clicks, from the initial visit to your site to the sales lead and ultimate customer sale. This information is generally collected in several places: your Google AdWords account, your Web server logs, and a CRM app.

The elegance of Salesforce Group Edition lies in the way it seamlessly integrates the data from all these sources in one place, making it easier to view and analyze the results of your PPC ads. You can readily determine which keywords bring you the biggest bang for your advertising buck. Lead source information is updated every 15 minutes, so you can track results almost as they happen.

Tracking Leads From Other Sources

Unfortunately, Salesforce Group Edition isn’t integrated as deeply with other PPC ad services, such as Yahoo Search Marketing and Microsoft adCenter.

You can use Salesforce Group Edition to track leads from these other PPC services, but the reports aren’t as complete. Furthermore, you can also use the service to track leads generated by sources other than PPC, such as telephone inquiries, e-mail, trade shows, and referrals from other Web sites.

Google AdWords Integration Requirements

To make full use of the AdWords integration, you’ll need to add a new Web-to-Lead inquiry form to your site to collect information from visitors, such as name and contact details. In addition, you’ll need to add a bit of JavaScript tracking code to each Web page on your site.

Salesforce Group Edition generates the code for both new elements, so you can copy and paste it into your Web editing application.

You must also enter your Google AdWords Customer ID and password in Salesforce Group Edition to link it to the CRM service. If you do not have an AdWords account, you can create one from within the service.

Is Salesforce Group Edition Right for You? is considered the leader in online CRM services. If you don’t require sophisticated lead tracking or Google AdWords integration, you may find a simple online CRM service such as Highrise better suited for your business needs.

Salesforce Group Edition targets small businesses, and lacks some features available in the company’s more expensive offerings for larger businesses.

Also, unlike NetSuite, which offers a complete end-to-end online business management service, Salesforce Group Edition concentrates on CRM. You must enter the amount of the sale manually, since it doesn’t automatically generate a sales invoice, for example. However, extra-cost add-on services available in Salesforce AppExchange enable integration with third-party accounting apps that do include invoicing, such as Intuit QuickBooks.

Salesforce Group Edition costs $600 per year for five users. A free 7-day trial is available, and you may be eligible for a $50 AdWords credit if you establish a new Google AdWords account (conditions apply). Normal Google AdWords advertising charges apply.


Turn Sales Prospects Into Regular Customers

April 16, 2007

By Richard Morochove

Sales are the key ingredient in the mix that creates a successful business. You need customers to buy your products and services or you don’t have a viable operation.

How can you convert more prospects to buyers, or first-time buyers into regular customers? Those are the aims of customer relationship management, widely known as CRM.

CRM Organizes Sales

CRM applications handle three main tasks: Track your prospects and customers; keep tabs on what they want; and let them know how your business can deliver the goods that satisfy their needs. In a nutshell, CRM organizes the sales process.

Many small businesses still use a spreadsheet, a generic database, or a general-purpose application such as Microsoft Outlook to keep track of contacts and prospective customers. But using a specialized CRM app can make it easier to achieve your sales objectives.

CRM applications evolved from early contact managers, the digital equivalent of the paper address book or Rolodex. But they can do much more, such as keeping track of what tasks you must perform to keep a customer happy, or performing simple project management that coordinates pre-sales work among different employees.

Highrise: A New Web-based CRM Service

If your business is new to CRM, Highrise could be just what you need to dip a toe into the waters. Highrise is a recently released Web-based service from 37signals, which is probably best known for its Basecamp collaborative project management service.

Highrise is relatively inexpensive (business plans start at $24 per month), and simple to set up and use. It’s especially well-suited for a far-flung virtual organization of few dozen or so people, since it lets you easily share information with other authorized users.

Simple but Effective CRM

Highrise’s virtue lies in its simplicity. You can enter contact information directly using your Web browser or import existing contact records in the popular vCard (.vcf) format, which many e-mail applications and contact managers use.

You can create new tasks, set deadlines, and assign tasks to categories. Establishing a case lets you bring together related contacts and tasks as a form of basic project management.

When you log in to the service, the Highrise dashboard displays recent activity and upcoming tasks. You can choose to have a daily task summary e-mail sent at 6 a.m. reminding you what you need to accomplish that day. (You can also opt for individual task reminders, but the summary list of all tasks due either goes out at 6 a.m. or not at all.)

Good Use of E-Mail Integration

I especially like the way Highrise uses nothing fancier than plain old e-mail to jump through a few hoops and perform some neat information integration tricks. You can forward e-mail messages to special user-related Highrise e-mail accounts, which then automatically assign those messages as new tasks or attach them to a contact.

If you already have CRM software and don’t find it to be overkill, Highrise probably isn’t for you. It’s best suited for neophytes, and it lacks the capabilities and integrated hooks into other business processes that larger, enterprise-scale organizations get from higher-end CRM services such as and NetSuite. However, Highrise officials say that an API (application programming interface) offering more integration possibilities is in the works.

You can check out Highrise by signing up for its free plan, which is limited to two users and 250 contacts, and provides no online storage. Paid plans range from Basic to Max. Basic costs $24 per month, permits six users and 5000 contacts, and includes 500MB of online storage. Max allows an unlimited number of users and 50,000 contacts, provides 50GB storage, and costs $149 per month. All paid plans offer a 30-day free trial.


CRM Made Simple

January 1, 2007

Few pieces of tech jargon are as unwieldy as CRM–customer relationship management. But what CRM systems do is actually quite simple. A CRM system is like an electronic Rolodex souped up so that every entry yields not only a phone number but your entire business history with that customer. The systems also can scan data to spot trends, enabling you to refine your sales, marketing, and customer service efforts. Such systems traditionally have been expensive and complicated, challenging the skills of even the smartest techies. But that’s changing. Forrester Research (NASDAQ:FORR) projects that in 2007, companies with fewer than 100 employees will account for more than a third of the CRM market. In other words, systems are no longer a luxury; increasingly, you need one if you’re going to compete. Here’s what the major vendors are offering.

Best for… Getting it all in one place


What it is: NetSuite provides a collection of software tools to manage nearly everything a business does, from accounting and payroll to e-commerce and publishing. CRM is one of the firm’s signature offerings. Those tools, which handle sales, marketing, and customer support, can be purchased separately from, say, accounting tools. But the company’s strong suit is the breadth of its software operations and its ability to integrate all of those functions into a single system.

What’s cool: NetSuite is best known for its easy-to-use dashboard interface. Its CRM features make it easy for marketers to monitor and fine-tune their search-engine marketing efforts with a tool that tracks keywords and leads, from click to sale. A new feature called SuiteFlex allows people to tailor the software to specific industries, like retailing or maintenance. NetSuite Small Business is geared specifically toward companies with 20 or fewer employees.

Drawbacks: NetSuite’s free e-mail support can take up to a week to respond to questions, so you may need to pay for a support plan.

Price: $499 per month, plus $99 per user per month

Best for… Easing the learning curve

Microsoft Dynamics CRM 3.0

What it is: The software giant’s product for sales, support, and marketing. It’s a licensed product that you install on your own servers rather than access on the Web.

What’s cool: Dynamics CRM appears as a folder in Outlook, and for many users it will seem like it’s another part of Microsoft (NASDAQ:MSFT) Office. That means staffers will need less training–often the bane of CRM implementation. The system is especially good at managing contacts and creating account information.

Drawbacks: Microsoft is new to CRM and is still working to catch up to its rivals. For instance, there is not yet a sales-commission management tool.

Price: The Small Business Edition, designed for companies with fewer than 50 employees, runs $440 to $499 per user and $528 to $599 per server. The Professional edition costs $622 to $880 per user and $1,244 to $1,761 per server. Both versions include a year of support and maintenance.

Best for… Revving up the sales team

What it is: is the original hosted CRM tool. Over the years, it has expanded from sales force automation to handle customer service, marketing, analytics, and more.

What’s cool: It’s flexible. The software’s latest version lets you customize the way data appears on your screen. Another new feature lets you slide your mouse over a contact name and bring up a pop-up screen filled with data such as current deals in process and service call status. The company also has established the AppExchange, a directory of more than 400 applications that integrate with and extend the capabilities of (as well as other applications).

Drawbacks: remains best at what its name implies: managing sales. It’s not as good at things like customer support and marketing.

Price: The Team Edition (maximum of five users) starts at $995 a year. The Unlimited Edition starts at $195 per user per month.

Best for… Coddling your customers


What it is: RightNow started out as a Web-based customer service application, but has added marketing and sales tools, becoming a full-fledged CRM application. The company’s strong focus on support means it has added interactive voice response and analytics, and also has developed its own professional services team to help businesses figure out how best to use its products.

What’s cool: A tool that lets you automate responses to customer inquiries, no matter where they come from–the Web, e-mail, or telephone. Knowledge management tools keep your entire staff up to date on what’s going on with all of your customers; in other words, you’ll know not to make a sales call to a client who just spent an hour screaming at a customer service rep.

Drawbacks: RightNow’s customer base is now more than 50 percent large companies, and its software really isn’t meant for companies with less than $50 million in sales. It can be difficult for small firms, with small IT departments, to manage.

Price: Starts at $52 per user per month (two-year commitment required)

Best for… Exploring the possibilities


What it is: A Web-based library of more than 100 open-source CRM products that visitors can sample and download for free. The site is sponsored by SugarCRM, a leading open-source CRM provider (see “Something for Nothing,” November 2006).

What’s cool: The exchange is a perfect way for CRM shoppers to get a sense of the range of free, open-source products available. Among the offerings: reporting tools to analyze customer data; contact tracking software; and tools to boost the efficiency of phone-based customer service operations.

Drawbacks: Because it’s stocked exclusively with open-source products, the pickings can be thin in some categories; only one application is available, for example, in list management. Implementing the software could require some in-house technical expertise.

Price: Free

Best for… Following the leader

Oracle’s Siebel CRM On Demand

What it is: Siebel helped invent CRM software, and is the largest company in the market today. (Last January, it was acquired by Oracle (NASDAQ:ORCL), which also owns CRM firms PeopleSoft and J.D. Edwards.)

What’s cool: Siebel systems have great customer service tools, including a feature that automatically routes calls to the support person with the most appropriate skills, rather than just the next one in line. Siebel CRM On Demand also has strong data-reporting capabilities that make it easier to track sales performance.

Drawbacks: On Demand lacks some of the features common in other applications, such as real-time alerts to let sales and support staff respond immediately when a prospect has a question.

Price: $70 per user per month


A Fifth Startup? It’s All In A Workday

November 13, 2006

By Sarah Lacy

Dave Duffield was alone in a hotel room 3,000 miles from home when he got the news that PeopleSoft Inc., the company he had started and built over 17 years into a software powerhouse, had been snatched away. It was Dec. 10, 2004, and Duffield was preparing to give testimony in a shareholder lawsuit when the call came from longtime colleague Aneel Bhusri. “I’ve got some very bad news” was all he needed to hear.

PeopleSoft’s independent board members had voted to accept an enhanced $10.3 billion buyout from Oracle Corp. (ORCL ) Oracle Corp., the megacompetitor Duffield had taken to calling “the bad guys” because he feared there would be layoffs and product cuts if it took over. He felt like some- one had punched him in the gut. “I was in the middle of nowhere,” he recalls. “It was totally depressing.”

Duffield had put up a good fight. Three months earlier, when he returned from retirement to try to rescue PeopleSoft from Oracle’s clutches, many were amazed. Here was a wealthy, retired man in his sixties who, with Bhusri, had turned the reins over to CEO Craig Conway back in 1999. He had philanthropy and six adopted children at home to keep him busy. What did he need with running a company again? So when Oracle Chief Executive Lawrence J. Ellison finally prevailed in the takeover battle, everyone assumed Duffield would retreat to Tahoe–with the $600 million more he made off the sale.

They were wrong. On Nov. 6, following a year of industry speculation, Duffield, 66, will launch his latest software company. The startup, his fifth, is called Workday. It’s a bold attempt to tackle head-on the giants of the business, Oracle and SAP (SAP ), with Web-based “on-demand” software.

That means taking on the old PeopleSoft products, which Oracle still sells and supports. Already, Workday bears a striking resemblance to Duffield’s old company. At its offices in Walnut Creek, Calif., executives sit in egalitarian cubicles. Many are former PeopleSofties with a strong sense of loyalty: Few forget that, following the buyout, Duffield put up $10 million of his own money to help laid-off workers. Today, CEO Duffield roams the halls in jeans and a golf shirt. Just like in the early days at PeopleSoft, it’s as if a Midwestern company has been plunked down on the edge of Silicon Valley.

Attacking Oracle and SAP, which hold 65% of the market for big-company applications, is an idea that would get most people laughed out of a venture capitalist’s office. Fortunately, Duffield is worth an estimated $1.2 billion. Bhusri, who is back as co-founder, is a partner at venture firm Greylock Partners, which jumped at the chance to fund Duffield’s next act. So far he and Greylock have ponied up $15 million and expect to invest $20 million more by yearend. Why get back in the game? “I had a good life, my kids were happy, and I could hold my head up high about what I accomplished at PeopleSoft,” Duffield says. “I wouldn’t [risk all that] unless there was a real opportunity.”

That opportunity is to catch the software business at a new inflection point. PeopleSoft came along when human resources and other business applications were moving from mainframe computers to PCs. It quickly became a leader in easy-to-use programs that automate HR tasks such as the administration around hiring, firing, and performance reviews. For its time, PeopleSoft produced programs that were remarkably easy to use and customize. Then it rocketed to No. 2 in software for broader use in corporate applications, such as accounting, factory planning, and supply-chain management.

Shortly before its sale, PeopleSoft had 13,000 employees and $3 billion in annual revenues. In 2003, PeopleSoft attempted to widen its lead by buying a smaller competitor, J.D. Edwards. Ellison launched a hostile bid for PeopleSoft that stunned the industry. Conway resisted vigorously but alienated shareholders who felt he needed to consider the escalating offers. Finally the board fired Conway and turned to Duffield. He opposed a sale, but was overruled by independent directors.

Fast forward to today: Corporate software packages have grown increasingly complex and expensive to maintain. Frustrated employers are turning to on-demand software, which is easier to use and cheaper long-term. Sellers run programs for customers, taking on the cost and hassles of operating databases and servers. Users log onto the Web to pull down information on payroll or figure out where an order is in the sales pipeline. At the same time, a new, more flexible style of programming is emerging that takes advantage of software building blocks. As companies grow, they can move pieces around without breaking up the whole system. Workday will try to exploit those changes.

But the idea that Web-based technologies can improve software isn’t exactly original. A handful of promising young companies– (CRM ), RightNow Technologies (RNOW ), and NetSuite, to name a few–are gaining share with midsize companies. And SAP, Oracle, and Microsoft (MSFT ) are retrofitting their programs.

So Workday has its work cut out. The largest of its five customers is Biosite Inc. (BSTE ), a biotech company with 1,100 employees. To build customer confidence, Workday needs to forge relationships with big software and services outfits. It’s in talks with Microsoft to figure out how to get Workday software to mesh with its ubiquitous desktop programs. And Accenture Ltd. (ACN ) is building a Workday practice to help big companies evaluate and implement the programs, a sign that it thinks Workday is on to something. “We think this is a huge opportunity,” says Bob Suh, Accenture’s chief tech strategist.

Still, Workday’s best asset is Duffield’s reputation as a software legend. Early on at PeopleSoft, he did much of the coding himself and personally manned booths at trade shows. His last slide at customer conferences showed his direct phone line (and, later, his e-mail). “There really is a cult following around Dave,” says AMR Research Inc. analyst Bruce Richardson. “If anyone can do this, it’s them.”


Web Services Hotshots

November 13, 2006

• Provides Internet service to help companies manage their salespeople

• Went public in June 2004, is up 27% since public offering

• CEO: Marc Benioff

RightNow Technologies

• Provides Internet service to manage call centers, customer e-mail, and salespeople

• Went public in August 2004, is up 92% since public offering

• CEO: Greg Gianforte


• Provides Internet service that duplicates general business and accounting software for small and midsize businesses

• Still private and likely to go public in next year or two

• CEO: Zach Nelson


• Provides an Internet service that ensures the right people are accessing a company’s other Net services

• Still private, no immediate plans for public offering

• CEO: Gordon Eubanks

Grand Central

• Provides an Internet service that connects other Net services like those offered by

• Still private and not near a public offering

• CEO: Halsey Minor


The Friendly Face of Business Software

May 3, 2006

By Sarah Lacy

Last fall, AMR Research analyst Bruce Richardson was sitting on a couch in San Francisco’s Moscone Center during one of’s many customer conferences thinking about the phenomenon the software company had become. As a scrappy upstart, it took the industry by storm, offering a cheaper and easier to install program to manage sales teams.

Dancing in Richardson’s head was a conversation he just had with the chief information officer of a large industrial company who was planning to ditch’s (CRM ) software for one of the market leaders, Oracle (ORCL ) or SAP (SAP ). But when he ran into a chatty conference attendee from the same company, he asked her about the CIO’s plans. “Over my dead body,” she exclaimed. It was fierce loyalty unlike anything Richardson had encountered in his 26 years covering business software. In fact, it was downright Apple-esque, he says (see BW, 9/19/05, “An eBay for Business Software”).

Such fierce user loyalty may be the first spoils in a growing design renaissance in business software. The feature wars are over. The new software upstarts have a powerful one-two punch: cheap startup costs and drop-dead ease of use. While much of the attention in the software industry has focused on inexpensive applications that undercut pricey traditional business programs, it’s the new design movement that could prove more important. In fact, it could end up reshaping the user experience across Corporate America.

THE GEEK FACTOR. Forget what the corporate IT department thinks about business software. The actual users will tell you programs like those offered by may be the first truly intuitive pieces of business software they’ve ever used. “My mom could pick this up in about three or four minutes,” says Chris Corcoran, CEO of Sunset Companies. He’s a customer of NetSuite, another on-demand company that’s getting ready for an Initial Public Offering this year (see BW, 2/13/06, “Giving the Boss the Big Picture”). “Most salespeople will tell you to take their right arm before you take away,” jokes Kim Niederman, senior vice-president of worldwide sales for Polycom, a Salesforce customer.

To really appreciate the change, consider just how frustrated the buyers of business software had been. Companies spent buckets of money in up-front costs, and then more dough getting that software to work. Even more galling for tech managers is the reality that a lot of people outside of, say, the accounting department, never bother to use the products because they’re too geeky and complicated.

That’s why two big software movements have been gaining steam. The first is on-demand computing, where companies such as Salesforce run the program for the customer, selling use of it over the Internet for a monthly fee. The other big trend is the open-source software movement, where vast communities of coders collaborate to build software that’s freely available online.

POSITIVE IMPRESSIONS. It’s not that all of those open-source contributors are great designers. The key to the appeal is the try-it-before-you-buy-it nature of the open-source movement. When the software works and it’s easy, it catches on fast within companies and quickly builds a grassroots following. Increasingly, open-source designers understand that their audience is counting on them to develop easy-to-use programs.

Take customer relationship management company SugarCRM. It even seeks to provide some entertainment with different “skins” it offers for its interface. Sales people can log client meetings and organize contacts against a backdrop of palm trees or a golf green. “It seems a little silly at first, but they smile the first time they see our application,” says Clint Oram, co-founder of SugarCRM. “That’s an important first impression.” (See BW Online, 10/3/06, “Open Source: Now It’s an Ecosystem.”)

Good design is becoming more than a nice-to-have feature. Thanks to slick Web sites like, people are coming to expect software that takes no or little training to use. In fact, Salesforce’s first prototype bore an intentional resemblance to The only difference: The tabs were changed from categories such as “Books” and “DVDs” to things like “Contacts” and “Sales Leads.” Says Parker Harris, Salesforce’s co-founder: “We want to get a toe-hold, and once people start using us, we know they’re going to like it. That’s our secret sauce.”

TALENT SHORTAGE. It shouldn’t come as a big surprise that on-demand software is focused on the user experience. The down side of letting customers pay by the month is that they can more easily switch to a rival. So on-demand software providers have to keep their customers happy with uncluttered, user friendly designs that, at least for now, the old guard can’t match.

“SAP and Oracle may be the standards, but if you get something that works, people will hold onto it forever,” Richardson says. Security software company IronPort Systems is one of several who tried to switch from Salesforce and faced a full-on revolt from the rank and file. “We’re stuck,” says CEO Scott Weiss.

That’s a good news/bad news scenario for usability companies such as Adaptive Path in San Francisco. Jesse James Garrett, director of user-experience strategy at Adaptive Path, says his business is booming and it’s near impossible to find good freelancers to bring in to meet all the demand. If they haven’t taken jobs at Google (GOOG ) or Yahoo (YHOO ), they have taken jobs with the new software up and comers.

ALWAYS EVOLVING. A lot of these are consumer-oriented Web sites, but just as many are Web applications aimed at businesses. The talent pool of good designers is getting so dry that venture-capital firm Sierra Ventures has hired Adaptive Path on retainer to consult with startups on usability and design before they even write a line of code — a big departure from the way software is usually crafted.

It’s not just a greater focus on usability. Companies like Salesforce and NetSuite have a natural advantage. Since they host the software, they can track every mouse click, just as an e-commerce site can watch how shoppers navigate the virtual aisles. So user feedback is almost instantaneous. If people are getting stuck, companies can make real-time changes to the site. It’s like the entire user base is in a real time usability lab. “We actually host companies’ Web stores, so we learn how great Web stores work,” says Evan Goldberg founder and chief technology officer of NetSuite.

Such constant tweaking — largely invisible to customers — represents another major difference in the way software is made and maintained. Traditional software companies do one big release every few years, and the upgrades are time-consuming and expensive. Hosted software is more an eternal work in progress. It’s continually updated, based on traditional focus groups and on watching how people use the software.

ADVANTAGE: SMALL FRY. That kind of direct connection struck Todd McKinnon immediately when he became vice-president of development for He previously worked for PeopleSoft, now part of Oracle — a company known for its good user interfaces. “At PeopleSoft we couldn’t get a release out in two years,” he says. “Here, we do it every four months, and a day later it’s being used by hundreds of thousands of people.”

Adds usability guru Garrett: “The big guys just handed this advantage to the smaller players.” And, as the overbooked calendars of usability experts show, scrappy upstarts aim to make the most of it.