Despite a slumping economy, Salesforce.com is showing substantial profits. With about 3,300 customers signed on in three years and a 300 percent revenue growth last year, the San Francisco-based online CRM services company is turning heads. Salesforce.com's President and CEO Marc Benioff spoke with CRM Senior Editor David Myron to discuss the company's success--and expectations for 2002--and Salesforce.com's attempt to facilitate "the end of software."
CRM: To what do you attribute your success?
Marc Benioff: We are pioneering a concept that we call "the end of software." We believe that what the Internet does is render traditional enterprise software solutions obsolete. We've been at this now for three years. The service has been live since March of 2000. We have signed up a lot of significant companies…including Adobe, Alcatel, BroadVision, Microstrategy, Dow Jones Newswire, Fujitsu, Siemens, and USA Today.
CRM: What about future growth?
Benioff: The next major stage for our company's growth is this: We routinely close transactions for sales forces of multihundreds of users, but we are looking at the multithousand-user customer. For that customer we've built an entirely new family of products that we call Enterprise Edition. These products include an entire platform that adds not only to our sales support and marketing components, but also adds an entire Web services foundation so companies can have XML interoperability between our service and either other Web services or legacy systems.
Our technology is proof that the end of software is upon us. And companies don't need the traditional hardware/software combination to be successful when implementing CRM.
CRM: How much can customers save using your service versus buying a software license?
Benioff: It's actually a fairly substantial amount. [Our customers] pay us between $65 and $125 per user, per month. So if you have 100 users at $100 per month, you're going to pay us $10,000 per month or $120,000 per year. The same solution from Siebel Systems would be $5,000 per user. That would be a $500,000 licensing fee to start. Plus, about $250,000 for the hardware and another $250,000 for customization, changes, and associated software. On top of that, you have annual maintenance and support fees.
CRM: What is your outlook for Salesforce.com in 2002?
Benioff: Our outlook is very aggressive for 2002. We've already seen a substantial growth rate and momentum coming into the year, and we feel very good about our current revenue projections for the year. We're expecting more than a 100 percent growth.
CRM: What new technologies are customers asking for?
Benioff: One of the big ones is XML. An XML wrapper on Salesforce.com turns it into a comprehensive Web service. It allows it to interact with other Web services as well as ERP applications like Oracle, PeopleSoft, and SAP. This XML API gives that panacea of being able to pass objects in and out of our database, so our application looks like it's within your network. That's a tremendous advantage to our customer base.
We also added [last month], a new marketing module that allows our customers to track not only the time a lead comes in from their Web sites, but also what opportunities are associated with what campaigns. So, for example, I can know that a particular deal closed because of an article, ad, or direct mail piece. That's a tremendous advantage.
Salesforce.com Joins Enterprise Fray
Salesforce.com in late February launched its multithousand-user CRM service called Enterprise Edition, marking its first formal foray into the lucrative large-enterprise market.
The San Francisco-based online CRM services company aims to compete with Oracle Corp., PeopleSoft Inc., SAP, and Siebel Systems by building on its successful online CRM services for small and mid-size companies called Professional Edition.
For $125 per user, per month, enterprise clients receive enhanced customization, integration, and administration. Enterprise Edition includes enhanced features that enable customers to change views, tab settings, page layouts, forecasting capabilities, and annuity forecasting calculations. Another improvement over the Professional Edition is the addition of an XML-based API that integrates with back-office and Web-based applications. The multithousand-user service also comes with the flexibility to control administrative and end-user privileges.
Additionally, the enterprise CRM service cuts two overwhelming concerns for large enterprises: speed to implementation and risk of implementation. "Our speed to implementation tends to be under 30 days," says Clarence So, director of product marketing at Salesforce.com. "And, our risk is quite low compared to typical software implementations, because there is a known technology convention. You don't have to worry if it will work after you hook everything up. It works." --David Myron