Accounting-software provider Coda, for example, spent nearly three decades delivering on-premises solutions before creating an on-demand edition called Coda 2go. According to then-CEO Jeremy Roche, building on Force.com saved millions of dollars and the equivalent of 50 man-years. After testing on the Force.com platform in 2007, the first version of Coda 2go launched at Dreamforce 2008, and an update was planned for Dreamforce ’09—until September, that is, when Coda 2go became FinancialForce.com, and
Salesforce.com became a minority owner. (Unit 4 Agresso, Coda’s parent, is the majority owner.) Salesforce.com’s Francis calls the deal an opportunity to “really show how far the platform can go and what it’s capable of doing.Take the Force.com cloud platform and [add] 30 years of experience in financial accounting. We thought that was a killer combination.”
Other Salesforce.com deals or acquisitions are an obvious concern for AppExchange vendors (and users of their offerings)—a situation Alex Dayon, the company’s senior vice president of customer service and support applications, is personally familiar with. The founder of InStranet, a knowledge-base company acquired by Salesforce.com in August 2008 for $31.5 million, Dayon says that
seeing the process from both sides proved Salesforce.com values the interests of its partners. The InStranet deal, he says, caused no major partner conflicts because “we really communicated our intentions on the AppExchange.”
Maybe so, but others may agree with Janine Popick, CEO of email marketing provider VerticalResponse, who warns that Salesforce.com acquisitions will threaten the growth of any AppExchange partners in the same category. That category may then become underrepresented on the AppExchange, and customers unhappy with Salesforce.com’s alternative may have no choice but to
jump to another platform entirely.
But there’s no denying that alignment with Salesforce.com can provide a huge leg up. “They’re the 800-pound gorilla in the SaaS CRM space,” says Jim Fowler, CEO and cofounder of Jigsaw, a business directory. After more than two years on the AppExchange, Jigsaw opted to build a native Force.com application. Introduced in April 2009, Data Fusion took a year and a half to develop—but Fowler says it’s now Jigsaw’s “signature product.” The overall process, he admits, was “not easy and not cheap, but so much easier and cheaper than in the past.”
AppExchange users primarily fear vendor lock-in. Developers, however, have a bit more to think about. Even before the FinancialForce.com bombshell, Roche says, Coda had no plans to “scoot off” the Force.com platform anytime soon; Guarino says Marketo’s short-term plans don’t include developing on another platform; and while Fowler says Jigsaw aims to “connect to every Web-based B2B database on the planet,” these initiatives take a great deal of investment.
“It gets stickier and stickier,” McCabe says. “If you’re running your apps that way, it gets harder and harder to make a switch to something else.”
Salesforce.com has to hold up its end of the bargain, McCabe says, noting that ownership of the infrastructure, software, hardware, and data-center investments means the platform has to scale and attract enough subscribers, or else Salesforce.com is stuck with all the costs.
“That’s what’s going to keep Salesforce[.com] honest,” Fowler says. “It’s a great self-correcting system.” Partners appear confident that the company won’t drive them away or crush them—after all, the thinking goes, Salesforce.com must recognize that partners helped the company become what it is today. At the same time, Fowler says, no one doubts that Salesforce.com’s in business to make money.
For most developers,McCabe says, the AppExchange remains a great place to start, but should never be the lone distribution channel. When LucidEra, a SaaS business intelligence provider, suddenly shut down this past June, speculation touched on its heavy reliance for leads on sales organizations running Salesforce. Darren Cunningham, former vice president of marketing at LucidEra and now senior director of SaaS marketing at data-integration firm Informatica, admits that, while LucidEra’s piggybacking atop Salesforce.com helped in the early days, “it might have hurt us in the long term.” LucidEra’s fate, however, doesn’t undermine the rationale for AppExchange participation, McCabe argues. In this economy, she says matter-of-factly, sometimes businesses simply fail.
The future of the AppExchange is anyone’s guess—Will scalability become an issue? Will Salesforce.com’s acquisitions or fees lead to mutiny?—but its runaway success to date is one of the strongest examples of Salesforce.com’s corporate muscle. “[Salesforce.com] made this thing take off,” McCabe says, “and it’s not going away.”