Cloudy, with a Chance of Reign

It’s a big leap from “small-shop CRM provider” to “enterprise cloud computing giant”—some might say an impossible one. Having hurtled past the billion-dollar mark in annual revenue, however, Salesforce.com is reaching beyond its sales force automation (SFA) and software-as-a-service (SaaS) origins into cloud computing.

 

The evolution has been clear in marketing materials and product positioning for some time now. Two years ago, for example, Dreamforce — the annual user conference—was billed as “The Premier On-Demand Event of 2007.” How very 2007, in fact. Dreamforce ’08 took a new tack: “The Cloud Computing Event of the Year.”

 

Gartner analyst Ben Pring argues that Salesforce.com, despite years spent proclaiming the benefits of SaaS, has actually been a cloud company at heart since its inception. The recent marketing and investment around Sales Cloud, Service Cloud 2, and the Force.com platform, he says, is just a sign that it finally has cloud computing on the brain as well.

 

“[Salesforce.com has] a little dilemma there,” Pring says. “They’ve just got into people’s minds this word ‘SaaS’ and now everyone seems to be talking about ‘cloud.’” Some even mistakenly think the two are identical or interchangeable. (An easy rule of thumb? SaaS is about the application layer—the programs themselves; cloud computing includes that, but refers to the infrastructural layer.)

 

So far, so good, says Jeff Kaplan, founder of SaaS consultancy ThinkStrategies. “[Salesforce.com] has been one of the key evangelists…and deserves the bulk of the credit for making the idea of cloud computing popular in the mainstream business world.” Still recovering from terminology whiplash after the shift from “application service providers” to “SaaS,” the industry needed Salesforce.com: a message-marketing veteran, eager to make the cloud seem enterprise-friendly—and perhaps itself in need of a second act. (See Pint of View for more on the marketing sleight-of-hand involved.)

 

“[Salesforce.com is] such a strong marketing machine,” says Darren Cunningham, senior director of SaaS marketing for data-integration company Informatica. “[It’s] done such a good job of educating the market about softwareas-a-service. It’s helped everyone else, to some degree, [with] multitenancy and some of the more-complex concepts.”

 

Despite efforts to promote the cloud and its own Force.com platform-as-aservice (PaaS), some believe the company’s “sales” branding persists in part because the name “Salesforce.com” skews public perception. (See this month’s Customer Centricity column for a closer look at what’s in a name.) It’s a Catch-22, Cunningham says:“They want to be seen as a platform, but…don’t want to lose the momentum in the CRM world.”

 

Momentum can shift when you’ve got good results: A Salesforce.com-sponsored report by industry research firm IDC estimates the Force.com platform enables users to build and run business applications and Web sites five times faster than—and at half the cost of—alternatives that don’t include the cloud.

 

Buzz aside, though, Pring says that “PaaS is a small marketplace at the moment, [and] not generating any revenue for Salesforce.com] yet.” Many PaaS-related benefits have yet to be uncovered, he says, so cloud-platform providers still face a high burden of proof. In other words, Force.com remains a harder sell than Salesforce CRM—and requires a great deal of education.