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Is there beef behind SalesForce.Com?

May 29, 2008 3 comments

I have been following Salesforce.com since its founding in the mid-1990s. Initially the company started by creating a contact management system which evolved into the sales force platform it offers today. Last month I attended a small dinner meeting in Boston hosted by Marc Benioff, Chairman and CEO of SalesForce.com, for some partners and customers. I met the Steve Pugh, CEO of CODA Financials, a subsidiary of Coda, a UK based developer of accounting software. I was intrigued that the company had built its new generation financial application on top of Salesforce.com’s infrastructure. In my next post, I’ll talk about Coda and why they made this decision. But before that I wanted to take a look at the Salesforce platform.

What is most interesting about Salesforce is that it intended to build a platform from day one. In my discussions with Marc in the early days he focused not specifically on the benefits of CRM but rather on “No Software”. If you think about it that was a radical concept ten years ago.

Therefore, It goes without saying that Salesforce has been a Software as a Service pioneer. For example, in June 2003 launched sforce, one of the first web services based SaaS platforms. It offered partners a published SOAP-based API. Rather than viewing Salesforce as an application, it views it as a “database in the sky.” It interprets this database as an integration platform. Likewise, from a customer perspective, Salesforce has designed its environment to “look like a block”. What does that mean? I would probably use a different term maybe a infrastructure blackbox.

Salesforce’s approach to creating its ecosystem has been incremental. It began, for example, by allowing customers to change tabs and create their own database objects. Next, the company added what it called the AppExchange which added published APIs so that third party software providers could integrate their applications into the Salesforce platform. Most of the applications on AppExchange are more like utilities than full fledged packaged applications. Many of the packages sold through the AppExchange are “tracking applications” for example, there is an application that tracks information about commercial and residential properties; another application is designed to optimize the sales process for media/advertising companies; still another package is intended to help analyze sales data.

But this is just the beginning of what Salesforce has planned. The company is bringing in expertise from traditional infrastructure companies like Oracle and BEA — among others. It’s head of engineering came from eBay. Bringing in experienced management that understands enterprise scalability will be important — especially because of Salesforce’s vast ambitions. I have been reading blogs by various Salesforce.com followers and critics. Josh Greenbaum, whom I have known for more than 20 years has been quite critical of Salesforce and has predicted its demise (within 18 months). He makes the comparison between Salesforce.com and Siebel. While any company that has risen as fast as Salesforce.com has will be a target, I do not believe that Salesforce.com is in trouble. There are two reasons I believe that they have a good chance for sustainability: their underlying SOA architecture and the indications that ISVs are beginning to see the company as a viable infrastructure.

So, what is the path that Salesforce is following on its quest for infrastructuredom (is that a real word — probably not). One of the primary reasons for my optimism is that Salesforce.com has a combination of traditional development through a procedural language it calls Apex that is intended to help developers write stored procedures or SQL statements. While this may disappoint some, it is a pragmatic move. But more important than Apex is the development of a standard XML based stylesheet interfaces to a service designed for use with Salesforce applications. This allows a developer to change the way the application looks. It is, in essence, the interface as a service. A third capability that I like is the technique that Salesforce has designed for creating common objects. In essence, this is a basic packaging that allows a third party to create their own version of Salesforce for its customers. For example, this has enabled Accenture to create a version of Salesforce for its customers in the health care.

But what is behind the curtain of Salesforce? First, Salesforce uses the Oracle database as a technique for serving up file pages (not as a relational database). But the core Intellectual Property that sits on top of Oracle is a metadata architecture. It is designed as a multi-tenancy service. Salesforce considers this metadata stack as the core of its differentiation in the market. The metadata layer is complex and includes an application server called Resin. The Resin Application Server is a high-performance XML application server for use with JSPs, servlets, JavaBeans, XML, and a host of other technologies. On top of this metadata layers is an authorization server. The metadata layer is structured so that each organization has a unique access to the stack. Therefore, two companies could be physically connected to the same server but there would be no way for them to access each other’s data. The metadata layer will only point to the data that is specific to a user. The environment is designed so that each organization (i.e., customer) has a specific WSDL-based API. In fact, the architecture includes the approach of access APIs through the WSDL interface. There are two versions of WSDL — one general and one for a specific customer implementation. If a customer wants to share data, for example, they have to go through the general WSDL interface.

Salesforce’s approach is to use XML based interfaces as an integration approach. It has used this to integrate with Google Apps. Salesforce has already begun partnering with Google around Adwords. This move simply deepened the relationship since both companies are faced with competitive threats.

The bottom line is that I think that Salesforce.com is well positioned in the market. It has an underlying architecture that is well conceived based on a SOA approach. It has created an ecosystem of partners that leverage its APIs and rely on its network to build their businesses. Most importantly, SalesForce.com has created an application that is approachable to mortals (as opposed to software gods). Companies like Siebel, in contract, created a platform that was complicated for customers to use — and therefore many purchased the software and never used it.

Salesforce.com is not without challenges. It needs to continue to innovate on its platform so that it does not get caught off guard by large (Microsoft, SAP, and Oracle) players who aren’t happy with an upstart in a market they feel entitled to own. They are also at risk from upstarts like Zoho and open source CRM players like SugarCRM. If Salesforce.com can collect more packaged software vendors like Coda to build their next generation applications on top of Salesforce’s environment, they may be able to weather the inevitable threats.

And the winner is Cognos

November 12, 2007 Leave a comment

This has certainly turned into an exciting M&A season. First SAP announces that it will buy Business Objects and now IBM announces that it will buy Cognos. I am actually not surprised. While Cognos does sell traditional business intelligence tools (i.e., reporting tools), it has expanded over the years to offer a wide array of solutions focused on performance management and financial analytics. For example, the company offers six different solutions for various aspects of financial reporting and analytics including Planning (a solution for real-time visibility into resource requirements and future business results), Controller (a solution for managing the close, consolidation, and reporting process finance), workforce performance (an analytical application that offers over 100 measures and 1,000 workforce-related attributes to support cross-organization reporting and analysis), performance management (analytics for customers, finance, and supply chain), and Cognos Now! (a family of operational business intelligence and performance management solutions available as appliances or hosted software-as-a-service (SaaS) models).

Clearly, this is part of IBM’s overall strategy to strengthen its position in the increasingly important information management sector. It is in keeping with IBM’s horizontal software strategy as well. All of Cognos’s solutions mentioned above are focused on solutions for analytics of the financial aspects of corporations.

IBM has had a strong partnership with Cognos over many years. In fact, the two companies have worked closely together on some key deals that have been focused on Cognos’s performance management analytics capabilities.

I think this deal makes a lot of sense for IBM (even at the $5 billion price tag). It fills in some gaps both in terms of solutions and basic analytics. It enables IBM to compete against both Oracle with its Hyperion acquisition and SAP’s acquisition of Business Objects.

Who is next? I expect to see HP begin to target some acquisitions in the BI space to both complement is Neoview data warehousing platform and to strengthen its software play.

Can you measure and monitor your user experience?

November 6, 2007 Leave a comment

Since the web has increasingly become the platform for interacting with customers, partners, and the like — the notion of managing the online experience has skyrocketed. The term “user experience” is confusing. I have traditionally thought about this in terms of how the user interacts with software.  But I am finding that the more interesting definition is around the idea of actually measuring and monitoring the performance of the web environment from the user or customer experience perspective.

I met with an emerging vendor called SYMPHONIQ that was founded in 2003 by Hon Wong, CEO. Wong is a veteran of the management space, having been one of the founders of NetIQ in 1995 and of EcoSystems (purchased by Compuware in 1994). Therefore, although SYMPHONIQ is a relative newcomer, it’s management team has lots of experience under its belt.

The company is just introducing its second product — TrueView Express. This product is intended to provide performance measurement and monitoring. The product measures browser response for any HTTP application. Therefore, the company says that it can track performance from the browser through to the database. The product monitors actually user transactions in real time, isolates performance problems, and includes service level reporting of transaction performance.

Because TrueView is instrumented with HTML it does not require the downloading of an agent. In addition, performance data is collected behind the firewall.

In a way, this product is a sort of trojan horse (I love trojan horses since they provide a quick value to customers) for the company’s higher end products. For example, its flagship product called TrueView provides end-to-end diagnostics.

Clearly, the company has some interesting IP and some traction in the market. It made a smart move by partnering with F5 Networks. F5 Networks provides a platform for Application Delivery Networking. This relationship should help the company gain traction with customers that might otherwise look towards the big players — CA (Wily), EMC (NLayers), Compuware, and HP — and a host of others.

The company seems to be making some progress in the market with two products under its belt and a couple of dozen customers such as Lockheed, Starbucks Coffee, and AMD. The reality, however, is that the company is in a space dominated by big companies so it will have to partner with some big players that will be attracted by its ability to correlate and aggregate actual transaction data. Its reliance on HTML and HTTP means that it provides a lighter footprint than some of its competitors. This is definitely a company to watch.

Five cool things about Master Data Management

October 18, 2007 1 comment

Ok, so you never thought that Master Data Management (MDM) was cool. Well I just returned from IBM’s Information On Demand conference and found that IBM has gotten MDM fever in a big way. In fact, they were handling out cool MDM buttons. Now, MDM has been around for a long time. Customers are always trying to get to a “single view of the customer”. But because there are so many sources of data that are stove-piped and disconnected across departments, it has been nearly impossible. One of the approaches that was popular a few years ago was Enterprise Information Integration (EII). I hereby declare EII dead! What is taking its place is true MDM.

Now that MDM is starting to mature it has the potential to become the authoritative way to manage the single trusted view of the customer. I got some valuable insights into MDM from Dan Wolfson, a Distinguished Engineer and MDM expert at IBM. His view is that MDM has to be constructed as a hub. Through this federated view it is possible to understand the context of data. I really like this concept and think that if we are indeed going to move to a model where there is a single view of the customer it will be because companies can have a single way to manage their information about customers, products, services, and the like.

Let me digress for a minute and tell you a little about IBM’s new approach to MDM. The company has come up with a strange name for it: multi-form MDM. Despite this name, I actually think they are on to something. The idea behind this is that rather than having a different platform for each type of MDM focused application, there is a single platform that can be used no matter what type of approach is at issue. For example, there are customer centric MDM applications that focus on the details about customer, location, relationships, etc. Another application might focus on products such as a company’s product portfolio, billing details, sales territories, and the like.

There is a lot more to say about this MDM hub approach but that will have to come later. Check out our monthly newsletter. I will probably write a more in-depth article about that later.

But as I promised, here are five cool things about MDM:

1. A Master Data Management platform can help avoid a thousand versions of the “truth”

2 . If implemented from a holistic perspective, MDM can actually solve problems

3. MDM can actually become an information integration standard

4. MDM could become the lynch pin between metadata, semantic web, and registry/repository

5. MDM is cool because it really matters to the business

Will Oracle win BEA? And what next?

October 12, 2007 1 comment

It has been quite a week. First, SAP sets its sights on Business Objects and now for about the same amount of money, Oracle is ready to swallow BEA. Indeed, it looks like the world of enterprise software is continuing to consolidate. So, what do I think? I actually think that Oracle’s decision to buy BEA is a smart move. Oracle needs the depth of middleware and business process software that are two strengths of BEA’s platform. I have spoken with Oracle customers who have not been happy with Fusion middleware. Therefore, the BEA acquisition should strengthen Oracle’s infrastructure assets. Remember that one of BEA’s original assets was AT&T’s Tuxedo distributed transaction processing software suite.

AcquaLogic , BEA’s services integration and business process management platform is well regarded among customers. A few years ago BEA bought Fuego, a very well designed business process management engine.

I could go on for a long time talking about the depth of the BEA software environment. Both its transaction management and business process platform are the jewels in the crown that will benefit Oracle — especially in its Service Oriented Architecture (SOA) strategy.

So, let me get to the bottom line. Here are my conclusions about the Oracle move:

1. Oracle is moving to pick up a strong middleware platform. It has the potential to fix some of the problems with the Fusion platform.

2. It will be a more complicated integration task than some of Oracle other acquisitions. Oracle will have to rationalize its work on Fusion middleware with BEA’s offerings. This will take some time.

3. The comparison between Oracle and SAP’s acquisition moves are very interesting. While SAP has bought a BI platform that will have to be kept separate from its ERP business, Oracle’s purchase will be much closer to its core strategy. The money isn’t that different.

4. BEA was in an uncomfortable position in the market. It has been a player with some impressive acquisitions and leadership. However, it was never able to break out as a leader in terms of revenue. It made its mark with WebLogic — the leading application server. However, it was never able to break out to be viewed by customers as a overall leader — despite some very nice acquisitions.

I expect that this acquisition will go through. I do not expect any other company to come up with an offer. HP, for example, that has been mentioned as a suitor, is unlikely to move in this direction.

I thought that Dana Gardner’s blog today was a well constructed analysis. I agree with many of his points. But don’t think that an HP counter offer is likely. I do think that his view of the interactions between other players will be impacted by this move.

My bottom line: I think that there will be major ripples from this move by Oracle. IBM will not sit still for long. Will IBM increase its alliances with other players — I think so. What does this mean for Tibco? I have talked to customers lately who have been buying Tibco for both its business process and scalable SOA middleware platform. Is Tibco in play? Will SAP and IBM strengthen their relationship?

Why is SAP buying Business Objects?

October 10, 2007 2 comments

The first time I made contact with Business Objects was in 1992 when I was hired by a venture capitalist to conduct due diligence on Business Objects. At that time the company was still emerging. At that time Business Objects was a tiny Paris-based that offered a windows based reporting product designed for use with the Oracle database. My advice to Atlas Ventures was that it would be a wise idea to invest in the company. I recommended that they improve their user interface, add more databases than Oracle, and learn how to partner. And as they say, the rest is history. So, more than 15 years later is to become part of the SAP empire.

So, what do I think? I have a mixed reaction. Here are my first takes:

1. Business Objects has a diverse and interesting base of technologies. For example, it has its traditional reporting platform that is a huge source of revenue (especially maintenance). Over the years it has added lots of products to its bag of tricks including the low end Crystal Reports to text analytics (acquisition of inxight Software ) and Cartesis for financial reporting. It appeared that the company was on a path to positioning itself as a full service information management player.

2 . Today, Business Objects is about $1.5 billion in revenue. While it is growing at about 20% a year in many areas, new license revenue is only about 9% of revenue. Many companies in the information management space are finding that it is hard to grow into a major player organically — or even with solid acquisitions.

3. SAP is paying a lot of money; making this a big gamble. Unlike Oracle, SAP has not made a lot of big acquisitions. Perhaps the company felt that Oracle was simply getting a bigger piece of the information management pie than was comfortable. SAP will have its work cut out for it as it tries to learn to sell at the low end of the market. Yes, it has introduced its mid-market platform but it still has a steep learning curve. It will also have to rationalize its existing offerings with those from Business Objects. For example, now SAP will have two financial reporting systems — Business Object’s Cartesis and Outlook Soft, a company with a similar product that SAP purchased.

4. I think that integration is very tough to full off. The plan mentioned in the announcement is to integrate the Business Object suite with SAP’s NetWeaver middleware. While this might be a good long term strategy, it might not be a high priority for customers who just want to get their reports done.

I plan to keep an open mind. My old friend, Josh Greenbaum, who is one of the most knowledgeable SAP watchers around is pretty bullish on the plan. So, it is definitely worth a second look as the acquisition moves forward.

I’ll make an obvious prediction right now — business intelligence vendors will continue to be targeted for acquisition by the big players. As this happens, the strong vendors that do remain independent will be attractive to customers who want to work with an independent player and to vendors who are looking for good ecosystem partners. Who is on my list as attractive independents: Information Builders and SAS Institute. Ironically, both companies are around Business Objects size and neither are public. Now there is some food for thought…