Salesforce.com to launch online CRM service

ITworld.com –

San Francisco-based sales force automation company Salesforce.com Inc. will include full CRM (customer relationship management) services on a hosted, monthly subscription basis starting next week.

Salesforce, which has been offering a more basic sales force automation (SFA) service for just over a year, has decided to move beyond its model of offering Web-based service applications for sales representatives and so has expanded to include marketing automation and customer support management as well, said Marc Benioff, the company's founder and chairman. The additional services begin Monday.

The company has tried to take the best features of a personalized Web portal like My Yahoo, and the best of enterprise software applications, like those offered by Siebel Systems Inc. or Oracle Corp., and instead of setting licensing fees in the thousands of dollars, charge a monthly fee, Benioff said.

Since its launch, Salesforce has been offering its SFA service for a fee of $50 per user, per month, with a trial allowing the first five users free for 12 months. When the company launches its expanded services Monday, both the price and the trial offer will remain the same.

This is compared to traditional CRM systems, which typically run for about $5,000 per user, plus hardware and support, and could end up costing close to $15,000 per user, by Benioff's estimate.

However, users shouldn't go for Salesforce and expect all the benefits of traditional enterprise applications, according to one user, although his comments aren't necessarily a glaring criticism.

"You get 80 percent of the functionality, for 20 percent of the cost," said Rodric O'Connor, vice president of technology for investment bank Putnam Lovell Securities Inc.

Putnam Lovell has had 150 employees using Salesforce's SFA services since October.

"We looked at Siebel, which would have cost us several million dollars, Onyx (Software Corp.) and Pivotal (Software Inc.) would have cost about half a million," O'Connor said. "Salesforce.com came out to $80,000."

Besides the price, other aspects of the Salesforce services appeal to him.

"You miss out on the customization features of traditional enterprise applications, but you get Internet service functionality," O'Connor said. "They upgrade every three months or so and you get the upgrade immediately."

That's an advantage because "it can be very painful and expensive to upgrade on the traditional model," he added.

One of the most important things to consider when using an Internet-based service is redundancy, O'Connor said. "If both points have multiple Internet connections, there's not too much to be worried about," he said. "We'd be more likely to lose our power than to lose our Internet connection."

Salesforce has already had some users "deinstalling" from Siebel Systems and switching over to Salesforce, according to Benioff.

"There will be some very well-publicized deinstallations in the future," he said, adding that using the Salesforce model also provides customers with a "no-risk" guarantee.

"If they try it and don't like it, they can just take all their data back" without being left with any extra hardware, Benioff said.

This "no-risk" offer, in combination with the low fee, is what makes Salesforce.com appealing, said Denis Pombriant, research director for the CRM market at Boston-based Aberdeen Group Inc.

"When the ASP (application service provider) solution came out, an awful lot of companies were flush with cash," he said. "Now, a lot of companies that might not have thought of it initially were forced to, because they couldn't afford to keep it in-house."

However, Salesforce won't work for all organizations.

"It's not the right model for everybody, but in broad strokes, you'll know quite quickly if it will work for you," Pombriant said.

Benioff left Oracle Corp. to start Salesforce in 1999, with the plan to create a Web site that would make the traditional model of enterprise software obsolete.

"At Oracle, only the richest companies could afford our software," he said. "I wanted to start a more scalable model that would give customers what they want, when they need it."

Salesforce now has over 26,000 companies signed up for its services, with 1,700 of them, including Intel Corp. and Siemens AG's Power Transmission and Distribution unit, signing up more than the five free users to become paying customers.

The company has offices in Europe and Asia, with 20 of its 170 employees based outside of the U.S.

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