Salesforce.com under threat ?
Published February 25th, 2006
Oracle, the US software and database giant, has a tried and tested policy for dealing with uppity rivals: it buys them.
Size is not an issue. Huge firms like Peoplesoft and Siebel have all succumbed to Oracle’s advances.
So will Salesforce.com - challenger not just to Oracle, but SAP and Microsoft as well - be the next takeover target? “In this case, I think it would be more fun to crush them,” says Charles Phillips, the president of Oracle.
Getting up Oracle’s nose is Salesforce.com’s founder and boss Marc Benioff, himself a former top executive at Oracle.
Mr Benioff, a laidback Californian with a yearning for the beaches of Hawaii, giggles when he talks about Oracle’s threat.
He professes not to be worried by his big rivals and reels off the advantages of Salesforce.com’s business model.
Salesforce.com offers “customer relationship management” (CRM) software that allows businesses to track and analyse all dealings with customers in real-time. It can smooth workflows, flag up problems and speed up the sales process.
Salesforce’s twist: It provides its software exclusively “on demand”, through a web browser over the internet.
Customers don’t have to worry about installing and maintaining the software, database or technical infrastructure. Buy it as a service instead, says Mr Benioff, and save money to boot.
Small companies without huge IT departments benefit most, but large firms like AOL, Cisco, Nokia and Merrill Lynch have opted for Salesforce.com’s on-demand solution as well.
But now Salesforce.com - and smaller on-demand rivals like RightNow and NetSuite - appear to be on to something.
Growth is rapid, with sales at Salesforce.com up from $96m two years ago to $309m during the past financial year, and annual net profits running at $28.5m.
The big players in the multi-billion dollar market for CRM software have taken note and launched their own on-demand products.
Siebel - now owned by Oracle - started offering online CRM services two years ago, while the global market leader in enterprise software, Germany’s SAP, announced its own on-demand product at the beginning of February.
Microsoft wants a slice of the action too, with the roll-out of its CRM 3.0 application and tests of its new on-demand “Microsoft Office Live” product.
Related Articles
