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AppExchange = Future Growth

Salesforce.com recently announced the acquisition of its 10,000th European customer as well as a 70% increase in new customers over the first quarter of 2008. Chief Strategy Officer Bruce Francis credited the speed of cloud-based implementation as a prime factor in its growth. Speaking from the European Cloudforce Conference, Francis further also cited global recession as a reason for Salesforce’s success, adding "The economic crisis has caused many CIOs to look at alternative computing models.”


Blogger3This comes as no surprise. Salesforce’s positioning as the antidote to traditional software headaches will likely reap major benefits until all its major competitors are firmly transitioned to similar on-demand CRM models. But beyond the next two years, Salesforce’s competitive edge will hinge on the strength of its AppExchange portal, where customers can download around 700 applications designed specifically for the Salesforce CRM.

At its essence, AppExchange is essentially emulating the Apple iPhone model. Like Apple, the company develops only a small percentage of apps, preferring instead to enable partners to contribute to the business model. As incentives, Salesforce vowed at last winter’s Dreamforce that the company would not compete with its AppExchange Partners, and also promised revenue sharing and cooperative marketing efforts for select products.

Salesforce’s current marching orders to its partners are to build industry-specific applications in order to attract underserved business verticals on the Salesforce CRM. Partners have responded in force. Partner-built AppExchange offerings range from sales & marketing to finance, PR and human resources. Many are free; most are offered on a monthly subscription basis.

What remains to be seen is whether Salesforce can leverage AppExchange to create truly turnkey industry-specific solutions for its customers. Like all truly flexible heavy-duty CRMs, Salesforce implementations can often entail a create deal of customization. But industry-specific applications, in theory, should greatly reduce the amount of customization needed because they would be built to best practices for each vertical. If Salesforce can make the implementation of these applications truly easy and seamless for its customers, it would give the company a competitive edge well into the future.


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