SaaS: Salesforce Circle of Success

In an effort to expand outside the CRM space, Salesforce.com is beginning to push vertical applications.  In February, just a few weeks after introducing a generic platform for on-demand solutions called Apex, Salesforce announced plans for the Salesforce Wealth Management Edition.

The Wealth Management Edition (WME) vertical is the first of a group of vertical applications that Salesforce is planning which target the financial services industry.  It is expected to be available in 2007 Q3.  Other planned vertical applications include the Salesforce Banking Edition, Salesforce Capital Markets Edition, Salesforce Insurance Edition, and Salesforce Mortgage Edition.  Release dates for these other verticals haven’t yet been announced.

WME is going after Bloomberg’s terminals that provide feeds of financial data and news to Wall Street traders.  WME combines Salesforce’s strong card of CRM with Bloomberg-like financial services.  Salesforce combines news feeds from Dow Jones and financial feeds from Thomson Financial.  Merrill Lynch has already signed up with a 25,000 seat subscription.

This wave of new verticals built on the Salesforce infrastructure base are part of a strategy
called the Circle of Success that is being championed by Marc Benioff, Salesforce.com’s chairman and CEO.  The strategy includes the following five points:
– Create high user adoption rates by introducing powerful and easy-to-use on-demand applications
– Provide the IdeaExchange to create an involved community of users
– Provide an easily customizable environment for deployment, the Apex Platform
– Create an active developer community with the Apex Developer Network
– Provide a marketplace for partner applications, the AppExchange

Benioff views their strategy as fuel for the next generation of Salesforce.com, something that he’s calling Salesforce 2.0.  He sees Salesforce focused on two businesses — CRM and the Apex platform.  Through AppExchange and AppStore, Salesforce hopes to bring in a new revenue stream to supplement their CRM activities.

But some critics challenge Salesforce’s strategy of creating their own verticals.  That puts them into direct competition with partners that they are counting on to develop apps for their AppExchange program.  Benioff admits that there will be some amount of competition but he thinks that the Apex platform still provides a compelling base for their partners to use for development.  Benioff says that from that base, partners “can become the next Salesforce.com”.

THINKstrategies has called Salesforce’s strategy as targeting the “Long Tail”.  If they can get partner vendors to stock the AppExchange with many apps, even apps that target very specialized niches, many small numbers will add up to an overall success for Salesforce.