Salesforce.com builds 'eBay of enterprise apps'

With its latest release, Salesforce.com hopes to create the "eBay of enterprise applications," a central repository of on-demand tools.

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SAN FRANCISCO -- Yesterday Salesforce.com CEO Marc Benioff delivered what he called "the most exciting presentation, most exciting announcement" of his career: the launch of AppExchange at Dreamforce 2005 Salesforce.com's annual user conference. AppExchange is a directory of applications that can be accessed in Salesforce.com, made available by Salesforce.com partners, customers and developers.

Speaking to a crowd of roughly 3,000 attendees, Benioff described Salesforce.com's latest release as the six-year-old company's "sixth level" of achievement. While previous advancements like Customforce and Multiforce had client/server equivalents, Benioff believes that AppExchange creates an "eBay of enterprise applications, or an iTunes music store of applications," and sets a new standard for on-demand applications.

Salesforce.com users can now access this directory of applications online at AppExchange.com. There are currently 70 applications available to preview, but Benioff expects more.

"We expect thousands of applications to reside on AppExchange," Benioff said.

At AppExchange.com users can read descriptions, reviews and rate applications. They can also test an application before purchasing it. With a few clicks the application is available as part of the Salesforce.com environment. The new application displays the customer's data through the interface of the new application.

One barrier to widespread use of AppExchange among Salesforce.com customers is the identification and certification of applications, but Bruce Richardson, chief research officer of Boston-based AMR Research, believes it is only a minor issue that will be resolved quickly.

While this seems like yet more hosting overhead for Salesforce.com, Benioff acknowledged the strategic advantage of AppExchange.com.

"We believe AppExchange will accelerate the use of Salesforce.com for non-CRM tasks within a company," he said during a press lunch following the keynote.

This new paradigm seemed to create more buzz than the announcement itself.

"This is what open source is supposed to be," said Chris Thomas, chief strategist for Intel.

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Agreeing with Thomas' comments, Richardson took it a step further stating that Salesforce.com's latest offering signaled a "shift in the industry." Richardson also addressed the hosted software model.

"We've always heard from [Salesforce.com] competitors, 'but have you looked at churn rates?'" Richardson said, referring to the criticism that Salesforce.com is simply CRM training wheels. "I've talked to lots of Salesforce.com customers, and I haven't seen the churn rate, only insanely happy customers. This is the future of do-it-yourself software."

The big AppExchange announcement overshadowed a preview of the 19th generation of Salesforce.com, dubbed Winter '06.

Highlights of the Winter '06 release included changes to the Salesforce.com user interface, as well as more consistent branding of the multiple Salesforce.com offerings. Winter '06 will also include new mobile technology like tighter integration and synchronization with Microsoft Outlook and improved offline abilities such as greater portable data volumes, field-level conflict resolution and the ability to make customizations offline.

A new AppExchange feature looks to have a huge impact in Winter '06. With a few clicks users can create a duplicate test environment where they can work on customizations and test new applications.

To make sure this whole hosted system stays up and running, Salesforce.com has also made extensive investments in their data centers. There are fully mirrored West Coast and East Coast data centers with real-time failover. They are also building a lab environment in San Francisco.

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