The wisdom of Marc Benioff and Salesforce.com.

Recently, I was invited to Manhattan for a Salesforce.com media and customer event. Initially, I wasn't sure what the event was about--I accepted it blindly. Why? Because there is always something so entertaining and informative about the events this company hosts--I just had to be there. So after checking for scheduling conflicts and finding none, I sent in my RSVP, and a few weeks later, I showed up at the event, bright-eyed and bushy tailed (thank you, Starbucks) and ready to absorb new information. The event kicked off at 11:00 am, and there I was, on time to pick up my badge and associated company information.

Unlike the last event I attended in New York (see www.tmcnet.com/478.1), this one had pedestal booths. I would have been surprised that most of the booths were sponsored by financial companies if it had not been for an article (see www.tmcnet.com/479.1) I had read a few days earlier in BusinessWeek discussing Salesforce.com's targeting of the financial services market through a new initiative called Wealth Management Edition or WME.

Salesforce.com has traditionally been very strong in delivering CRM products to the financial services community, so it made sense for them to branch out into the financial market by providing a service very similar to what might be offered from a Bloomberg Terminal (see www.tmcnet.com/480.1). The concept, of course, is that you don't need a terminal if you can host the service. The information provided consists of news, quotes, analyses, opinion, graphs, charts and more.

In addition, the information from WME is married to your traditional CRM system from Salesforce.com, meaning you can track stocks for customers more easily. Let's say a financial advisor has 1,000 clients and 75 of them have expressed interest in Apple as an investment. You can now ping those people more easily when you see Apple news of interest. In addition, you are able to log other information about clients such as their likes and dislikes. A platinum client who loves golf, for example, could be easily notified that Tiger Woods will be playing or appearing in the client's local area.

The point is, financial advisors are going away from a commission-pertrade model and instead are focusing on relationships and charging fees based on a percentage of assets. This means relationship building and touching customers frequently are more important than ever.

Since Bloomberg terminals really don't integrate very well with other systems, this sort of functionality could not be duplicated easily by the company built by the sitting mayor of New York City. Besides, there are millions of financial advisors out there and only a few hundred thousand use Bloomberg terminals.

So, will anyone buy this new service? The answer seems to be "yes," as Merrill Lynch conducted a pilot of 5,000 users and has now decided it wants a total of 25,000. I can't imagine a better customer with which to kick off this initiative.

Getting back to the exhibits, I wasn't so interested in the financial vendors, of which there were many. I wanted to know how CRM would improve in the investment community, so I focused on booths like those of Siemens (www.siemens.com) and Cisco (www.cisco.com) where the themes were tying unified communications into wealth management systems. I also saw a service from StraightThrough (www.straightthrough.com) that integrated the investing tools into the CRM system even more tightly.

To be honest, I didn't really attend to see the exhibits. I came to hear Marc Benioff speak, as he is quite a maverick in the industry. He has a unique and refreshing style that has been largely lost in the CRM and call center markets. The call center and CRM players that existed up until about 2000 were fairly entrepreneurial; you could hear the fire and passion in the words of company founders and managers. In many cases, this passion has died as companies have been rolled up into larger and larger private equity-backed companies that are more focused on accounting than product development. Alternatively, they have become product lines at Oracle. Sure, Larry Ellison is charismatic, but as his net worth has become greater than that of most countries, he has become less and less accessible to the media. I suppose consolidation is a phase virtually all industries are dealing with but, thankfully, in the CRM space, Benioff's passion is still inspiring (and accessible).

Marc explained to the audience that the total number of Salesforce.com customers now stands at 29,800, which equates to 646,000 paying subscribers. He also mentioned that in the fourth quarter, the company processed four billion transactions; the number of transactions has increased and the response time per-transaction has decreased by 50 percent over the last few years. This is an admirable accomplishment.

From there, Benioff went into a discussion about Salesforce 2.0, a concept he calls "the new circle of success." This consists of six initiatives working together to become greater than the sum of their parts. These include Salesforce.com, AppStore, AppExchange, IdeaExchange and Apex.

IdeaExchange (see www.tmcnet.com/481.1) is a pretty novel concept. It is a community set up for Salesforce.com customers and prospects that allows community members to evaluate and comment on all things Salesforce.com. Benioff proudly stated that the company's roadmap gets posted to this site and customers can comment on what they want and don't want, like and dislike.

Marc is not adverse to controversy and has used it extremely well to gain publicity for his company. He has often taken shots at Siebel in the past, and I was curious if he would mention the company as now Siebel, of course, is part of Oracle. Marc did not disappoint. He mentioned that he has leased out space to many members of the AppExchange community of developers to enable these developers to work more closely with members of Salesforce.com. Here is the interesting part: it seems Salesforce.com is using an old Siebel building for this effort. Marc, of course, spun this story out in a very amusing way.

Was this meeting the same old dog-and-pony show you see at many of these kinds of events? The answer is an emphatic "no," and the reason is that Salesforce.com has done an amazing job of creating something unique. They have developed an on-demand operating system available to any developer to use and make money from.

The operating system consists of Apex DB, which allows for database creation; Apex Builder, which allows the creation of any user interface; and Apex Code, which creates business logic. The point is that before you get started delivering a hosted application of any kind, you need to build or lease a data center, build multitenancy, deal with disaster recovery issues and authentication issues, and set policies for upgrades, renewal, analytics, workflow, etc.

Now that the company has built all of these resources, you can effectively write programs that work on the system using a drag-and-drop interface. At this point, these applications are able to be sold through Salesforce.com. In addition, Marc made a point of mentioning that applications are SAS 70 Type II-complaint, which is essential for complying with Sarbanes-Oxley regulations.

There was a fun question-and-answer session at the end of Marc's presentation. He finished up by saying, "The enemy of my enemy is my friend. That makes Google my best friend." This, of course, was in reference to competition from Microsoft.

I asked Marc what he thought about all of the consolidation in the market and he said that organic growth is slowing in the client-server space and these companies must consolidate to survive. I also asked if the name Salesforce.com was limiting as the company expands. He replied that the CRM space is still growing quickly, as is the hosted market. From this perspective, he believes the name is still an excellent one, as are the names of the different initiatives, such as AppExchange.

And the fact that the company's stock ticker symbol is CRM is not too shabby, either.

By: Rich Tehrani, Group Publisher, Group Editor-in-Chief, Technology Marketing Corporation

[ILLUSTRATION OMITTED]