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Saas: CRM & the Extended Enterprise

Posted on Wednesday, Feb 21st 2007

In the recently concluded Philippe Courtot interview, we discussed at length the Extended Enterprise and its challenges from the perspective of Collaboration and Security. I wrote a follow-on piece on how Webex has done an excellent job capitalizing on the Extended Enterprise opportunity. (You can read the Courtot interview here:
[Part 1]
[Part 2]
[Part 3]
[Part 4]
[Part 5]
[Part 6]
[Part 7]
[Part 8]
[Part 9]
[Part 10]
[Part 11])

In this discussion, I want to explore how Salesforce.com (Nasdaq:CRM) takes advantage of the Extended Enterprise trend.

Salesforce.com, of course, has been THE posterchild of Software-As-A-Service (SaaS), OnDemand, and other buzzwords that have come to characterize the next generation Enterprise software business. It’s an unbelievably growth story, with the stock trading near its all time high, recently named on the Forbes top disrupters via Internet technologies, and one of the fastest growing technology companies around.

All this, when set in the context of the fact that almost every VC turned down Marc Benioff, and it was Larry Ellison who angel funded this company, makes you wonder about the incredible visionaires the venture business is full of. But that’s a separate discussion!

So, let’s explore why the Extended Enterprise phenomenon has been so very important for the growth of Salesforce.com.

If you look at the CRM workflow (sales force, distributors, resellers, customer support, technical support, telemarketeers, telesales reps), much of the participants in this portion of the business ecosystem operates from outside the firewall. The sales force is traveling with laptops. Distributors and resellers are most certainly not within the enterprise IT system. The telebusiness functions are often outsourced, but in that early part of funnel building, leads and account data need to be shared with the in-house sales force in a time-critical manner.

With Salesforce.com, it is easy to do exactly that. And thus, I believe, the company aligns well with the Extended Enterprise trend, which the bulkier enterprise systems would have more difficulty adopting to.

Now, add in the post sales support functions, which are almost inevitably being outsourced to a low cost destination like India. Often, the up-sell, cross-sell opportunities need good understanding of the support call logs. Now, we’re talking about a very complex workflow integration, which definitely has to straddle the Extended Enterprise.

In fact, I am not even saying Salesforce.com can do this quite yet. However, they are well-positioned to capitalize on this trend. And I think they will.

And I will also submit, that if the gigantic egoes of their CEOs would not be on the way, Salesforce.com and Webex would make a terrific merger, and can give SAP-Oracle a run for their money. Then, add in Netsuite, which is preparing its IPO – you have a completely separate alternative to the big boys!

This segment is a part in the series : Saas

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Hi Sramana — Thanks for the excellent post. As the CEO of LucidEra (a company providing a complete Business Intelligence On Demand solution), I also see a trend in the extended enterprise. I agree that the four walls of a company are disintegrating, and the employees, data, and applications are no longer all contained behind a nice, neat firewall. As a result, the data you need to manage your operations becomes much more distributed than before. You need access to not only your own internal data, but also data residing within a partner’s organization, data coming from hosted solutions, data from the web, etc. So, reporting and analysis is very different in the extended enterprise, and benefits from having a hosted, on-demand solution accessible by all parties regardless of location. That’s why on-demand Business Intelligence is becoming a hot topic.

Also, you mention combining salesforce.com, NetSuite, and Webex to get an alternative to the big boys. If you add in on-demand Business Intelligence, then you truly have a complete alternative.

Ken Rudin Friday, February 23, 2007 at 5:01 PM PT

Indeed the future will see more on demand CRM implementations than traditional ones, and for sure the big boys will be missing out on this opportunity, but remember larry (the big boys) owns most of Netsuite and at least 5% of Salesforce.com, and maybe he owns other shares in other crm vendors who knows.

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