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Follow UsDuncan Martell
SAN FRANCISCO: Marc Benioff, a 13-year veteran of Oracle Corp. and now
chairman of start-up Salesforce.com, has a set a modest goal for himself and his
140 employees: Kill the very industry that made him a fortune and create
hundreds of billions of dollars in market value.
"Software is fundamentally dead and companies like Salesforce.com are
creating this moment," Benioff said in an interview. "I feel strongly
that we're into the next paradigm shift already."
Talk about biting the hand that feeds you.
Benioff, whose bold claims match his towering 6-foot-5-inch-frame, joined
Oracle straight out of college and by 27 was piloting a Ferrari convertible. He
was one of the initial 10 investors in Siebel Systems Inc., which is the largest
maker of customer-relationship management software, and made tens of millions of
dollars when it went public.
Now the 35-year-old Benioff is not only competing against his former
employer, database software giant Oracle and its ruthlessly competitive chairman
Larry Ellison, he's also taking on Siebel, its chairman Tom Siebel, and its
spin-off, Sales.com, along with other upstarts such as UpShot.com and others.
Based on what Oracle, Siebel and others are doing and what analysts are
saying, his claims - while perhaps overstated - should not be dismissed out of
hand.
Because of the explosion of the Internet, companies are discovering that
instead of spending millions of dollars and years installing complex software
programs on their own computers to help automate their operations, they can pay
companies to do it for them as a service. Customers then use the software with
nothing more than a secure Web browser and a password.
The trend is big, gaining momentum and large companies are embracing it ever
rapidly.
Software services
Call it software services, and it's at the heart of what not only Benioff and
Salesforce.com are doing, but also Ellison and Oracle, and even PC software
giant Microsoft Corp. and its chairman Bill Gates.
Microsoft, with its .NET efforts, is seeking to deliver more of its software
via the Internet, just as is Oracle with its OracleSalesOnline.com initiative,
which for the time being allows users free use of its software to help
salespeople manage leads, contacts, meetings and the like over the Internet.
Ellison himself has said software will eventually become a service delivered
over the Internet, as inevitably as night follows day.
So, software as software isn't dead, Benioff argued, but the way it's been
sold historically - packaged on CD-ROMs and the like - is. Software companies
will still sell software, but customers will buy it on a per-user basis per
month, typically, and the software company will host the program either on its
own computers or at a Web-hosting company, which are known as application
service providers.
San Francisco-based Salesforce.com uses Qwest Communications, which provides
the space, power, routers and switches while Salesforce.com has supplied its own
hardware and people. It charges $50 per month per user and claims that more than
20,000 organizations use its service. Benioff adds that his firm has more than
1,100 paying customers and that his company has inked deals with Yahoo! Inc. and
DoubleClick to be the providers of online salesforce automation for the Web
portal and online advertising company.
Not standing still
What Salesforce.com is doing right now is smart, said Chuck Phillips, a highly
regarded software analyst at Morgan Stanley Dean Witter. "It's a lot easier
to do this for new applications and what (Benioff) chose is a good one because a
lot of people haven't invested in" (online sales force automation),
Phillips said, adding that, at least so far, Salesforce.com has the lead.
"But it's not something that happens quickly; almost every large company
is looking at some form of software service," Phillips said. "But
these things play out in years, not months."
But Oracle isn't standing still. In late August, it launched a competing
product to Salesforce.com, OracleSalesOnline.com and is, for the time being,
giving it away for free. The Redwood Shores, California-based company's
executive in charge of CRM software, Mark Barrenechea, said it's already been a
tremendous success.
In its first 60 days, Barrenechea said the free service has attracted more
than 6,000 businesses and 125,000 subscribers. "It is scary and we're doing
little to no advertising," Barrenechea said, who dismisses Salesforce.com
and Siebel's Sales.com as "single-user and low-end user products in the
marketplace."
Barrenechea said the OracleSalesOnline.com efforts are little more than
"a way to ramp sales of 11i," Oracle's suite of software products that
help businesses become e-businesses, running everything from salesforce
management to ordering supplies over the Internet.
Yet as a stand-alone offering, a recent Gartner Group report said Oracle has
shortcomings. Unlike Salesforce.com, OracleSalesOnline.com can't link up with
personal digital assistants such as Palm Inc.'s Palm device and others.
"Early users provided as references by Oracle have compared the offering
unfavorably to those from Sales.com and Salesforce.com," the report stated.
Picture this
Maybe so, but don't expect Ellison and Oracle, the world's second largest
software company by revenue, Siebel and others to stand still. Oracle has tens
of thousands of employees, a world-recognized brand and a rabid salesforce,
analysts said. It also has the 56-year-old Ellison, who is known for his prickly
relationships with former executives who left to found their own companies.
Benioff eventually reported directly to Ellison at Oracle and, for the
moment, appears to be keeping Ellison - who is an investor in Salesforce.com -
at bay.
Along with the canine accessories in his office for his dog, Koa (in Hawaiian
it means warrior), Benioff has a picture of him and Ellison. The photograph was
taken on a shared vacation, with Benioff in a T-shirt and shorts towering over
the already tall Ellison, who sports a tank-top and shorts.
One has to wonder how much longer it will be until Benioff must tuck the
framed photograph into a drawer and begin a new life as an ex-Ellison protege.
(C) Reuters Limited 2000.