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Salesforce.com on a Roll

CRM kingpin Siebel continues to struggle even as scrappy newcomer Salesforce.com enjoys surprising success.

• By Stephen Swoyer
• June 1, 2005

There's been a reversal of fortune recently in the CRM market. Long-time CRM kingpin Siebel Systems Inc. is still struggling to find its footing after a series of well-publicized setbacks, and scrappy start-up Salesforce.com is enjoying some surprising successes.

This trend continued last month, when Salesforce.com posted better-than-expected earnings news and announced support for new customization options, which are seen as vital to improving its competitive position vis-à-vis on-premise players like Siebel. In addition, the CRM-as-a-service pioneer announced a pair of mega-deals with financial services powerhouse Merrill-Lynch and professional services giant Accenture Ltd.

Customforce on the Move

Late last month, Salesforce.com gave customers a glimpse of its upcoming Customforce 2.0 toolkit at the aptly named Customforce Day launch event in New York. It marked Salesforce.com’s third such event this year: In March, the hosted-CRM provider touted its new Multiforce initiative at a similar confab in New York, while in April, Salesforce.com shifted coasts for its Integrationforce Day event, which was held in San Francisco.

Salesforce.com’s ambitions with Customforce 2.0 are, to put it simply, nothing less than audacious. The company says the second iteration of Customforce will let users construct custom-tailored analytic, business process, and forecasting views that address their business requirements.

Customforce includes a new Customforce Business Processes feature, a packaged set of 100 business functions that users can embed in their custom-tailored Salesforce.com applications. Canned Customforce Business Processes include features such as lead scoring, case aging, and commission calculations.

Customforce 2.0 builds on its predecessor in other ways, too. It ships with a new Customforce Analytics component, which Salesforce.com officials say supports real-time analysis of business data, via reporting and dashboarding.

Customforce Formulas, another Customforce 2.0 application, lets users create customized, spreadsheet-style formulas and calculations to help with business decision-making. Similarly, Customforce Forecasting lets users design accurate business forecasts (classified by product line or opportunity) for different time periods. Finally, Customforce Standard Related Lists lets uses customize related lists to show relevant data for accounts, contacts, opportunities, and cases.

Also last month, Salesforce.com announced what it said is its largest-ever first-time deal, an agreement with Merrill Lynch to deploy its hosted CRM service to as many as 5,000 users. Officials were careful to point out that while some Salesforce.com customers have deployed the company’s hosted CRM services to more than 5,000 users, the Merrill Lynch deal is its largest initial deployment.

Elsewhere, the deal Salesforce.com notched with professional services giant Accenture was another coup of sorts for the CRM-as-a-service pioneer. According to the terms of the agreement, Accenture will develop a practice around Salesforce.com’s hosted CRM offerings, and will, officials say, also recommend Salesforce.com to many of its clients. Accenture has similar agreements with Salesforce.com competitors Siebel and SAP AG.

Top Notch Financials

For the quarter just ended, Salesforce.com says it added 40,000 new CRM subscribers, bringing its total number of subscribers to 267,000.

During the same quarter, profits were up by 4 cents a share, to $4.4 million—a drastic year-over-year improvement. At $64.2 million, Salesforce.com nearly doubled its performance in the year-ago quarter.

Officials expect this growth to continue, too: The company revised its earning expectations for the 2006 fiscal year upwards, and says it could generate $300 million or more in revenue this year.