Salesforce.com Jumps into the Hosted SOA Market

| May 24, 2007 | Application Infrastructure | Competitive Intelligence Report

| Analyst: Brad Shimmin

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

May 21, 2007 -- Salesforce.com announced Salesforce SOA, taking service oriented architectures on demand for the first time. Salesforce SOA will deliver SOA as a service, seeking to counter complex and expensive software-based SOA solutions for intelligent Web services integration. Salesforce SOA is a new capability of the Apex programming language that will allow developers to focus on innovation, not infrastructure, while building a new class of on-demand applications. Salesforce SOA was unveiled and demonstrated today at the Salesforce Developer Conference.

Analytical Summary

• Current Perspective: Positive on Salesforce.com announcing Salesforce SOA, a set of extensions to its Apex programming language, designed to facilitate on-demand, hosted SOA applications that need not be dependant upon or connected with the company’s software as a service (SaaS) CRM solution. Though at least six months away from tangible results, Salesforce.com’s overall business plan for a blended SOA-SaaS platform and ISV ecosystem has the potential to dramatically alter the SOA landscape for IT practitioners.

• Vendor Importance: Very high to Salesforce.com, which has worked since 2003 to connect its hosted CRM solution with customers’ on-premise line-of-business software and to tailor its service to more closely map to company-specific CRM business process requirements. With the introduction of Salesforce SOA, developers working in Apex can now write extensions to the company’s CRM system that are able to not only publish Web services but incorporate external Web services either from a customer’s on-premise network or over the Web.

• Market Impact: Very high on both the SOA and application and data delivery markets over the long-term. Over the next twelve to eighteen months, Salesforce.com's continued work on its on-demand, hosted environment, proprietary programming language and 3rd party software marketplace will begin to alter the way IT professionals view their SOA installations, giving them a low risk opportunity to host select portions of their software infrastructure on Salesforce.com as an SaaS application. The same will be true for SOA ISVs, which will be able to affordably create, publish, promote and sell SOA-based software on the Salesforce.com marketplace, AppExchange.

Recommended Competitor Actions

• Microsoft should see Salesforce.com’s Salesforce SOA announcement as particularly threatening to its recently announced Biztalk Services initiative and overall SaaS efforts with Dynamics Live. Unlike Salesforce.com, Microsoft has an established development framework (.Net), tooling and support for various programming languages, which it could exploit comparatively. However, Microsoft, without experience as a SaaS provider, should consider a relationship with Salesforce.com rather than resorting direct competition.

• SAP should also consider Salesforce.com’s commitment to SOA and willingness to move away from its line-of-business CRM application as particularly threatening. SAP, since releasing its SAP CRM on-demand solution last February has not seen tremendous update among customers, some of which cite off-the-shelf, inflexibility as a deterrent to extensive use.

• Oracle, which also has released on demand versions of its line-of-business applications, should watch Salesforce.com closely. Like SAP and Microsoft, Oracle does not have the experience as a hosted, on-demand software vendor. However, the company has taken a very aggressive approach to this space, SaaS-enabling not just its enterprise applications but also its database administration, collaboration, disaster recovery and training solutions.

• Traditional SOA vendors including TIBCO, BEA, Software AG/webMethods, Sun and IONA, should seek a partnership with Salesforce.com, providing core SOA services for its Salesforce Platform Edition foundation. These vendors should also consider building direct support for Apex into their solutions to better support customers employing a mixed hosted and on-site solution with Salesforce.com.

• All Salesforce.com rivals should position the company’s announcement as being technologically premature with no direct, immediate market impact. Salesforce SOA extensions to the Apex language (itself in developer preview with plans for final release in December) won’t reach developer preview status until this fall. And while there are more than 750 registered AppExchange ISVs presently, full AppExchange commerce via AppStore is still pending.

Recommended End User / Customer Actions

• Current Salesforce.com customers employing SOA-based solutions in-house should welcome Salesforce.com’s announcement heartily, as Salesforce SOA will enable them to incorporate Web services into their hosted CRM application capable of reaching out to external applications via SOAP/XML.

• Potential Salesforce.com customers with existing SOA solutions and experience with the Java language should begin evaluating Apex to assess whether or not existing development resources can support both Java and Apex. Nevertheless, these customers should push Salesforce.com to open up its runtime environment to more than Apex.

• Potential and existing customers with no Apex experience, who need to integrate Salesforce.com CRM with on-premise systems, should not be put off by Apex. Though they cannot build applications which themselves can be hosted alongside Salesforce.com’s CRM application, the company’s established API supports most major languages and provides deep access to its hosted CRM code.

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