Salesforce's AppSpace signals major shift in SaaS

A hosted portal is the vendor's latest venture - and it's sparking comparisons with MySpace

The days of dismissing SaaS as “just another delivery system” are long over. In its recently-announced Spring ’07 release, Salesforce.com has shown how there is an endless number of ways in which it can reconfigure its core competency to serve new purposes.

This time, it’s AppSpace, a hosted portal environment that Salesforce executives like to call MySpace for the Business Web.

By exposing documents through web services, AppSpace will enable users to create a two-way collaborative, shared environment for its partners and customers, allowing users to bring in mashups and custom applications, including all AppExchange applications, documents, spreadsheets and calendars.

Martin Schneider, a senior analyst with The 451 Group, says AppSpace represents an obvious shift by Salesforce away from being a silo of technology with its own data to a more process-centric service.

As it moves up the food chain towards ever larger customer deployments, Salesforce is now able to work with IT rather than circumvent it, he says.

“Before they got in, the decision maker was a line-of-business guy, not IT,” he says.

Initially Salesforce offered its own static data that lived only within the Salesforce platform. But now, thanks to web service APIs and other SOA technology, it is becoming an environment for integration and interoperability with other applications and data.

“Their product is beginning to make sense in a process sense rather than being data-centric,” Schneider says.

Salesforce now includes workflow as part of its service and supports pulling in order data or inventory data to close the loop of a business transaction.

Jeff Kaplan, managing director at THINKStrategies, says AppSpace is a smart move because it extends Salesforce’s exposure beyond CRM to companies looking for portal solutions.

However, Kaplan also sees in AppSpace a warning sign to Salesforce’s own partner base.

“There are a few Salesforce partners that are also in the portal business.”

Partnering with a large vendor like Salesforce is always a double-edged sword. As they expand their portfolio, such vendors run the risk of stepping on the toes of some of their partners. However, if history is any indication, smaller companies will always be willing to enter the lion’s den in the hope of expanding their own customer base despite the dangers, as Microsoft partners know very well.

Denis Pombriant, principal at Beagle Research, likes the second major new feature in Spring 07 almost as much as AppSpace. Dubbed IdeaExchange, it uses the AppSpace technology to capture information from customers about what they want to see in a new release.

This feedback is on demand so that Salesforce can use the feedback to drive product direction, according to Pombriant.

“It is in line with a lot of research and thinking coming out of MIT these days,” says Pombriant. That research says that customers are rebelling against having new releases thrown at them without considering their needs first.

Idea Exchange is a technology not easily adopted by Salesforce’s tradition-bound on-premise competitors, whose architecture does not allow for the kind of quick turnaround available in a true SaaS application.

With only one code set running, a vendor doesn’t have to spend a lot of time building for different operating systems and different back-ends. They can build once, test it once, and know that it works for everybody, everywhere.

The difference can be seen in the fact that Salesforce releases a new version four times a year while on-premise vendors may not even offer a new version on an annual basis.

Pombriant’s conclusion is that Salesforce and SaaS are not going away.

“This is the real McCoy”, he says.

AppSpace or MySpace?

In a sign that Salesforce isn’t letting up on hyperbole, its flamboyant chief executive, Marc Benioff, has dubbed AppSpace “the MySpace of the Business Web”.

That tag brings to mind his description of Salesforce’s products and AppExchange platform as “the end of software”.

In fact, Benioff describes AppSpace as “the End of Software for portals”.

David Watson

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