Restless Salesforce natives form new gang

Profile picture for user pwainewright By Phil Wainewright April 27, 2014
Summary:
The AppExchange generation has grown up. Vendors native to the Salesforce1 platform want a voice of their own, independent of Salesforce.com

© freehandz - Fotolia.com
Within the fast-expanding universe of enterprise cloud application vendors, there's a unique band who have irrevocably tied their fortunes to SaaS bellwether Salesforce.com.

These are the Salesforce1 natives, whose applications are built entirely on the larger vendor's cloud-hosted platform. This is not like hosting on a cloud infrastructure provider such as Amazon Web Services or Microsoft Azure, where the ISV usually has the choice of moving their code to another platform should they wish to. These applications are written to take advantage of data objects and application functions defined within the Salesforce1 platform. They cannot move anywhere else, even if they wanted.

AppExchange matures as vendors grow upAccording to a favorite adage of Salesforce.com CEO Marc Benioff, people always overestimate what yo…May 2 2013diginomica.com

Yet despite this constraint — perhaps because of it — the leading members of the tribe are prospering. There has even been an IPO, when life sciences CRM specialist Veeva issued shares on the NYSE last October. Although recent moves in sentiment against tech high-fliers have taken Veeva's stock back down to just below the offer price, it initially popped 84 percent on the opening day.

Others in the tribe are attracting big backing. A few days ago, FinancialForce.com announced a $50 million investment commitment from the private equity firm that is currently taking over UNIT4, its main owner (Salesforce.com also holds a stake). Last month field service management provider ServiceMax added $71 million to bring its total funding to $120 million. Others include quote-to-cash provider Apttus, which raised a first round of $37 million last September and MRP provider Kenandy, led by enterprise applications veteran Sandy Kurtzig and backed by leading VCs to the tune of $43.5 million.

Raising awareness

These are now substantial businesses. Veeva's financials in the year to 31st January show total revenues of $210m, with its subscription revenues doubling over the previous year. Unusually for a SaaS provider, it was even able to report a GAAP profit. ServiceMax expects revenues in the $50-100 million range this year, according to its CEO. FinancialForce.com grew 85 percent last year to an annual run rate of $30 million.

Force United logo on blue background
It should be no surprise, then, that a few of this select band have decided it is time to raise their profile. ServiceMax, Kenandy and Apttus last week announced the launch of Force United, an advocacy group exclusively for Salesforce1 native ISVs.

The motivation is to raise awareness among enterprises of the benefits of adopting a group of applications that all share the same underlying platform, as ServiceMax CMO Stacey Epstein explained to me last week:

"In the past a sales rep never had access to understand what's going on on the field service side. Now that we're native to the platform, that's all just one shared object.

"Integration just becomes a no-brainer when you're all on the same platform. It's just, point all the objects to talk to each other."

That message sometimes gets lost when Salesforce.com promotes its wider AppExchange ecosystem, said Epstein:

"Salesforce.com don't spend a ton of time promoting the ISVs and how advantageous it is. A lot of the tools on AppExchange are not native apps ..."

"If you think about having all of your solutions being on one platform, I think that's going to be very key going forward.

"We want to help educate the community about those benefits in a different way than Salesforce does it — but of course in a complementary way."

Therefore the group is also launching an event taking place in July, the CIO Innovators Summit, designed to highlight the benefits of Salesforce1 native applications for enterprises.

Collective bargaining?

Stacey Epstein, ServiceMax
Stacey Epstein, ServiceMax

Behind the scenes, the consortium will share technical learnings with each other and collaborate to improve integration and other aspects of working with the Salesforce1 platform. That may include making collective representations to Salesforce.com about specific functionality, such as the governor limits built into the platform, which act as a gate on high-volume updates from one application to another.

But Epstein was quick to scotch the suggestion that Force United might become like a militant trade union, agitating on behalf of its members. Instead she emphasized the opportunity to be a positive influence on the evolution of the platform:

"Us collectively putting our input together, prioritizing the things we want for Salesforce will be a great thing for Salesforce."

The group's ability to speak on behalf of the wider Salesforce1 native ISV community does of course depend on it building up a broadly based membership. As of launch date, however, Epstein admitted that the three founding members had not yet spoken to any of their peers.

"This has been a grassroots thing where we haven't been focused on recruiting other vendors ..."

"The definite plan is that this group will grow. I think of it as like an independent user group. We're not trying to be exclusionary. This happens to be the three founders of the group but we expect that it will grow."

Verdict

With my background as a founder of EuroCloud, I'm very much in favor of advocacy groups within the industry. It really makes a difference to get together with others that face the same challenges and opportunities to share knowledge and experiences. Everyone benefits.

Therefore I hope Force United will be a successful initiative. But I do find it somewhat bizarre that the founders have launched it without apparently making any effort to contact any other prospective members. That could rebound on them as they seek to gather broader support for the initiative.

One of the challenges when bringing together any industry group is getting competitors to work alongside each other. With Kenandy as a founding member, will that sytmie support from Rootstock, which was offering its Salesforce-native MRP before Kenandy even existed? Or from ERP rival FinancialForce.com? Many similar potential conflicts will have to be assuaged.

Salesforce1: platform or puff stuff? Benioff answersA long Twitter discussion thread on the topic of Salesforce1 aka SF1 broke out, involving a variety …Dec 2 2013diginomica.com

There's also the question of how Salesforce.com itself will view this new group. Epstein's analogy of a user group is a good one — the Salesforce1 native vendors clearly have common points of interest and it makes sense to band together.

But the relationship between a vendor and its user group does not always run smoothly — the existence of a subset of activists pushing a specific line often feels like unwelcome interference with how the vendor chooses to manage its relationships with the broad mass of customers and partners. All the more reason, then, for Force United to make sure it has as broad a base as possible rather than being seen as pursing the vested interests of a small clique.

On the whole, though, Salesforce.com should be pleased with this development, even if it means ceding some control of the terms of debate within its ecosystem. Almost a decade after the original launch of the AppExchange — when people scoffed at Marc Benioff's exhortations to ISVs to build their apps on the Salesforce platform — its native vendors now feel grown up enough to want to take control of their own destiny. As Epstein puts it:

"The kids are off to college, they don't necessarily need mom and dad to help further this mission."

We'll watch with interest to see how this develops.

Disclosure: FinancialForce.com and Salesforce.com are diginomica premier partners.

Image credits: Gang © freehandz - Fotolia.com; Stacey Epstein headshot courtesy of ServiceMax; Force United logo by Force United.