SaaS favors Google over Salesforce

Salesforce opened the door, but Google has the goods to make SaaS a long-term enterprise play

To say that strategy and technology are finally becoming interlinked in business is pure BS.

It has always been thus.

I'm certain that when the first cash-register salesman convinced the first general-store owner to buy a cash register, the sale went through because he was able to convince the owner that this new technology would improve the general store's bottom line.

SaaS as strategy

Even when companies bought and failed to successfully deploy technologies for technology sake in the late '80s and early '90s, you'd have to say they were well-intentioned. By that I mean, no company decided to spend $100 million on SAP R3 because it was cool technology. Some cash-register salesfolks reincarnated as SAP sales representatives convinced them it would, eventually, improve the bottom line.

There is a difference today, however, as Web 2.0 and SaaS (software as a service) are emerging to create technologies that perfectly serve businesses virtualization as a business strategy.

According to Ben Pring, vice president at Gartner Research, virtualization is just a synonym for the ongoing trend to outsource more and more processes.

Call it what you will, Web 2.0 or SaaS, coupled with outsourcing is a match made in heaven.

"First companies bought SAP instead of using home-grown ERP; then they used companies like EDS to handle customer support; now SaaS is just another version of this story," Pring says, who will elaborate on these points at the Gartner Symposium/ITxpo in the US this week.

I suppose this is all about that old chestnut, "Focus on your core competence and let somebody else do the rest."

But what Pring predicts will happen next really caught me off guard. He believes that a company such as Salesforce.com can grow linearly during the next three to four years but that there will be no exponential, sudden leap in the number of customers it serves. And if it did happen, Salesforce.com couldn't handle it anyway.

Enter a company like Google.

"Google is prepared for the exponential. They built out the architecture and the infrastructure to manage that kind of growth," Pring says. Whereas Salesforce celebrated its 1 millionth user a couple of months ago, it is estimated that Gmail serves well over 5 million users.

What's more, as I mentioned in "A step closer to the integrated cloud," Google is looking to acquire ISVs from the CRM, ERP, and BI markets. By combining those offerings with front-end productivity applications, Google could create a service that, over time, will be hard to beat -- a back-end, front-end suite that Pring believes businesses will more readily buy than anything Salesforce develops via its AppExchange partnership model.

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