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• Software

By Andy McCue, 27 February 2004 17:25

NEWS Hosted CRM vendor salesforce.com continued the march towards its hotly anticipated stock market flotation with announcements aimed at building its credibility as a mainstream CRM alternative for large enterprises.

At its sixth annual "customer success" day in New York this week, CEO Marc Benioff unveiled two major customer deals and a partnership with IBM and its WebSphere platform that allows greater customisation options for users.

Salesforce.com executives lined up as the company revealed it now has in excess of 9,500 customers - but while the salesforce.com bandwagon continues to gain momentum ahead of its expected $100m IPO, which could happen as soon as March, questions still remain about its ability to compete with Siebel, PeopleSoft and Oracle at the high end of the market.

Indeed, one of the new customers, payroll processing services firm ADP, is using salesforce.com across 3,000 users for the automation of its salesforce processes and management – but John LaMancuso, senior VP of sales at ADP, revealed the company has just taken on Siebel to replace its old Clarity customer-facing CRM systems.

Likewise, US bank SunTrust will use a combination of over 2,000 salesforce.com subscriptions with Siebel for CRM. But Ernie Megazzini, senior VP of enterprise information services at SunTrust, said even that move to hosted software is something of a revolution for the bank.

"We are not the traditional hosted software buyer. We are an old traditional conservative bank," he said. "We don't take too many risks."

Jim Davies, research analyst at Gartner, told silicon.com that salesforce.com will increase its attractiveness to the high-end customers with its IPO.

"Large organisations need to have some form of security and look into someone's books and see how viable they are," he said.

Davies also said that salesforce.com has changed its selling tactics, particularly in Europe and the UK, after acknowledging that while small firms can be targeted by telesales, face-to-face is essential for the big customer accounts.

Another issue that continues to dog salesforce.com is the churn rate at which it loses customers, despite the impressive numbers of new customers it keeps chalking up. It is not something that anyone at the company will comment on but Gartner's Davies said the fact users can just switch their subscriptions on and off works for and against the company.

"Customer churn is a very closely guarded secret at salesforce.com," he said. "Sometimes if someone doesn't have the budget up front [for a CRM project] it can be viewed as a stop-gap solution until they have the budget."

Yet there are no signs of the momentum slowing just yet, with ADP looking at a possible increase in users to 4,500 worldwide and Sun Trust evaluating the product for a further 14,000 seats. But despite salesforce.com executives dismissing Microsoft's entrance into the market, Davies said the Redmond giant will be a major competitor.

"The thing with Microsoft is you have got viability. Microsoft you know is going to be there. For customers, that is the paramount concern – the vendors are consolidating every quarter," he said. "By the time Microsoft gets to version two and three a lot of gaps will be plugged and it will appeal to the larger organisations."