With Dreamforce ‘11 coming up later this month, I thought it might be interesting to do a quick review of what I am seeing in the market around the Force.com initiative.  Salesforce has been one of the early proponents of using a Platform-as-a-Service or PaaS solution in building out your SaaS business.   I believe that the Force.com platform offers new and existing ISV’s several real value propositions:

• Pay-as-you-go pricing model.   This is really helpful to small companies just getting started and Salesforce will allow the customers to tie their their revenues to the royalty fees for the platform.

• Packaged platform.  The platform contains everything from a development kit, database, configurable UI, reporting and the hosting infrastructure, all for one price.  In addition to the price advantages it is just the streamlining of vendor relationships by getting all of your technology from a single supplier.

• Elastic scalability.  Because Force.com is built on the Salesforce infrastructure, it can scale up and down to meet the needs of high transaction or even periodic type applications.  This is a very nice feature that makes true multi-tenant Cloud Computing infrastructures so cost efficient to operate.

For a company that is new to the Cloud and looking to launch a SaaS business quickly, Force is a great way to start.   Based on some of my discussions with clients and other ISVs, here are some of the real and perceived challenges associated with Force.com and other PaaS solutions.

• Lock-in.  Most companies tell me that having a PaaS package is attractive but they don’t like putting all of their technology needs in the hands of a single provider.

• Development environment.  For many companies who are used to coding in Java or other languages, the Apex 4GL language is not very appealing to hard core developers. It also doesn’t offer enough flexibility for certain types of  applications.

• Complexity.  Companies who offer complex enterprise applications that require robust rules and calculation engines, workflow, integration or are offering other types of deep infrastructure solutions, find that Force is not a good match for their requirements.

Even with these potential drawbacks, there are many companies who are building their SaaS businesses on top of the Force platform.   Here is my short list of some of the more well know firms:

• FinancialForce.  The company is a joint venture between Salesforce.com and Unit4, a Dutch ERP firm. FinancialForce offers both financial and professional services applications.

• RemedyForce.  Developed by BMC Software and Salesforce.com, it is based on the popular Remedy ITIL and help desk product.

• AgileVision. This is CA Technologies Agile development tool based on Force.com.

• ServiceMax. Independent company that is offering a Cloud-based Field Service Management solution. The company just landed a Series B round of funding for $14M.

• JobScience. Offers a talent relationship management suite on top of Force.com.

• Veeva Systems. Offers CRM and regulated content management solutions.

• BasicGov.  Delivers a suite of applications designed for the needs of state and local governments.

• CyberU. Cloud-based learning management system.

• Less Software.  Provides a light-weight supply chain management software product.

Other traditional software firms, or Hybrids, and even some SaaS firms are using the Force.com platform to extend their existing products and solutions.  Some of these companies include:

• Axway. Axway Community Management (ACM) is a new offering that extends the company’s existing on-premise B2B and EDI products.
• Callidus Software. This hybrid company built a new set of Cloud-based SMB sales performance management solutions, Plan Communicator and Commission Manager.
• Convio.  Their Common Ground product extends their constituent engagement solution for non-profit organizations.
• Xactly.  A leading SaaS firm that offers incentive compensation and sales performance management solutions.  Built a very lightweight solution on Force.com for very small companies called Xactly Express.
• Zuora.  Offers their Z-Force 4.0 subscription management platform for Salesforce.com customers who want a tightly integrated solution.