0
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.
There are many more applications being developed and I am sure more will be announced at Dreamforce at the end of August. What is clear is that there are many different use cases and the PaaS market is evolving very quickly, it is just important for companies to carefully evaluate their needs before committing to any platform.
I would also recommend to connect to other firms that are doing similar types of products or services and ask them about what has worked and what to watch out for. When used in the proper situation Salesforce can really offer a nice Force multiplier for your SaaS business.
Company: Cornerstone OnDemand
Started: 1999
Located: Santa Monica, California
Geography: Global
Market: Integrated Talent Management
Products: Onboarding, Learning Management, Social Networking, Compliance, Performance Management, Compensation, Succession Planning and Extended Enterprise
Key Customers: Barclays, Barnes & Noble, Kelly Services, MasterCard, Turner Broadcasting, Starwood Hotels & Resorts, Flextronics, Ticketmaster, Sanford Health, Save the Children
Website: Cornerstone OnDemand
Blog: Talent Management Blog
Twitter: @Cornerstoneinc
Recent News:
Cornerstone OnDemand EMEA General Manager to Give Keynote Presentations at iLearning Forum 2010
NRF Foundation Chooses Cornerstone OnDemand’s Industry-Leading LMS for Global Training Initiatives
I asked Adam Miller, Cornerstone OnDemand’s President and CEO a few questions about his business and his view of the SaaS market as we move into 2010.
Did you start out as a Software-as-a-Service company?
We started the company in 1999 as CyberU, which was an on-demand Internet content company, focused on e-Learning. We were on-demand before there was Software-as-a-Service.
The original idea for the company was to provide access to education on-line for individuals and small businesses, which was more of a consumer business model than what we are doing today. CyberU was a distributor of on-line training content as opposed to delivering the courses through a traditional classroom.
What we started to realize is that large companies were interested in educating their employees, so we then begin selling to large Fortune 100 type companies. Many of these companies had a strong resistance to using any type of on-line business solutions, because they felt that it should be inside their own data center behind a secure firewall. There were a lot of concerns around security, scalability and control of business applications. This was about the same time that Amazon.com was launching their on-line retail operations and consumers had similar issues putting their credit card information on-line. From about 2000 through 2006 we were just a small software company that sold training and content over the Internet.
We held to our belief in on-line solutions and even as recently as 2004 we lost many of our deals because we wouldn’t deliver our product as an on-premise offering, but we knew if we did that for even one client we would undo our economic model.
Then over time we were still managing training on-line but our customers wanted to tie the courses back to leadership and succession plans and then led us to rollout an integrated Talent Management suite of solutions. Well, as it turns out the SaaS model has caught on and has grown form less than 300,000 to now over 3.3 million eLearning and Talent Management users, who are happy we decided to deliver our products over the Internet.
Why do your customers buy from Cornerstone OnDemand?
Our customers buy from us because our solutions are better, faster and cheaper than traditional Talent Management solutions.
We are better because we offer a fully integrated talent management platform that covers all of the different aspects of managing people all the way from ‘hire-to-retire’.
Cornerstone OnDemand is faster because our entire system is configurable with 11 discrete modules and over 9,000 individual features, that all can be personalized to address our customer’s business requirements. Our customers can also start with a single model and then turn on incremental modules over time as they are ready for more functionality. Our system can scale to serve the needs of the largest organizations and down to very small companies. In fact, our largest customer is Kelly Services with over 750,000 users and we have eight customers who have more than 150,000 users each. Our average customer has about 14,000 users.
The reason we are cheaper is because we are a pure-play SaaS provider. Our customers have found that it is cheaper to only have to buy from a single supplier, not have to buy hardware and have a lot of staff having to manage multiple systems and relationships.
Our customers also like that we only build products based on their enhancement requests because we don’t build software they don’t want. We currently offer five integrated products including Learning, Performance, Succession, Connect or what some are calling Social Networking and Extended Enterprise which services the needs of non-employees using both our Learning and Connect products. Cornerstone offers global capabilities and has users in 141 countries and supports 16 languages. We think we are doing a good job because we have 95% customer retention rates and that is very important to us.
What do you see as the key trend emerging in the SaaS industry?
The biggest trends we see are Cloud Computing and Mashups. Mashups can be Platform-as-a-Service (PaaS) methods to combine application functionality and even integrations between different company’s systems. It is like delivering third party content to customer and they don’t know where it comes from but it is valuable. We anticipate that customers in the near future will be able to do basic integrations between content and systems themselves without needed the assistance of any third party or system integrators and that will be very popular.
We are also starting to see more, large-scale deployments as SaaS becomes more mainstream. As I mentioned earlier we have eight customers with over 150,000 users including some very large banks, insurance and two of the largest healthcare companies who are now deploying Cornerstone OnDemand solutions, which is exciting.
What is your outlook for 2010?
2009 was the best year we have ever had and broke all of our records. We think that 2010 is even going to be better and we are very bullish.
Last year we were able to gain some significant marketshare and we will continue our expansion this year. For instance our partnership with ADP is just getting off the ground and this year we will anticipate more deals from a growing partner pipeline. ADP is proving to be a great partner and has brought a lot of resources to the table and we are optimistic about 2010.
But we are still not out of the woods with the broader economy and there are still has some weak spots, so we will continue to monitor things carefully.
Back to top