Transitioning From The Enterprise To The Cloud

By Juergen Urbanski

At its user conference DreamForce’09, Salesforce.com released some impressive statistics on the traction that its Force.com platform has been gathering. The company claims 135,000 custom applications and 10,000 sites are built on Force.com. Already, 55% of the HTTPS transactions the company processes come through the API (i.e., from partner applications) versus only 45% coming from Salesforce’s own applications.

What drives that adoption and how does Force.com stack up against the alternatives?

New research [email info@techalpha.com] by GigaOmPro analyst firm TechAlpha contrasts the strengths and weaknesses of Force.com vs. platforms provided by NetSuite, Workday and Intuit. TechAlpha finds that PaaS is gaining most traction with corporate developers, not independent software vendors (ISVs).

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It’s no secret Software as a Service (SaaS) has generated tremendous excitement among many customers for its apparently transformational adoption model and ownership experience.  Unlike client-server applications, SaaS delivers faster time to value often via a viral buying cycle as well as lower risk deployment.  The early adopter focus has been on small and midsize businesses (SMBs) because SaaS makes it economical to reach them with broad penetration for the first time.  Where SaaS has carved out successes in large enterprises, it has largely been in more independent, non-mission critical departmental functions who have no capex budgets such as HR, CRM, or marketing, not end to end suites.  Despite the undoubted progress that SaaS is making, we believe the adoption of core, mission critical processes (Financials, order management, industry-specific processes such as manufacturing or securities processing) in large enterprises is still many years out for a variety of technical and business challenges.

SMBs have been the early SaaS suite adopters because traditional vendors couldn”t reach them

SMBs have been the low hanging fruit for early SaaS adoption because they’ve historically been underserved by application vendors.  Small deal sizes and bare bones cost of ownership requirements typically were critical stumbling blocks.  The small deal sizes mean vendors have to reach them with a much lower cost channel than direct sales.

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