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The End of Software, and a New Way of Doing Business

By Renee Boucher Ferguson  |  Posted 2007-03-15 Print this article Print

Salesforce.com chief Mark Benioff has brought the concept of consumer e-commerce applications to business users, creating one of the fastest growing tech companies in the world.

Most days, at least in public venues, Marc Benioff wears a small white button pinned to his lapel that has the word "software" printed in the middle of a red circle with a thick red line drawn across it. The symbol translates to "The End of Software," in Salesforce.com parlance, and it's become synonymous with Benioff, 43.

Salesforce.com was founded by Benioff and three partners—Parker Harris, Dave Moellenhoff and Frank Dominguez—in March 1999 in a one bedroom apartment atop Telegraph Hill in San Francisco, Benioff's home town.

The concept for the company was simple: provide intuitive, easy-to-use CRM (customer relationship management) software-on-demand, enabling customers to pay a per user, per month subscription fee for the software.

In the process, Salesforce.com introduced the first multi-tenant (shared infrastructure) CRM solution that, in practice, brought the concept of consumer e-commerce applications like Amazon.com and eBay to business users. That innovation alone has led Salesforce.com to become one of the fastest growing tech companies in the world.

To date the company has 29,800 customers and 646,000 subscribers. Its software has been translated into 14 languages and is sold in more than 100 countries. For its fourth quarter of fiscal 2007 the company reported a record 90,000 new subscribers. In March Forbes ranked the company third on its list of "25 Fastest Growing Tech Companies," just behind Google and biotech equipment supplier Illumina.

"The numbers don't lie," said Benioff in a statement. "Customers are flocking to companies like Salesforce.com and Google because we are using the Internet to change the way services are delivered and people interact online."

Salesforce.com's growth, and its status as the poster child for on demand software, has sparked rivalries from some of the biggest applications providers in the world, including Microsoft, SAP AG and Oracle. To compete in a market that's becoming increasingly commoditized, Salesforce.com has stepped up with continuous innovation.

In the last two years the company has launched several major new technology and services initiatives, including AppExchange, a marketplace for Salesforce and third party applications; AppStore, for partners selling applications on AppExchange; Apex code, an on-demand programming language and development platform; IdeaExchange, a community where Salesforce customers can suggest and rank software development ideas that Salesforce incorporates back into its product roadmaps; and trust.salesforce.com, a Web site that monitors Salesforce.com's performance in real time.

Salesforce's innovation isn't by accident. Benioff, a fourth-generation San Franciscan with leanings toward Eastern philosophies, operates on the concept coined by author Steven Covey in his book, "Seven Habits of Highly Effective People," which says one has to begin with "the end" in mind.

You must see beyond the trends to become an influential IT person, writes Eric Lundquist. Read his column here.

"If there was a Buddhist in the room, they would talk about having the specificity of your intention," Benioff has said. The end of software—the install in-house model, not the code—has been Salesforce's intent from the start.

"We knew from the very beginning that we wanted to sell a service that made sales-force automation as easy as buying a book on Amazon.com," said Benioff. "That meant customers had to love to use it. And our subscription-based business model meant that they had to succeed. It sounds simple, but this was a revolutionary break with the enterprise software model of the past, where drawn-out implementations were long on promises but short on results."

Prior to founding Salesforce.com Benioff was steeped in the on-premises software model. He spent 13 years at Oracle in a variety of roles from sales and marketing to product development as a protégé of Larry Ellison.

"When I was at Oracle, we sold our software only to large companies," said Benioff. "We knew that had to change when we started Salesforce.com."

In addition to introducing a new model for software deployment, Benioff and his co-founders also wanted to implement a model of community involvement. So the same day they launched the business they also formed the Salesforce.com Foundation, setting aside 1 percent time; 1 percent equity, and 1 percent product donations for philanthropic projects.

"It has been a decision that we are very, very proud of," said Benioff. "What we didn't know at the time is that this 1/1/1 model would prove to be essential to our corporate culture."

Since the Foundation's inception, Salesforce.com and its employees have donated more than 40,000 hours of their time, given millions of dollars in grants and donated products to more than 1,600 nonprofit companies. In the process, Benioff has written two books, Compassionate Capitalism and The Business of Changing the World.

"We believe that now, any application can be developed on our Apex Platform, marketed on the, AppExchange, sold via AppStore, deployed seamlessly into Salesforce, and run on our on-demand infrastructure," said Benioff.

"That's never happened before, and that's a revolutionary idea that we believe will lead our customers and partners to new levels of success."

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