In-Depth

Salesforce.com Updates Hosted CRM Service—Again

Upgrade is the third this year, and the second upgrade of the salesforce.com service in the last six months. Does the company's in-house development of new features make sense?

• By Stephen Swoyer
• 11/19/2003

At its inaugural user and developer conference, held last week in San Francisco, Salesforce.com announced the salesforce.com Winter ’04 release of its on-demand CRM service.

Salesforce.com says that Winter '04 is the 14th generation of its salesforce.com hosted CRM service. New features include integrated dashboards, workflow automation, real-time alerts, and contract management. The new release also ships with version 2.0 of Salesforce.com’s sforce application server.

With Winter ’04, Salesforce.com begins its expansion into extra-CRM (but nevertheless complementary) markets such as billing. To wit: The contract management capabilities the hosted CRM pioneer has built into salesforce.com Winter ’04. Salesforce.com has said that future enhancements in this area will include order management and invoicing capabilities.

Kelly Spang Ferguson, a principal CRM analyst with Current Analysis Inc., speculates that Salesforce.com will introduce its order management and billing capabilities in an Operations and Finance module. Spang Ferguson questions Salesforce.com’s decision to shoulder the development burden of these and other capabilities entirely on its own, noting that such capabilities can be had—perhaps inexpensively—from outside sources. “We continue to have reservations about salesforce.com’s approach to building such capabilities in-house given the maturity of billing, invoicing, and order management functionality,” she writes. “[I]t would seem that salesforce.com might expedite its entry into the market by seeking an acquisition of an online billing and presentment company.”

As for the topical branding of the salesforce.com service—Winter ’04—Spang Ferguson suggests the CRM-as-a-service pioneer is trying to differentiate itself from conventional, on-premise CRM solutions by trumpeting the rapid upgrade cycles—each chock full of new features and capabilities—that it can deliver through the hosted model. “[T]he Winter ’04 release is a clever way for salesforce.com to communicate the fact that it is essentially upgrading its hosted service every quarter, which is one of the unique aspects of the ASP model versus traditional licensed application deployment,” she writes.

Make no mistake about it: Salesforce.com will maintain the product branding—Professional Edition, Enterprise Edition, etc.—to which its customers are accustomed. If the company holds to its seasonal release schedule, these products will simply be refreshed about every four months.

Not surprisingly, Salesforce.com boasts that Winter ’04 is the company’s third major release this year. Spang Ferguson acknowledges that the hosted CRM pioneer has a good history in this regard. “Salesforce.com continues to be a company that has an exceptional track record of execution, and perhaps this is one of the ingredients to the tremendous success that the company is enjoying,” she writes.

Nevertheless, she cautions, it could be difficult for the company to sustain the breakneck pace that it has set over the last 12 months, especially: It introduced its salesforce.com S3 service this spring, at which time it touted more than 100 usability improvements. At about the same time, it unveiled its long-awaited sforce platform, one of the most ambitious initiatives in the young company’s history. Now, with salesforce.com Winter ’04, the hosted CRM vendor claims to have included about 1,000 new features or enhancements.

“There is a concern about whether salesforce.com can continue the rate of improvement that it has demonstrated over the past several quarters,” she acknowledges. “One question is whether salesforce.com is driving enhancements that are most valuable to its users and whether its investments are also focused on ensuring high levels of customer support.”