Boston-area Software Firms Hitch Their Wagons to Salesforce; Say Ride Can Be Rough But Profitable

1/14/09Follow @wroush

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submit a support request to the queue, and somebody in their call center will eventually respond to it.”

Adds Hubspot’s Volpe, “There aren’t people at Salesforce who worry about the vast majority of companies on the AppExchange. That may be because they aren’t driving the volume of business that they care about yet.”

This, in fact, was another theme. The common perception among the folks I interviewed was that while the AppExchange platform has attracted new business and a lot of great publicity for Salesforce, the company hasn’t done much yet to spread the wealth—except to the developers of applications that become big sales vehicles for Salesforce itself. “They talk about doing things like joint webinars and joint marketing events [with third-party developers], but in order to get that type of attention, you have to be one of the companies driving a lot of seats for Salesforce,” says Ernst.

Clara Shih denies that Salesforce plays favorites, but she says that the company has to focus, for obvious reasons, on the third-party apps that have the most potential to build Saleforce’s customer base. “I spend a lot of my time on the phone with partners,” she says. “We don’t have time to do that with every single partner, but certainly for those that have demonstrated a commitment to us and where there is really potential for demand, we are really open.”

In the end, is it worth a software company’s time to join the AppExchange ecosystem? The verdict is still out.

Some companies say the exposure they get simply by having their app in the AppExchange directory makes all the trouble worthwhile. “It’s a valuable lead generation tool for us, and it helps make for stickier customers as well,” says Zimmerman at Brainshark.

Other companies say they haven’t yet seen a big return on their AppExchange development work, beyond the benefit of being able to say that their software is compatible with Salesforce. “We have not really seen any important increase in business from us being included in the AppExchange,” says Volpe. “It hasn’t really helped to grow our business, except that when we’re doing our own marketing and talking to a customer, being able to connect with Salesforce is a positive in their mind.”

Says Ernst: “Every once in a while we’ll get an inquiry from somebody who finds us on the AppExchange, but we haven’t really cracked the nut yet to figure out how to use the AppExchange to drive demand. Most of the people I talk to within the Salesforce ecosystem say the same thing.”

But it’s a nut that will undoubtedly get cracked eventually, at least in the cases where third-party developers (and Salesforce itself, which keeps a cut of every sale on the AppExchange) stand to make real money. Business apps like appointment-makers and commission-trackers may never be as sexy, or as high-volume, as the apps being downloaded by all those millions of 20-something iPhone-toting Facebook users. But that doesn’t mean Web-based platforms like Force.com won’t end up transforming the daily workings of business—it’ll just be a slower change, with less attendant hype.

“A year from now, I would like to see even greater depth and breadth [in the AppExchange] than what we have today, and I’d like to see as many Salesforce subscribers as possible adopting partner applications,” says Shih. “eBay democratized who could buy and sell things. We want to be the platform and the marketplace to connect businesses and customers.”

Addendum, January 15, 9:45 a.m.: Speaking of platforms, today Salesforce rolled out a new product called the Service Cloud. Built on the Force.com platform, it’s designed to help customer service agents and corporate contact centers by aggregating customer-feedback data from other cloud-based, Web 2.0-style sources such as Facebook, Amazon, and Google.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://sellsellsell.salesnexus.com Craig Klein

    I’ve spoken with many App Exchange developers who say being listed there has been meaningful from a marketing credibility perspective but, few actual sales opportunities have come via Salesforce.com.

    The user is often left in the middle trying to make Salesforce.com and the App Exchange provided software work and both sides pointing at the other when problems arise.

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