Very Expensive + Affordable = Still very Expensive
His argument is that Salesforce is spending nearly 8 times on sales/marketing as it spends on R&D – and that essentially makes the business model highly bloated.
Well, I have worked in a SaaS startup (KPCB funded) and all I can say is that except for SalesForce and NetSuite, no other SaaS product has created a dent in the enterprise market.
The real challenge in SaaS is not just in getting past the customer mindset (“my data will be stored in your server? That’s not safe”? ), to scaling up, platform customization (to suit each customer’s needs) and of course, acquiring new customers.
Marc Benioff, given his sales background will spend 8X the money he spends on R & D – because he still needs to ensure that Siebel is dead and Salesforce creates enough branding/mindshare (read *noise*) in the market. And let’s not forget that Salesforce created the SaaS industry – right from evangelizing to creating awareness and confidence among the SMEs.
Most importantly, Salesforce’s Force.com is probably the most easy-to-use-and-integrate API I have used in the recent times – point I am trying to make is that they are spending time in “D” (i.e. development) and have the vision to build “open” apps – a good platform strategy which need not be an “open” strategy.
“..just how little Benioff understands the value of open ecosystems. He is still playing a 1990s software game, with expensive software (sorry, software-as-a-service!) and a business model that is sure to make Larry Ellison flinch, which is saying something.” – interesting insights from Sridhar.
Should platforms be Open-for-all?
While Google Gears is open, Google itself is not. Google would love Zoho to implement Google Gears because G wants wider adoption of Gears – they are fighting a big online/offline browser war with M$ and giving away a small slice of platform to competitor (i.e. Zoho) is quite okay.
I think it’s all in the context and Zoho is looking at the “online office” context and seeing things, while Google is aiming the bigger context, i.e. Microsoft.
Most of the “business” platforms are open, but just not open-for-all (especially competition)
What’s your take?