Today Google and Salesforce.com announced another step in their ongoing flirtatious relationship. Salesforce.com will now bundle Google business applications into its on-line CRM offering. Salesforce will also begin to distribute Google applications backed by Salesforce support. It's always interesting when these two make an announcement for two reasons: First, they are both 100% committed to cloud computing and they think about the future of the industry in very similar terms. Second, it is fundamentally interesting to conjecture about the potential of a Salesforce acquisition. Note the rumor mill cranking up on this topic a few weeks ago when Oracle arranged for a $2B line of credit.
Now, Marc Benioff has stated early, often and loudly that Saleforce.com is not an acquisition target and has every intention of becoming the next major software infrastructure vendor. Fair enough. Salesforce.com has done all the right things to do just that. They've invested heavily in an infrastructure and built a reputation that represents a significant barrier to entry to anyone that wants to horn in on their territory. Salesforce.com has a significant history of securely and reliably delivering mission critical enterprise applications in the cloud. Raise your hand if you can make that claim. Not a lot of hands.
That said, there are folks gunning for this emerging opportunity. Microsoft, Oracle and SAP all have on-line CRM offerings. IBM and Microsoft are moving into on-line collaboration. These are not necessarily folks you want coming after you. The disruption that can and will be caused by cloud computing is a potential source of risk and opportunity for every major player in the industry.
So, if cloud computing becomes the norm for more and more types of users, data and processes what are the characteristics that will define the winners? In a recent document,we defined some of them and rated Google and others. It's interesting to revisit Google and Saleforce as a single offering:
- Data Center Efficiency and Reliability — Google did extremely well. They run applications incredibly efficiently. They would do better with Salesforce's expertise in enterprise reliability.
- Applications Designed For Multi-tenancy — Google did very well. Salesforce.com would make the offer even better because of the nuances associated with enterprise requirements.
- Enterprise Experience — Google scored on the middle of the scale. When it comes to the cloud, no one does this better than Salesforce.
- Efficient Go-To-Market Channels — Google scored in the middle of the scale. The big players still have major leverage points. Saleforce.com helps and Google has the ability to completely redefine the go-to-market model.
- Application Functionality — Google scored in the middle again. That said, Google is delivering new functionality at a torrid pace and Saleforce.com has lots to bring to the table.
- Adjacent Market Leverage — Google didn't score well. They took a big step forward today by moving to integrate their productivity, content and collaboration offerings with a major player in CRM that already has a footprint in the enterprise. Still not as strong as the existing infrastructure players, but a step in the right direction.
Here's the bottom line. It looks like a sea change is coming and Salesforce.com is sitting smack in the middle of it. The big players are moving quickly and aggressively which could ultimately spoil the best laid plans and aspirations of Salesforce.com. They like to squeeze little guys with good technology and markets. The problem here is that an acquisition of Saleforce.com by any of the major players represents a huge threat to all of the other players. So, squeezing could end up driving them and their assets into the hands of the enemy.