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CW: In your opinion, what are the most important innovations that Salesforce.com has brought out with the recently introduced summer release?
ARMSTRONG: The most important thing for us is the evolution of the idea - from software-as-a-service to applications-as-a-service to platform-as-a-service. Salesforce.com has completed its offering with the integrated development environment Apex. Everyone, whether partner or customer, can develop applications in the future, which are then hosted on the Salesforce.com platform. The platform will be the service in the future.
CW: How does this work?
ARMSTRONG: We offer a software-free programming environment. Anyone who can work with Java will also be able to cope with the Salesforce.com environment and build new applications.
CW: Since this is a proprietary environment, are the developers tied to the Salesforce.com platform with their applications?
ARMSTRONG: The result is code written for the Salesforce.com platform. The applications are based on our programming standards, use our programming language and are operated on our platform.
CW: Do the developers have to pay a fee?
ARMSTRONG: The fees are very low. It is a kind of runtime license.
CW: What are the advantages for the development partner?
ARMSTRONG: The development is quick and easy. In addition, the developers do not need their own infrastructure. Every application that is developed on this basis is a multi-tenant application. The advantages are: no compatibility problems, instant upgrades, automatic version controls and much more. These things usually mean a lot of effort for developers in conventional development environments. Salesforce.com has taken this burden off its customers and partners.
CW: How closely are the Apex applications linked to the Salesforce.com applications?
ARMSTRONG: That depends on the respective application. You have to differentiate here. Some of the applications developed on Apex integrate automatically with the Salesforce.com systems, but others have nothing to do with customer relationship management (CRM) and therefore do not require any integration.
CW: What about the integration into software outside the platform?
ARMSTRONG: Almost all CRM users require some kind of integration. Many link the SaaS environment to enterprise resource planning (ERP) solutions in the backend, for example SAP or Oracle. Around 100 million transactions run through our system every day. Around half of these are API calls (API = Application Programming Interface), i.e. calls from outside the Salesforce.com world. Our CRM programs are inherently deeply integrated into other systems.
CW: How does this integration work?
ARMSTRONG: We offer ready-made integration modules that customers can also expand and modify themselves.
CW: What do these modules cost?
ARMSTRONG: The use of the integration modules is included in the monthly rent.
CW: Does Salseforce.com have plans to expand its own product portfolio beyond CRM?
ARMSTRONG: In addition to CRM, we offer solutions for service and support as well as marketing. We also have a number of vertical solutions in our program, for example for financial services. There will be more vertical solutions from Salesforce.com in the future. However, a large part of our industry know-how comes from our partners.
CW: How can a partner be sure that Salesforce is not developing exactly the same application as himself?
ARMSTRONG: The big difference to the on-premise providers is that the companies work much closer together in the SaaS environment. The further development of the entire platform takes place in close cooperation with the partners and users. In this way, collisions in the development of new applications can be avoided at an early stage. This is supported, for example, by the portal, which is already integrated in the platform with the new version.
CW: Will the competition from Microsoft and SAP's SaaS initiatives be tougher?
ARMSTRONG: When companies such as SAP and Microsoft become active in the SaaS environment, this initially means a confirmation of our model. Another question, however, is whether these companies will be successful here. We don't believe that SAP and Microsoft can survive. SaaS is two things - a business model and technology. When a customer purchases a traditional software system, he is bound to the manufacturer for many years. But our business is about the immediate satisfaction of the customer. Salesforce.com has to continuously ensure that the customer can handle the offer. Changing the business model is very difficult.
CW: How do you see the new competition from telecommunications providers and web hosts who are also becoming more active in SaaS matters?
ARMSTRONG: We welcome everyone who enters this market. The more applications are available, the more choice users have and the greater the acceptance of SaaS. Three or four years ago this idea was almost unknown. Today, Gartner analysts say SaaS will account for 40 percent of the entire software business in the not-too-long time. The more providers participate, the better for us and for everyone in the market. Getting SaaS to where customers want it to take thousands, if not tens of thousands, of different applications.
CW: Aren't the customers losing track of things?
ARMSTRONG: Our platform offers the necessary structure. There are currently 650 applications based on Apex. Users can search for specific functions via the portal.
CW: When customers use different applications, they also have to deal with many different providers. Is this a problem?
ARMSTRONG: We are working on a function called "Appstore" that works in a similar way to Paypal within Ebay. The customer only has Salesforce.com as a contact person. Behind this are the various software providers from whom he obtains his services. Processes such as billing run through one instance. I assume that this feature will be delivered with the fall release.
CW: But that only applies to questions of payment. What about problems customers have with the software?
ARMSTRONG: 90 percent of the problems with which a classic help desk is confronted do not concern the application itself, but the fact that certain parts of the system do not work together smoothly. According to the motto: I installed a new version of Microsoft and after that half of my software no longer works. That doesn't happen in the SaaS world because the individual applications are integrated into the platform from the start. Application support therefore only plays a subordinate role. This mostly revolves around questions of how to use the software. Basically, this is not a support issue; it concerns user training.
CW: How much training do users need?
ARMSTRONG: How much training do you need to get along with Google or Amazon? Practically none at all. That is what the SaaS world is all about: We take the knowledge that users already have and build our business applications on it. The SaaS providers do not have call centers where thousands of help desk employees are busy solving user problems. That is the key to why the system is so efficient and easy to use. Google updates its software every two months without users noticing anything about the upgrade.
CW: The Salesforce.com software is highly standardized. How does that fit together with the individual and complex processes in many large companies?
ARMSTRONG: On the basis of the Apex platform, there will also be applications for the requirements of large companies. In addition, corporations will be able to develop their own solutions based on Apex, which exactly fit their needs - and they don't even need their own hardware to operate the applications themselves. In many companies, the number of applications is growing and with it the problems of IT organization. The majority of the budget must be used to maintain the operation of the application landscape. Only a small part is available for innovations. If it is now possible to make a large part of the required applications available as a service, then this brings many advantages to the organizations.
CW: So far, only a few customers have seen these advantages in the European or German market. What do you want to do to get more customers interested in the model in this country?
ARMSTRONG: It's less of a problem to approach the market. The SaaS model has grown up very quickly. According to Gartner analysts, the SaaS business is now growing faster in Europe than in the USA. What I have already said: Especially when new players are looking for the SaaS business, it is good for the entire market - also in Europe. We assume that the European market will develop significantly faster than the American market in the near future.
CW: Why do you believe that?
ARMSTRONG: The key to this is again the platform. Companies can use it to quickly expand their business internationally. An example: A trading company that was previously only active in Great Britain was able to quickly expand its business with the help of the Salesforce.com platform and the applications running on it. Today this company makes 80 percent of its sales in North America. The users develop their applications for a global market. The whole world is open to them.
CW: Nevertheless, the model has not yet been adopted by medium-sized companies, especially in Germany.
ARMSTRONG: Germany's SMEs are the backbone of the economy there. The second mainstay is export, in which medium-sized companies are also very active. Put both things together: If a medium-sized company wants to align its business internationally, there is no better tool than the Apex platform to align its applications accordingly. Apex gives these companies access to a global market.
CW: However, it is precisely the small and medium-sized companies in this country that have very close relationships with their software suppliers and system houses. Salesforce.com will find it difficult to break these relationships.
ARMSTRONG: I don't think it's about breaking these relationships. We ourselves have over 1150 partners in Germany who do exactly the same thing. We want to develop further and take all of our partners with us. We care for our ecosystem. Everyone needs the other here. Salesforce.com needs the partners: on the one hand to implement the solutions for the customers, and on the other hand to develop applications. We cannot and do not want to do everything ourselves.
CW: What role does the cooperation with Google play in this ecosystem?
ARMSTRONG: This cooperation is very important for Salesforce.com. The combination of our offer with Google Adwords brings advantages for our customers. We also benefit from it. Over three quarters of our campaigns run through search engine marketing. Here we can track exactly which success brings which action. We can react quickly and change something. The tool is also very easy to use. This is ideal, especially for small companies that are not safe in this environment. You can measure exactly how many clicks and how much sales are associated with a particular promotion. By linking it to the Salesforce.com system, it is possible to track exactly which deals are directly linked to which ad. That will change search advertising in the long run. It's no longer just about the clicks. Success is not measured by the number of clicks, but by sales.
CW: Google is also trying to expand its SaaS business. Doesn't that also create a certain amount of competition?
ARMSTRONG: We work together. Salesforce.com itself uses a number of Google tools such as spreadsheets. Google offers a dynamic environment, and that's exactly what users want. The users don't want to send their documents to a lot of people and in the end don't want to know which version is the right one. In a SaaS environment there is only one version, one true instance and nothing else. This is a new era in software use.
CW: What are the next steps Salesforce needs to take in this new era?
ARMSTRONG: Expand the platform further and explain the ideas behind it to users: Platform-as-a-Service. Our competitors are currently trying to clarify the term SaaS and its effects on their own business. We did this a long time ago and understood how to run SaaS. Now it is a matter of expanding the entire system and bringing many thousands of applications onto the market. We will tackle this with the help of our platform.
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