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DAILY NEWS AND INFORMATION
FOR THE GLOBAL GRID COMMUNITY /
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Special Features:
SALESFORCE.COM SUCCESS SPARKS
DEBATE OVER SOFTWARE RENTING
Though expected to be the newest innovator in the delivery of business
applications to corporations, Salesforce.com ended up debuting a month before
the dot-com bubble burst and it struggled to stay alive.
Yet Salesforce.com persevered and maintained its mission -- selling
software
to aid in companies' efforts to track customers -- and actually turned a
profit for three straight quarters last year. Such success is rare in a time
of falling dot-com businesses.
Now, the software maker plans to sell public stock in 2004 -- and people
are
watching closely.
Salesforce.com is garnering attention because they offer "software as a
service" or "computing on demand," which is a highly controversial issue. The
idea involves businesses renting software, and accessing it through commercial
companies' Web sites for a fee.
Though some dislike the idea, others argue that computing is just lagging
behind the railroad, electricity and telephone industries in offering a pay-
as-you-go model. In addition, proponents say that companies will cut down on
programming and troubleshooting that may not be necessary.
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Oracle and Microsoft have stalled the implementation of such a system,
however. Big vendors argue that hosted programs might make sense for small
companies, but most large companies desire to customize their software and
fear losing control of their data in rented versions. In addition, first-
generation start-ups that tried to create similar services on the Internet
were hindered by the complexities of multiple programs.
Salesforce.com took a simpler approach and wrote an application made for
quick
access through Web browsers. The group wanted to offer a more streamlined
approach for firms to manage their sales operations and customer
relations.
Salesforce.com customers can expect to see prices ranging from $200 to
$1,000
per user per year, varying due to company size. The company has approximately
110,000 individual users and has collected some $66 million in revenue. It
reported $4.7 million in net income for the nine months ended Oct. 31.
The success of Salesforce.com is opening the eyes of other start-ups.
NetSuite
Inc now rents online accounting tools to companies, in addition to customer
management software. Many believe such a system is a glimpse of the
future.
The software industry, now in a state of widespread turmoil and
consolidation,
is beginning to take notice of online customer-management services.
Cost is a large factor in this shift. Rented software usually offers a
cheaper
option for small companies who may not be able to afford installation,
operation, and maintenance of purchased applications. Additionally, renting
gives businesses added flexibility to coincide with company shifts. Yet long-
term renting may end up exceeding the cost of owning the application.
But owning the application requires maintenance, and many businesses may
not
have the ability to handle mission-critical software projects that
continuously grow in complexity and power.
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