Salesforce vs. Google
April 10, 2007
Up to now, Salesforce.com and Google have been defined, competitively, by their mutual disdain for the Horrible Monster of Redmond. ("I don’t think it makes sense for me to comment on the words and actions of Steve Ballmer," sniffs Chief Googler Eric Schmidt at the start of a new Wired interview.) But with Salesforce's announcement today of a broad push into content management, the two new-age enterprise IT companies are now on a collision course. They're not just bedfellows anymore. They're competitors.
One of Google's central strategic thrusts is to store "100%" of users' data. That, it seems clear now, doesn't just apply to consumer users. It applies to business users as well. Google is in the early stages of a major, multi-year thrust into the corporate market. In that Wired interview, Schmidt calls the company's fledgling package of business applications, Google Apps, its "most interesting" opportunity to find new sales growth beyond advertising. Google, he says, is "already beginning to get some significant enterprise deals ... Corporations are tired of dealing with the complexity of the old model, and our products are now strong enough to serve business needs reliably."
In announcing Salesforce's expansion into content management, through the launch of Salesforce Content and its ContentExchange service and the related acquisition of Koral, CEO Marc Benioff called the move "a decisive step towards our vision of managing all information on demand. With Salesforce Content, we not only manage a company's traditional structured information, but their unstructured information as well." Salesforce, too, wants ultimately to be the repository of 100% of a company's data. To underscore the point, Salesforce exec Bruce Francis told Richard MacManus that the company aims "to help our customers manage and share all their business information on-demand."
It's illuminating to think of Salesforce and Google as competitors because their distinctive strengths point to some of the future terms of rivalry in the new IT market. Salesforce's strength lies in the customer interface - not just the friendly interface of its software services but its Benioff-fueled prowess as a marketer to businesses. Google, to put it generously, is relatively weak in those areas. Where Google's strength lies is in the back-end infrastructure. Its network of data centers, and the software that connects them, presents a forbidding technological (and financial) challenge to other vendors seeking to "own" all of a client's data.
Both Google and Salesforce are still small fish in the ocean of enterprise data. But as they swim ahead of the fat bottom-feeders of the old IT market, they may at the moment be the most interesting fish in the sea.
I don't quite see it like that. Google's apps are hosted because there's not much of an alternative. Salesforce is arguing that its hosted service is better than Siebel's non-hosted service.
I think when the SaaS enthusiasm begins to wain, users will see that self-hosting, a la SugarCRM, is attractive. Managing a LAMP box isn't that difficult and most companies should have or develop that basic competency.
Most of the times, I found your vision very accurate.
This time, however, I feel your view is not correct.
Both Salesforce and Google are building very strong bases for SaaS (Software as a Service).
Salesforce (SF.com) is very strong on structured applications and Google may become the leading provider of Office 2.0 solutions.
Both have understood that opening their API is the only way to succeed in this new world.
Google is already using Salesforce tools and I would not be surprised to learn that Salesforce will soon be using Google Apps Premier Edition.
Google and Salesforce have closed links at their board levels ; my feeling is that they need each other very much.
Once a client has chosen solutions from either ones, he is very likely to add the second one.
In our contacts with large clients, the number one issue raised by everyone is :
Confidenciality of data.
When you accept to let your data go "on the cloud", customer information or documents, you are more likely to do it for more data.
There will be, of course, some overlap between their offering ; this is inevitable.
As far as I know, Google does not offer Web Content Management today.
In the coming years, I see Google and SF.com becoming the two main platforms for Saas. There are already some 500 applications built on the AppExchange platform from SF.com.
My pronostic : Google and SF.com will compete on less than 10% of their solutionss and collaborate on the remaining 90 %.
Posted by: Louis Nauges at April 10, 2007 02:34 PM
Louis, I think you're absolutely right for the time being. But if you look at both companies' ambitions, you see a steady increase in the competition percentage in the years ahead. (That assumes, of course, that they're both successful in pursuing their ambitions.) Nick
Posted by: Nick Carr at April 10, 2007 03:04 PM
Managing a LAMP box isn't that difficult ...
Unfortunately, one box leads to another, and before you know it you have a big data center and a big IT department.
Posted by: Nick Carr at April 10, 2007 03:09 PM
Thanks, Nick for your answer.
It will take a minimum of 8 to 10 years for large organizations to move massively to a SaaS world.
There is so much money to be made during that time, taking business away from the likes of Microsoft or SAP that I think Google and Salesforce.com will stay mostly friends over this timeframe.
After 2015, who knows ?
Posted by: Louis Nauges at April 10, 2007 04:30 PM
Google and SalesForce.com have services that are complementary rather than competitive. Google can provide the search service for all that content SalesForce.com will host. Also, no reason why Google's sofware applications can't be integrated into SalesForce.com. Plus, SalesForce.com could provide a version of their software paid for by Google ads. Google is an advertising agency. You only have to look at their MySpace deal to realize that they don't necessarily believe it has to be built by them.
I have published, in french, on my blog, a post on this subject.
It's a long document, but I felt that this is a very important topic, and I have built part of my business on these solutions !
(The google translator, from french to english, is available on my blog ; it's not perfect, but give an "understandable" rendering of my views.
Posted by: Louis Nauges at April 11, 2007 05:45 PM
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