Salesforce.com Targets New Markets With Apex Development Tools

Salesforce.com on Tuesday began testing new programming tools meant to push its sales management software into new markets. CEO Marc Benioff said the company has signed a contract with Dell for 15,000 seats.

The moves show how Salesforce, which is growing quickly by selling online customer relationship management software that's easier for field reps to use than traditional CRM apps, is tackling bigger installations and building a network of developers to keep expanding. Dell becomes Salesforce's second large customer with 15,000 employees licensed to use the software, joining Cisco Systems.

"If small and midsized businesses can do it, anyone can do it," said Salesforce CEO Marc Benioff at a news conference in San Francisco Tuesday. Sales from the Dell contract will begin to show up in results for Salesforce's fourth quarter ending Jan. 31, but won't have a material effect on Salesforce's financials until the start of the new fiscal year Feb. 1. Revenue at Salesforce rose 57% last quarter, and Wall Street expects the company to report $495 million in revenue during the fiscal year which ends Jan. 31. Last month, Salesforce raised its guidance for revenue in the coming 2008 fiscal year to $710 million to $720 million.

Benioff pointed to new growth initiatives at the company. Salesforce has upgraded all 556,000 users of its software to the company's new Winter '07 version, released over the long holiday weekend. In tandem with the new version, Salesforce began a broad test of a programming language and tools called Apex that the software company and consultants can use to customize Salesforce.com. That could lead to new users.

It's part of a plan by Salesforce to use its network of 250 independent software vendors and consultants that sell apps that piggyback on Salesforce.com as a way to generate more revenue. Each add-on app Salesforce sells on its AppExchange site requires another license for Benioff's software. In December, Salesforce began charging companies that participate in its online sales program a percentage of revenue in return for sales and marketing support. That program is called AppStore. Now, via Apex -- developers can program with Salesforce's own tools, or the popular open source Eclipse development tools -- Benioff hopes independent software vendors will create customized versions of Salesforce that can lead to more customers.

One potential source of new users are small vertical markets that haven't traditionally used CRM, says Sheryl Kingstone, an analyst at market researcher Yankee Group. In sectors such as construction, travel booking, and real estate, as much as 70% of the market for managing sales leads is composed of simple contact management software and Microsoft's Outlook E-mail program, instead of more sophisticated tools.

For Salesforce, recruiting a network of partner companies to crack those markets will be key, she says. But Salesforce until recently didn't offer a formal model for sharing revenue with companies that sell and write add-on software. Says Kingstone, "The AppStore and the code is so critical to the success of the vertical editions."