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The Enterprise System Spectator

Wednesday, May 31, 2006

SAP and Salesforce.com: opposing application platforms

Recent moves by both SAP and Salesforce.com illustrate two different approaches to building a new platform to support an ecosystem of related solution providers.

First out of the chute was Salesforce.com, which back in January announced its AppExchange platform, which allows anyone to build extensions, customizations, and complete applications on top of the Salesforce.com infrastructure. This approach allows the tiniest developer--even a single individual--to build a new application, deployed as a service, and offer it for sale through Salesforce.com's AppExchange directory. Salesforce.com recently dropped the price of entry to this game, from $75 per user per month, to $25. At that price, any developer with a hot idea can work out of his or her bedroom and develop an application for sale.

The opposite approach is shown by SAP, which recently launched a venture fund to finance software development firms that want to develop applications to work on top of SAP's Netweaver platform. In contrast to Salesforce.com, however, these applications will be on-premise deployments, and it's hard to imagine them being deployed anywhere but in an organization that is running SAP. It appears that with much of the software venture money these days going to new software-as-a-service startups, SAP needed to launch its own venture fund to get money to its partners that are using a traditional on-premise model.

So, there are two key differences between these two attempts to provide a platform for building an ecosystem of application providers: (a) Salesforce.com's on-demand model vs. SAP's traditional on-premise model, and (b) Salesforce.com's providing a very low cost, low entry-point platform vs. SAP's providing venture funding for developers.

With SAP's increasing dominance of the enterprise market, and its deep pockets, there's a good chance that SAP will be successful. But its goals are to extend the reach of its SAP installed base.

Salesforce.com's approach is more innovative, in my opinion. It is attempting to provide a web-based, on-demand operating system, upon which new applications may be deployed. Of course, there is nothing to stop other providers from offering similar platforms. Furthermore, because Salesforce.com's offering is based on a service-oriented architecture and open standards, there would appear to be nothing to stop applications from interoperating with those built on top of Netweaver. Or, vice-versa.

While it appears to be harder and harder for traditional enterprise system vendors to be successful--witness the latest merger/acquisition of SSA by Infor, now with over 50 separate systems in their combined portfolio--the models offered by SAP and Salesforce.com provide a glimpse into how applications will be developed and delivered in the future.

Datamation has more on recent moves by Salesforce.com with AppExchange, and there's a good overview of AppExchange on Salesforce.com's website. ASPnews has more on SAP's venture funding of developers for its Netweaver platform.

Related posts
The death of packaged software
Rolling up the rollup: SSA Global to be acquired by Infor
Salesforce.com publishing real-time system status

by Frank Scavo, 5/31/2006 11:12:00 AM | permalink | e-mail this!

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