30 Minute Interview

‘‘Our customers are our best advocates’’

Aaron Katz, Area Vice President, Corporate Sales, Asia Pacific, Salesforce.com talked to Varun Aggarwal about the company's strategies for the Indian market and its key differentiators

Aaron Katz

SaaS adoption is still at a nascent stage in India. What are your strategies to target this potential market?

According to a recent study by Springboard Research, the Indian SaaS market will grow at a compound annual growth rate (CAGR) of 77% from 2006 to 2010, to reach $165 million by 2010. We believe India is leading the way as one of the key contributors to this momentum. Given the growing adoption rate of SaaS solutions in the Indian market, salesforce.com is focusing on India for the long-term and is striving to be the partner-of-choice for customers of all sizes throughout India.

We believe the top three areas that have the most potential for leading SaaS adoption in India include:

• Developers: There are over six lakh developers in India. With Force.com, the world’s first Platform as a Service (PaaS), developers can create and deliver any kind of business application, entirely on-demand and without software. It is a breakthrough new concept that is making companies radically more successful by letting them translate their ideas into deployed applications in record time. We believe we have the potential to unlock the intellectual capital of India’s software developer community that will, in-turn, increase SaaS adoption.
• SMBs: According to IDC, “2008 will witness a major expansion of Software-as-a-Service (SaaS) as a way to accelerate SMB penetration and Service Oriented Architecture (SOA) adoption. The role of SaaS delivery platforms will become a key strategy for reaching the SMB market.” There are more than 7 million SMBs in India and they have a craving for SaaS technology as it offers ease of use, speed of implementation, affordability, and immediate business benefits. SMBs are underserved and this is our opportunity to address their needs. For these reasons, SMBs are a key focus for salesforce.com now and in the long term.
• Broadband: With regard to broadband penetration, TRAI Data recently showed that “broadband penetration in the country crossed the 4 million mark in April 2008 with the addition of 0.11 million subscribers in April. The broadband penetration in March 2008 stood at 3.9 million.” With the significant increase in broadband penetration, the door is wide open for SaaS to gain even more traction in India than previously thought.

You have come up with your CRM services for the iPhone in India. However, iPhone today is a very low selling phone in the country. Are you planning tie-ups with other mobile vendors apart from Apple in India?

It does not take much research into Mobile platforms to realize that Salesforce.com has built something unique. Many mobile platforms require that specific client versions be created to support specific business processes. That is all very well, but salesforce.com customers are quite used to just adding a field here or creating a custom object there and continually improving their business process. This is a key differentiator for salesforce.com and a big reason that customers choose to go with us for their CRM implementation.

Salesforce CRM applications and Force.com platform are available as Salesforce Mobile applications for the iPhone on Apple’s App Store. Businesses of all sizes now have access to a new universe of mobile applications to run their enterprises. Salesforce.com’s award winning CRM applications and any custom or third party application built natively on the Force.com Platform-as-a-Service can now be accessed using the Salesforce Mobile application on the iPhone.

With the Salesforce mobile application, Force.com developers will be able to deploy their applications to the iPhone without writing additional code, and they will be able to access their Force.com apps on the iPhone.

Salesforce CRM applications and Force.com platform are also available to BlackBerry users. It is important to us to give our users a choice – we want them to use the best devices for their business, whether it is a BlackBerry, iPhone or other mobile device.

Can you tell us about the importance and growth of SaaS and PaaS in the worldwide market and in India?

CRM is a growing market worldwide. According to Gartner, it will be an $18 billion market by 2011. Further, it forecasts worldwide enterprise application SaaS revenue to reach $11.5 billion by 2011.

There has been a tremendous shift in the software industry from when we started. Gartner also predicts that SaaS will become 25% of the overall software market by 2011. Other analysts have been even more aggressive in their predictions than that. In the future, I believe that all software will be delivered as a service. Today you see new companies built on the Software-as-a-Service model every day delivering applications that manage everything from human resources to supply chain and ERP, and many of them can be found on AppExchange, our one-of-a-kind directory of SaaS applications.

We believe that packaged software will become obsolete one day, as everything is moving online. Just as the client-server software replaced the mainframe during the 1990s, we think we are in the midst of another major evolution in technology and SaaS will overtake client-server applications. The client-server industry has been consolidating, and Oracle has clearly emerged as the [company doing the most acquisitions]. I think you see a new generation of leaders rising: salesforce.com, Google, eBay, Amazon.com—all of us are building platforms for cloud computing.

The future of all business software is on-demand, and salesforce.com is leading the charge with 47,700 customers and 1.1 million subscribers who believe in that vision.

Just as Amazon.com, eBay, Google, iTunes, and YouTube made it possible to access new capabilities and new markets through a Web browser, PaaS offers a faster, more cost-effective model for application development and delivery.

PaaS provides the entire infrastructure needed to run applications over the Internet. It is delivered in the same way as a utility like electricity or water. Users simply “tap in” and take what they need without worrying about the complexity behind the scenes. Moreover, like a utility, PaaS is based on a metering or subscription model so that users only pay for what they use.

This model is driving a new era of mass innovation. For the first time, developers around the world can access unlimited computing power. Now, anyone with an Internet connection can build powerful applications and easily deploy them to users wherever they are located.

With increasing number of SaaS players in the market, what are the key differentiators for salesforce.com?

We feel there is a lack of serious competition in this market. We have been steadily growing for more than nine years now and have more than a million subscribers. Yet our competitors have yet to mount a credible SaaS offering.

There are two major barriers to entry into the SaaS space for traditional software providers. First, there is the technology model. The common shared platform of a multi-tenant on-demand provider like salesforce.com does not require any infrastructure—there is no need to buy, maintain or manage any software and the customer only needs to be equipped with a PC and an Internet connection. On-demand solutions also allow organizations to get applications up and running in a matter of days compared the possible months it can take for on-premise solutions, providing a much shorter deployment process.

Secondly, the business model changes the dynamics internally for vendors as sales people brought up in the traditional software model have an incentive to close big deals and receive big payouts at the time of closing a deal and then move onto the next one. In a SaaS model, where customers pay on a per user per month basis, commissions are paid out over the life of the contract. Customers must stay happy and see value from the product or they will leave and this forces vendors to be 100% focused on customer success, not just on closing deals.

For end-users, it is a great time. The possibilities of what you can do on our Force.com platform-as-a-service are incredible. Any application can run in the world’s most popular enterprise SaaS environment.

Our customers are our best advocates and as they have succeeded, other enterprises from around the world have turned to salesforce.com to experience the same success.