Salesforce.com's Balancing Act

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Organization Tools

But Salesforce.com's upcoming products—ContentExchange for end users and Apex Content for developers—will also compete with offerings from large software vendors such as Microsoft (MSFT), IBM (IBM), and EMC (EMC), whose products are entrenched at companies. Employees who use Salesforce.com often need access to order forms and invoices that live in corporate applications from vendors such as Oracle (ORCL) and SAP (SAP) or to marketing materials that sit on a company's intranet. And departments such as HR need to manage large numbers of Word files and other documents that aren't always easy to retrieve.

As a result, IBM, EMC, Oracle, and Open Text (OTEX) have been acquiring makers of document management software. And Microsoft has been aggressively selling its SharePoint Server software, a complement to its Office suite that can comb companies' intranets for files. While Salesforce.com can't match those companies' distribution levels, its skill at word-of-mouth marketing could be an asset, Bois adds. "Your average HR person will know of Salesforce.com," he says, "and they've probably heard positive things."

Empowering End Users

The acquisition of Koral is Salesforce.com's third. It bought handheld computer software company Sendia in April, 2006, for $15 million, and Kieden, which lets users manage Google (GOOG) marketing campaigns, in August, 2006, for an undisclosed amount. Salesforce.com is expanding into other areas too, including desktop market data for financial advisers (see BusinessWeek.com, 3/5/07, "Up Front: An Assault on Fortress Bloomberg?").

The company's foray into content management could make its core sales and marketing software more useful, says Sheryl Kingstone, an analyst at market researcher Yankee Group. "No CRM system has been great about managing unstructured data," she says. "It's been one of the limiting factors for CRM as a whole."

A bigger challenge may be helping companies weave together processes that span departments—something traditional business software hasn't done well. Most application software targets a specific area, such as sales, marketing, customer service, or HR. "The whole point is to blow that all up and empower the end user," Kingstone says. Salesforce.com will need to tread gingerly as it does so.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.