On-Demand Software: Little Things Add Up

Posted by: Steve Hamm on June 28, 2006

A couple of news items crossed my desk that aren’t earth shattering in themselves but point to remarkable things happening in the on-demand world. 1) Market pioneer Salesforce.com announced that one of its customers, Jobscience of San Franscisco, is running its entire business on AppExchange—Salesforce.com’s platform for on-line applications. 2) NetSuite, which offers a suite of on-demand applications, announced that for the first time a national mass-market retailer has agreed to sell on-demand software. CompUSA will begin selling the NetSuite service on June 27 in 10 stores in New York and Connecticut and continue its national rollout from there. Sometimes the on-demand market seems to be running in slow motion. By its nature it advances in small increments. Then, all of a sudden, something happens that signals how fast things are changing.

First, AppExchange. This is truly a revolutionary proposition. The service went live in January as both a platform for running online applications and a marketplace where developers can share or sell applications. Jobscience, a 30-person online jobs board for the health care industry, had been running its sales and marketing operations on the standard Salesforce.com service, and, once AppExchange was up and running, it decided to switch its run-the-business applications to services it plucked off AppExchange. Altogether, Jobscience built 11 applications using Salesforce.com's tools and selected another 20 applications from the AppExchange directory. That includes everything from HR and product management to marketing. Mark Desrosiers, the company's vice president of marketing and business development, is a happy customer. "I feel more stabile than I have before now that my business data is all in one system, rather than being fragmented," he says. "I know my data is backed up, secure, and highly available."

Turns out that Salesforce.com shaded the truth a bit in its announcement. Not every application at Jobscience runs on AppExchange. Not yet, anyway. Desrosiers says the company still runs QuickBooks for core accounting, though a bunch of its finance-related applications are running in the on-demand mode. "We'll have to see if we can migrate over to AppExchange completely," he says. "One of the greatest things about it is that as new technology becomes available we have the opportunity to switch over easily."

I wouldn't be surprised if many small companies that, like Jobscience, were born in the online era, decide to run large chunks of their business on demand. For most big outfits, this stuff will still just be used around the edges. SAP and Oracle are safe--for now.

NetSuite's deal with CompUSA is another solid advance for on-demand software into the SMB market. The suite will be sold through CompUSA Business Services' 1,100 in-store sales specialists. It's a smart move to make it a consultative sale, rather than trying to just put boxes on the shelves. This is a significant step forward for NetSuite and the on-demand movement. By selling through CompUSA's 225 stores, this stuff is really going mainstream.

Today, small- and medium-sized businesses. Tomorrow? Much bigger shifts are in store.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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