Moves into Website Services with New Amazon and Facebook Alliances

Includes: AMZN, CRM
by: Jeffrey M. Kaplan

Despite the economy, election and lingering questions about whether Software-as-a-Service (SaaS) is enterprise-ready, this week's (NYSE:CRMDreamforce conference drew nearly ten thousand energetic attendees and exhibitors to celebrate the power of the 'cloud.'

The event not only dispelled any questions about whether the SaaS movement can withstand today's economy, it also helped to resolve the needless debate over whether there is a difference between SaaS and cloud computing. succeeded in dissolving any line of demarcation, which may have existed between the SaaS and cloud computing worlds by:

  • Using the terms interchangeably throughout its keynote and breakout sessions

  • Unveiling a new round of cloud-based applications and platform capabilities

  • Expanding its strategic alliances to include two more pivotal 'cloud' players's two most significant announcements were its move into website hosting services, and new alliances with Amazon (NASDAQ:AMZN) and Facebook.

The website hosting services add another layer to the company's capabilities and extend its reach across the value-chain of customer/partner facing interactions. This new layer of services provides a clear 'use-case' for's VisualForce web design capabilities and fortifies's positioning as a strategic source for customers and ISV partners.

The new alliances with Amazon and Facebook are a natural extension of its rapidly growing allegiance with Google (NASDAQ:GOOG). Amazon gives users added storage and computing power capabilities to enhance and expand their SaaS solutions. The Facebook relationship could finally enable business users to effectively leverage the popular social networking site for more than simple advertising and promotional purposes.

Most importantly from's perspective, these new alliances put the company squarely at the center of the cloud computing world just as Microsoft (NASDAQ:MSFT) is beginning to describe how it will deliver its own vendor-centric cloud platform. has succeeded in pulling together the key cloud-computing players who stretch across the four corners of this rapidly expanding marketplace. I expect these alliances to accelerate new mash-ups and produce more substantial, cloud-based solutions. This foursome of cloud computing players could be viewed as the "Four Horsemen."

Between the keynote sessions, I had two days of back-to-back meetings on the show floor with a mix of SaaS vendors, customers and investors facilitated by the SaaS appointment maker solution, TimeTrade.

The exhibitors were nearly all extremely pleased with the volume of quality leads they generated during the event. As always, I also learned about a variety of subplots among the various vendors in attendance.

All of the people I met were upbeat about the overall SaaS/cloud computing market outlook long-term, but concerned about the short-term impact of the economy on deals already in their sales pipeline. Corporate indecision or company edicts to put a hold on all new spending, will probably delay many SaaS deals through the end of 2008.

I think this delay in sales, combined with a tightening of VC and other financing, will accelerate a shakeout in the SaaS/cloud computing industry. The most vulnerable players will be those who only offer point products with 'nice to have' features rather than 'must have' business benefits. The survivors will be those who can demonstrate their strategic value, along with their financial viability in a tough economic climate.

Despite these potential storm clouds, the prospects are still far brighter for the overall SaaS and cloud computing market than traditional, on-premise, legacy software vendors. The energy and enthusiasm of's customers at Dreamforce served as a solid confirmation of this very exciting market opportunity.

Disclosure: None