Q&A With Salesforce.com CEO Marc BenioffQ&A With Salesforce.com CEO Marc Benioff

Marc Benioff, CEO of Salesforce.com, was in typical raucous form during his keynote address at Tuesday's Software 2007 conference in Santa Clara, Calif., taking pot shots at his software industry rivals. Benioff sat down with information editor-at-large Mary Hayes Weier following his keynote to talk about the industry's growing support of SaaS, comment (a little bit) about the potential of getting acquired by a larger vendor, and explain why he thinks Salesforce.com will be relevant for years to come.

information: A recent information Research survey of 250 business technology professionals showed that about 1 in 3 have no plans to use software as a service, also called on-demand software. Security of data and applications was the top concern. Integration and flexibility also were concerns. Why are so many businesses more trustful of the traditional software licensing model?

Benioff: That's very common. If you read Geoff Moore's book Crossing The Chasm(Collins; 2002), it talks about this. It's a bell curve, and at the beginning of it are the early adopters. Then we come into the mainstream, and then we hit laggards. If you look at the research over the last five years, it's gone from very, very tiny interest in SaaS to 63% interest. Along the next few years it'll be 80%. Within the next five years we'll be at the top of the curve and in the mainstream. We'll be where client server was three years ago.

information: What did you think about (SAP Chairman) Hasso Plattner's keynote earlier today, where he seemed to embrace the idea of SaaS?

Benioff: Today is the first day that Hasso Plattner has changed his mind and said software as a service is mainstream. This is an important day for that reason, because when the big guys [support it], everyone will. It means the laggards will start looking at us, too. The SAPs, Microsofts, and Oracles all say on-demand is the future. That will help the market shift faster.

information: Among the big three, Microsoft, Oracle, and SAP, which will be the most successful at on-demand software?

Benioff: Salesforce.com.

information: You didn't answer my question.

Benioff: You need a new business model. These companies have been too busy protecting their cash cows instead of innovating. You're a mainstream journalist. Do you know who is Microsoft's biggest on-demand customer? Who is SAP's? Oracle's? You know who our biggest customer is. [It's Merrill Lynch, with 25,000 seats.] Those vendors have waited too long and stalled the market with all kinds of crazy ideas. It was only a year ago they were talking about isolated tenancy. Now they're talking about mega tenancy. Now SAP is talking about going into the steak sauce business with something called A1S. It's too late.

information: Salesforce.com seems like the perfect acquisition for a big application vendor. Do you see yourself becoming part of a bigger company?

Benioff: We're probably too big for SAP. It's hard to say [about other possible suitors]. We're a very different company, very unique. Whether it's our distribution model or our philanthropy model, it's very different than a traditional software company. It would take a lot of work.

information: Has Oracle approached you about an acquisition? Benioff: I can't comment on that.

information: What's the biggest untold story in the software industry?

Benioff: The biggest untold story is we're gong through the biggest renaissance in software. More innovation is happening now than in the last 10 years. Walk around this conference and you'll be amazed at what you see. The future of the software industry is really at this conference.

information: Every software vendor seems to have an acquisition strategy these days. What's yours?

Benioff: Extending our core applications and extending our platform with new technologies. One [recent acquisition] was to extend our platform onto mobile devices. Another was to extend our platform onto Google. If you know what your strategy is you'll find some tremendous opportunities. You'll also see a ton of people from SAP and Oracle not wearing name badges [at the conference]. That's really interesting because they're looking around. They feel like they're being left out of the change that's happening, and they're looking around. A lot of people are trying to figure out what's going on in the industry.

information: Are you starting to see Workday [an SaaS ERP startup founded by PeopleSoft founder Dave Duffield] come up against you in request-for-proposals? Who would you cite as up-and-comers in the area of on-demand software?

Benioff: We're seeing a lot of new companies in RFPs. I don't know that we're seeing Workday, but a lot of new software as a service companies are coming up. These are the ones growing today. If you go to the venture capitalists on Sand Hill Road, they're not investing in new client-server software companies.

information: So if SaaS becomes generic in five or 10 years, what will make Salesforce.com matter?

Benioff: I think the most important thing is we do it better than anyone else. It's like the motorcar industry. Toyota is No. 1 because they're the most innovative, they're ahead of the curve. They're an innovative, well-run company, and that's how we want to be, too.

information: How important is your AppExchange platform to the company's success?

Benioff: Our focus is bifurcated between our applications business and our platform business. Those two things are really important to us. I'm here with a mission, and my mission is to, No. 1, evangelize the SaaS movement as leader of that movement; No. 2 is get people on our platform; and No. 3 is to get people building natively on our application set.