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Salesforce Heretic » The AppExchange…

September 6, 2006

The AppExchange…

Filed under: Salesforce.com, The Soapbox — heretic @ 10:32 am

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In my last post I basically ripped apart an SFDC AppExchange advertising campaign as being overly obtrusive and obnxcious.

Gareth Davies followed up with an excellent blog entry on his “Where’s the Upside?” blog. It’s a great read, and he raises some excellent points:

How can partners sell their new products to end-users? In the B2C market it’s easy. They guy using the product has the power to purchase and install it. No-one else is involved, in B2B that’s not the same.

If you haven’t read it, go take it for a read, well worth a few mintes of time.

I had a reply to his post I was going to place on his blog, until I realized just how long and varied it got and thought I’d express it here as well.

Gareth raises several good points, especially from the provider side of the equasion.First off, I don’t dispute that in order to make the AppExchange model work for vendors looking to turn a profit, keeping marketing and sales acquision costs low is extremely key.

The point I raise is that no matter if you are SFDC or the Red Cross looking for Katrina donations, obnxious impeading advertsing is going to annoy (some) people. That said…

I see the AppExchange as a grand experiment. No more, no less. I see the theory being tested here as: Can a sub-economy of SFDC tools survive in the on-demand market.

I don’t yet know how it will play out - but I do see some interesting things. First there’s a good number of free addons that are of good to high quality. This attracts admins to get some ideas, and users to poster their admins for stuff. and SFDC gets soem added marketing lines, all well and good. (Unless your the perster-ee)

There are also a number of reasonably priced add-ons that provide functionality far above and beyond the basic capabilities of the platform.

These segments I see growth in, first the free items because it’s in SFDC’s best intertest to _not_ have the AppExchange protraied as another enterprise cash-sinkhole, and 2nd to spur other development and ideas. The latter segment because it provides above-and-beyond functionality and a reasonable cost.

That leaves the two areas I see painted with bullseyes. The overpriced items and the for-cost extensions that only slightly to moderately enhance platform functionality.

Not to pick on them unduely, but I’ll use PartnerForce and the Email marketing addons as posterchildren for this argument.

PartnerForce is a multi-thousand-dollar addon to SFDC for managing your channel partners. The price tag alone ($1500/partner if I recall correctly) tends to price it out of reach of anything but a good sized enterprise. And in looking through the dirth of documentation — is what it does really worth that kind of spend?

Second are the various email mareting addons for SFDC. I see these as being very short term items on the AppExchange as I have to wonder just how long it will take the user base to realize that SFDC is imposing arbritary limits on Mass emails (built-in feature to the platform). Without that limitation (or significantly raised) how many customers would need these partner apps? What kind of load is it really to send a few thousand more emails a day per org (or a few hundred/user) when the SPAM rate on the internet is so high. One would think the email servers could handle it.

Lastly I wonder about the long-term viability of the AppExchange model for vendors. As a user I expect SFDC to add more and more features to the platform over time, as they have done in the past. As a developer I expect that my add-ons will continue to work and SFDC won’t take my ideas and implement like-functionality in the base platform. At what point do these paths cross in such a way as to drive the developers/vendors away? Look at the Sendia acquisition as a means to an end in this regard.

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7 Comments


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    I appreciate your comemnts, regarding Partnerforce, allow me to share with you the power of this new offering and why its value is well worth the spend.

    If you’d like to learn more, here are three ways:

    1. You can listen to a recorded demonstration by visiting http://salesforce.breezecentral.com/p28353522/

    2. You can listen to one of our customers talk about how Salesforce Partner Edition drives incremental channel revenues and reduced channel conflict. Access this pre-recorded webinar called Capitalizing on On-Demand PRM through our site.

    3. You can participate in the Channel Executive conference at Dreamforce.

    All the best….

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    Elay COhen — September 6, 2006 @ 12:41 pm


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    PartnerForce is ridiculously priced. The only companies that pricing model works for are companies with a small number of partners (such as SFDC). If you’re a channel distribution company with many partners, that pricing model is insane.

    SFDC Partners have to be getting a little worried lately. The purchase of Sendia dealt a big blow to the other mobile partners and the upcoming Lotus Integration is going to kill another SFDC partner (if it’s full-featured and functional) as well. We then have rumours of an in-house mass-email tool be developed, which is going to put the hurt on any mass-email centric partner. If you’re a partner right now it looks like your future is either to be bought out by SFDC or put out of business by them unless you expand into other non-SFDC areas quickly.

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    E.J. — September 6, 2006 @ 12:44 pm


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    The value of PRM and Partnerforce is different for each company and each channel structure.

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    Elay COhen — September 6, 2006 @ 12:56 pm


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    E.J.

    I have to disagree that the ‘only’ model that works is the few partner model. The other model that I can see being viable is where your partners drive a substancial portion of your business, or enough to cover the additional costs of something like PartnerForce.

    For example, perhaps a large equipment manufacturer that deals mainly with Distribution channels and VARs might have a large number of ‘partners’ but only bring in those that have enough volume into PF.

    So either you’ve only got a few, and it’s financially viable to bring them in to something like PF, or your business is centered around them and the incremental ‘cost’ to bring them into PF is minimal.

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    heretic — September 6, 2006 @ 1:02 pm


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    Great discussion you’ve started.

    I think the biggest need on the PartnerForce side is to cover the angle of what the partners get out of the deal (since they’ll have to come to one component of their market instead of having a one-stop shop).

    As for the email marketing add-ons, your post implies that all these partners are good for is to get past the mass-email cap that Salesforce.com enforces. I don’t think there’s a single email marketing partner on the AppExchange that’s still that one-trick pony. Take a deeper look and you’ll find progressive form entry, lead scoring, clickthrough analytics, intelligent de-duplication, dynamic content, and much more that Salesforce.com doesn’t even come close to doing (and I think they’d get unnecessarily bogged down if they tried to do it all). I don’t think the “email marketing partner” subset is going anywhere, and you might find them to be more valuable than anticipated.

    Just want to encourage you to take a deeper look - not because I work for any of them (I don’t), but because they provide so much additional value to the tool, much like many of the other AppExchange offerings.

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    Chris — September 6, 2006 @ 3:24 pm


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    … just got caught trying to make a quick reply…

    You’re of course correct Chris — the products do alot more, and I should have refined my argument more. I have looked into them, admittedly not in the last 6-8 months just due to lack of need, but am somewhat familiar with their stuff — and it’s quite nice from what I’ve seen.

    If you’re doing a large (100k+ mabye?) campaign, or do alot of them, then there’s value, potentially significant value, to those offerings, and likely will continue to be after SFDC does whatever upgrades I’ve seen hinted at on the SFDC forums.

    That said, take a stroll through the forums and search for ‘mass email’ — there’s a few threads about people looking to do relatively simple things but can’t because of the quantity limiation @ SFDC. My impression of many of those threads (not all) is that if that limit were raised, perhaps significantly, even with no other changes, the email tool providers would loose that bit of the market.

    In essence my argument boils down to any improvment in the email space by SFDC is almost certanly going to eat into share by the partner offerings on the AppExchange now. By extension, as more and more offerings are made available I can only see this situation playing out more and more as the base featuers erode into features by partners on the AppExchange.

    Law of unintended consequences? Donno… but a nice discussion nonetheless.

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    heretic — September 6, 2006 @ 4:10 pm


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    I agree with many of heretic’s assessments. In some respects, salesforce.com is using AppExchange as a “free” developer proving ground for products. It then cherry-picks the best applications and folds them into salesforce.com.

    Besides Sendia, look at Kieden (the Salesforce.com add-on to manage Google Adwords). Kieden made a big splash as a startup at the AppExchange Day in May. Two months later, the entire company was acquired by salesforce.com.

    And it is not just companies getting acquired. People get acquired too. Ron Hess produced the fabulous Excel connector while working for NeoForm. Then he was hired by salesforce.com. David Brooks was an active, vocal member of the salesforce.com developer community until he was hired by salesforce.com.

    Getting access to the half-million salesforce.com users makes AppExchange an attractive development target, but it is very difficult, as Gareth Davies noted, to get an actual sale from the AppExchange channel. As noted in this blog, salesforce.com demands a VERY STEEP price for access to its customer base via Dreamforce and other events.

    My conclusion is that unless you have a $100,000 marketing budget for the first year, you will probably not see any return from an AppExchange product (unless you can sell your product/intellectual property to salesforce.com).

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    David Claiborne — September 8, 2006 @ 10:24 am

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