Benioff: can support 'business Web'

The company's AppExchange aims to be the eBay of enterprise applications

Despite a recent outage of the company's hosted CRM (customer relationship management) service, Chief Executive Officer Marc Benioff said Tuesday that his company has made significant infrastructure investments to support its most ambitious release yet.

Benioff spoke to IDG News Service after the formal debut of the Winter '06 release of the service in San Francisco. The service has been updated with AppExchange, a Web services-based platform that allows software companies to offer their applications as hosted services integrated directly into

According to Benioff, AppExchange will provide an Internet-based operating system to enable what he calls "the business Web." The company modeled its new offering on the consumer Web, where companies such as Yahoo, Google, and eBay offer Web-based services that have become essential to the everyday life of consumers, he said during a presentation in San Francisco.

Companies should be able to control the content of the applications they buy and not have to depend on software companies to offer releases with features that are controlled by those companies and not customers, Benioff said. Having an Internet-based platform on which they can build and offer applications will enable this.

"Why can’t there be an eBay of enterprise applications, why can't we have an iTunes music store of enterprise applications and bring back the services we need to run our business?" he said during his presentation. "If it’s so easy for us to get anything we want as consumers, how can we get that for our customers as well? That’s really how we came up with the concept of ... the business Web."

Winter '06 is a culmination of six months of investment by the company to rearchitect's software, as well as to fortify its back-end hardware infrastructure. To prepare for the release, the company established two new data centers -- one on the East Coast at a location the company declines to disclose, and one on the West Coast in San Jose, California. Currently, the San Jose data center is up and running, while the East Coast center is on standby.

Come February, Benioff said in the interview, the East Coast data center will mirror, or replicate, all of the data running on the infrastructure in the West Coast facility. In case there is an outage or a problem in one center, the other center can immediately take over in a disaster-recovery scenario that will ensure users' data is protected and the service stays up and running.

The December outage was a temporary glitch that has been fixed, he said. The outage lasted all day for some customers and drew criticism that the company can't scale its infrastructure to keep up with its growth. Benioff said during the interview he is confident that's new back-end infrastructure will be strong enough to support the myriad hosted applications the company plans to offer through AppExchange.

"That's why we’ve made huge investments in all this new technology," he said. "We've wholesale replaced our architecture, our hardware, our software, to get us to the next level [of the service]."

That next level is to enable developers and customers through AppExchange to create custom, composite applications from various applications, what calls application "mash ups," all on a Web-based platform that has the tools and APIs (application programming interfaces) built in. This access to unlimited applications, all available through subscription fees paid for a service or a set of services over the Web, is the Holy Grail Web services technology has been promising for years. Companies such as Microsoft Corp., Oracle Corp. and SAP AG, in different ways, also plan to offer hosted Internet-based services that open up the possibilities for application development and more customer choice. Oracle plans to shed more light on its plan, Project Fusion, Wednesday at an event in San Francisco.

But Benioff, who has been predicting the demise of packaged software for years, said competitors just aren't there yet. According to him, they won't be able to compete with's "business Web" strategy not just from the technology side of things, but also because they are entrenched in a long-standing business model of selling software licenses and long-term maintenance contracts to their customers.

"They’re trying to get there," he said during the interview. "But this is a whole different game. They don’t have the technology, the proven platform, the users deployed. They don't have large implementations, history of security and availability."

AppExchange is live Tuesday with more than 160 third-party hosted applications offered from within the service. Among the more high-profile services available in AppExchange are the VOIP (voice over Internet Protocol) service from Skype Technologies SA and a service from Adobe Systems Inc. that automatically generates PDF (Portable Document Format) documents.

Another customer and partner offering its application through AppExchange is Omniture Inc., an Orem, Utah, company offering marketing intelligence. Mark Stock, senior manager of sales for the company's Account Development Group, said that while he doesn't think business customers necessarily need or will use more than 100 applications for their business, they likely will find a core three or four through AppExchange that will be helpful to them.

AppExchange also is a way for smaller companies such as Omniture to reach more customers by riding piggyback on the service, he said.

"What's nice about this is we have about 1,000 customers ... has about 19,000 customers," Stock said. "So it's a good way for us to do two things -- assist our customers in greater understanding [of what they can do through hosted services], and access customers of and bring them on."

Copyright © 2006 IDG Communications, Inc.

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