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The company unveiled its partner tool environment that it hopes will extend the scope of the on-demand model beyond just CRM.

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The San Francisco-based company released Winter '06, the latest upgrade to its CRM application Tuesday, but also made available AppExchange, its new application sharing directory. The directory grew out of the CustomForce tool the company made available last year that allows customers to adapt the application to their individual business needs. The success of that effort combined with customer interest catalyzed a new model that included independent software vendors (ISVs).

The result is AppExchange, a platform that allows to host and exchange applications developed by third parties. The concept is similar to the online auction site eBay, where third parties buy and sell goods. In the case of AppExchange, the "goods" are business applications. unveiled 40 of the 150 applications that are now available on the online AppExchange. They range from Internet telephony applications from Skype, which allows users to make phone calls over the Internet while working within the CRM application, to an application from Adobe that allows users to securely share documents online using .pdf delivery. AppExchange also features additional applications developed by All applications are available on demand.

"People are also building applications that may have nothing to do with CRM, using purely as a platform -- processing, real estate applications, credit card transactions, all sorts," said Phil Robinson, chief marketing officer.

Trying before buying

The AppExchange applications are available for free "test drives" that offer a limited amount of functionality. According to, its customers have conducted more than 75,000 test drives of AppExchange applications during its preview mode and in its first week of availability there have been 1,500 installations. Additionally, 500 ISVs have inquired about the program, Robinson said. will also encourage end users and developers to share their own customizations and applications.

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"It's the idea of social production," Robinson said. "Applications on the business Web should be as easy to build and use as blogs are in the consumer space."

However, it remains to be seen just how prepared businesses are to move all their applications to the Web.

"They're a lot more ready now than they were a couple years ago," said Laurie McCabe, vice president of SMB business solutions at New York-based Access Markets International. "There's no en masse migration to this. Certainly people are more open-minded, but it's not a slam dunk yet. Unfortunately, Salesforce may have set itself back a bit with the outage before Christmas." maintains the pre-Christmas outage of its datacenter, which prevented customers from accessing customer records for a couple of hours, did not significantly discourage customers. Future outages should be mitigated, thanks to a $50 million investment in two new data centers on the east and west coasts that will mirror one another and provide emergency back up, according to However, AppExchange applications will not necessarily be sitting on servers.

"As customers run more applications as services, they're going to need to get savvier about what they should be vetting and requiring in terms of reliability," McCabe said.

The success of and Benioff, its pitchman extraordinaire, has opened doors for Software as a Service and other applications are seeing success, such as human resources and supply chain applications, McCabe said. "Applications which require lots of users, geographically dispersed users and the need to bring external people in."

Can stay the CRM course?

As pushes itself as a platform it is going to need to keep its eye on the CRM prize at the same time, McCabe warns. Platform development and partner management are going to require attention.

"What they've said publicly is they're going to continue to focus on the CRM market and do well with AppExchange also," McCabe said. "I think they're way too early to not have equal intensity on CRM. They're not an 800-pound gorilla yet. This vision of a marketplace for applications is certainly very core but the thing is, for them to do it right it's got to be partner-centric. Going forward they'll probably have to put pretty clear rules of engagement [in place]. We'll develop this but not that."

Applications developed internally by are available at no charge. The other applications will be purchased by the customer through's AppExchange partners. Most will be offered on a subscription basis similar to's existing pricing structure, Robinson predicted, but pricing is up to the partners. For example, the Adobe application is $80 per user per year, on top of's own subscription costs. also released Winter '06, which features an improved user interface, territory management, an integrated campaign builder, customizable forecasting, updated Microsoft Outlook integration and a re-engineered offline edition.

Additionally, made available its Sandbox tool, which allows users to test customizations and run training and development and Service & Support 2.0 -- an upgraded version of its multi-channel service solution with more than 50 new features.

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