From Olivier Verhage – Kennet Partners (@olivierverhage)
As an investor with a strong focus on enterprise software, I frequently speak to tech entrepreneurs that built their business on the Salesforce platform. Although most people think of Salesforce as the incumbent CRM monster, the company also has a cloud platform called Force.com that enables you to build and deploy powerful cloud-based enterprise applications faster than ever before. Veeva Systems is probably one of the best examples of a tech company that decided to deploy on the Force platform, it has built the leading healthcare industry cloud CRM and has a current market cap of close to $4 billion. Other successful SaaS businesses include ServiceMax which has raised over $200 million in venture capital and Apptus (raised $78 million).
So yes, you’d say that sounds successful, right? As the Force platform is becoming increasingly popular and many entrepreneurs consider starting off with Salesforce, I thought it would be helpful to outline the pros and cons in a blog post and highlight some of the alternatives.
Reduce coding time and leverage core functionalities
Force.com enables developers to create and deploy applications that can leverage core functionality provided by Salesforce.com, such as Chatter, workflows, business processes, mobile software development kits, communities, and real-time hierarchical reporting. This reduces coding time, infrastructure headaches, and enables efficient uses of start-up capital.
Integrate with any data source
Force.com apps are easily connected with any external data source using standard APIs, many of which you don’t have to build yourself.
Stable and secure
As Salesforce isn’t new to building cloud platforms, many of the kinks and security weaknesses typically associated with new product platforms have previously been worked out.
Mobile and tablet ready
The Force.com mobile-first emphasis is a big plus – especially when you want to deploy a product that has to be smartly geared to support sales professionals, customer support and marketing teams who rely heavily on their mobile devices.
Benefits of the app store
If you want to ride on Salesforce’s coattails and sell into their customer base. Building a Force.com app allows you to drop your app directly into the Salesforce environments of those customers, and you can access the sales/customer data stored there.
BUT;
It doesn’t come cheap
When you decide to use the Force platform, you are basically subject to the pricing waves of Salesforce. They usually take a cut on revenue and I’ve heard of numbers up to 25%. And don’t forget that here’s always a risk that their commission might increase once your initial contract expires. However, you should also realise that using Force.com may significantly reduce your time to market and may thus be a relatively inexpensive way to launch; Veeva Systems is a great example. It was the most capital efficient VC-backed exit since 2009 (better than WhatsApp in fact) having only raised $4 million.
Lack of flexibility and control
When building on Force.com, you are not in control of the platform and you might need to re-write parts of your application if Salesforce changes features or tightens security. Force.com claims to be a high-productivity application development platform that integrates with Salesforce data, along with other external data sources. The fact is that when things get complex, developers will have to use a proprietary Java-like language called Apex. They will lock you in for life…
Competitive differentiation
Companies also worry about competitive differentiation. What if Salesforce decides build its own comparable application on the platform, making it difficult for customers to decide between similar options? Don’t expect to get any distribution help from Salesforce.
Other alternatives
Luckily Force.com is not the only PaaS platform that enables developers to deploy fast, today there are numerous other solutions that can be a good alternative depending on what you are looking for. For example, the things you can do with Force.com are more attractive when selling enterprise apps versus consumer apps, so if you decide to build a consumer facing business you are probably better off building on a platform such as Heroku (which Salesforce acquired for $210 million in 2010).
If you want some guidance as to what is the best PaaS solution for your business, have a look at this PaaS decision matrix.
