First Coffee for September 9, 2005

David Sims : First Coffee
David Sims
| CRM, ERP, Contact Center, Turkish Coffee and Astroichthiology:

First Coffee for September 9, 2005

By David Sims

The news as of the first coffee this morning, and the music is Frank Sinatra’s album of “suicide songs,” as he called them, Only The Lonely:

First CoffeeSM’s off to’s Dreamforce 2005 in San Francisco tomorrow morning – leave Antalya at 5:00 a.m., fly through Istanbul and Chicago, landing in the Queen of Cities that same day at eight in the evening. You can do things like that, travel for twenty hours and arrive a few hours after you leave when you lose ten hours in a day. Wonderful things, time zones. So efficient.

Tip Your Waitress: Every organization has their press relations people, whatever they’re called their job includes the grim task of having to interact with, pacify and inform the human subspecies known as journalists, a job only slightly less difficult and thankless than coordinating Baptist missionaries in Saudi Arabia.

But when it’s done well it can be done quite well indeed – Angela Lipscomb at SAS is one of the better ones First CoffeeSM’s encountered – and Mentha Benek has done an outstanding job making First CoffeeSM’s trip a) possible, and b) smooth, arranging interviews, the hotel, all the details necessary. Many thanks, Mentha, look forward to meeting you.

Among other things to look forward to next week in this column are interviews Mentha’s arranged for First CoffeeSM with Jim Steele, president of and Bonnie Crater, VP and GM of Supportforce. The interviews published occasionally here have become a popular feature, so Jim and Bonnie will fit right in. First CoffeeSM will also try to catch up with former comrade-in-arms Bob Thompson, who’ll be at Dreamforce and who runs the highly successful and pick his brain over what’s coming up in the industry, hopefully over a lunch Bob’s paying for.

One thing of import will be’s rumored morphing from a midmarket hosted CRM player to enterprise hosted CRM player. They’re getting a few enterprise contracts here and there, treading on SAP, Siebel and Oracle’s toes, is that where they really see their future, or is that just a nice sideline for them? Are they really changing their identity or just taking opportunities where they see them?

After all, analysts expect them to improve on their currently-stated 300,000 subsrcribers by having 400,000 or so by January, where do they see most of those customers coming from? Whose lunch are they eating?

We’ll also look at their Asynchronous Java and Extensible Markup Language toolkit (a.k.a. AJAX), “aimed at helping customers easily integrate's sales software with outside applications like Google,” according to industry observer Stacy Cowley.

There will be a different First CoffeeSM schedule during Dreamforce, it won’t be up before six in the morning as it is now, but will be published with more exclusive, breaking content at later times in the day to reflect the importance of what’s happening at Dreamforce. What with dozens of product announcements from partners set to be released, executive interviews, a hundred vendors exhibiting and over three thousand attendees there won’t be a lack of content, don’t worry.

So maybe First CoffeeSM can change to Last Anchor SteamSM during the conference, or First SourdoughSM, or Fifth DoughnutSM. Dunkin’ Donuts outlets around the Moscone Center in San Fran had better stock up, as it’s one of the things First CoffeeSM misses living overseas.

There are lots of other tech conferences and company confabs throughout the year, some more and some less important, but Dreamforce is truly one of the more important ones of the year and First CoffeeSM will try to give it the coverage it deserves, such as finding out what salesforcers think of Microsoft CEO Steve Ballmer’s painting a big red target on their butts, by dropping subtle hints the way the Enola Gay dropped a subtle hint on Hiroshima that Microsoft’s got this great new idea for something called “on-demand software” you sell by subscription, and specifically that they’ll be aiming the firepower of the huge U.S.S. Microsoft battleship on that pesky little boat zipping around in the water.

(Mike Ricciuti’s blog has Marc Benioff,'s CEO firing back with his typical understated restraint: “Microsoft's failed enterprise software strategy has let the industry down. We have competed against them in the CRM market since 2002, and they have failed to deliver a competitive product. Customers are tired of waiting for Microsoft to innovate.” If Microsoft’s looking for a dust-up they’ve found one.)

Can Microsoft do it? There are three serious firms in the midmarket hosted CRM space, RightNow, NetSuite and, although Microsoft calls out only, their real stumbling block would be the triumvirate.

In the past couple months First CoffeeSM’s spoken with the CEOs of both RightNow and NetSuite – hoping to get a few moments with Marc Benioff at Dreamforce – about exactly this issue, what’s their disaster recovery plan for when a Category 5 company such as SAP or Microsoft slams into their markets?

Both Greg Gianforte of RightNow and Zach Nelson of NetSuite pooh-poohed the danger huricanes like Microsoft and SAP present to hosted midmarket CRM. They have to, of course, they can’t say “We’ll get rolled like a drunk in a blind tiger and I’ve always wanted to sell used cars instead anyway.” But First CoffeeSM doesn’t think they’re merely whistling past the above-ground graveyard, as both had substantive reasons for why Microsoft can’t swamp their levees.

“SAP, for example, would have to completely re-write all of its applications from scratch in order to build a multi-tenancy architecture to match ours,” Gianforte says. “And, from a business perspective, they would have to replace this huge services ecosystem they’ve developed over the years that thrives on complexity and difficulty.”

“They will be too late to the party when they jump in,” Nelson says. “We have a seven-year head start in building the functionality and the systems to deliver software as a service. I don’t care how much money or how many developers they throw at the problem, it will take them seven years to get to where we are today.”

Gianforte points out that enterprise applications of the sort Microsoft and SAP sell are “something you have to sell direct, which they don’t do.” Indeed, one of the more delicate aspects of Microsoft elbowing into the midmarket space is competing directly against their partners, who might decide they’re done with being Microsoft partners at that point.

And as Gianforte says, Microsoft’s customers are in IT – “not the business unit, which is where the on-demand buyer is.”

“I hope they do announce on demand products in the CRM and ERP space,” Nelson says, as “it will be the ultimate validation of what we are doing, and will force customer to look at our solutions as well as theirs.”’s identity as an on-demand vendor is a coroporate cultural advantage Microsoft can’t hope to match, either. “These big software companies like to take the money and run,” Gianforte says. “They have no idea what it’s like to depend on a subscription model where you must satisfy your customer to get a renewal.”

The “dinosaurs of the software industry” can make all the noise they want to, as Gianforte sees it retooling to compete in the midmarket hosted space is a poison pill: “To really come after us, they’d have to completely cannibalize their existing business. They can’t afford to do that, and Wall Street won’t let them.”

Should be a great event, First CoffeeSM’ll be there, soaking up the cool, foggy weather instead of this monotonous warm sunshine here on the Mediterranean coast (First CoffeeSM’s wife: “He’s serious, he’d really rather live in jeans and sweaters than shorts and t-shirts. Opposites do attract.”)

And if you’d like to actually meet First CoffeeSM in the flesh, sit down over a doughnut or Anchor Steam send an e-mail or leave a message at the Marriott across the street from the Moscone West.

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