Salesforce.com bites bullet on need for integration

Salesforce.com last week rolled out the latest version of its hosted software with added features that include a built-in link to SAP's ERP applications. The move is part of an effort by the customer relationship management vendor to address integration shortcomings cited by current and former users.

Several IT managers and corporate executives said that despite its continued momentum in the CRM market, Salesforce.com still faces the inherent limitation of selling a best-of-breed offering that doesn't easily connect with other business applications.

For instance, Tom Kramer, president of San Francisco-based Bella Pictures, said the wedding photography company had to build hooks between Salesforce.com's applications and marketing automation software from Eloqua. Now Bella has hired a third-party consultant to link the Salesforce.com tools to Sage Software's Peachtree accounting application.

However, Kramer said other vendors should take the initiative to develop hooks to Salesforce.com's software as well.

There will always be a debate over whether it's better to standardize on a single application platform or use best-of-breed systems, he noted. But he said that he's willing to accept the inherent problems of the latter approach. By using Salesforce.com's software, Kramer added, "we don't sacrifice on the technology that manages our biggest asset: our customer relationships."

In some cases, though, the lack of widespread integration offerings and the cost of running separate CRM and back-office systems have led users to defect from Salesforce.com.

"If I were to say one single reason for our change, it was that we needed tight integration," said Flora Sun, chief operating officer at Adina for Life in San Francisco. "We needed fully functional end-to-end processes."

In April, the beverage maker switched from Salesforce.com and a mix of accounting and inventory systems based on Excel, QuickBooks and homegrown applications to an integrated system hosted by NetSuite. Previously, Adina had tried to dovetail Salesforce.com and its other applications "by doing jury-rigging," Sun said. "It was just very laborious, and we constantly had to have someone watch over it."

Portland, Ore.-based Learning.com cut over from Salesforce.com to NetSuite last September in order to get an accounting system that was tied to CRM applications, said Douglas Stein, vice president of technology and development at the provider of online educational services.

The license fees charged by the two vendors are about the same, Stein said, but he added that the change has resulted in a lower total cost of ownership. He estimated that Learning.com could save hundreds of thousands of dollars because it won't need to add technical staffers. Just avoiding the cost of integrating the CRM and accounting applications saved the company about US$60,000, Stein said.

Salesforce.com is taking steps to address the integration concerns. In January, the San Francisco-based vendor launched its AppExchange software marketplace, which lets users buy third-party applications that can be linked to their Salesforce.com systems.

And last week, as part of its Summer '06 software upgrade, Salesforce.com added a ready-to-use connector to SAP R/3. The Java-based connector will enable Salesforce.com's applications to share customer data with R/3 and synchronize the information, said Kendall Collins, the CRM vendor's vice president of product marketing.

No other integration links are in the works, Collins said. But, he added, "on integration, we clearly want to take the leadership role." He said that 23 packaged connectors are currently available on the AppExchange Web site.

"I was encouraged by what I saw with the R/3 integration," said Chad Rycenga, an IT director at Charter Communications. The cable TV and broadband services provider uses Salesforce.com's software to support its business customers and runs a mix of AS/400 and mainframe back-end applications.

Salesforce.com is attempting to appear integration-friendly, said Martin Schneider, an analyst at The 451 Group in New York. "But integration, regardless if you're deploying software as a service or on-premise applications, is hard work," he said.