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Regarding this week's Salesforce.com and Google global sales deal, I spoke with David Bradshaw, principle analyst in software at Ovum. What follows is the very interesting transcript of our conversation. Please enjoy.

The participants of this podcast are Elizabeth Book, ebizQ editor-in-chief (EB); and David Bradshaw, Ovum principle analyst, software (DB).

EB: Hi, this is Elizabeth Book and this is another ebizQ podcast. Today I am speaking with David Bradshaw, who is with Ovum, an analyst firm headquartered in London with offices around the world. Thank you for being with us, David.

DB: You're very welcome, Elizabeth.

EB: Basically, David is principal analyst at Ovum, covering software and has quite a good history and a background in the software industry and has been really covering it, I guess for about 17 years. Is that correct?

DB:Yeah, that's about right, yes.

EB: Okay.

DB: Feels like a long time.

EB: Yes. So, basically -- thanks for being with us. And we're talking today about the Google/Salesforce deal that took place. And we wanted to get your thoughts on the announcement, first of all. And I guess maybe we can start there. And have a discussion about what this means for the industry and what this might mean for lead generation and how people work on the internet, etc.

DB: Okay. Well, let's think of the announcement as actually being in two parts, really. First of all, there's the announcement of global partnership between Salesforce and Google. That's linking up two very well-known companies in the Internet. Google, of course, is very well known for its search platform and the advertising revenue that that brings. Salesforce, of course, very well-known for its leadership of the CRM sector, the Software-as-a-Service CRM sector.

Secondly, we got a specific from that partnership. Which is the random convolutedly-named deliverable from the alliance is Salesforce Group Edition Featuring Google Adwords, or let's just call that Group Edition for short. That enables you to use, use keywords accessing Google and connect them to Salesforce. So let's deal with the specifics first, because that's probably the easiest part to figure out. This is a linking up of the Google advertising platform to Salesforce that enables you to put ads on Google using key words and then track the results of those ads all the way through to sales. And this kind of functionality has been available to large enterprises who have been able to build the pieces for themselves.

What the Google and the Salesforce alliance has made possible through the Group Edition is that this is now available to small businesses with the Sphere's Five CRM users. And from my viewpoint, that's a very positive contribution to small businesses. Because Internet advertising is an increasingly important source of leads. But, you have to be able to measure the results, otherwise you could wind up spending a large amount of money and getting nothing out of it. What this enables you to do is to see which key words and which placements have brought you the best results.

EB: In fact, what you said yesterday about advertising budgets always -- people always think that their advertising budget is only working halfway--

DB: Yeah, it's --

EB: -- but they don't know which half is working.

DB: Yes, one of the widest known pieces of wisdom about the advertising market is that half your advertising budget is wasted. You just never know which half is wasted. This improves that situation by improving the measurability. Once of the advantages of using the Internet for advertising is it gets more measurable. You can measure click-throughs from certain sites. You can track those click-throughs to customers. And you can track those interactions into sales. As I said, that's been possible for quite a while. The big companies have got those facilities and now Salesforce and Google are placing those kinds of facilities in the hands of the small companies and small advertisers, too.

EB: Right! And what we talked about yesterday, I think, when I first discussed this deal was that you had a higher view of this as sort of a way of altering the way people use the Internet.

DB: Yes. I think this is definitely helping to move more commerce onto the Internet than has been in the past. The problem for a lot of people is that they have on-premise systems and so on, that they depend on. One of the ultimate aims is to move more businesses into a flexible sourcing environment on the Internet where people play for what they use.

So the problem has been, for a long time, that people are depending on on-premise based software that, particularly for small businesses, produce a lot of burden in terms of support costs and hardware costs and lack of expertise. What's progressively happening in Salesforce is it has certainly contributed to this in large businesses, but it's becoming more possible to run your business life as well as your personal life on the Internet, using Software-as-a-Service to do that. Of course, it's by no means complete. There's still big gaps in the capabilities but that's changing gradually.

Software-as-a-Service makes available sophisticated facilities to businesses of all sizes. Facilities that in the past have often only been available to larger businesses and so it's beginning to help level the playing field between the large businesses that spend many millions of dollars building sophisticated systems as they need it and the smaller businesses that don't have budgets and nothing like that size. And it also is helping the controllability of costs, by allowing you to only pay for what you need and what you use.

EB: Right. So this is a Software-as-a-Service concept and it's also a Web services concept, where in general, ebizQ has been covering for many years service-oriented architecture and using the Web as a way to produce reusable services for a client. And, as you said, this kind of benefit has really only been available to large companies. So with sort of Software-as-a-Service and pay-as-you-go pricing, it's kind of changing the way people could possibly utilize the Internet for business. And utilize Web services for businesses.

DB: Yes. Services-oriented architecture is by and large, very much the way that people have built the Software-as-a-Service offering that that they have online. So as well as getting the raw functionality out of the software that you are using online, the Software-as-a-Service, you also have potential to connect together that functionality with other vendors functionality comparatively easily. I have to say. Services-oriented architecture doesn't solve all the problems but it certainly removes a good few of them.

And one of the areas of opportunity is for the many smaller players, particularly in the ecosystems of both Google and Salesforce.com to offer products at relatively low cost and in some cases, no cost. But help join together useful functionality into usable chunks for users of all sizes.

EB: One other question that I had, and maybe I will make this the last question for you today, and that is with the -- I think it's called AppExchange portion of Salesforce which I don't know too much about. And this is somehow connected to SOA, I believe. Or for SOA users? Is that correct?

DB: Well! The AppExchange is connected to Salesforce.com at the moment in that a vast majority of applications on the AppExchange are ones that Salesforce users could use to enhance their CRM capability. For example, I was looking on the AppExchange itself just a few minutes ago and what you find there is not just the applications being listed. But you find people's comments on those applications. And believe me -- some of them are very forthright! If an application doesn't work for somebody, they say so! And they make no bones about it.

On the other hand, if the application works well for them and works with their Salesforce implementation, they will say that too. So it makes a very good place for people to go and look and buy applications. Now, Salesforce is extending the capability to use applications that you don't have to be a Salesforce.com user to buy. They have what they call now their platform editions of Salesforce.com, they recently launched. So in the future, you will be able to become a Salesforce.com subscriber and basically get the infrastructure you need to run any of the applications on the AppExchange that aren't connected to Salesforce.com.

EB: So the AppExchange is not the platform for the Enterprise users.

DB: No. The platform is called Apex.

EB: Oh, thank you! Okay.

DB: Salesforce has done some name changes over the past year or so to try to clarify this. Because they used to call everything every thing the AppExchange. It used to be the platform as well as the marketplace.

EB: Oh, okay.

DB: And it is also a development language called Apex code involved in this too. So, what you have increasingly, is an on-demand platform built by Salesforce that started out as a CRM-only platform. And then the extension came along with partners and now most recently, Salesforce is saying "Well, let's open up the platform to anybody, to use it to build their own applications or buy applications from our partners and run them on this on-demand platform."

EB: All right! Well, I think that's about all the time we have with you today, David. I want to thank you so much for your time. David Bradshaw, principal analyst for software at Ovum, based in London. And this has been an ebizQ podcast. Thank you, David.

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