"The total cost of ownership is much lower than the traditional CRM software," Dresser says. "Also, we're not dependent on our IT department to fix stuff anymore, we didn't have to put in a huge effort up front, and upgrades take place instantaneously without affecting our custom modules." ClearCube's (an Austin, TX-based maker of specialized hardware and software for the federal government and the health-care and financial sectors) controller Dean Dresser testifies to the savings Salesforce's hosted service brought his company.

Since 2001, ClearCube had been using customer relationship management (CRM) software from Siebel. CRM helps organizations keep track of current and prospective customers. It tracks customer contacts, logs sales visits, generates forecasts, and generally helps to convert sales leads into deals. But at ClearCube, only 35 percent of the sales staff was willing to use the Siebel software."It was a very painful, broken system," Dresser says. "It was difficult and unwieldy to manage. Every time we went through an upgrade, all the customization we had done on the previous version would disappear." And because people weren't using it consistently, Dresser adds, the software couldn't produce consolidated forecasts. "People would send me their weekly reports in Word or Outlook or Excel or on the back of a pizza box. As a result, we had no way of knowing the probability of closing deals."

The migration of a host of other businesses from Siebel and other CRM providers to Salesforce has given the company the lion's share of the market for Web-based CRM services.The company increased its customer base by 40 percent in 2004, from 9,500 to 13,300, according to Forrester Research. Quarterly revenues almost doubled between its first quarter of 2004 and the same quarter a year later, from $35 million to $64 million, with profit margins hovering at about 5 percent. And Wall Street has rewarded the company handsomely, pushing its stock price from $11 per share at the time of its June 2004 initial public offering to about $24 per share in July 2005.

Source: Technology ReviewPrashanth RaiTag(s):SaaS, Salesforce