THINK IT Services

THINKstrategies, Inc. announced today that BMC RemedyForce Service Desk has been named the latest winner of the Best of SaaS Showplace (BoSS) Awards program, which is aimed at promoting the measurable business benefits being delivered by today’s Software-as-a-Service (SaaS) solutions.

The BoSS Awards is an ongoing program of THINKstrategies’ new Cloud Computing Showplace which recognizes SaaS companies that are producing tangible business benefits for specific user organizations. These benefits can include increased sales, lower costs, higher customer satisfaction, faster operations and greater profitability.

BMC is a global leader in IT management solutions. The Remedyforce Service Desk delivers a simple and fast IT service management solution that increases IT service desk productivity by automating the entire IT support process with pre-configured, ITIL®-based incident, problem, self service, change, and inventory management processes. cloud-enabled service desk, self-service, and inventory management capabilities Hosted on the number one SaaS platform from Salesforce.com, Remedyforce enables IT departments to take advantage of BMC’s 20 years of service management leadership delivered on a proven, trusted cloud infrastructure.

Click here to read about the measurable business benefits which BMC’s RemedyForce Service Desk has delivered to users.

Click here to learn more about the BoSS Award program and to apply for an Award.

As a result of the success of the BoSS Awards program, THINKstrategies has launched the Cloud Computing Business Value (CCBV) Awards program to recognize companies which are delivering Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) solutions producing measurable business benefits for their customers. For more information regarding the CCBV Awards, see http://www.cloudshowplace.com/awardprograms/ccbv.php.

The year of the Cloud has come to a climax at Salesforce.com’s Dreamforce conference in San Francisco where over 30,000 registrants converged to celebrate the rapidly expanding world of ‘on-demand’ solutions and collaboration tools.

Salesforce.com used the event to beat back the recent efforts of Oracle and Microsoft to gain a share of the Cloud Computing market with a new round of initiatives aimed at building on its phenomenal momentum and success.

The two most significant announcements on Day One were Salesforce.com’s offer of free Chatter accounts across its customer base along with a public version of the social networking service in February, and a new Database.com offering as a spin out of its Force.com Platform-as-a-Service (PaaS).

Day Two began with the news that Salesforce.com plans to acquire the Open Source oriented, Ruby-based application development platform, Heroku, for $212 million in cash. Salesforce.com and BMC Software also announced that they are joining together to offer RemedyForce, a new Cloud-based IT service management and support offering built on Force.com. Salesforce.com also unveiled SiteForce, a new and improved version of its website design tool which was introduced previously.

Talking About Chatter

A year ago, Dreamforce attendees responded to the unveiling of Chatter with a lot of apprehension about why they should permit a Facebook-like social networking tool into their organizations. In response to this lukewarm reception, Salesforce.com put its marketing engine to work to overcome this hesitancy and has generated growing customer acceptance. 

Much of the opening session of Dreamforce was focused on the practical benefits of Chatter in corporate environments through a series of demos of use-cases and customer success story testimonials. Salesforce.com also emphasized how Chatter bridges the old and new worlds of the business user by linking to Microsoft Outlook and mobile devices.

Salesforce.com announced Chatter Free to extend its reach further into organizations beyond the sales and marketing departments. This initiative will permit Salesforce.com users to invite others within their organizations to utilize Chatter, in the same way Facebook users can invite friends to join their social networks.

With less fanfare, but possibly of greater significance, Salesforce.com plans to also roll out a public Chatter.com service in February aimed at popularizing Salesforce.com’s social networking capability in the open market. Both these moves will broaden Chatter’s footprint within organizations and brand equity in the marketplace. These moves will also make the folks at Facebook rethink whether they should have pursued the corporate market rather than relinquishing it to Salesforce.com. It will also get the attention of SuccessFactors which has been proclaiming that its Business Execution Software solution has a greater installed base of end-users than Salesforce.com.

Fortifying Force.com

Salesforce.com isn’t just seeking to permeate the enterprises via Chatter. It also wants to convince the developer world, both independent software vendors (ISVs) and internal enterprise developers, that Force.com is a credible PaaS for a new generation of enterprise-class, Cloud-based, mobile apps.

In its typical style, Salesforce.com unveiled Database.com as a new capability even though it is actually a part of Force.com which has been unbundled to create a new standalone offering and point of entry to Salesforce.com’s PaaS environment.

The standalone Database.com capabilities are being offered to respond to the changing way in which applications and databases are being architected in a more pluralistic fashion in the Cloud. The goal of Database.com is to democraticize database development, and give Salesforce.com’s customers and partners another reason to expand their use of its applications and PaaS. 

Salesforce.com has also been working hard to fend off competitive claims and developer concerns that its Force.com PaaS is too proprietary. It made a strong move in this direction with its alliance with VMware earlier this year, which produced VMforce.

Salesforce.com’s acquisition of Heroku reinforces this point, quickly giving Salesforce.com a strong foothold in the Open Source/Ruby application development environment, and immediate access to the rapidly growing Heroku developer community.

Heroku is considered by many to be the top Ruby platform in the Cloud market. The company has experienced 50% growth in application development activity in the past few weeks alone according to its Founder/CEO during his keynote presentation. Heroku will maintain its brand and become Salesforce.com’s seventh Cloud offering.

The Heroku acquisition and Database.com are geared to the new world of social, mobile apps. They are also intended to offset Microsoft’s aggressive efforts to gain customer and partner acceptance of its Azure PaaS, and undercut Oracle’s ‘false cloud’ offerings which it calls “Cloud-in-a-Box”. The Heroku acquisition is also a dramatic contrast to SAP’s purchase of Sybase, with Heroku representing the rapidly growing world of Cloud-based applications and Sybase viewed as an old-world development vendor attempting to recreate itself around mobile apps.

As Salesforce.com’s executives strongly stated during an industry analyst/press briefing, the message which the company is trying to convey to the market with this acquisition is that Force.com will be open and that Salesforce.com is going to be a platform company. A number of enterprise customers confirmed the importance of Salesforce.com’s PaaS efforts in their decisions to select the company as a strategic vendor.

SaaSifying IT Management

Salesforce.com’s announcement of RemedyForce in conjunction with BMC is significant for a number of reasons.

It is the company’s first attempt to provide a solution aimed specifically at the IT organization which is increasingly embracing SaaS-based alternatives to traditional IT management software. I’ve been telling clients and others about that the SaaSification of IT management and why this trend in the Cloud Computing market eliminates another barrier to greater customer adoption.

It is also the first time Salesforce.com has teamed with another company to launch one of its product-lines, or “Clouds”. This represents an important endorsement for BMC, as well as a risk for Salesforce.com. Teaming with an established ISV is an interesting choice for Salesforce.com. Like every established ISV which has attempted to add a SaaS component to its portfolio, it hasn’t been an easy road for BMC. But, the company has a highly committed CEO and has built a SaaS solution on Force.com which is gaining customer acceptance in the market.

This alliance puts Salesforce.com in the peculiar position of depending on a partner for the success of one of its product-lines. It also renews questions and concerns among its other partners about who gets preferential treatment within Salesforce.com’s ecosystem and why.

Closing Thoughts

One of the lingering complaints about Salesforce.com’s solutions is their premium price. Marc Benioff even joked about this point in his opening remarks at Dreamforce and got a hearty laugh from the audience. In an attempt to capitalize on this issue, Microsoft has launced a marketing campaign offering $200/user rebates  to Salesforce.com customers who jump ship in favor of Microsoft’s Dynamics CRM Online.  Benioff made light of Microsoft’s PR ploy by bringing the actor/model who is pictured in the Microsoft ads on stage during the Day Two morning keynote session and successfully convincing him to come back to Salesforce.com.

All joking aside, Salesforce.com’s premium prices hasn’t slowed its tremendous growth and hurt customer satisfaction/retention rates, or diminished the enthusiasm of the customers and partners attending Dreamforce this year.

The buzz and activity at Dreamforce 2010 is not only a clear indication of the Salesforce.com’s growing success, but also an impressive illustration of the widening movement to the Cloud.

[Disclosure: Salesforce.com paid for my hotel accommodations during my attendance at Dreamforce.]

Seven weeks of traveling came to an end in Florida today after attending SAP’s Sapphire user conference and speaking to Tech Data’s TechSelect executives about the channel implications of the rapidly evolving Software-as-a-Service (SaaS) and Cloud Computing market.

Prior to this week’s events, I traversed the country from Boston to the Bay Area six times to speak, host and moderate sessions at SaaScon, Under the Radar, AlwaysOn OnDemand, Pervasive’s Metamorphosis and the SIIA/OpSource All About the Cloud conferences, and conduct strategy sessions with a wide range of clients in between.

The common theme of all these events and client meetings is that SaaS has become a viable alternative to legacy on-premise software across nearly every application segment, and a newer wave of Infrastructure-as-a-Service (IaaS) cloud computing services is quickly disrupting traditional data center models across nearly every industry.

Concerns about hyperbole outdistancing today’s realities are being pushed aside by a growing number of customer success stories which clearly illustrate the tangible and measurable benefits of these ‘cloud’-based services.

SaaS, IaaS and Platforms-as-a-Service (PaaS) are changing the way software and systems are designed, developed, packaged, priced, promoted, acquired, delivered, consumed and supported. 

At nearly every step of this process, the burden of success shifts from the customer to the vendor, with the potential of greater customer satisfaction, loyalty and profitability promising to offset the tremendously painful migration but necessary process for vendors, i.e. the classic ‘innovator’s dilemma’.

In response, a parade of incumbent software vendors (ISVs) are surrendering their efforts to fight off the ‘on-demand’ movement with FUD (fear, uncertainty and doubt) marketing campaigns, and replacing them with their own SaaS initiatives and cloud computing strategies.

CA and BMC have unveiled SaaS IT management solutions built on Salesforce.com’s Force.com PaaS. Software AG is offering a hosted version of its CRM solution, rebranded as update software AG.  (6/15: A spokesperson for update software AG has informed me that it is an independent company which is not associated with Software AG.) And, Microsoft is giving away a free version of Office…and suing Saleforce.com for patent infringements.

Few ISVs have more at stake and face tougher challenges as a result of this transformation process than SAP.

Over the past four decades, SAP has built a portfolio of complex enterprise applications which are at the heart of the operations of the world’s largest corporations, and thousands of others. It has created an equally vast internal organization and intricate set of channel relationships to develop, deliver and support its products, and serve its customers.

SAP’s shift to SaaS has been plagued by a series of perceptual, philosophical, developmental and sales missteps. The company underestimated the level of customer discontent with traditional software and their willingness to adopt ‘on-demand’ alternatives. It also discounted the architectural and operational requirements of developing and delivering competitive SaaS solutions.

After two false starts with its Business ByDesign (ByD) flagship SaaS offering, the company’s leaders are now more determined than ever to get it right. This week’s Sapphire conference was a coming out party to convince SAP’s customers and partners, as well as press and analysts, that ByD is now on the right path.

SAP has rebuilt the application with a new multi-tenant architecture to make it more scalable and economical. Even more importantly, ByD is being positioned as a part of a broader, corporate-wide portfolio of cloud solutions which the company’s leadership is hoping will be ”game-changing”.

As a guest of the company (SAP is a client, and paid my way to the conference) I had the privilege of meeting one-on-one with key corporate executives for a series of candid conversations about their new strategies. 

They intend to differentiate ByD, and the broader cloud portfolio, by embedding greater analytics into the solutions and offering an integrated suite of modules spanning nearly every corporate functional area across on-premise and on-demand environments, as well as various mobile devices.

Although ByD sits within the SAP’s Small- and Mid-Size Enterprise (SME) division, key executives are now willing to offer ByD to large enterprise (LE) divisions and regional offices as well.

While SAP has put a lot of investment into rebuilding the ByD architecture, it still has a long way to go to match today’s market leading solutions from a user experience perspective. ByD’s straightforward functional capabilities lack the type of dynamic, user-friendly interface common in most SaaS applications. As a result, it has limited user configurability and can be inflexible at times according to one customer I spoke with. Despite these limitations, ByD is winning more customers who are pleased with its operational and financial benefits.

I also got demos of the latest versions of SAP’s StreamWork collaborative decision-making tool and its Carbon Impact and Sustainability service. Both demonstrate SAP’s growing understanding of the type of dynamic user experience expect in today’s market, which will hopefully find its way into ByD soon.

Underlying SAP’s growing portfolio of SaaS and cloud computing solutions is the analytic expertise and skills of SAP’s Business Objects unit. Company executives are hoping they can also leverage the Sybase acquisition to fortify its in-memory capabilities to support its SaaS solutions and extend its mobility capabilities.

There is no question that SAP is determined to succeed in the SaaS and cloud computing arena. Ironically, the company’s biggest challenge will be the tendency of company executives and its army of developers to over-engineer SAP’s solutions.

In the past, SAP succeeded by focusing its vast resources on the enormous complexities of enterprise environments. Today, a growing number of SAP’s customers are seeking to streamline and simplify their operations, so they can become more agile and responsive to rapidly changing market requirements. In many cases, the customers are willing to accept less functionality if it improves their productivity, effectiveness and profitability.

SAP must recalibrate its efforts and solutions to match these changing requirements and expectations. If SAP’s leaders and staff can learn this lesson from the SaaS movement, they can become an important player in the maturation of the broader cloud computing industry.

I’ve been suggesting for years that the IT system management (ITSM) market is ripe for a new generation of Software-as-a-Service (SaaS) solutions, and a widening array of emerging players are finally fulfilling my vision.

Up until recently, IT departments have been plagued by the same frustrations which permeated most large-scale enterprises contending with overly complex, cumbersome and costly business applications.

In the case of the business units, it was trying to implement and maintain enterprise applications, such as CRM or ERP, which drove them crazy and in the direction of SaaS alternatives from companies like Salesforce.com and NetSuite.

Now, IT organizations are starting to migrate away from the ITSM platforms offered by IBM, HP, BMC and CA in favor of SaaS-based alternatives from Service.now and others.

Why are IT departments moving in this direction? For the same reasons as their business unit counterparts,

• Frustration with the costs and complexities of traditional, on-premise ITSM has reached a breaking point.
• In today’s tough economic environment, IT departments have to do more with less and can’t afford the inefficiencies associated with legacy ITSM.
• Traditional ITSM wasn’t designed with today’s highly dispersed workplaces, mobility and cloud computing resources in mind.
• Technological advancements are making today’s SaaS-based ITSM solutions more viable alternatives to legacy systems.

So, just like in the broader business environment, there is a ‘perfect storm’ of economic, technological and attitudinal forces which are driving IT professionals to adopt various SaaS ITSM solutions.

My latest commentary in Ecommerce Times discusses these drivers further.

But, it is worth noting that between the time I submitted this column to the online publication and when it was posted the following industry announcements and SaaS-based ITSM vendors crossed my radar,

• CA announced its intention to acquire Nimsoft after previously announcing that it would acquire 3Tera.
• Citrix acquired Paglo to strengthen its SaaS-based GoToManage capabilities.
• AccelOps is rolling out enhancements to its integrated datacenter monitoring and ITSM software.
• ManageEngine continues to enhance its ITSM suite which sells for a fraction of the cost of legacy platforms.
• France-based, Staff&Line, is opening offices in the U.S. to offer its ITSM, IT asset management, configuration management database (CMDB) and automatic inventory capabilities here.

These are just a handful of the numerous companies targeting this market. THINKstrategies has over 150 companies listed in the HelpDesk, IT and Application Management categories of its SaaS Showplace. And, this is probably only half of the total number of companies targeting the ITSM market!

Just like in the overall market, these SaaS ITSM vendors are successfully penetrating large-scale enterprises as well as small- and mid-size businesses (SMBs). We’ve recognized many of these players with our Best of SaaS Showplace (BoSS) Awards.

And, the ITSM legacy vendors — IBM, HP, BMC, CA and others — are desperately trying to respond to this significant challenge in the same way as their enterprise application counterparts — Microsoft, Oracle, SAP and others — have done … with a combination of acquisitions, alliances, internal development and external PR.

It is for all these reasons that I identified ITSM as one of the key battlefields for 2010.

My travels this week have taken me from Miami to San Francisco, for Parallels Summit and Pacific Crest Securities’ Emerging Technology Summit to hear and see the latest developments in the ‘clouds’.

In Miami, I witnessed the emergence of a key new player in the rapidly evolving cloud computing industry. Parallels is not a new company, but it has recently realigned its various corporate capabilities into a singular focus on cloud computing enablement.

The company is specifically targeting the vast community of service providers – hosting companies, VARs and telcos — that are supporting the IT needs of small businesses with limited or no IT staff.

In short, Parallels is seeking to help these service providers replicate the success of Amazon Web Services (AWS) in the mainstream small business marketplace.

Although AWS has found a very receptive audience among start-ups and enterprise developers, it hasn’t generated much interest with mainstream small businesses which lack IT skills and demand ongoing support. These small businesses are already turning to various hosting companies, telcos and VARs to support their traditional IT needs and would welcome a broader assortment of cloud services, ranging from packaged Software-as-a-Service (SaaS) apps to pay-as-you-go storage and processing power from these same service providers.

Hosting companies, telcos and VARs have recognized this opportunity, but have been unable to fully address it because it has required considerable technical skills and financial resources to build the service delivery infrastructure, provisioning and management engine to support a cloud computing business.

While there are plenty of virtualizations vendors, led by VMware, and business service management vendors, including BMC and HP, they are primarily focused on the enterprise, as well as the major telcos’ operational support systems (OSS). Jamcracker has also struggled trying to help telcos generate meaningful revenue from its SaaS marketplace capabilities.

This has left a gap in the market for an ‘end-to-end’ cloud services solution which Parallels is attempting to fill. Its product portfolio has evolved via a series of acquisitions and organic development to now include the following elements,

• Server virtualization
• Management automation
• Service provisioning & billing
• SaaS marketplace creation

These elements enable a service provider to build and administer a cloud computing business which can help them win and retain customers who are seeking a strategic source for their widening array of on-demand service needs.

This is a very appealing value proposition for service providers who have found themselves in an increasingly competitive marketplace and need to better differentiate themselves and reduce the risks of customer churn.

With these ideas in mind, Parallels appropriately used the tagline of “Profit from the Cloud” as the theme for this year’s Summit. The timeliness of this theme and Parallels’ newly realigned portfolio was clearly illustrated by the jump in the conference registrants, from 800 last year to 1400 this week, and sponsors, doubling from 30 to 60, including Google, HP, Intel, Novell and Microsoft.

The tone and energy of this event reminded me of the ConnectWise Partner Summit which I attended last year.

It is also important to note that Parallels has added senior executives from Amazon, Microsoft, VMware and other major players to accelerate the company’s growth. I had an opportunity to meet with the executive team during an analyst briefing session the day before the conference. (Disclosure: Parallels paid for my travel expenses for this trip.)

The company has not only aligned its product portfolio around cloud enablement, it has moved its headquarters to the epicenter of cloud innovation, Seattle. This puts the company closer to the pioneer in this market, Amazon, and Parallels’ key partner, Microsoft. 

I couldn’t stay for the entire Parallels conference because I had to fly to San Francisco for the Pacific Crest Securities event where much of the discussion centered on how Amazon is revolutionizing the computing industry in the same way Salesforce.com and an assortment of SaaS vendors have disrupted the software industry. (I serve as a member of Pacific Crest’s Mosaic expert program.)

As further confirmation of the timeliness of Parallels’ cloud enablement strategy, Pacific Crest reported that its latest CIO survey found that the organizations it is tracking expect to dedicate upwards of 30% of their software spending on SaaS solutions in 2010. This is two years ahead of the pace which Gartner predicted.

Back to back announcements this week have brought renewed attention to the IT service management (ITSM) market as a key battleground for Software-as-a-Service (SaaS) competition.

On January 19, BMC announced its latest Remedy ITSM Suite On Demand solution, a SaaS-based offering which promises to integrate with BMC’s Atrium Configuration Management Database (CMDB) and Business Service Management (BSM) platform.

That same day, Service-now.com announced that PepsiAmericas had selected its SaaS-based ITSM solution. In Service-now.com’s announcement, PepsiAmericas’ IT Customer Service Manager, Amy Irwin said, “Our old tool couldn’t meet our needs so we went shopping for a tool that could. We quickly determined SaaS would best fit our tool requirements.”

IT acceptance of SaaS-based solutions isn’t new. THINKstrategies first identified this trend in our 2007 customer survey in conjunction with Cutter Consortium.

However, SaaS vendor focus on this segment of the market has intensified over the past two years. Service-now.com has experienced significant growth in the mid- and large-scale enterprise market with its SaaS-based ITSM solution. The company won a Best of SaaS Showplace (BoSS) Award for the measurable business benefits its solution delivered Unitus Community Credit Union.

BMC has been dabbling in the SaaS market for a few years. THINKstrategies published a profile of BMC’s initial SaaS offerings in 2006.

Like other established independent software vendors (ISVs), BMC has been attempting to rearchitect it software application, realign its go-to-market strategies, and reorient its business operations in order to integrate its SaaS offerings into its legacy portfolio. Last November, BMC announced at Salesforce.com’s Dreamforce conference that it was developing new ITSM solutions on Salesforce.com’s Force.com Platform-as-a-Service (PaaS).

It is no coincidence that Salesforce.com has targeted this market with its Service Cloud offerings. CA also announced at Dreamforce its intent to ‘SaaSify’ its ITSM capabilities via Force.com.

HP has also been circling these waters with its cloud-oriented solutions.

Why all the attention on this segment of the SaaS marketplace?

Because this is one of the few places within an organization that touches everyone and where the IT department and business end-users directly intersect. Therefore, the SaaS solution plays a pivotal role in this area and can have a tremendous strategic impact on an organization’s day-to-day operations standpoint.

I expect activity in this segment of the SaaS market to escalate and a series of acquisitions to follow.

As the new year and decade get underway, here are a few of the areas of the cloud computing market which I think will be important competitive battlefields for established and emerging players:

1. Collaboration Wars: Collaboration is the ‘killer app’ in the Software-as-a-Service (SaaS) segment of the cloud computing market. The rapid adoption of Google Apps has demonstrated the latent demand for these web-based solutions. Now, IBM is promoting the enterprise-class qualities of its LotusLive offering to win a share of the market. Cisco Systems is also intensifying its efforts to promote its collaboration solutions built around WebEx and Telepresence. I also think Microsoft will accept a greater level of cannibalization of its Office products to win a bigger share of the collaboration market with OfficeLive.
2. Business-Oriented Social Networks: These are closely linked to collaboration and have gained a tremendous amount of attention because of the explosive growth of Facebook and Twitter. Although many corporate executives are still uncertain about how to harness social networks, Salesforce.com’s introduction of Chatter at Dreamforce clearly shows that offering an enterprise-class solution can create a competitive advantage.
3. Platforms-as-a-Service Wars: Salesforce.com will continue to push its Force.com PaaS capabilities hard. And, Google App Engine will continue to be a popular development environment with start-ups and tech heads. But, I think Microsoft Azure will experience surprising success in 2010 because the company has a better understanding of how to work with third-party developers and is less likely to create channel conflicts because it would prefer not to develop and deliver its own SaaS solutions. There are also plenty of niche PaaS vendors who will be acquisition candidates in 2010.
4. Cloud Governance: HP, IBM and an assortment of niche players are capitalizing on the lack of unified management systems for cloud computing services. While price competition threatens to commoditize raw Infrastructure-as-a-Service (IaaS) offerings, management vendors that can help the IaaS providers and their customers monitor and control their cloud resources will gain a competitive advantage. HP and IBM are realigning their legacy management portfolios to address these needs. A proliferation of niche players are also seeking to win a share of the market, especially focused on single sign-on and access control.
5. IT and Service Management: IT professionals are learning about how SaaS-based management solutions can help them do their day-to-day jobs more cost-effectively. In response, a plethora of new web-based players are emerging and established players, such as BMC and CA, are shifting their attention toward SaaS-based solutions. Salesforce.com has also helped to bring greater attention to the ’service cloud’, where other SaaS companies like RightNow and Service-now.com are experiencing rising demand.
6. Communications-as-a-Service (CaaS): HP and Cisco Systems are on a collision course to compete for unified communications enablement opportunities among service providers and end-user organizations, large and small. Unified communications has been an ideal for over a decade, and now cost-effective, web-based solutions are becoming a reality. CaaS can also be a key enabler of end-to-end enterprise collaboration solutions.
7. eHealth and Energy Management: With the Obama administration promising to plow billions of dollars into modernizing healthcare systems and everyone trying to reduce the cost of their ‘carbon footprint’, these segments of the market are ripe for SaaSification. Brand-name corporations, as well as a new generation of web-based ventures, will ratchet up their efforts to win mindshare as well as marketshare offering cloud-oriented services to address these important issues.
8. Millennials and Generation Z: Companies positioning themselves for the longhaul are already trying to win the hearts and minds of our children. Apple has converted years of cultivation work within the classroom into a new generation of corporate workers who prefer Macs over PCs. Google is attempting to do the same by encouraging public school systems and universities to use its Apps. Although many kids use Microsoft’s Xbox, few have any allegiance to Microsoft Office and are adopting Google Apps. Other vendors will try to follow Apple and Google’s lead into the classroom.

Escalating cloud computing battles in these areas will also fuel additional acquisitions by established players seeking to accelerate the rollout of new services and penetration of new markets. Oracle and Cisco have been active acquirers for years. Salesforce.com will likely make additional acquisitions and continue to be a target of acquisition speculation as well.

I also think SAP will make a substantive SaaS/cloud acquisition in 2010, in an attempt to overcome some of the internal obstacles which have prevented it from successfully rolling out its BusinessByDesign solution. An acquisition could also offset the growing success NetSuite has had nimbling away at the SAP customer base.

Let me know if there are other important competitive battlefields I missed.

Day 2 of Dreamforce came with a little less enthusiasm than yesterday’s kickoff as many of the attendees recovered from the previous night’s parties. Today’s focus was on the Force.com Platform-as-a-Service (PaaS) which salesforce.com calls “Custom Cloud 2″.

Unlike yesterday’s meandering keynote regarding the Sales Cloud 2, Services Cloud 2 and new Chatter social computing capabilities, Marc Benioff immediately went to work at convincing the Dreamforce audience of the power and growing adoption of salesforce.com’s PaaS capabilities by quickly introducing the CEO of BMC, Bob Beauchamp, who unveiled its new Software-as-a-Service (SaaS) IT service desk application developed on the Force.com in a couple of months.

BMC’s use of Force.com to ‘SaaSify’ its application is another important endorsement of salesforce.com’s PaaS by an established independent software vendor (ISV). It is particularly compelling for other ISVs who have grappled with the technological and operational challenges of migrating their applications to a SaaS architecture. Interestingly, BMC won’t make the new application available until Q2 2010. My guess is that the company will face far more challenges developing and executing the go-to-market strategy for the new app than it had developing and delivering the app itself.

Benioff later introduced John Swainson, the CEO of CA, who also demo’ed a new app built on Force.com and talked about the economic implications of cloud computing which he called “the most profound change in the history of the IT industry…changing the economics exponentially.”

Both CA and BMC are significant because their applications are aimed at IT professionals, and their enlistment in the SaaS movement will help reduce lingering resistance within the IT community.

The focus on Force.com was an opportunity for Benioff to evangelize about the virtues of cloud computing,

• Eliminate the costs and hassles of hardware
• Accelerated deployment and time-to-value
• Greater agility and analytics

Benioff’s views were reinforced by an Accenture guest as well.

He also introduced the CEO of Vetrazzo, a manufacturer of countertops using recycled glass, who talked about how he runs his entire business on Force.com. He was previously a SAP suite user and wanted to leverage a similar suite from salesforce.com. Using  an independent Force.com consultant, he was able to develop a full suite to meet his needs in a few weeks, including enterprise resource planning (ERP), order management, inventory management, and document management, in addition to salesforce.com’s CRM and SFA capabilities. Although the Vetrazzo success story was published a year ago, the company has continued to create additional apps via Force.com. His talk was not only a swipe at SAP, but NetSuite as well which often attempts to position its SaaS solutions as more significant because they are aimed at helping business run their operations not ‘just’ CRM.

Benioff also carved out time at the end of his keynote to revisit the importance of the company’s new Chatter social networking solutions and to reiterate that it is also a ’social platform’ that can be customized to meet the unique needs of individual companies.

Yesterday’s Chatter announcement met with mixed reviews from the customers, partners and analysts I met. Most didn’t understand why salesforce.com is moving in this direction. They didn’t expect their employees or customers to replace any of the social networking tools they are already using or add another to the list.

This was clearly illustrated when Benioff asked for a show of hands from the keynote audience regarding how many would adopt Chatter and only a small proportion raised their hands despite the fact that nearly everyone in the audience raised their hands when Benioff asked them how many understood what salesforce.com was offering.

I think there is a solid argument for a more robust and secure social networking tool that is more ‘enterprise-ready’ and more easily integrated into an enterprise application portfolio than Facebook and Twitter. But, salesforce.com will face serious challenges convincing customers, and will have to make a significant technological and marketing investment to successfully deliver and sell this new dimension of salesforce.com’s corporate portfolio.

Ultimately, the company will need more customer success stories and ‘use cases’ to convince current and potential customers to adopt this new capability.

Despite these concerns, the overwhelming mood at Dreamforce has been very upbeat, providing another promising sign of the potential growth of the SaaS and cloud computing market.

[Disclosure: Salesforce.com paid my travel expenses to attend Dreamforce.]