Salesforce.com celebrates 10th birthday

Salesforce.com has been selling the SaaS model for a decade

Salesforce.com celebrates its 10th anniversary today, but experts have warned that the next 10 years may be a lot tougher for the software-as-a-service (SaaS) pioneer.

The firm was founded in 1999 with a vision to create a new way for customers to access services through the cloud, using a pay-as-you-go subscription based model rather than the traditional approach of selling software which had to be paid for outright and physically installed on-site by customers.

Surviving the dot-com crash, Salesforce launched its first salesforce automation solution in 2000, its first customer relationship management (CRM) offering the year after, and celebrated its first 1,000-subscriber customer in 2004.

Critics said initially that Salesforce would never make a mark on larger companies, but were proved wrong when Cisco became the first 15,000-subscriber customer in 2006, followed by Japan Post with 50,000 subscribers the year after.

Since then, Salesforce has taken its cloud computing model and expanded to offer the AppExchange online developer marketplace and the Force.com platform, which allows developers to build multi-tenant applications that are hosted on Salesforce.com servers as a service.

And just last month, the firm announced that it had become the first SaaS vendor to pass $1bn (£700m) in yearly revenues.

David Mitchell of analyst firm Ovum suggested that Salesforce's level of growth had been "extraordinary".

"The multi-tenancy architecture Salesforce put in allows them to scale. It's been very powerful for them," he said. "They had to do a lot of heavy lifting in the plumbing layer to enable it to scale in the way it has done, both economically and commercially, and having cracked this, to offer up this [technology] to others was a very smart move."

Hugh Scantlebury, managing director at on-demand accounting software firm Aqilla, argued that Salesforce's success and work in educating the market has persuaded other companies to follow in its footsteps.

"Salesforce has PR'd the field for us," he said. "Outages are rare, although some people like to draw attention to them. They are pretty skilled operators with a high degree of availability, security and resilience."

However, despite the successes of the first 10 years, the future may be a bit trickier, according to Mitchell. He argued that, because the firm has reached the $1bn-a-year revenue mark, some of the high growth rates it experienced during the past decade will be very difficult to replicate.

Salesforce could also face competition in the future from home-grown regional players, especially in Asia, the analyst warned.

"You could get a series of local SaaS businesses springing up in the Philippines," Mitchell said. "They need to be careful in thinking that the larger west coast players [own] SaaS as a category."