Hosted CRM company Salesforce.com is partnering with Microsoft, BEA Systems, Sun Microsystems and Borland Software to enable tighter integration with its applications.
The development tools earmarked for construction will grant customers and software providers the ability to hook directly into Salesforce.com's online service and to connect more easily with other back-end applications.
Saleforce.com's Application Utility Framework initiative indicates a major shift in the way enterprise software is provisioned, said Denis Pombriant, vice president and research director of CRM at Aberdeen Group.
"Software has become very complex and expensive. Evidence points to more of a utility model being the way of the future," Pombriant said. "We're going to see enormous growth in hosting, and [CRM] vendors that don't make investments in hosting will be laggard or out of business."
In a recent report, Pombriant estimated that companies hosting CRM services can undercut suppliers delivering products via a licensing model by as much as 90%.
Aberdeen predicted that during the next year most CRM players will aggressively enter or redouble their efforts in the hosted realm.
However, Erin Kinikin, senior analyst at Forrester Research questioned whether Salesforce.com's highly visible partnerships will carry substance.
She said all CRM suppkiers are being forced to "play in the integration world" or risk losing business to enterprise-suite competitors such as Oracle, SAP, or NetLedger on the hosted side, and that Salesforce.com's web services APIs are too complicated for non-IT customers to disseminate.
"If Salesforce.com can deliver application integration (or business users, they'd really have something," Kinikin added.
Siebel recently rolled out 50 integration applications for its vertical-oriented UAN (Universal Application Network).
Analysts believe that UAN 2.0 will be successful in countering the need to mix and match applications and to transform process information into business information.
Brian Fonseca writes for InfoWorld