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Salesforce.com Adds PaaS Rubies to Its Vault With Heroku Buy

By Richard Adhikari CRM Buyer ECT News Network
Dec 8, 2010 10:43 AM PT

Salesforce.com on Wednesday announced that it has signed a definitive agreement to acquire Heroku, a cloud application platform.

Salesforce.com Adds PaaS Rubies to Its Vault With Heroku Buy

It will pay about US$212 million in cash, net of cash acquired.

The transaction is expected to be completed by the end of January 2011 if everything goes well.

Salesforce.com made the announcement at Dreamforce 2010, being held in San Francisco through Thursday.

Salesforce also announced Force.com 2 on Wednesday.

About Heroku

Heroku is a cloud application platform offered as a service. It's used for writing applications in the Ruby language.

Like Salesforce's Force.com, Heroku is based on multitenancy. It's a platform and hosting environment that's fully managed.

Heroku controls all the infrastructure and software layers. It curates each layer of these so clients always get the latest in software and best practices.

Impact of the Heroku Purchase

"This acquisition strengthens Salesforce.com's position in the PaaS [Platform as a Service) market," Jeffrey Kaplan, managing director of Thinkstrategies, told CRM Buyer.

"It's becoming increasingly important to develop and integrate additional enterprise applications to CRM solutions," he added.

"Cloud platforms may become the new disruptive model, but they still need customers and applications, and this acquisition gives Salesforce.com a ready set of new-age applications written in Ruby," Al Hilwa, a program director at IDC, told CRM Buyer. "It fills out the application platform offering.

"The idea is to create an integrated set of assets and cross synergies," Hilwa elaborated.

"This may be one of a list of acquisitions to come. It is interesting to see that the much-hyped partnership with VMForce will not be the sole vehicle for bringing applications to the Salesforce.com platform," he added.

"When a company like Salesforce buys a company like Heroku, it's not for the technology, despite the fact that this is a good product," Denis Pombriant, principal at Beagle Research, told CRM Buyer.

"CRM is a maturing market; the interesting things that will happen next are at the periphery, so it's how you look at it," Pombriant said. "Will the combination of analytics, social and mobile be additive to CRM or will they combine to replace it? My thinking is replacement. I think we're at the beginning of a massive rewrite of front-office software to focus much more on the business process. That's what social, mobile and analytics is going to do, and that's in part why this acquisition might be important."

Force.com 2 Details

Heroku has already been made part of Force.com 2, which Salesforce introduced Wednesday.

There are five new enterprise cloud platform services in Force.com 2, including Heroku. The others are Appforce; Siteforce; VMforce; and ISVforce.

Appforce lets users build powerful, scalable departmental apps. Siteforce lets business users make simple changes to their corporate websites. Users can draw pages, manage content, and reuse pre-built content.

VMforce, Salesforce.com's partnership with VMware, gives 6 million Java developers a path to the cloud. Whether or not that will run afoul of Oracle's attempts to control the Java code remains to be seen.

ISVforce lets independent software vendors quickly build and deliver multi-tenant cloud apps. It provides forms, processes, analytics, search, social and mobile features to developers. It also includes an integrated data model, sharing rules, a security model and a social data model.

"If Salesforce is right, they make everything else old instantly," Beagle Research's Pombriant said. "But this is a dynamic industry and a friendly arms race, so it will be interesting and entertaining to watch the responses."

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