by Tom Taulli | March 15, 2012 1:33 pm
Over the past decade, Salesforce.com (NYSE:CRM) has leveraged cloud-computing to dominate the market for customer relationship management (CRM) software. This technology centralizes applications in off-site data centers, which means lower costs for customers as well as easy maintenance.
But to justify its $21 billion market cap, Salesforce needs to expand its reach. So at its Cloudforce conference today in San Francisco, the company announced a new application to help companies manage their human resources (HR).
It’s certainly a huge market opportunity (hey, most companies have HR departments). But that category also has entrenched players like Oracle (NASDAQ:ORCL) and SAP (NYSE:SAP). Other cloud operators have also been in the market for some time, including NetSuite (NYSE:N) and WorkdDay (which is expected to come public soon).
Then again, Salesforce is good at ginning up buzz — and landing big-time customers. And its HR offering has some promise. Called Rypple, it’s now seamlessly integrated with Salesforce’s CRM platform as well as Chatter, which is a Facebook-like social network for enterprises. The thinking is that Salesforce’s existing customers may be willing to give Rypple a try.
Yet it could still be a slog to get traction. SAP and Oracle have recently purchased cloud-based HR companies – such as Taleo and SuccessFactors — which will certainly help them lock in customers. Besides, when it comes to these types of applications, the purchase decision takes a long time because of the expense and disruption to existing in-house applications. So don’t expect an extra slug of revenue from Rypple any time soon.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.
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