SAN FRANCISCO (Business 2.0 Magazine) -- The Disruptor: Salesforce.com

The Innovation: AppExchange 2.0 fills the gap between Web-based and traditional enterprise apps

There he goes again: Salesforce's Benioff is known for bombast, but he has disrupted enterprise software before and says he's about to do it again.

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The Disrupted: Microsoft, Oracle, SAP, and other enterprise software incumbents

Marc Benioff, CEO of Salesforce.com, is now proclaiming that he's going to demolish the $15 billion traditional database market.

So what, you ask? It's true that Benioff is known throughout the tech business for his bombast, and he's always predicting that Salesforce is about to do something amazing. But he's not all talk: Benioff has already built Salesforce.com into the world's most successful Web-based customer-relationship management software, which currently boasts 25,000 customers and more than half a million individual subscribers. His approach, selling industrial-strength corporate apps as a service over the Web, helped to drive his biggest rival, Siebel Systems (Charts), to sell itself to Oracle (Charts) last year. To top that, Benioff launched a service called App Exchange as a way to attract software developers to build their own Web-based enterprise applications atop Salesforce.com's infrastructure.

But that's not enough disruption for Benioff. The types of applications that can be built and fully hosted on AppExchange today are still no match for traditional enterprise software built on an Oracle or Microsoft database. "Our database is not intelligent," Benioff says. He means that AppExchange cannot apply logic or rules to the data sent to it; powerful Microsoft (Charts) and Oracle databases can.

With AppExchange 2.0, which Benioff plans to unveil this month, Salesforce.com will begin to close that gap. The details are mind-numbing, but Benioff's engineers have come up with a way to enable AppExchange to host both the data and the logic. "We are going to show you why you don't need to buy a database," Benioff vows. AppExchange, he explains, will be the database and the tools all rolled into one; it also, he says, will go a long way toward becoming a fully formed Web operating system, a holy grail for software mavens almost since the Internet arose.

To maximize AppExchange's power, Benioff needs more apps. In a creative twist, he is leasing a former Siebel facility in San Mateo, Calif., visible from Highway 101, Silicon Valley's main artery, which he plans to turn into a kind of incubator for apps development. He'll lease cubicles for $20,000 a year to startups that want to build their businesses on top of his Web operating system. Salesforce.com will provide onsite programmers to help with coding questions, expose the startups to potential customers, and help them market their services. "The future of technology is all lower cost and easier usage," Benioff says. "We will destroy Oracle and SAP because they won't be able to respond to the innovation we are about to unleash."

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