SAN FRANCISCO -- Salesforce.com upped the ante this week in its battle against traditional software vendors with the announcement of Salesforce for Google Apps. CEO Marc Benioff all but declared packaged software dead here Monday during the unveiling of his company's integration of its on-demand customer relationship management (CRM) applications with Google Apps

The two companies already had a partnership but Monday's news significantly expanded the relationship. Still, at least one analyst said the new offering is nothing for Microsoft to be too concerned with as far as its near time impact on enterprise customers.

Tom Kucharvy, vice president for market research firm Ovum, said he doesn't think Microsoft has anything to fear that corporate sales of its cash cow, Office 2007, is threatened by the news, at least for now. "Their upgrade legacies are so strong, [Salesforce for Google Apps] will not have any effect on them for years to come," Kucharvy told InternetNews.com.

He also noted most large organizations are much slower to upgrade, whereas "small and mid-sized companies have no legacy to protect and fewer security concerns." He thinks eventually a cross-section of customers, from SMB's to enterprise, will be interested in Salesforce for Google Apps, but for now SMBs might prove to be a more fertile sales territory.

Last year, the two firms began a formal working relationship with the release of Salesforce Group Edition with Google AdWords. "It was a huge success and offered a clear vision that we could do more with Google," Benioff told the luncheon meeting here at a downtown hotel.

Salesforce (NYSE: CRM) had been using Google Apps internally because "we don't want to be installing more software, we don't want to be upgrading more software, we want to use e-mail right in the cloud," said Benioff.

One company that has begun testing Salesforce for Google Apps is UST Global, an application development and services company. Prasan Vyas, a director with the company, said right away he could see the integration generating enthusiasm among his staff.

"We were using Salesforce and third-party applications and having to send the file, Word documents, Excel spreadsheets and Powerpoint presentations, as attachments to Salesforce documents," he told InternetNews.com. "With this option, they can work entirely on the Internet and many users are saying they are much more likely to use Salesforce.com more because of the integration."

Salesforce CRM and Google Apps are based in the cloud, but functioned separately. The integrated offering gives salespeople the ability to, for example, send a sales lead with an attached spreadsheet and not have to launch a separate application.

Google (NASDAQ: GOOG) chairman and CEO Eric Schmidt, also present, said this represented the new model for client computing services. "The Salesforce model is the defining model for the client computing age," he told the audience.

"The first step is build the business, add the customers, get the reference accounts and built the underlying technology to make this change happen," he went on to say. "This is a twenty, thirty, forty year vision, not a one or two year vision. This is the development of a real business."

TAGS: Google, Microsoft, e-Mail, Salesforce.com, SaaS

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