Oracle Following Salesforce.com's Services Lead

(MoneyWatch)  Not only has Oracle invited arch-nemesis Salesforce.com CEO Marc Benioff to speak at its user conference today, it is shadowing the software-as-a-service (SaaS) vendor's moves in the customer service industry as well.

Vendors like Salesforce have begun offering SaaS-based applications to help companies manage the increasingly varied number of points of contact that call center agents engage in with customers, which range from 800 numbers to Web chat; the SaaS vendors argue that Web-based applications are naturally flexible than on-premise software because feature sets can evolve more quickly and allow agents to communicate more cost-effectively with customers.

The most glaring example of this is Salesforce.com's introduction of knowledge-sharing applications as part of its new Service Cloud. The application, the natural culmination of its 2008 acquisition of French knowledge management vendor InStranet gives call center agents access to an evolving knowledge base that includes real-time accretions from internal as well as external sources of information like Twitter and Facebook.

The hope is that these applications will allow agents to process service calls more quickly, reduce the number of cases that have to be escalated to employees higher up in the organization, and create an increasingly richer and more comprehensive knowledge base that will result in a virtuous cycle of improved customer service and customer retention.

The field is clearly growing; Chris Hall, vice president of product marketing for InQuira, the company Oracle picked as a partner for knowledge applications after Instranet fell into Benioff's sphere of influence, told me his company has sales of more than $30 million per year and is growing at an annual 30 percent clip.

As I have mentioned before, Benioff sees services as the next $1 billion-plus business, which is an important step to offset the inevitable leveling off in growth for Salesforce.com's flagship customer account management software, Salesforce Automation (SFA). But for SaaS-based software to have as much impact in the customer service world as it has in sales, it will have to deliver an equivalent benefit.

For sales organizations, SFA represented a way for salespeople to track their accounts on the move, because their customer account information followed them on their laptops, wherever they went. That it was easier to use than on-premise alternatives was helpful to increasing usage, but the principal benefits were speed of implementation and portability.

Call center agents sit in place and use whatever tools they're given; in contrast to SFA-type applications, which can be deployed by small departments, call center deployments tend to be much larger scale. This is why the SaaS-based applications need to offer something that on-premise applications like SAP, Remedy, Amdocs, Genesis and Oracle-owned Seibel don't.

The InQuira application can be deployed as either on-premise or SaaS, so knowledge doesn't necessarily equate SaaS, but the SaaS applications have thus far stolen a march in terms of being able to connect to a wider variety of sources on the Web. So it won't be a surprise to hear Oracle speak more favorably about SaaS this week than it has in its entire history leading up to today.

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