Sqware Peg makes a name for itself as cloud integrator

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This article appeared in the April 2010 issue of CRN magazine.

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Sqware Peg makes a name for itself as cloud integrator

The eccentrically named Sqware Peg was founded in 2003 on the back of a hunch. Managing director Shawn Stilwell had spent the 1990s building a career in software consulting during which he had become overly familiar with the short-comings of on-premise software, dealing with multiple versions and upgrades, customisations and multiple customer sites.

In 2001 Stilwell was one of the early customers to sign up for Salesforce.com, which had only been operating for almost two years. He still remembers the moment when the power of cloud-based software became apparent.

"I went home on a Friday and came to work on the Monday and Salesforce had made an announcement that they had a new version. I realised that they had upgraded [the software] overnight and I thought it was a pretty interesting model that they could put a version of the software across hundreds of customers" without the hurdles of on-premise software, says Stilwell, with understatement. "I just took a punt that this was the next best thing after e-commerce."

Stilwell founded Sqware Peg in 2003 with the sole purpose of selling on-demand technologies. Salesforce was the first product and it contributes the lion's share of the business.

The company added marketing automation service Eloqua in 2007; two years later it started selling productivity suite Google Apps and Financialforce, an accounting platform built on Force.com, Salesforce.com's developer platform. Financialforce, a joint venture with Coda and Salesforce, was the first company to bring a real accounting toolset to the Force.com platform, says Stilwell.

The company uses data integration technologies such as Informatica, Pervasive and Cast Iron.

The company is now the premier consulting partner in Asia Pacific for Salesforce with 1000 customers and a large back catalogue of successful implementation and integration work. Its revenue, mainly from SMEs, is shifting towards enterprise.

Most of its business with enterprise is integrating SAP and Oracle into Salesforce, which can act as a conduit into other cloud apps such as Eloqua.

Customers tend to buy one or two products and Sqware Peg steps in to integrate the data and set up business processes.

Although there is overlap in feature sets and potential uses, Salesforce has managed to squeeze itself into the enterprise ecosystem as a quick fix rather than a competitor bent on unearthing incumbents.

Stilwell finds that enterprises want to bolt on Salesforce as a front-end to their large-scale databases as a way to quickly give their sales forces better access to sales information.
"Users, particularly the sales people, are getting frustrated standing in line at the IT deparment waiting for three or six months for changes to traditional technologies," says Stilwell. "So they are using SaaS to accelerate delivering value to the sales organisation."

"It's not replacing them, it's serving as a front end to the user community so they don't have to use some of the larger packages that are more expensive," says Stilwell.

Cloud gains momentum

Stilwell says that the momentum towards cloud technologies has picked up from two years ago. He sees SAP's "failed attempt" at cloud with Business by Design and Oracle's on-demand CRM products as indicators that the big on-premise vendors are starting to feel the pressure.
"They must be feeling it because they are reacting," says Stilwell.

CIOs are talking about how to move more of their businesses to the cloud and some large financial companies such as SAI are investigating Force.com as a development platform, says Stilwell.

He now sees advantages such as easier implementation and migration, automatic updates and monthly billing as demonstrations of a single principle guiding cloud vendors. Salesforce and its ilk have a different level of interest in making sure that the customer flourishes, says Stilwell.

"They are connected to the customer in a way that we haven't seen vendors connected to the customer before. If you aren't happy with the tool and it's not adding value then you switch it off. So they have a vested interest in you being successful."

However, Stilwell doesn't believe companies are ready to abandon their investments in large, on-premise deployments. "We aren't seeing sweeping replacements of massive technologies," he says.

Customer demand for cloud-based solutions is leading Sqware Peg to evaluate which parts of the enterprise are ready to make the shift. Financials and human resources are next in line, says Stilwell. "We are constantly looking for answers to bring to those customers."

NetSuite, which covers CRM and ERP (enterprise resource planning), is often mentioned together with Salesforce as one of the success stories in enterprise cloud software. Stilwell says he thinks NetSuite's decision to cover a broader chunk of the enterprise ecosystem has limited its growth.

"I think the NetSuite proposition is a good one for a small business, it does everything a small business can need. But it's a big ask for an enterprise," says Stilwell. "Salesforce has done a much better of job of getting into the enterprise accounts by doing CRM really well and not necessarily trying to do everything. NetSuite has attempted to do everything and hasn't been able to capture those mid-market or enterprise accounts."

Distribution stuck with SMB
One question yet unanswered is what role traditional distributors will play in cloud software. For integrators like Sqware Peg, that role will be limited indeed - if it exists at all. The company has had a direct relationship with Salesforce for the eight years it has operated. Stilwell can't see a role for distributors in the mid-size and enterprise markets where the sales cycle is long and complex.

"I think in the small business space there definitely is an opportunity where someone could buy their broadband and Salesforce as well, like a business startup package. A distie could do the bundling and sell it through their resellers. People can buy it off the shelf for a small business."

Selling Salesforce requires light assistance for companies with up to 25 staff. It normally requires just pre-sales - taking a proposal document that shows how the customer's data will look in Salesforce's dashboards, Stilwell says.

But he is unconvinced that many resellers will be able to adapt to a cloud computing model overnight. "The same trouble that the on-premise vendors are having trying to rebuild their technology in an on-premise fashion is holding true in the systems integration space as well," says Stilwell.

"We don't have people that are just making calls and selling boxes, our sales people are very consultative and focused on business process and are about solutioning rather than transaction selling."

As with most enterprise integrators, Sqware Peg is totally focused on industry verticals, including telco, automotive, business services, education and high technology.

The business services industry is catching up to the telcos and is starting to standardise on Salesforce. Recent converts include Rentokil and Corporate Express. Cloud sales software makes sense in a country such as Australia where a distributed sales force needs to cover a large territory, says Stilwell.

"Cloud computing means their mobile workforce can get access to these tools very easily. I think that's why it's so important to them," he says.

Does Stilwell plan to return to on-premise software? Or has it been killed off by the arrival of the cloud? "For developing, absolutely. On-premise has its place but the time to market of a platform as a service over a traditional development environments is months versus years. If it's on-premise we don't touch it," says Stilwell.

A future with Force.com

Stilwell has not just witnessed the speed at which developers can create applications using cloud platforms. He founded another company, Click to Cloud, in July last year, which will build products on Force.com, Amazon and other cloud platforms. The first application is aimed at recruitment, with real estate and automotive versions in the pipeline. All three applications are industry-specific tools for dealer or agent networks.

Stilwell explains that recruiters rely on three systems; CRM, an applicant tracking system that talks to the job boards, and a resumé searching tool. Click to Cloud's application does all three tasks within the one program. Half the software uses the Salesforce platform and the other half consists of unique features built for that industry, says Stilwell. "You manage your clients, candidates, vacancies and you talk to the job boards," says Stilwell.

A similar product produced by another company is already sold in North America, but Click to Cloud's application will be the first that integrates to Australia and Asian job boards such as
Seek, MyCareer and Career One, claims Stilwell.

The ISV's two developers took just five months to get the application ready for beta testing.
Stilwell hopes to have the next two versions of the dealer-network application ready by the end of
the year. "If we start booking significant revenue it might go faster," Stilwell says.


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