Marc Benioff of salesforce.com

Marc Benioff is an ebullient character, a worthy heir to a long line of noisy, passionate and opinionated West Coast technology executives.

But even judged by those standards, the founder and chief executive of Salesforce.com, the software rental group, was in particularly bombastic mood late last month as he reflected on a momentous week.

“This is the most exciting week of my career,” he says. “Not only have we introduced our most important product, but our top competitor just disappeared.”

The “most important” product is Salesforce.com’s AppExchange, of which more later, while the competitor is Siebel Systems, which had just been swallowed whole by Oracle.

Siebel employees and customers are doubtless waiting to discover what is in store for the once high-flying customer relationship management software provider. But Mr Benioff is already certain of what the future holds.

“There is no future for Siebel customers. We’re now in a situation where Oracle now has seven CRM applications, so which will they continue and which will they kill? And what happens to the customers and what’s the plan? The reality is they have one product, Oracle Fusion. and they say it’s not ready for 2009,” he says.

Mr Benioff, whose “on- demand” model has been eating away at the traditional software licence business model that was the bedrock of Siebel, does not mourn the demise of his closest rival.

He says: “For the industry it was a good day, as the company that has given us the worse software with the poorest success rate is gone. Siebel’s epitaph will read: ‘They invented CRM, but the customers didn’t like the product’.” All of which begs the question of why Oracle paid billions for this unpopular software.

With his 13-year experience of working for Oracle, where he was once regarded as Larry Ellison’s protégé, Mr Benioff has some insight: “Larry has SAP envy. He wants to do everything he can to become SAP. He dominates database but that can’t be said about the applications business.

“Larry never cared about it until the past year or two but he wants to be king of applications and the only way is to buy market share.”

Keen as Mr Benioff is to discuss other people’s businesses, he only really gets going when talking about Salesforce.

The demise of Siebel as an independent business, is merely confirmation, he says, of the arrival of the business model that has made Salesforce one of the decade’s technology growth stories.

What’s more, he says, he is not alone in appreciating this shift. “In 1999 he [Mr Ellison] spent $2m on 4 per cent [of Salesforce] because he believed that the future of industry is the internet and delivering software as a service,” he says.

The change, he says, has been prompted by the experience of many customers in the late 1990s, when they paid huge licence fees for huge systems that failed to deliver satisfaction.

“A lot of customers spent a lot of money for no return. They are now very cautious and that’s why buying patterns have changed. Companies that were buying multi-million dollar packages are now buying smaller things, or piloting them and buying later,” he says.

And herein lies the strength of the business model. Customers try a product, like it and roll it out further and further across their organisations.

“We have better products that users love. We turn our users into our salespeople, and they love us,” he says.

Among those romantically linked with Salesforce at the moment are Deutsche Post, ADP and Merrill Lynch, big names that serve to emphasise Mr Benioff’s point that the Salesforce model is about providing companies of all sizes with usability, functionality and flexibility.

The AppExchange will add to those qualities, allowing Salesforce users to create their own customised applications on the group’s architecture and sell them on.

“Someone in Bangalore might go home one evening and develop an application on our service. They save it to a directory and charge others. Once we had two on-demand applications and now we have 70 and soon we will have thousands,” he says.

And adding new and better services for customers, Mr Benioff believes, is the key to growth. “We’re hiring developers not lawyers and investment bankers. We think it’s a good idea and will benefit customers.”