Q: Earnings growth is huge, but profits are still elusive. What are your thoughts on this?

A: I think they've got the right strategy. You have to consider the model and market size. It's a huge market. In the business application market we're talking over 10 million potential customers and maybe $60B globally. So while Salesforce is the leader with 32,000 customers and a projected $700M in sales, they've barely scratched the surface. So you've got to focus on customer acquisition and nailing the product if you want to really outflank the competition in the long term.

Q: When you were running Small Business for IBM, your alliance with salesforce.com helped put them on the map. How has their strategy evolved since then?

A: Wow, what a memory Tom! Back in 1999 we shared a common vision for how business applications would be delivered to small and medium businesses. IBM was going to develop the platform and salesforce.com was the first company to commit to using it. When the "bubble" burst, IBM lost its nerve, but Marc Benioff didn't. He picked up the idea and today with AppExchange and Apex is likely to capture this flag too. This evolution from an application provider to a platform provider is a major change in their strategy since the early days. The other big change is their focus on large enterprise customers. I think this was always part of the vision, but the traction they've gotten in this segment happened faster than I expected and has certainly moved them in a new direction.

Q: Do the SaaS suite players like NetSuite and SAP's planned A1S product pose a threat? How about Microsoft (NASDAQ: MSFT)?

A: I've been in the industry for 35 years. The debate about which business application solution is better for customers, "suites" or "best of breed," has been with us for decades. In the current SaaS era it's playing out again. I seriously doubt that NetSuite is even in the top 10 competitors to salesforce.com. By focusing on solving all customer application needs while still a very young company, they end up being a mile wide and inch deep. Most customers are really smart. They want depth and realize that the providers of these apps must provide ways to facilitate integration. So in the early stages of a computing platform cycle, the advantage inevitably goes to the "best of breed" players like Salesforce and Intacct. In the later stages of the cycle, consolidation occurs and allows customers to get multiple mature and deep applications from a single provider. Seems like as long as there is a market this debate will continue. There will always be room for both types of players in a market this large.

Q: Your company, Intacct Corp, is a prominent salesforce.com partner and sponsor of their upcoming Dreamforce Conference. Is this important to customers?

A: It's huge. The salesforce.com solution addresses the front end of an important business process -- everything from capturing leads to closing an order. The Intacct solution addresses the back end from booking the order to fulfillment to actually collecting the cash. By linking the systems, customers eliminate the manual processes in between that are costly, time consuming, and prone to errors. Salesforce customers and prospects would be nuts not to look at Intacct and vice versa. We'll be making an important announcement about this integration before Dreamforce.

Q: Do you see salesforce.com expanding their application portfolio beyond CRM?

A: Yes. They will have the opportunity and it will eventually be good for customers. Today they're saying no to this question because they are focused on being a platform provider. No one will use their platform if they think Salesforce will use it to learn the apps and become a direct competitor. But eventually I think they will grow their application portfolio.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.