Duffield: Just look at the biggest on-demand provider, which is ADP. People aren't too concerned about that company. If I were a CFO and I could be shown that there's as much or better data privacy or security with an on-demand provider, and I get a better job of governance and auditability, and it's a lower cost, and I don't have all this infrastructure that I have to deal with, then how can that not be attractive?

CIO: So when you're going in and meeting with, say CIOs, CFOs and HR people, what makes you not attractive to them?

Bhusri: Typically what happens is, we first come into a company through the VP of HR or someone else in that organization. Given how our system looks, in terms of the consumer Internet look and feel, the embedded reporting and the analytics that are there, we win the HR team almost immediately. Then it becomes a question of whether the CIO buys into on-demand or not.

CIO: If they're not on-demand believers, what are they saying? Where are they pushing back?

Duffield: If they come with a predefined, negative attitude toward on-demand, it doesn't matter what the HR people think. The CIO and IT people are going to get their way. If they come in with an open mind, and just want to be shown that the security is being taken care of, there are no issues with data privacy and that our company is viable, then they're OK.

The IT community is slowly changing. Lucky for us it's not changing too quickly because we couldn't deal with all the new business. But it's changing fast enough to show us that we have an enormous market opportunity here.

New ERP Competitors, New Challenges

CIO: What do you make of the rise of cheaper, third-party ERP maintenance and service providers, such as TomorrowNow and Rimini Street, combined with companies like yours, Salesforce.com, NetSuite and others? There's a lot of new competition in the enterprise applications space. Is that a sign of the times that there are more alternatives for companies, or that customers are frustrated and seriously looking for options, or some big improvements in technology?

Bhusri: I think it's all of the above. Technology has changed quite dramatically. If you compare what an SAP, PeopleSoft or Oracle looks like to an eBay or Amazon, it looks like it was built for the Dark Ages. You've also got a new wave of workers coming up that have a expectations of how systems should look and feel, and they feel comfortable with the eBays and Amazons—and not the SAPs, PeopleSofts or Oracles.