"We have customers linking their Salesforce.com data to other applications, such as finance, human resources and manufacturing, using Web services," says Annrai O'Toole, CEO of Cape Clear Software. "The new era of integration has begun." Also, third-party software developers wanting to build product extensions for Salesforce.com can use CapeStudio.

Silicon Valley-based Cape Clear Software, a 70-employee integration-software developer and a Salesforce.com customer, saw an opportunity to ride the coattails of the hosted CRM service provider, as it moved up market toward enterprise customers. Currently, low-end Salesforce.com customers access the service via a browser, while high-end customers use an XML-based API.

With the latter, Cape Clear Software has taken the API and exposed it as a Web service. Now, using CapeStudio, customers can develop Web services links into ERP and even legacy systems, turning multi-million dollar integration projects into mere tens of thousands, claims O'Toole. Cape Clear Software's offering is unique in the industry, says Mike Creadon, director of product alliances at Saleforce.com, "and it's currently the only Web services software development kit for Salesforce.com."

The Cape Clear Software-Saleforce.com deal though, is little more than a veneer. In fact, "There's no proprietary hooks between our products because that would undermine the reason [for Web services]," says O'Toole, adding, "There's also no discounts for Salesforce.com customers... it's kind of a referral [agreement]."

Still, the announcement is significant, says Sheryl Kingstone, senior analyst at market researcher Yankee Group. "As large enterprises start to evaluate software as services, they don't want to give up integration -- connecting to their ERP systems is pretty critical," she says. "And they've never been able to do this in the past."

The main use of Web services today is inside the firewall, say industry watchers. That's because enterprises are concerned about security and reliability issues pertaining to their mission-critical applications. Simply put, they want to test new-fangled Web services in a controlled environment. Even O'Toole admits it's early for Web services and CRM, and especially early for Web services and an outside-the-firewall solution. Says Kingstone: "People are just starting to see the impact, and it'll be 12 to 18 months before we see a truly leverage-able Web services architecture."