Peter Coffee CIO Forum 20100406

1

The Enterprise Cloud

Immediate. Urgent.

Inevitable.

Peter CoffeeDirector, Platform Research

salesforce.com

CEO Needs

Operational

Governable

Affordable

CIO Mandate

s

Productive

Reliable

Secure

Platform as a

Service

2

InformationWeek reports that Census CIO Brian

McGrath sees promise in cloud offerings, but he is

taking things slowly. The first use of cloud-based

offerings for the bureau was using a contacts

database from salesforce.com. The bureau has a

database of 170,000 partners that had been initially

planned to be hosted in house. However, problems

with the contract forced an alternative solution.

Salesforce.com was the alternative solution and the

database was rolled out in six weeks. Compared to

the months or years that the average government IT

project requires for deployment, the salesforce.com

database was deployed shockingly fast.

DailyTech.com, 1/22/2010

U.S. Census BureauIncreasing Response Rates for the Decennial Census

U.S. Census BureauIncreasing Response Rates for the Decennial Census

Deployed a custom app in three months

Records, tracks and manages contacts and

activities between staff and external partners

App has scaled up as census goes active;

will unwind as process concludes

Manages 2,200 users: temporary workers

geographically dispersed at headquarters and

12 regional offices

3

IT really is “doing more with less”

Gartner:

� Global IT spending estimated down 5.2% during 2009

� Spending won’t return to 2008 level until 2012

� Half of CIOs will see zero growth or further cuts this year

But mandates of security, governance, and mobility continue

4

100% Cloud Cover?

www.networkworld.com/news/2008/102908-bechtel.html

“If you take the ideal

world, everything is

done as a service:

computing, storage,

software and

operations.”

“The risk for enterprises

that don't start a SaaS

migration strategy soon

is that their IT

organizational

structures will be a

competitive

disadvantage.”

Geir Ramleth

CIO, Bechtel Corp.

5

Infrastructure as a ServiceInfrastructure as a Service

Virtual

Servers

Virtual

Servers

Virtual

Servers

Virtual

Servers

Virtual

Servers

Virtual

Servers

Platform as a Service

(PaaS) for the

Inquiring Developer

“Servers as a Service” PaaS as Enterprise

Application Framework


Database as a ServiceDatabase as a Service

Python/Java

Application Server

Python/Java

Application Server

~Familiar Developer Model

Rapid Scalability

β Offering

Innovative Technology

Supports Large-Scale SaaS

Deep-Dyed Multitenancy

Database as a ServiceDatabase as a Service

The Cloud as a Multi-Product Marketplace

Unlimited Real-Time Customization

Granular Security & Sharing

Programmable Cloud Logic

Real-Time Workflow& Approvals

Programmable User Interface

Integrated Content Library


Moving toward an ideal: “Zero, One, Infinity”*

0 On-premise infrastructure

Acquisition cost

Adoption cost

Support cost

1 Coherent and resilient environment – not a brittle “software stack”

∞∞∞∞ Scalability in response to changing need

Integratability/Interoperability with legacy assets and other services

Customizability/Programmability from data, through logic,

up into the user interface without compromising robust multi-tenancy

* From The Jargon File: “Allow none of foo, exactly one of foo, or any number of foo”

What it Means to Promise “The Cloud”

6

Faster Results; Lower Risks; Predictable Costs

On-Premise Operations:

Upgrade Expense &

Opportunity CostsUp-front Capital

Expense & Delay

Variable Cost Aligned with

Business Value

Va

lue

Time

Cloud Computing:

Average 49% ROI

within 10 Months2

53% of software projects cost

189% of original estimate1

Buying Function,

not Infrastructure

Va

lue

1 Standish Group, Chaos Report 20062 Third-Party CustomerSat Research on 4,165 Salesforce.com customers, February 2008

Fixed Costs and

Excess Operating

Expenses

Minimal

Initial Cost

Single-Tenant vs. Multi-Tenant Architecture

Single tenancy gives each customer a

dedicated software stack – and each layer

in each stack still requires configuration,

monitoring, upgrades, security updates,

patches, tuning and disaster recovery.

On a multi-tenant platform, all applications

run in a single logical environment: faster,

more secure, more available, automatically

upgraded and maintained. Any improvement

appears to all customers at once.

Shared infrastructure

Other apps

Server

OS

Database

App Server

Storage

Network

App 1

Server

OS

Database

App Server

Storage

Network

App 2

Server

OS

Database

App Server

Storage

Network

App 3

7

Coherent Code Base and Managed InfrastructureCoherent Code Base and Managed Infrastructure

Your Clicks

Your Code

User Interface

Logic

Database

Metadata representations:

Rigorously partitioned data, logic and customizations for multiple customers

Build strategic applications

Customize any aspect

Upgrade when convenient

Retain IP ownership

Why Multi-Tenancy Matters to Developers

Cloud Development: reinvented, not just relocated

� Nucleus Research analyzed Force.com deployments: found

average 4.9 times faster development (range 1.5x-10x)

versus Java or .Net

– Custom objects

– Administrative tools

– Workflow engine

– Pre-tested platform

� Galorath Inc. compared developers’ Force.com productivity to

Java development

– Requirements definition time reduced 25% due to rapid prototyping

– Testing effort reduced by (typically) more than 10%

– Development productivity of new code 5x greater

– Overall project cost 30-40% less

� CustomerSat sampled more than 1,100 Force.com

development teams during summer 2009

– Average experience: 4 applications deployed to date

– Average project cost savings: 48%

– Average project acceleration: 5.1x

8

Cloud Development: reinvented, not just relocated

Cloud Integration: No Need for Rip/Replace

Mash-ups from

Web and

AppExchange

Native

Desktop

Connectors

Integration

Partner

Ecosystem

Developer

ToolkitsNative ERP

Connectors

9

4 Months

(Oct ’06- Feb ’07)

1 Month

(Dec ’06)

5 Months

(Dec ’06 – May ’07)

2Q07

Deployments

“This is process lite. It gives my business users what they want,

a unique app for each sales team, fundamentally reflecting their own personality.

“And yes, I get a single standard SAP integration. It’s a terrific success.”

–CIO, Fortune 500 Firm

SAP Back-end

Integration

Customized for

Diverse Sales Groups

Sales

Distributors

Sales

Distributors

EMEA

Inside Sales

EMEA

Inside Sales

AFS Global

Sales

AFS Global

Sales

FLPR Field

Sales

FLPR Field

Sales

Cloud Integration: New Leverage for Knowledge

For the first time we have visibility into the effectiveness

of our client programs and the ability to set and track

metric-based benchmarks for client progress.

50% reduction in time spent on paperwork,

reporting and reimbursement

Eliminated 2-month wait for County reports

Real-time tracking of individual client outcomes

(treatments adjusted accordingly)

Self-audits and tracking of clinician, program, and

division productivity

Automated reimbursement process though auto-

population of funder forms

� Client Intake

� Case Management

� Service Plans

� Client Outcomes

� Self-audits

Bob Bennett

CEO”

“

Cloud Integration: Family Service Agency / SFO

HIPAA-compliant EHR for mental health case management

10

• SSL data encryption

• Optional strict password policies

• SAS 70 Type II & SysTrust Certification

• Security certifications from Fortune 50

financial services customers

• May 2008: ISO 27001 Certification

Platform Security

• Fault tolerant external firewall

• Intrusion detection systems

• Best practices secure systems mgmt

• 3rd party vulnerability assessments

Network Security

• 24x365 on site security

• Biometric readers, man traps

• Anonymous exterior

• Silent alarm

• CCTV

• Motion detection

• N+1 infrastructure

Facility Security

Cloud Security: No Need for Excuses

“There are some strong technical security arguments in favor of Cloud

Computing… (Craig Balding, Fortune 500 security practitioner)

� Password security policies

� Rich Sharing Rules

�User Profiles

� SSO/2-factor solutions

Login… Authenticate…Apply Data Security Rules… View Filtered Content

Multi-Tenant Application Security

11

May-July 2009

• 99.997% of planned

availability

• Continually narrower

maintenance windows

Live System Status

Security Best Practices

Historical Performance

Full Public Disclosure

Amazon

Google

Trust Through Openness

Trust Through Openness

12

Real-World Results: Financial Services

� The Phoenix Companies sought a new CRM solution with flexibility, ease of use,

mobile accessibility, low-cost modification capabilities, minimal user training

requirements, and simplified integration with other apps.

� Changeover to Salesforce CRM took less than two months. Working with

salesforce.com partner OKERE (now part of Fujitsu Consulting), Phoenix used the

Force.com platform to create customizations for contracts and underwriting.

� Using the Force.com API, Phoenix integrated several legacy systems with

Salesforce CRM to provide consolidated, real-time access to information.

� The Salesforce CRM implementation cost the company less than one-fourth of the

project’s original budget.

� By streamlining communication between field and inside sales within Salesforce

CRM, Phoenix has reduced phone and email inefficiencies, boosted productivity,

and, in 2005, increased life insurance sales by more than 33%.

� Following its upgrade to Salesforce CRM Unlimited Edition, Phoenix achieved

96% user adoption.

Real-World Results: Green Manufacturing

� Vetrazzo, a leader in the rapidly growing market of recycled glass countertops,

required an enterprise resource planning (ERP) system it could customize to

handle its unique manufacturing processes. The eco-friendly small business

lacked the budget and personnel required to purchase and implement a

traditional on-premise ERP system.

� Without an IT department, executives wanted to avoid having to purchase and

manage hardware infrastructure. The company needed a Web-based solution

for its national staff that could handle anticipated growth.

� With the help of salesforce.com partner The Claiborne Company, Vetrazzo

expanded on a prototype to build an ERP system customized to fit its

specific business processes. The company’s custom apps include Customer

Service and Order Management; Finished Goods Inventory Management;

Production Planning and Scheduling; Raw Materials Management; Shipping and

Logistics; Document Management, and Warranty Management.

� Planned integration with Quickbooks will tie in financials.

13

Are Your Customers Pulling Their Weight?

Ideas has been an unbelievable home run. We are loving

it―the voice of the customer is totally present at Starbucks

in a brand new way, thanks to the Force.com platform.

“

” Chris Bruzzo

CTO, Starbucks

� It’s hard to add security to a tool that shares by default

� It’s possible to add social tools to a proven trust model

How “The Cloud” Creates Communities

14

The Conversation Within

� The friction-free marketplace

comes home:

– Employees are customers, too

• Career experience is a product

• Time on the job is a payment

– Employees seek value

• Factions go under the radar

• You can’t tell what they’re

really doing

� The in-house conversation

will take place

– Harness the energy

– Focus the ingenuity

What Drives Web 2.0 in the Workplace?

� Goals:

– Collaboration

– Creation

– Knowledge Identification

– Talent Motivation/Retention

� Methods

– Knowledge Engineering

– Peer Tagging/Rating

– Networking

– Publication

15

This Is Not the Bleeding Edge

� 40% of IT execs have been using cloud computing for more than

three years

– 62% of surveyed firms plan to increase their use of SaaS this year

– 60% project SaaS in vertical apps within two years

� By 2011, more than 70% of U.S. enterprise data centers will hit the

wall on power, cooling and space:

– More than 1/3 of companies expect IT investment reductions in 2009

– Outsource data-center demand is up 14% in the last 12 months;

capacity has grown by only 6%

– Data center costs have doubled in many markets; in London, they're

up sixfold

� 37% of firms are replacing current on-premise systems with SaaS

� Nothing is perfect…

…but some things are improving more quickly than others

� If “the cloud can’t do that” today, what about next year?

� Can today’s mature traditional models say the same?

This is the Leading Edge

16



� If “the cloud can’t do that” today, what about next year?

� Can today’s mature traditional models say the same?





17

zSeriesS/3904300S/370S/360IBM 701Mainframe

Sun/AMDx86 Servers

Niagara CPUs

Sun/ILMRender Farms

SunWorkstations

& Servers

DEC

VAX 11/780

DEC

PDP-8Mini

Windows XP

& Mac OS X

Windows

3.x/9x/NT

& Linux 1.0

IBM PC

MacintoshMITS AltairPC

’00s’90s’80s’70s’60s’50s

To Everything There is a Season

Appea

ranc

e

Em

erge

nce

Ascendance

Ref

inem

ent…

zSeriesS/3904300S/370S/360IBM 701Mainframe

Sun/AMD

x86 Servers

Niagara CPUs

Sun/ILM

Render Farms

SunWorkstations

& Servers

DEC

VAX 11/780

DEC

PDP-8Mini

Windows XP

& Mac OS X

Windows

3.x/9x/NT

& Linux 1.0

IBM PC

MacintoshMITS AltairPC

Grid

ComputingX Window

Cloud Apps

&

Platforms

’00s’90s’80s’70s’60s’50s

18

How Low Does the Bar Need to Go?

Best Practices and Pitfalls

• Adopting the Cloud does not mean starting over

• Retain what’s working: innovate and add value at Web speed

• Don’t settle for the least unsatisfactory solution:

treat the Cloud as a supermarket of services

• Preserving familiar pain is not a measure of success

• Moving existing complexity into the Cloud avoids short-term pain

• Mastering new developer models is a high-return investment

• Don’t apologize for doing what made sense two years ago

• Bandwidth has grown

• Customizability has grown

• Costs of doing things the old way are skyrocketing

• Don’t mistake the consumer Web for the enterprise cloud

• Expect high availability; robust security; deep customizability

• Demand clear commitments on data ownership and protection

19

� Conventional IT model front-loads

capital spending on infrastructure

– Debt service and depreciation charges

persist despite business contractions

– Future capacity must either be bought in advance,

or added later at higher cost with substantial

business disruption

� The cloud enables preparation for upturn

– New systems can be built and tested with negligible

up-front investment

– Resulting systems can be rapidly scaled to respond to

improving conditions

– "It has been our repeated experience that business

uncertainty is inevitably accompanied by opportunity“

(Jack Welch, Letter to GE Shareholders, 1997)

Clouds Put IT Spending Back in Balance

� Don’t think of the cloud as technology

– Virtualization

– Metadata customization

– Multi-tenancy

– 4G wireless

– SOA

– These are enablers, not guarantors

� Think of the cloud as a commitment

– Negligible up-front capital

– Alignment of cost with value

– Maximal stakeholder engagement

– These are Business Solutions to IT’s Problems

Clouds Put IT Spending Back in Balance

20

Safe Harbor Statement

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: This presentation may contain forward-

looking statements including but not limited to statements concerning the potential market for our existing service offerings

and future offerings. All of our forward looking statements involve risks, uncertainties and assumptions. If any such risks or

uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from the results

expressed or implied by the forward-looking statements we make.

The risks and uncertainties referred to above include - but are not limited to - risks associated with possible fluctuations in

our operating results and cash flows, rate of growth and anticipated revenue run rate, errors, interruptions or delays in our

service or our Web hosting, our new business model, our history of operating losses, the possibility that we will not remain

profitable, breach of our security measures, the emerging market in which we operate, our relatively limited operating

history, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to

release and gain customer acceptance of new and improved versions of our service, customer and partner acceptance of

the AppExchange, successful customer deployment and utilization of our services, unanticipated changes in our effective

tax rate, fluctuations in the number of shares outstanding, the price of such shares, foreign currency exchange rates and

interest rates.

Further information on these and other factors that could affect our financial results is included in the reports on Forms 10-

K, 10-Q and 8-K and in other filings we make with the Securities and Exchange Commission from time to time. These

documents are available on the SEC Filings section of the Investor Information section of our website at

www.salesforce.com/investor. Salesforce.com, inc. assumes no obligation and does not intend to update these forward-

looking statements, except as required by law.

CEO Needs

Operational

Governable

Affordable

CIO Mandate

s

Productive

Reliable

Secure

Platform as a

Service

Thank you

[email protected]/petercoffeefacebook.com/peter.coffee

More information atwww.salesforce.com/cloudcomputing

Peter Coffee CIO Forum 20100406

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