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Having the Cloud Conversation: Why the Business Architect Should Care

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Peter Coffee presentation at The Open Group in Seattle, February 2010, on business incentives and handling of business concerns surrounding cloud computing

Peter Coffee presentation at The Open Group in Seattle, February 2010, on business incentives and handling of business concerns surrounding cloud computing

Published in Business , Technology
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  • 1. Having the Cloud Conversation: Why the Business Architect Should Care Peter Coffee Director of Platform Research salesforce.com
  • 2. 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 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 in the SEC Filings section under Investor Information 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.
  • 3. IT Had a Very Bad Year 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 – Gartner (informationweek.com, 26 Oct.)
  • 4. 100% Cloud Cover?
  • 5. “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 www.networkworld.com/news/2008/102908-bechtel.html CIO, Bechtel Corp.
  • 6. The Cloud as a Multi-Product Marketplace Platform as a Service PaaS as Enterprise “Servers as a Service” (PaaS) for the Application Framework Inquiring Developer Virtual Servers Programmable Programmable User Cloud Logic Interface Virtual Servers Python/Java Virtual Application Server Real-Time Workflow Integrated Content Servers & Approvals Library Database as a Service Database as a Service Unlimited Real-Time Customization Granular Security & Sharing Infrastructure as a Service Infrastructure as a Service Infrastructure as a Service ~Familiar Developer Model β Offering Supports Large-Scale SaaS Rapid Scalability Innovative Technology Deep-Dyed Multitenancy
  • 7. What it Means to Promise “The Cloud” 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”
  • 8. Faster Results; Lower Risks; Predictable Costs On-Premise Operations: Cloud Computing: 53% of software projects cost Average 49% investment recovery 189% of original estimate1 within 10 Months2 Fixed Costs and Variable Cost Aligned with Excess Operating Business Value Expenses Value Buying Function, Value not Infrastructure Time Minimal Initial Cost Upgrade Expense & Up-front Capital Opportunity Costs Expense & Delay 1 Standish Group, Chaos Report 2006 2 Third-Party CustomerSat Research on 4,165 Salesforce.com customers, February 2008
  • 9. Enterprise Clouds Enable Deep Customization Build strategic applications Your Clicks User Interface Customize any aspect Logic Upgrade when convenient Your Code Database Preserve IP control Metadata representations: Rigorously partitioned data, logic and customizations for multiple customers Coherent Code Base and Managed Infrastructure Coherent Code Base and Managed Infrastructure
  • 10. Cloud Integration: No Need for Rip/Replace Mash-ups from Native Integration Developer Native ERP Web and Desktop Partner Toolkits Connectors AppExchange Connectors Ecosystem
  • 11. Cloud Security: No Need for Excuses Facility Security Network Security Platform Security • 24x365 on site security • Fault tolerant external firewall • SSL data encryption • Biometric readers, man traps • Intrusion detection systems • Optional strict password policies • Anonymous exterior • Best practices secure systems mgmt • SAS 70 Type II & SysTrust Certification • Silent alarm • 3rd party vulnerability assessments • Security certifications from Fortune 50 • CCTV financial services customers • Motion detection • May 2008: ISO 27001 Certification • N+1 infrastructure “There are some strong technical security arguments in favor of Cloud Computing… (Craig Balding, Fortune 500 security practitioner)
  • 12. Transparency Surpassing Enterprise Norms Full Public Disclosure Live System Status Security Best Practices Historical Performance May-July 2009 • 99.997% of planned availability • Continually narrower maintenance windows Amazon Google
  • 13. 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.
  • 14. Real-World Results: Health Care CRC Health—the nation's largest provider of drug and alcohol treatment services—acquired the country’s largest youth treatment provider. The combined organization required a platform to manage patient intake, track Web entities, and streamline operations to increase revenue. The company used ACT!, spreadsheets, and other proprietary systems to manage extensive patient data. Only one call center operator could open the spreadsheet at a time, making the process inefficient, opaque, and unscalable. The company developed a customized user interface on Force.com for 12 users. With help from salesforce.com partner Appirio, CRC Health extended the application to broadly leverage the platform. Security levels are matched to what’s required to comply with HIPAA and other industry regulations. Open APIs enable tight integration with legacy tracking systems, Microsoft Outlook, eFax, and other third party apps. Web marketing effectiveness tracking within Salesforce CRM indicates to the dollar what is performing and what is not.
  • 15. 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
  • 16. To Everything There is a Season ’50s ’60s ’70s ’80s ’90s ’00s Windows IBM PC Windows XP PC MITS Altair 3.x/9x/NT Macintosh & Mac OS X & Linux 1.0 DEC DEC Sun Sun/AMD Sun/ILM Mini Workstations x86 Servers PDP-8 VAX 11/780 Render Farms & Servers Niagara CPUs Mainframe IBM 701 S/360 S/370 4300 S/390 zSeries
  • 17. ’50s ’60s ’70s ’80s ’90s ’00s Cloud Apps Grid & X Window Computing Platforms e nc da en sc A Windows IBM PC Windows XP PC MITS Altair 3.x/9x/NT Macintosh & Mac OS X & Linux 1.0 e nc ge er Em DEC DEC Sun Sun/ILM Sun/AMD Mini Workstations x86 Servers PDP-8 VAX 11/780 Render Farms & Servers Niagara CPUs … e nc t en ra em a pe in Ap ef R Mainframe IBM 701 S/360 S/370 4300 S/390 zSeries
  • 18. Peter Coffee Director of Platform Research pcoffee@salesforce.com Q&A? facebook.com/peter.coffee twitter.com/petercoffee