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Peter Coffee CIO Forum 20100406

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Peter Coffee presentation on enterprise cloud computing to CIO Forum in Schaumburg IL 6 April 2010 with new material on Chatter and social tools as well as U.S. Census case study

Peter Coffee presentation on enterprise cloud computing to CIO Forum in Schaumburg IL 6 April 2010 with new material on Chatter and social tools as well as U.S. Census case study

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  • 1. s The andate CIO M Enterprise ctive eed s Produ CEO N tional Reliab le Cloud Opera e nable Secur Gover dable Immediate. Urgent. Affor Inevitable. e Servic m as a Peter Coffee Platfor Director, Platform Research salesforce.com 1
  • 2. U.S. Census Bureau Increasing Response Rates for the Decennial Census 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 Bureau Increasing 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 2
  • 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 3
  • 4. 100% Cloud Cover? “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. www.networkworld.com/news/2008/102908-bechtel.html 4
  • 5. 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 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” 5
  • 6. Faster Results; Lower Risks; Predictable Costs On-Premise Operations: Cloud Computing: 53% of software projects cost Average 49% ROI 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 Single-Tenant vs. Multi-Tenant Architecture Shared infrastructure Other apps App 2 App 1 App Server App 3 App Server Database App Server Database OS Database OS Server OS Server Storage Server Storage Network Storage Network Network Single tenancy gives each customer a On a multi-tenant platform, all applications dedicated software stack – and each layer run in a single logical environment: faster, in each stack still requires configuration, more secure, more available, automatically monitoring, upgrades, security updates, upgraded and maintained. Any improvement patches, tuning and disaster recovery. appears to all customers at once. 6
  • 7. Why Multi-Tenancy Matters to Developers Build strategic applications Your Clicks User Interface Customize any aspect Logic Upgrade when convenient Your Code Database Retain IP ownership Metadata representations: Rigorously partitioned data, logic and customizations for multiple customers Coherent Code Base and Managed Infrastructure Coherent Code Base and Managed Infrastructure 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 7
  • 8. Cloud Development: reinvented, not just relocated Cloud Integration: No Need for Rip/Replace Mash-ups from Native Integration Developer Native ERP Web and Desktop Partner Toolkits Connectors AppExchange Connectors Ecosystem 8
  • 9. Cloud Integration: New Leverage for Knowledge “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 Deployments Sales Sales 4 Months Distributors (Oct ’06- Feb ’07) Distributors EMEA 1 Month EMEA Inside Sales (Dec ’06) Inside Sales AFS Global 5 Months AFS Global (Dec ’06 – May ’07) Sales Sales SAP Back-end FLPR Field FLPR Field 2Q07 Integration Sales Sales Customized for Diverse Sales Groups Cloud Integration: Family Service Agency / SFO HIPAA-compliant EHR for mental health case management 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) Client Intake Self-audits and tracking of clinician, program, and Case Management division productivity Service Plans Client Outcomes Automated reimbursement process though auto- Self-audits population of funder forms “ our client programshave visibility into set and track of For the first time we and the ability to the effectiveness metric-based benchmarks for client progress. ” Bob Bennett CEO 9
  • 10. 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) Multi-Tenant Application Security Apply Data Login… Authenticate… Security Rules… View Filtered Content Password security policies Rich Sharing Rules User Profiles SSO/2-factor solutions 10
  • 11. Trust Through Openness Full Public Disclosure Live System Status Security Best Practices Historical Performance May-July 2009 • 99.997% of planned availability • Continually narrower Amazon maintenance windows Google Trust Through Openness 11
  • 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. 12
  • 13. Are Your Customers Pulling Their Weight? “ Ideas has beenofan unbelievable home run. We areStarbucks it―the voice the customer is totally present at loving in a brand new way, thanks to the Force.com platform.” Chris Bruzzo CTO, Starbucks How “The Cloud” Creates Communities 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 13
  • 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 14
  • 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 This is the Leading Edge 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? 15
  • 16. This is the Leading Edge 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 Nothing is perfect… …but some things are improving more quickly than others 16
  • 17. 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 ’50s ’60s ’70s ’80s ’90s ’00s Cloud Apps Grid & X Window Computing Platforms e nc a nd ce As 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 t… e nc en ra em ea p in Ap f Re Mainframe IBM 701 S/360 S/370 4300 S/390 zSeries 17
  • 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 18
  • 19. Clouds Put IT Spending Back in Balance 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 19
  • 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. s andate CIO M ctive eed s Produ CEO N le Thank you tional Reliab Opera e nable Secur pcoffee@salesforce.com Gover twitter.com/petercoffee dable facebook.com/peter.coffee Affor rvice m as a Se Platfor More information at www.salesforce.com/cloudcomputing 20

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