Social Models and Innovation Ecosystems

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Keynote presentation to MIT's conference, "Democratizing Innovation," 23 February 2013 -- by Peter Coffee, VP & Head of Platform Research, salesforce.com inc.

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Social Models and Innovation Ecosystems

  1. 1. Social Modelsand Innovation Ecosystems Peter Coffee VP & Head of Platform Research, salesforce.com inc.
  2. 2. Safe HarborSafe harbor statement under the Private Securities Litigation Reform Act of 1995: This presentation may contain forward-lookingstatements that involve risks, uncertainties, and assumptions. If any such uncertainties materialize or if any of the assumptions In Other Words:proves incorrect, the results of salesforce.com, inc. could differ materially from the results expressed or implied by the forward-looking statements we make. All statements other than statements of historical fact could be deemed forward-looking, includingany projections of subscriber growth, earnings, revenues, or other financial items and any statements regarding strategies or plansof management for future operations, statements of belief, any statements concerning new, planned, or upgraded services ortechnology developments and customer contracts or use of our services. Everything ThatThe risks and uncertainties referred to above include – but are not limited to – risks associated with developing and delivering newfunctionality for our service, our new business model, our past operating losses, possible fluctuations in our operating results andrate of growth, interruptions or delays in our Web hosting, breach of our security measures, risks associated with possible mergers You See Hereand acquisitions, the immature market in which we operate, our relatively limited operating history, our ability to expand, retain,and motivate our employees and manage our growth, new releases of our service and successful customer deployment, ourlimited history reselling non-salesforce.com products, and utilization and selling to larger enterprise customers. Further informationon potential factors that could affect the financial results of salesforce.com, inc. is included in our annual report and on our Form10-Q for the most recent fiscal quarter: these documents and others are available on the SEC Filings section of the Investor is RealInformation section of our Web site.Any unreleased services or features referenced in this or other press releases or public statements are not currently available andmay not be delivered on time or at all. Customers who purchase our services should make the purchase decisions based uponfeatures that are currently available. Salesforce.com, inc. assumes no obligation and does not intend to update these forward-looking statements.
  3. 3. Finally Catching Up With Peter Drucker • “The typical large organization, twenty years hence, will be composed largely of specialists who direct and discipline their own performance through organized feedback from colleagues and customers.” • “It will be a knowledge-based organization.” Peter F. Drucker, in The New Realities …in 1989 What happened to the future?
  4. 4. Old IT Did Not Connect Our Knowledge• Complex legacy IT portfolios made the simplest data integrations an overwhelming task• Cumbersome, brittle integrations demoted end users to information consumers• Path of least resistance then over-emphasized rear-view mirror views of historical data – or deep inspection of recent past• This is what “IT vendors” are still selling
  5. 5. Why ‘Cloud’ Changes Everything Forever• Since the IBM PC was introduced (Aug.1981 to now) • Processor speed has risen ~25 per cent per year • Memory capacity has grown ~40 per cent per year • Mass storage surging ~50 per cent per year• Desktop systems are burdened with too much state • File system technology has not addressed new needs • Governance falls short of rising demands Server shipment growth rates:• Trends redefine “best practice” Server market overall, 2011-2015: 7.1% CAGR (TechNavio) • Bandwidth expansion: ~45 %/year • Processor road maps favor shared machines  “One of the key factors contributing to this market growth is the growing adoption of • Data centralization  superior governance* cloud computing.” Servers for cloud hubs, 2011-15: * Knowingly provocative statement with backup to come 21% CAGR (IDC)
  6. 6. Social Bandwidth: More Than Just ‘Sum of the People’(Arcs Represent Number • Distance of Facebook ‘Friend’ Links) Pop quiz: where is Beijing?
  7. 7. When the Served Community is Social• Silo Behavior: – Prospects get content from Marketing – Buyers negotiate terms with Sales – Customers raise issues with Support• Social Behavior: – Prospects seek insights from customers – Buyers collaborate on competitor research – Customers tell the world when they’re not happy• Organizations need new processes & power models – Authority to address issues pushed to edge of organization – Collaborative capability available on demand
  8. 8. ‘Digital’  Better, Faster Cheaper Box‘Social’ &‘Connected’  Blow Up the Box Medicine: sensor-equipped patients & homes reduce office & hospital visits Education: students in external settings learn by practice
  9. 9. Cloud Connection New Models of Membership and Value “One automaker’s chief financial officer told Sun “More than 4,000 COO Jonathan Schwartz photographers access that his company could give Canon’s portal site, which a car away for free, if it was developed using the could charge a customer Service Cloud Portal. By $220 per month for a providing information in real- subscription.” time, we have strengthened www.zdnet.com/news/sun-puts-java-into- gear-for-cars/136886 relationships with our members and have dramatically improved customer satisfaction.”“CE device margins are razor thin, and the Canon Marketing Japanpromise of maintaining an always-on connectionto the customer after the point of sale is mightyenticing. With a connected device, there are allkinds of new opportunities to present offers andservices that can generate ongoing monthlyrevenue. Simply put, connected devices makeconnected customers.” Richard Schwartz, President and CEO
  10. 10. Experience Delivery: a Model, not an App• Collaborative process creation & maintenance• Best practice Andrew Leigh. I need to create a new sharing customer service process for the iPad, can you guys help?• Integration with New process created: iPad Tier 1 Support feeds and other Process (Goals: Run time, 5 min) social channels• Social Steve Wood. Great – I can help with the case escalation by linking in the Apple Escalation Process. process Varadarajan Rajaram. Yes, I know this product well – there are a bunch of management solutions I can build into this process.
  11. 11. Environments are Ripe for Re-InventionSoft displays adaptive to Solo Driver and Driver/Co-pilot modesurban versus highway, with radically different content deliverywork versus leisure, etc. opportunities and expectations Integration of portable devices
  12. 12. Whose Knowledge Is It, Anyway? Innovation “goes rogue” when: – Products are open-source and/or highly configurable/customizable – Some users have incentive to innovate – Some innovators have incentive to share – Diffusion of innovations is inexpensive What is the new “intellectual property”? – Brand equity – Community loyalty – Ecosystem diversity and strength
  13. 13. What Role for “The Crowd”? Sift more dirt, find more gold – With modern machines/methods, gold mines are viable at 1 g. Au / ton of ore – Costs of collecting/sifting the crowdstream continue to fall The oddly opposite models: – Delphi Method: people with wildly varying knowledge, exposed to each other’s opinions, produce consensus surpassing the sum of the parts – Open-Source Method: Individual contributions, appropriately incented (if only with ego rewards), yield cost-effective combined results Can the crowd survive its success? – “Even mild social influence can undermine the wisdom of crowd effect.” Proceedings of the National Academy of Sciences, 16 May 2011 wired.com/wiredscience/2011/05/wisdom-of-crowds-decline – Vital elements: diversity, independence, decentralization, aggregation
  14. 14. The IntellectualProperty Impact of InternetProtocol Transformation http://imgs.xkcd.com/comics/crowdsourcing.pngWhat is your value-add?What is the barrier to competitor entry?What is the distinctive competence?What is the defensible intellectual property?What is the basis of brand equity?What is the motivation for customer loyalty?What is the actual product being bought?** Hint: it’s rarely what you think you sell
  15. 15. The Value of Velocity Legacy Stack-Based Process – Wherever It Is Install & Write Deploy & Monitor Patch and Configure Load & Tune Regression Code Stack Test TestYou Your AppAverage time to build a custom app with software is 8 months.IDC White Paper sponsored by Salesforce.com: “Force.com Cloud Platform Drives Huge Time to Market and Cost Savings”, Doc # 219965, September, 2009By late 2009, Qualcomm/Android cycle time had dropped to 4.5 months.Computerworld, “Is Quadroid the new Wintel?,” 2 December 2010
  16. 16. The Value of Velocity One developer with no prior Force.com training built a patient admission app in just 4 days Deployed to Medical Directors and Program Directors in hospitals on iPhones and iPads • Eliminated paper forms; • Workflow reduced response time by more than 60%;“We’re blown away…a mobile healthcareapp on Force.com with one person in just 4 • Cut process time from 18 hoursdays… The same app built in [previous to less than 60 minutesmodels] would have taken over 3 months”
  17. 17. Trust Attainment Enables Cloud Adoption• Robust infrastructure security• Rigorous operational security• Granular customer controls – Role-based privilege sets – Convenient access control & audit• “Sum of all fears” scrutiny – Multi-tenancy shrinks attack surface; slashes opportunities for error – The most demanding customer sets the bar – PCI DSS Compliance Level 1; FIPS 199 LOW and MODERATE – Comprehensive, continuing audit/certification
  18. 18. All Assets Secured, All the Time “Despite resource sharing, multitenancy will often improve security… “Our research and analysis indicates that multitenancy is not a less secure model — quite the opposite!”
  19. 19. Nothing Happens Overnight; Nothing Goes Away ’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
  20. 20. ’50s ’60s ’70s ’80s ’90s ’00s-’10sClouds + Grid Edge X Window ComputingDevices Windows IBM PC Windows XP/7/8 PC MITS Altair 3.x/9x/NT Macintosh Mac OS X & Linux 1.0 DEC DEC Sun Sun/ILM Sun/AMD Mini Workstations x86 Servers PDP-8 VAX 11/780 Render Farms & Servers Niagara CPUsMainframe IBM 701 S/360 S/370 4300 S/390 zSeries
  21. 21. This is No Way to Get to the Cloud
  22. 22. The Framework: Data, Process, Collaboration • Scalable, secure, socially enabled multi-tenant database • Proven services to build rich, attractive, ‘anywhere’ apps • Secure collaboration with any IT asset or process – person, application, or machine Chatter Force.com Database.com
  23. 23. The Plug-Ins: Content, Scalability, Integration • Build, run, and scale a world-class website with site.com: integrated with database and customer social profile • Agile deployment on Heroku for Ruby, Node.js, Clojure, Java, Python, and Scala: run anything, see everything • Collaboration in sales, service, and marketing processes Chatter Force.com Site.com Heroku Communities Database.com
  24. 24. It Only Matters If It Integrates – Securely • Bring in the information that matters most: what your customers and partners are doing, and what they want • Connect it with the information you already own: all of your legacy assets become more valuable in more ways Any Social Network Chatter Back-end Systems Force.com Site.com Heroku Communities AppExchange Apps Any System ERP Finance Database.com
  25. 25. It’s About the Corollaries The bad news is that this is a truly intense technical and business undertaking, and not for the faint of Any technology distinguishable from heart. magic is insufficiently advanced. The good news is that what it makes Gehms Corollary to Clarkes Third Law possible is magical. Marc Andreessen, “The Three Kinds of Platforms You Meet on the Internet” Web 1.0: Discover Web 2.0: Collaborate Web 3.0: Innovate
  26. 26. Thank You petercoffee linkedin.com/in/petercoffeef facebook.com/peter.coffee pcoffee@salesforce.com

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