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From Valleys to Clouds


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Enabling Innovators for the Era of the Social Enterprise: presented to Triple Helix 9 conference at Stanford University to address the opportunities for expanding the Silicon Valley model to emerging economies

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From Valleys to Clouds

  1. 1. From Valleys to CloudsEnabling Innovators for the Era ofthe Social EnterprisePeter CoffeeVP / Head of Platform inc.
  2. 2. Safe HarborSafe harbor statement under the Private Securities Litigation Reform Act of 1995: This presentation maycontain forward-looking statements that involve risks, uncertainties, and assumptions. If any such uncertaintiesmaterialize or if any of the assumptions proves incorrect, the results of, inc. could differmaterially from the results expressed or implied by the forward-looking statements we make. All statements In Other Words:other than statements of historical fact could be deemed forward-looking, including any projections ofsubscriber growth, earnings, revenues, or other financial items and any statements regarding strategies orplans of management for future operations, statements of belief, any statements concerning new, planned, orupgraded services or technology developments and customer contracts or use of our services.The risks and uncertainties referred to above include – but are not limited to – risks associated with developingand delivering new functionality for our service, our new business model, our past operating losses, possibleEverything That You See Herefluctuations in our operating results and rate of growth, interruptions or delays in our Web hosting, breach ofour security measures, risks associated with possible mergers and acquisitions, the immature market in whichwe operate, our relatively limited operating history, our ability to expand, retain, and motivate our employees is Realand manage our growth, new releases of our service and successful customer deployment, our limited historyreselling products, and utilization and selling to larger enterprise customers. Furtherinformation on potential factors that could affect the financial results of, inc. is included in ourannual report and on our Form 10-Q for the most recent fiscal quarter: these documents and others areavailable on the SEC Filings section of the Investor Information section of our Web site.Any unreleased services or features referenced in this or other press releases or public statements are notcurrently available and may not be delivered on time or at all. Customers who purchase our services shouldmake the purchase decisions based upon features that are currently available., inc. assumesno obligation and does not intend to update these forward-looking statements.
  3. 3. Drucker Had It Right  ―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
  4. 4. Barriers to Becoming Knowledge-Based Complex legacy IT portfolios have made the simplest data integration an overwhelming task Cumbersome, brittle integrations have demoted end users to information consumers Path of least resistance has over-emphasized rear-view mirror views of historical data
  5. 5. Connections Now Draw the World‟s Map(Lines Represent Number • Distance of Facebook „Friend‟ Links)
  6. 6. People Crave Social Tools
  7. 7. 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  The user conversation will take place – Users can readily find each other – Users turn to each other for affirmation as well as for assistance – You can host the conversation
  8. 8. 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 – Vital elements: diversity, independence, decentralization, aggregation
  9. 9. The Customer Becomes the Product“ 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 platform. ” Chris Bruzzo CTO, Starbucks
  10. 10. „Social‟ is a model, not an application Collaborative process creation & maintenance Best practice sharing Andrew Leigh. Integration with New process created: iPad Tier 1 Support feeds and other Process (Goals: Run time, 5 min) social channels Steve Wood. Social process Process Apple Escalation monitoring Varadarajan Rajaram.
  11. 11. Products Become Participants Instant updates, not limited by human speed or attention Effective integration of hardware speed & human judgment The next new application opportunity public String CloudThoughts{ get; set;} Mike Leach,
  12. 12. Cloud Connection Margin Growth and Brand Differentiation ―One automaker‘s chief financial officer told Sun COO Jonathan Schwartz that his company could give a car away for free, if it could charge a customer $220 per month for a subscription.‖ ―CE device margins are razor thin, and the promise of maintaining an always-on connection to the customer after the point of sale is mighty enticing. With a connected device, there are all kinds of new opportunities to present offers and services that can generate ongoing monthly revenue. Simply put, connected devices make connected customers.‖ Richard Schwartz, President and CEO, Macheen
  13. 13. All Cloud Models Simplify Something Cloud Platform for Cloud Platform for Servers as a Service Consumer Apps Enterprise Apps UI as a Service Logic as a Service Python or Java Server Integration as a Service VM VM VM VM Non-Relational Database Full Relational Database Infrastructure as a Service Infrastructure as a Service Infrastructure as a Service Virtualization enables Basic Web frameworks Pure APIs shift focus toscale (but preserves or lower ISVs‘ barriers to problem, not mechanismcompounds complexity) market entry
  14. 14. True Clouds Enable Transforming Scalability Constituent Engagement Portal Concept to Live in Three Weeks Zero to Peak in One Hour 134,077 Registered Users 10M Page views 1.4 M Votes 1.8TB Volume 52,015 Ideas 39.3M Hits
  15. 15. True Clouds Enable Outcomes Assessment 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 Bob Bennett CEO Family Service Agency of San Francisco
  16. 16. The Metadata Model: Clouds Can Customize 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
  17. 17. Common Code Base Eases Upgrades A Better Upgrade Path for Everyone ―Windows 7 is now at 22.31%, up 1.44 points from Customers decide when (or December. However, XP whether) to adopt new features and Vista are losing share faster than Windows 7 can Customizations move forward gain (XP is down to 55.26% without regression or breakage and Vista down to 11.66%)‖ Vendor resources are not Tom‘s Guide, 3 Feb 2011 diluted by need to support legacy versions of products
  18. 18. Click to Connect User Interface Your Clicks Logic Your Code Database Selectively exposed data, logic and customizations Coherent Code Base and Managed Infrastructure
  19. 19. Cloud Platforms Can Offer Developer LeverageA path of least resistance to high-function applications
  20. 20. Cloud leverage empowers innovatorsRapid iPad Deployment for Patient Prescreening One developer with no prior training built a mobile app in just 4 days Deploying to Medical Directors, Program Directors in hospitals on iPhones and iPads Eliminates paper forms, workflow cuts response time by more than 60%―We‘re blown away by how we built a mobile Cut processing time from 18 hrs tohealthcare application on with one less than 60 minperson in just 4 days…The same app built in .NET would have takenover 3 months‖
  21. 21. Cloud Development: reinvented, not just relocated  Nucleus Research analyzed 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‘ 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 development teams during summer 2009 – Average experience: 4 applications deployed to date – Average project cost savings: 48% – Average project acceleration: 5.1x
  22. 22. Attackers no longer need to find you… …because your network comes to them
  23. 23. Threat Doesn‟t Need an Outside Enemy "There are five common factors that lead to the compromise of database information": • ignorance • poor password management • rampant account sharing • unfettered access to data • excessive portability of data, October 2009
  24. 24. Bottom-Up Design to be “Shared and Secure” Apply Data Login… Authenticate… Security Rules… View Filtered Content Password security policies Rich Sharing Rules User Profiles SSO/2-factor solutions
  25. 25. Every Act an Invocation: Granular Privilege
  26. 26. Data Stewardship is a Practice, not a Technology  Data protection regulations – Where can it be stored? – Who‘s allowed to see it?  Peel the onion of ‗compliance‘ – Anonymize/encrypt/partition specific fields – Cloud disciplines can enhance auditability • Role-based privilege assignment • Actions taken using granted privileges  Looking at the laws is not enough – USA PATRIOT Act inspires concern from global collaborators who may fear a multi-tenant ‗dragnet‘ – Court rulings encourage escrow/isolation of targeted data when a multi-tenant system is involved
  27. 27. Trust is Earned by Transparency Full Public Disclosure Live System Status Security Best Practices Historical PerformanceContinual Improvement• systems achieved 99.99% of planned availability during YE April 2011• 31 billion transactions in Amazon Apr‘11, up 57% from 2010• Maintenance shortening: Google ―5 minute upgrade‖
  28. 28. Trust is Earned by Transparency
  29. 29. Trust is Essential to Cloud Adoption  Robust infrastructure security  Rigorous operational security  Granular customer controls – Role-based privilege sets – Convenient access control & audit  ―Sum of all fears‖ scrutiny and response – Multi-tenancy reduces opportunities for error – The most demanding customer sets the bar
  30. 30. Cloud Integration: Not an All-or-Nothing Choice Mash-ups from Native Integration Developer Web and Desktop Partner Toolkits AppExchange Connectors Ecosystem
  31. 31. Cloud Integration: New Roles 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 4 Months Distributors (Oct ‘06- Feb ‘07) EMEA 1 Month (Dec ‘06) Inside Sales AFS Global 5 Months (Dec ‘06 – May ‘07) Sales SAP Back-end FLPR Field 2Q07 Integration Sales Customized for Diverse Sales Groups
  32. 32. ―If you take the idealworld, everything isdone as a service:computing, storage,software andoperations.‖―The risk for enterprisesthat dont start a SaaSmigration strategy soonis that their ITorganizationalstructures will be acompetitivedisadvantage.‖ Geir Ramleth CIO, Bechtel Corp.
  33. 33. Cloud Computing: Most Sustainable IT Model in the World Energy Efficiency Comparison: Transactions, not Cycles or ServersCarbon Footprint (g. CO2 / transaction) 95% 64% lower lower carbon carbon intensity intensity On-Premise Private Cloud *Estimated avoided carbon emissions from customers running applications on the multi-tenant cloud as opposed to running on-premise servers. Actual carbon emissions savings could vary. Based on WSP comparison model and research commissioned by, March 2011.
  34. 34. The Cloud‟s Lower Cost is Compelling. So What?If we talk about cost reduction, the most I can do for you is cut yourIT spending by 100%. Then we‟re done.If we talk about value creation, I can keep on delivering value with noupper bound. That‟s a much more interesting conversation.If you want cheap IT, go ahead. You won‟t bein business next year. Your competitors willdo projects with attractive ROI, while youspend less, and you won‟t be competitive inservice or performance.Demand curves slope downwards. Betterapps at lower cost will expand demand andgrow total IT spending. And that’s OK.
  35. 35. Don‟t Settle for “Same Function, Lower Cost”True Cloud Storage as a Service – No one can sell you a hard drive that tells you when your data‘s out of date – In the cloud, your storage can be self-cleaningTrue Cloud Customer Support as a Service – No one can build you a call center that knows everything your customers know…and everything they‘re saying to each other about you – In the cloud, your service center can interact with social netsTrue Cloud Application Platform as a Service – No one can give you a local development platform that automatically deploys your applications onto every new portable device – In the cloud, apps can acquire new features and support new devices at zero cost to the developer
  36. 36. 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
  37. 37. ‘50s ‘60s ‘70s ‘80s ‘90s ‟00sCloud Apps Grid & X Window Computing Platforms Windows IBM PC Windows XP 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 CPUs Mainframe IBM 701 S/360 S/370 4300 S/390 zSeries
  38. 38. Cloud Credibility: Option of First Resort
  39. 39. “Do it yourself” vs. “Who you gonna call?” Potential benefits from transitioning to a public cloud computing environment: • Staff Specialization • Platform Strength • Resource Availability • Backup and Recovery • Mobile Endpoints • Data Concentration
  40. 40. The Rising Floor of “Easy” Bulldozers greatly reduce the jobs for ditch-diggers…but they greatly increase the number of jobs for landscape architects and golf-course designers Old IT: – Make capacity decisions once a year, then keep the pedal to the metal and wish that you had more – Make security decisions based on perimeters…and hope for the best New IT: – Make capacity decisions every hour—or less—and continually evaluate business value of every marginal cycle – Make security decisions based on relationships…and monitor use of the privileges you grant
  41. 41. The Future Has Already Happened When a bomb explodes, it takes some time before you see anything happen… …but the energy has been released Three fundamental energies are in play: – Connectivity • Capacity in place • Protocols and power management – Mobility • Devices drive cloud demands – Social interaction model • Already more popular than email
  42. 42. Peter CoffeeVP / Head of Platform Research Q&A?