Keynote presentation to Dallas SaaS University conference: "Prospects for SaaS in the Obama Economy"

1. SaaS in the
tes
Ma n d a
CIO
ctive
Obama
CEO N eed s Produ
tional Reliab
le Economy
Opera
nable Secur
e
Gover Opportunity
dable
Affor Challenge
Necessity
e
Servic
m as a Peter Coffee
Platfor Director, Platform Research
salesforce.com
Not just another year of “Do more with less”…
Business imperatives kept moving in new directions…
• Governance requirements
• Threat environment
• Competitive challenges
…while on-premise IT offerings followed familiar trajectories
2001 2009
Most of the time, CIOs’ actual mandate has been to
“do a lot more with just a little more…”
…but not last year
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2. 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.)
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3. What are the Obamanomics of SaaS?
Forecast
Hiring won’t turn up soon Month
(2010)
%
seasonally
50%
+/-
80%
+/-
(per Financial Forecast Ctr 12/20/09) adjusted
Feb 10.2 0.2 0.5
Mar 10.2 0.3 0.6
Apr 10.2 0.3 0.6
May 10.2 0.3 0.7
Jun 10.2 0.3 0.7
Month Forecast 50% 80%
U.S. GDP will stay flat (2010)
∆%
year-on-year
+/- +/-
(per Financial Forecast Ctr 11/30/09)
Feb -0.5 0.8 1.9
Mar -0.5 0.9 2.0
Apr +0.2 1.0 2.1
May +0.2 1.0 2.2
Pressure will persist to seek
Jun +0.2 1.0 2.3
radical economies
What are the Obamanomics of SaaS?
Public-sector CIOs have the green light to pursue SaaS solutions
– Vivek Kundra, administration CIO: Federal gov’t “has been building
data center after data center…We cannot continue on this trajectory.”
– In a joint effort between the IRS and the Department of Education, it
has become possible with one click of a mouse button for IRS data to
populate the [federal student aid application] form, Kundra said,
eliminating more than 70 questions and 20 screens
(Daniel Terdiman, cnet.com, 12/15/2009)
Domino effect is under way
– In October, the Los Angeles City Council unanimously approved the
plan to switch from Novell GroupWise to Google Apps... More than
8,000 of the city's 30,000 employees have signed up [for pilot effort]…
– Los Angeles Chief Technology Officer Randi Levin…has received 27 or
28 inquiries from California governments
(Matt Williams, govtech.com, 11/17/2009)
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4. What are the Obamanomics of SaaS?
Conspicuous, quantified success stories and policy statements:
– In a traditional IT procurement environment, it would have taken us
about six months to upgrade USA.gov to better meet the needs of our
citizens. However, in the cloud environment we are now able to do
upgrades in one day – giving us greater agility and saving taxpayers
approximately $1.7 million annually in computing infrastructure costs
associated with USA.gov.
David McClure
GSA Associate Administrator
Office of Citizen Services and Communications
– We will...work with industry to ensure cloud-based solutions are secure
and compliant thereby reducing duplication of security processes
throughout government.
Casey Coleman
GSA CIO
gsa.gov, 9/15/2009
U.S. Census Bureau
Increasing Response Rates for the Decennial Census
Deployed a custom app in three months
Record, track and manage contacts and
activities between census staff and external
partners
App will scale up as decennial census
approaches
Manages 2,200 users temporary workers
geographically dispersed at headquarters and
12 regional offices
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5. What are the Obamanomics of SaaS?
Make your message part of the “Obamacare” story:
– The February 2009 health industry cost saving initiatives proposed by President
Obama directs the industry to rapidly transition…to an instantaneous electronic
mechanism… The Company's MD@Hand technologies allow physicians to gain
access and securely store electronic medical records…
Instacare Corp. press release, 11/23/2009
Gain leverage from established cloud platforms:
– Practice Fusion is launching its patient health record on Force.com,
salesforce.com's enterprise cloud computing platform….
Practice Fusion press release, 8/5/2009
The approach…that has been charted by Practice Fusion, and is significantly
enhanced by Salesforce.com’s expertise and resources, is a tremendously
positive step... Elimination of barriers to EHR adoption, while at the same time
ensuring security and privacy of protected health information, are all positive
results of using the “cloud” approach.
Robert Rowley, MD
thehealthcareblog.com, 8/12/2009
Family Service Agency of San Francisco
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
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6. Look for the upside; be on the right side
A compliance economy needs compliance tools
An economy of higher energy costs needs energy
management tools
An economy with inflationary expectations needs
retirement tools
An economy shedding “permanent” jobs needs free-
lancing tools
All of these are rapidly evolving opportunities that
benefit from rapid deployment of new SaaS solutions
The IT budget wasn’t the only shrinkage
Dear CIO: Thinking about retirement? (Average CIO tenure = 4.4 years)
Let’s play a little game called “Rebuilding your 401K”…
…and then let’s play it again
Not only no capital or headcount budget; also no interest in disruptive risk
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7. Selling to CIOs:
they know it’s not just “keeping the lights on”
65% of CIOs report that generating business innovation is how their
success is measured (N.B. – not technology magic tricks)…
…up from 56% the year before (techExec Society, State of the CIO)
When I used the word “innovative” as one of three key “CEO
needs,” our CIO roundtable attendees corrected me
es
andat
The new word on that graphic is “operational” eeds
CIO M
tive
CEO N Produc
le
ional Reliab
Operat
e
nable Secur
Gover
“Strong CIOs don’t innovate. They figure out Affor
dable
ways to make money for the business. They
rvice
cut waste and plow those savings into projects m as a Se
Platfor
that create value.” (techExec)
What do CIOs not want?
Questions about security: perception of security risk is #1 concern
about cloud computing in nearly every survey
– OK, so ~80% of people believe that the cloud is inherently insecure
– 80% of Americans also believe the government is hiding its knowledge
of alien visitors to Earth
– Fears are refuted by facts
• ISO 27001
• SAS 70 Type II
• SysTrust
– Fact: Silicon Valley VCs
say that IPOs are made
easier when startups use
cloud services to address
their SarbOx requirements
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8. 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)
Cloud security: all the way down
Apply Data
Login… Authenticate… Security Rules… View Filtered Content
Password security policies
Rich Sharing Rules
User Profiles
SSO/2-factor solutions
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9. What do CIOs want?
Credible customer stories
– In their industry
• Relevant to their needs
• Threatening them with competitor advantage
– In their region
• Addressing issues of governance, compliance, and skills
Negligible downside, guaranteed upside
– For example: salesforce.com initiatives include…
• Developer Account is free
– Tools and references are free
– On-line training is free
• Force.com Free Edition triggers viral growth
– Show people that status quo is the high-risk strategy
– Get people to stop saying “can’t” and start saying “how?”
• Certified Developers and Admins are waiting for your call
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.
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10. 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
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.
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11. What do CIOs want?
Bottom line: assurance that this is ready for prime time
– Real companies are building real solutions
– Stop fearing the myth-perception of the proprietary cloud
• There is one cloud: a global, public network using standard protocols
• In part of that cloud, buy computing in bulk from Amazon
• In part of that cloud, buy collaboration tools from Google
• In part of that cloud,
– Find the world’s most effective
and most user-approved
CRM portfolio…
…and build better applications
in less time with Force.com
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
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12. Trust through openness
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”
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13. This isn’t 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?
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14. 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
If “the cloud can’t do that” today, what about next year?
Can today’s mature traditional models say the same?
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15. 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
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16. s
andate
CIO M
ctive
eed s Produ
CEO N
le
Thank you
tional Reliab
Opera
e
nable Secur pcoffee@salesforce.com
Gover
dable
Affor
e
Servic
m as a
Platfor
More information at
www.salesforce.com/cloudcomputing
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