Cloud Computing Today
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1 CEO Needs CIO Mandates Operational Productive Governable Reliable Affordable Secure Platform as a Service Cloud Computing Today Opportunity Challenge Necessity Peter Coffee Director, Platform Research salesforce.com To Get Your Attention: an Unresolved Paradox CEO Needs Operational Governable Affordable CIO Mandates Productive Reliable Secure Has anyone here not heard of Moore s Law? Does anyone here not think that it promises continually cheaper computing? Platform as a Service If computing is always getting cheaper, why do IT budgets keep going up? 1
2 Do More with Less is not a new demand on the CIO Business demands have moved in new directions Governance Security Competitive Environment but enterprise IT offerings have followed familiar trajectories 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.) 2
3 100% 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. 3
4 The Cloud as a Multi-Product Marketplace Servers as a Service Virtual Servers Virtual Servers Virtual Servers Platform as a Service (PaaS) for the Inquiring Developer Python/Java Application Server PaaS as Enterprise Application Framework Programmable Cloud Logic Real-Time Workflow & Approvals Programmable User Interface Integrated Content 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 Rapid Scalability β Offering Innovative Technology Supports Large-Scale SaaS 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 4
5 Faster Results; Lower Risks; Predictable Costs On-Premise Operations: 53% of software projects cost 189% of original estimate 1 Cloud Computing: Average 49% ROI within 10 Months 2 Value Fixed Costs and Excess Operating Expenses Value Variable Cost Aligned with Business Value Buying Function, not Infrastructure Time Up-front Capital Expense & Delay Upgrade Expense & Opportunity Costs Minimal Initial Cost 1 Standish Group, Chaos Report Third-Party CustomerSat Research on 4,165 Salesforce.com customers, February 2008 A Cloud for Every Use Case Grids are clouds of computation Grids address massively parallel problems Electrical grid analogy has limits: platforms have different strengths Virtual servers are clouds of illusion: a familiar IT model Virtualized servers can be quickly provisioned but still represent redundant complexity and risk What you had to do before, plus more Enterprise clouds are API portfolios Immediate focus on function; immediate delivery of value A multi-vendor marketplace of frameworks 5
6 Single-Tenant vs. Multi-Tenant Architecture Shared infrastructure App 1 App Server Database OS Server Storage Network App 2 App Server Database OS Server Storage Network App 3 App Server Database OS Server Storage Network Other apps Single tenancy gives each customer a dedicated software stack and each layer in each stack still requires configuration, monitoring, upgrades, security updates, patches, tuning and disaster recovery. On a multi-tenant platform, all applications run in a single logical environment: faster, more secure, more available, automatically upgraded and maintained. Any improvement appears to all customers at once. Why Multi-Tenancy Matters to Developers User Interface Logic Database Your Clicks Your Code Build strategic applications Customize any aspect Upgrade when convenient Retain IP ownership Metadata representations: Rigorously partitioned data, logic and customizations for multiple customers Coherent Code Base and Managed Infrastructure 6
7 Cloud Development: Value Propositions Old code in new clouds LAMP stack on Amazon s virtual servers Python code in Google s sandbox Leveraged code in enterprise framework Force.com code from salesforce.com Java-like, but coupled with database for integrity Governed by environment for safety and performance Distributed code Combine and connect multiple cloud models for competitive advantage Cloud Development: New Market Models Package the product for the cloud e.g., Alfresco Cloud Content Application Developer Program open source Amazon EC2-ready stack developer kit for customers and partners develop, deploy and monetize cloud content apps Provide cloud service abstractions e.g., Windows Azure SDK for PHP Classes for Blobs, Tables and Queues PHP sessions Azure Table Storage 7
8 Go Ahead, Take the Red Pill Straightforward abstractions Familiar tool extensions e.g., Groovlets on EC2 Download plug-ins for Eclipse Configure Deploy and test Ref: Andrew Glover on IBM DeveloperWorks, Sept But When Code is Metadata 8
9 When Code is Metadata: Platform Leverage When Code is Metadata: Run-Time Governance 9
10 When Code is Metadata: Proactive Protection Active Rendering: Declarative Directness 10
11 Active Rendering: Through the UI Glass Active Rendering: Extensible Composition Standard form IFRAME area Data, context and content from server IFRAME contents HTML Level Control 11
12 Custom Code Flexibility + Cloud Efficiency Reconceiving the Developer Experience Metadata API Force.com IDE Force.com Sandbox Force.com Code Share Easy Access to Code and Schema Everything You Need to Build Apps Instantly Set Up Dev Environments Easy to Collaborate on Projects 12
13 Reconceiving the Developer Experience Metadata API Force.com IDE Force.com Sandbox Force.com Code Share Easy Access to Code and Schema Everything You Need to Build Apps Instantly Set Up Dev Environments Easy to Collaborate on Projects Reconceiving the Developer Experience Force.com Metadata API IDE Force.com IDE Force.com Sandbox Force.com Code Share Everything Easy You Access Need to Code to and Build Schema Apps Everything You Need to Build Apps Instantly Set Up Dev Environments Easy to Collaborate on Projects 13
14 APIs Yield Platform Leverage A path of least resistance to high-function applications Unlimited Real-Time Customization Granular Security & Sharing 80+ Million Lines of Cloud Logic 245,000 Workflow Rules and Approvals 312,000 UI Customizations Real-Time Mobile Deployment Real-Time Websites Integrated Content Library Real-Time Analytics 800+ Integrated Applications ISO 27001, SAS 70 Type II Certified Security Proven Reliability Proven Scalability (15 billion transactions/q2) Real-Time Query Optimizer Real-Time Upgrades Proven Real-Time integration Real-Time Sandbox Environments Salesforce to Salesforce Sharing 3 Global Data Centers & Disaster Recovery Real-Time Transparent System Status Multi-Tenant Kernel 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 14
15 Cloud Integration: No Need for Rip/Replace Mash-ups from Web and AppExchange Native ERP Connectors Native Desktop Connectors Integration Partner Ecosystem Developer Toolkits 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 SAP Back-end Integration Deployments Sales Sales Distributors Distributors 4 Months (Oct 06- Feb 07) EMEA EMEA Inside Inside Sales Sales 1 Month (Dec 06) AFS AFS Global Global Sales Sales 5 Months (Dec 06 May 07) FLPR FLPR Field Field Sales Sales 2Q07 Customized for Diverse Sales Groups 15
16 Cloud Security: No Need for Excuses Facility Security 24x365 on site security Biometric readers, man traps Anonymous exterior Silent alarm CCTV Motion detection N+1 infrastructure Network Security Fault tolerant external firewall Intrusion detection systems Best practices secure systems mgmt 3 rd party vulnerability assessments Platform Security SSL data encryption Optional strict password policies SAS 70 Type II & SysTrust Certification Security certifications from Fortune 50 financial services customers May 2008: ISO Certification There are some strong technical security arguments in favor of Cloud Computing (Craig Balding, Fortune 500 security practitioner) Cloud Security: All The Way Down Login Authenticate Apply Data Security Rules View Filtered Content Password security policies Rich Sharing Rules User Profiles SSO/2-factor solutions 16
17 Trust Through Openness Full Public Disclosure Live System Status Security Best Practices Historical Performance May-July % of planned availability Continually narrower maintenance windows Amazon Google Trust Through Openness 17
18 Cloud Applications Expand to New Domains 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 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. 18
19 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. Real-World Results: Professional Services Animators at Law, a leading provider of litigation graphics, litigation consulting & litigation technology for many of the largest law firms, pioneered a unique system for identifying the litigation activities of law firms and corporations and wanted to make the data available to third parties through a subscriptionbased service. In just a few months with no added development staff the team created LawProspector, the first comprehensive sales lead and litigation market intelligence tool. The application, built on the Force.com platform, integrates with Salesforce CRM Enterprise Edition and Salesforce CRM Partner Networks. LawProspector is integrated with applications from the Force.com AppExchange. LinkedIn for Salesforce, enables users to access LinkedIn information directly from Salesforce CRM contact and account records, and Account News Feed powered by Google News displays relevant news items from Google alongside Salesforce CRM records. 19
20 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. Why The Cloud is the New Normal Since the IBM PC was introduced Processor speed has risen 30 per cent per year Memory capacity grown by 50 per cent per year Mass storage mushroomed 80 per cent per year Desktop systems are burdened with too much state File system technology has not addressed new needs Governance of critical data falls short of rising demands Trends redefine best practice Bandwidth has grown 40 per cent per year Processor performance trends favor shared machines Data centralization improves coherence and governance 20
21 Why The Cloud is the New Normal Since the IBM PC was introduced Processor speed has risen 30 per cent per year Memory capacity grown by 50 per cent per year Mass storage mushroomed 80 per cent per year Desktop systems are burdened with too much state File system technology has not addressed We new expect needsto see, by 2012, [20 to 25 per cent] of the server market will be running Governance of critical data falls short of some rising version demands of cloud computing Right now, as much as 14 percent of server Trends redefine best practice purchases are going into some sort of cloud deployment. Bandwidth has grown 40 per cent per year Jason Waxman Processor performance trends favor shared machines General Manager, High-Density Computing Intel Server Platforms Group Data centralization improves coherence and governance 17 Feb To Everything There is a Season 50s 60s 70s 80s 90s 00s PC MITS Altair IBM PC Macintosh Windows 3.x/9x/NT & Linux 1.0 Windows XP & Mac OS X Mini DEC PDP-8 DEC VAX 11/780 Sun Workstations & Servers Sun/ILM Render Farms Sun/AMD x86 Servers Niagara CPUs Mainframe IBM 701 S/360 S/ S/390 zseries 21
22 50s 60s 70s 80s 90s 00s Cloud Apps & Platforms PC MITS Altair X Window IBM PC Macintosh Emergence Grid Computing Windows 3.x/9x/NT & Linux 1.0 Ascendance Windows XP & Mac OS X Mini Appearance DEC PDP-8 DEC VAX 11/780 Sun Workstations & Servers Sun/ILM Render Farms Refinement Sun/AMD x86 Servers Niagara CPUs Mainframe IBM 701 S/360 S/ S/390 zseries Australia to Israel: the Transforming Cloud Electronic components made in China Have their specifications imported into software that s written in Sydney That s used to lay out circuit boards in Europe and the Middle East With ID numbers burned into each board that enable lifetime, Internet-accessible audit of testing and performance of components By a company that s just switched from MS Office to Google Mail and Docs 22
23 India Emergent: the Innovative Cloud My chauffeur was learning Java Small and medium businesses are already 40% of IT spending and growing at 40%/year Year-on-year growth rate of SaaS/PaaS adoption: ~80%/year through 2011 Arguably India s biggest export: process skills Tata offices in Mexico, Brazil, Chile, Uruguay Cognizant in Shanghai and Phoenix Wipro in Canada, China, Portugal, Romania, Saudi Arabia and Atlanta 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 23
24 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? 24
25 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? 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 25
26 PaaS Puts 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 PaaS 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) Safe Harbor Statement Safe harbor statement under the Private Securities Litigation Reform Act of 1995: This presentation may contain forwardlooking 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 Salesforce.com, inc. assumes no obligation and does not intend to update these forwardlooking statements, except as required by law. 26
27 Raise Your Expectations! Marc Andreessen: A platform is a system that can be programmed and therefore customized by outside developers -- users -- and in that way, adapted to countless needs and niches that the platform s original developers could not have possibly contemplated, much less had time to accommodate. Levels 1 and 2: Access API and Plug-In API The entire burden of building and running the application itself is left entirely to the developer. If an app succeeds on a Level 2 platform, the technical and financial burdens on the developer can rapidly become overwhelming. Level 3: Runtime Environment The platform handles everything Level 3 platforms are much harder to build but what it makes possible is magical Raise Your Expectations! Marc Andreessen: A platform is a system that can be programmed and therefore customized by outside developers -- users -- and in that way, adapted to countless needs and niches that the platform s original developers could not have possibly contemplated, much less had time to accommodate. Levels 1 and 2: Access API and Plug-In API The entire burden of building and running the application itself is left entirely to the developer. If an app succeeds on a Level 2 platform, the technical and financial burdens on the developer can rapidly become overwhelming. Level 3: Runtime Environment Any technology distinguishable from magic is insufficiently advanced The platform handles everything Level 3 platforms are much harder to build but what it makes possible is magical (Gehm's Corollary to Clarke's Third Law) 27
28 CEO Needs Operational Governable Affordable CIO Mandates Productive Reliable Secure Thank you Platform as a Service More information at 28
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