Global CIO: CEO Benioff On IT Scams And Cloud Power

In Part 2 of our analysis, Benioff describes the power of the cloud and proves it with his company's incredibly lean IT infrastructure.
"People are riding the curve at their own pace, and that's just the way it is," Benioff said during an interview in his San Francisco office. "That's reality, and it's not necessarily a shortcoming that everybody's not seeing it the same way or jumping on board aggressively. Everybody gets there eventually."

"The curve" to which Benioff refers is an allusion to Geoffrey Moore's work regarding the impact on businesses of technology's relentless increase in power and decrease in price, and Benioff insists that the ultimate impact will lead companies to not only believe in cloud computing but to invest in it as well.

Addressing a large audience of CIOs at the Google Atmosphere event in London three months ago, Benioff asked, "Are we riding this technology continuum, or are we not riding it? Because if you're not, your competitors are. And they're riding it because they have to do things at a lower cost, they have to do things that are easier to use, and they have to be more competitive than you are. . . . So we have to grab that technology brass ring and run with it, and today that brass ring is cloud computing."

One example: is preparing to run with its new enterprise-strength social-media application called Chatter, which goes into beta next month before being offered as a more-powerful and –flexible alternative to Microsoft Sharepoint.

"We want to take Chatter up very aggressively against Sharepoint and show what cloud computing can do when you combine the best features of social media with enterprise applications," Benioff said. "We've got a whole different approach to collaboration than Microsoft does.

"Think about Facebook: the amazing thing about it is it lets you know so much about so many people that you really don't care about," he said with a chuckle. "But what if you could apply that type of leverage and engagement and widespread knowledge to the business world or to enterprise applications?

"That's really the power of this model we're creating with Chatter," which will allow to "change Customer Relationship Management into Collaboration Relationship Management. I think that when we give our customers that sort of power and capability, they'll be ready to get rid of complex and limited and closed systems like Sharepoint and, in particular, Lotus Notes."

Since Chatter is completely web-native and optimized for the cloud, the next version of the product will deliver a capability that I believe will be a major if not the primary differentiator for enteprise apps in the next two or three years: the ability to weave customers intimately but securely into your company's operations.

"And with our next version of Chatter, we're going to have the capability to bring customers on board as part of the workstreams, and we think that's going to be another great opportunity for CIOs to go forward and create change and innovation within their organizations," Benioff said.

Another big opportunity for Benioff and is professional services, specifically in helping large customers integrate and optimize their existing on-premise applications with's applications and tools. In the last quarter, handled 15 billion database transactions for its customers (you can check it out the stats here), and Benioff said that half of those involved data exchanges between customers' legacy apps and apps. From the company's 2009 annual report, page 5:

As the customer realizes the benefits of our service, we try to sell more subscriptions by targeting additional functional areas and business units within the customer organization and pursuing enterprise-wide deployments. We also want to provide professional service offerings that are complementary to our service and enable us to sell subscriptions to larger customers who require assistance with complex integrations and customizations.

One such customer is Dell, which has 80,000 users. The two companies have worked together to create a customized vendor-relationship application for Dell, and is now developing a new global supply-chain application for the company, Benioff said at the Google Atmosphere event last year.

In explaining last week "why you're seeing us have some success," Benioff said, "Lots of CEOs as well as CIOs have undergone enormous change in the past year—they need to be able to deliver high availability, high reliability, massive scale, broad transformation, etc." And while it takes time for the message to be embraced, more of those CEOs and CIOs are beginning to believe that the cloud approach offered by Salesforce—infrastructure, apps, development platform, AppExchange, and collaboration capabilities—can "give these CEOs and their companies the real ability to change."

On top of that strategy, and Marc Benioff have some impressive numbers to toss around: 70,000 customers, $1.3 billion in annual revenue, continued growth through the global recession, multiple customers with more than 50,000 users, and so on. But to me, the real stunner is this one, because it shows that that after all the talk, the simplicity promised by the cloud can be delivered:

The entire global cloud-computing business—all 70,000 customers, all $1.3 billion in revenue, all 15 billion quarterly database transactions—runs on 1,500 PCs.

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GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

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