When analysts deliver presentations on cloud computing they inevitably reference US enterprise software service company Salesforce.com in their PowerPoint slides.
The reason isn’t hard to decipher. Because of its success, Salesforce.com has become a poster child for cloud computing, a new model in IT where data, shared services and software are delivered on demand over the Web.
Large companies, including financial services giants Merrill Lynch and Bank of America, use Salesforce.com’s online customer relationship management software, preferring it to more complex offline alternatives.
It has taken time for Salesforce.com to prove its credentials. Companies have to trust it with data that is often sensitive and confidential. And they need to be sure that its servers stay up and that its systems are secure.
It’s not the sort of trusted environment in which you’d expect social networking services like Facebook and Twitter to feature. Yet, Salesforce.com now wants to integrate social networking-type tools into its enterprise products. In doing so, it hopes to change the way employees communicate — and take cloud computing to the next level.
Moran says Facebook and Twitter are as successful as they are because they provide convenient online platforms that allow people to collaborate and for applications to share data. “We asked why enterprise apps couldn’t use the same metaphor,” he says. “We wanted to know if we could do what Facebook does, but in a secure enterprise environment, allowing companies to collaborate internally.”
As a result of its research, Salesforce.com is testing a new product called Chatter, which it plans to integrate into its core customer relationship management offerings later this year — at no charge to its 74 000 customers. About 200 companies are testing the software in a trial programme.
Since implementing Chatter internally at Salesforce.com, Moran says e-mail traffic has nosedived. “Collaborating in real time, instead of on e-mail, is proving to be a much more productive way of doing business.”
Of course, Salesforce.com isn’t the first company to develop tools to assist with corporate collaboration. Microsoft’s SharePoint does exactly this; so does IBM’s Lotus Notes.
But Moran says SharePoint and Notes are “fundamentally file storage systems offering one-dimensional collaboration. I can’t use SharePoint to build groups, feeds and communities around more than a file. With Chatter I can do it around people, applications, content and processes.”
Mark Walker, director of the vertical industry practice in Africa & Middle East for analyst firm IDC, says cloud-based social networking-type services like Chatter make “absolute sense”, especially for larger companies that are geographically dispersed.
Security is always a concern, but “if a company is already entrusting its sales leads list and some of its financial information to Salesforce.com already, why should it [have concerns about this]?” Walker says.
In any large company, what’s needed is a communications structure to ensure the right people receive information and communication that is pertinent to them. “If not, you’ll have employees bugging the CEO over tactical issues,” he says.
There also need to be ground rules over confidentiality of information and the protection of copyright, he adds.
However, security itself doesn’t appear to be a significant issue given that many companies are using Salesforce.com without incident.
SA lags behind
It may take longer for SA business to adopt these newfangled tools, however. Local companies are lagging behind when it comes to cloud-based computing, says Moran.
This may be a function of the country’s inadequate and expensive telecommunications infrastructure. “I do feel that the level of understanding about cloud computing is not as great in SA [as elsewhere], but it will come, and it will be helped as Internet connectivity in SA comes along in leaps and bounds.”
Salesforce.com does not have an office in SA, preferring instead to work through partners. Moran says the company has no immediate plans to set up a direct presence here.
Internationally, companies have mostly overcome their initial fears of using cloud-based services. “We encountered a lot of resistance when we started this business 10 years ago,” Moran says. “Most of those objections [around scalability, reliability, security and functionality]have been addressed.”
The scale of running a cloud computing or software-as-a-service business is breathtaking. Salesforce.com has 2m users logging into the company’s data centres each day. And it operates three facilities, two in the US and one in Singapore (which opened in December), with plans to build one in Europe soon. A third facility in the US is also on the cards to provide additional scalability on North America.
In the quarter ended January 2010, Salesforce.com — which is listed on the New York Stock Exchange with a market capitalisation of US$10bn — processed 19bn transactions on its servers.
Martin Moran, senior vice-president for global alliances and channels at Salesforce.com, likens the move to cloud computing to the shift that happened when the world migrated off mainframes to smaller servers and PCs.
Moran predicts that within a decade, companies will no longer install large, in-house enterprise software applications from companies like SAP and Oracle.
He says traditional enterprise software companies like these will face tough times as technology buyers turn to lower-cost and easier-to-use online alternatives rather than install their own, complex software systems.
“Chief information officers I speak to say they have no budget at all to do anything even remotely innovative,” Moran says. “They have a budget to keep the lights on, that’s all. Because of that, they have to think fundamentally differently about what they do for their companies. They realise they may have to look at different technology models to serve their companies better.”
This, Moran believes, will play into the hands of companies that have emerged to offer cloud-based services. — Duncan McLeod, TechCentral