Cool Solutions

The Salesforce Effect



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June 18, 2010 7:26 am

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There used to be a saying that what was good for GM was good for America. That’s obviously a bit dated now, but you could say what’s good for Salesforce.com is also good for your company. How, you ask? Well, Salesforce is one of the leading cloud computing providers. Their products and services have changed the way we do business, but the way they do business could also be changing the way we manage our computing resources. When I was at the MIT Sloan CIO Symposium last month, I learned that Salesforce.com runs less than 2000 servers to support over 72,000 customers (according to Trae Chancellor, VP of Enterprise Strategy at Salesforce.com). That’s really incredible when you think about it and the same economy of scale could apply to your company.

The Economy of Scale

Chancellor says this economy of scale is one of the huge advantages of cloud computing. “The economy of scale for cloud computing providers is astronomical,” he said. John Jordan, a professor at Penn State University, who teaches about IT strategy agrees. In a commentary in Forbes this month, Jordan wrote:

“Whether run by a cloud provider or a well-managed enterprise IT group, very large data centers exhibit economies of scale not found in smaller server installations.”

They Have Security Concerns Too

Just as you worry about security when moving to the cloud, so does Salesforce, maybe more so because a security breach could have a profound effect on the company’s business. Chancellor said (speaking at the same conference) that his company has experience answering privacy concerns. He says the convergence of how you deal with security applies to all customers. What he means that every customer benefits from the customer with the most stringent requirements because it gets applied to every customer, regardless of size. The same logic could apply inside your organization.

The Salesforce Trajectory

Finally, you can learn more than the way they run their business, you can also learn from the way they built their business.

  • Salesforce began in 1999 as as single product running CRM online.
  • Over the years they added new features and functionality to the core product.
  • In 2006, they launched the AppExchange, a marketplace for related products and services.
  • In 2007, they launched Force.com, a platform on which companies could build their own applications.

Companies wishing to build a private cloud could follow a similar path, starting slowly perhaps building the cloud infrastructure, then launching an application or set of services and seeing how people react. Over time, you can build on that until you have a whole cloud platform, just as Salesforce did. 

Salesforce.com took a concept, putting your customer data in the cloud, and built a business, then they evolved even further from simple Software as a Service to today, where they are a Platform as a Service (PaaS). It turns out that what’s good for Salesforce.com could be good for you too, just as once upon time, what was good for GM, was good for the country.

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1 Comment

  1. By:johni2

    Excellent article.

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