Cloud

2020: I See It Clearly - Through the Clouds

  • author image

Editor’s Note: Marc Benioff, the chairman and CEO of Salesforce.com, is known for his visionary approach and taking the lead role in the creation of the cloud computing industry. Benioff has been lauded with honors including a Wall Street Journal Technology Innovation Award and being named the San Francisco Business Times Executive of the Year.

In this article, Benioff reveals the details of how he built a $1 billion in revenue business and spawned an industry in his recent book, “Behind the Cloud” (click here to read an excerpt).

I was a college student obsessed with computers when the movie 2010 (the sequel to the iconic “2001: A Space Odyssey”) came out. Twenty-six years later — at the start of the real 2010 — what interests me most is not the science fiction that remained fiction, but what’s really happened that’s made the film’s predicted future obsolete—and how that changes everything as we move ahead.

In the decade leading up to 2010, we chased a place a lot closer than Jupiter, but still somewhere with far reaching effects. We went to the cloud, which made the storyline of 2010 — trying to salvage information locked away on one computer — an antiquated concern. Thanks to cloud computing, sensitive information is no longer prisoner to a device, data is accessible from anywhere, and collaboration is enabled like never before. Consider this non-sci-fi example that depicts our new world.

At Google’s Atmosphere conference in London, Nikesh Arora shared a story to which we can all relate. He was late for a flight. Airport security was the usual tough slog: pockets empty; shoes off; laptop out. With moments to spare, he boarded the plane — and then realized his bag was a little too light. His laptop was back at security.

The loss of a key executive’s laptop would be a considerable cause of concern for most companies. However, unlike most of the laptops that passed through Heathrow that day, there was not much on this computer — certainly no sensitive data. As soon as Mr. Arora got a new laptop, he connected to his Google Apps, and was back in business. Nothing was lost, nothing was comprised, and a whole new way of doing business was gained via the cloud.

In the early 90s Google CEO Eric Schmidt said in an email to George Gilder:

“When the network becomes as fast as the processor, the computer hollows out and spreads across the network.”

That is both an accurate description of what we are seeing today — and a dire prediction for the future of traditional software.

We are experiencing a phenomenal change in our industry with the rapid adoption of cloud computing. The last time we saw such a shift was in the 1990s when the PC revolution morphed into client-server and challenged the mainframe for dominance of the enterprise. That transition threw the balance of power from stalwart companies such as IBM and DEC to challengers including Microsoft, Oracle, and SAP.

Now, at the start of this new decade, everything is changing again. Microsoft, Oracle, and SAP are finding themselves confronted by companies such as Google, Amazon.com and Salesforce.com. Perhaps to everyone’s surprise, these are not scrappy dot-com companies anymore. Google does everything (it’s even a verb). Amazon.com is the Internet’s biggest retailer and its web services business uses more bandwidth than its retail business. Salesforce.com topped $1 billion in revenue and you can now get all your enterprise apps on demand.

Today, every major analyst firm sees cloud computing expanding its share of the overall IT market. Gartner Group predicts that cloud computing will continue to be the top strategic opportunity in technology this year, and it has forecast that cloud revenue could grow from $56 billion in 2009 to $150 billion in 2013.

We used to be alone (and it was challenging work to gain acceptance for this new idea, you can read about one experience from those dark days here), but now there is a robust marketplace of cloud applications and cloud platforms. There are many clouds to choose from — everything from financials to the classic productivity apps, and more are coming online every day.

Customers are voting for the cloud with their dollars, euros, and yen because the software industry grew too greedy, too complex, and too out of touch with the customer. Outrageously expensive to buy, costly to maintain, and difficult to change, traditional client-server software has failed customers for too long. Even Microsoft, the company that stands to lose the most from this dramatic shift, has pledged to introduce cloud-based services. This is good news; it opens minds and markets for us and for a whole new generation of entrepreneurs who are creating new applications in the cloud.

(It’s also good for Microsoft, which has many brilliant software engineers who are no doubt tired of being tarred by punchline-worthy products like Windows Vista and Zune.)

The massive migration to the cloud is the result of its innovative models that suit today’s increasingly fast-paced environment, which will become adopted even more in the following years.

First is the technology model, which is based on multi-tenancy. In the same manner that large urban office buildings house multiple discrete, secure tenants that share core services like plumbing, electricity, and elevators, cloud services manage data and applications. Because the vendor has a single code base to manage—not dozens scattered over various platforms and operating systems — customers receive the most current version seamlessly.

For the vendor, there is a single virtually constant innovation, which is wildly different from the traditional model. (Look no further than Microsoft to see how that company — once the real leader of the industry — has failed to innovate for its customers in its core Windows franchise.)

The business model behind the cloud — subscriptions — is also a big break with the client-server past. Customers pay as they go; vendors recognize revenue as they deliver the service. This model aligns the vendor with the customer’s success.

That’s a significant change over the way we viewed the relationship when I was in the enterprise software business, when it was all about making the sale. Today, cloud computing vendors know they have to build enduring customer relationships, not the one-night stands that define traditional enterprise software sales.

The cloud is already supplanting traditional business software, and the trend will accelerate, yet no new technology completely replaces another. We have many customers who still use some form of mainframe and will probably continue to do so for some time. But the best minds and the best new ideas move forward.

(When was the last time that someone told you about a hot new shrink-wrapped business app? Probably a decade ago!)

The next new frontier — the exciting territory to be explored in the next 10 years — is collaboration. Much as we once learned from consumer sites such as Amazon.com and eBay, we’ve learned a tremendous amount from the latest consumer development, social networking. Businesses are beginning to take notice. Executives are watching these new services and asking, “Why do I know more about strangers on Facebook than my own employees? Why is it so easy to follow Ashton Kutcher on Twitter, but I can’t follow a key deal? Why can a picture tell me that I have been tagged, but a document in my company can’t tell me it has been updated?”

There is a very compelling immediacy to services like Facebook and Twitter. One look and you know what’s going in your whole world. That’s exactly what we want from our business technology. Consumer services have outpaced enterprise technology, and businesses are not going to wait for the traditional software companies to catch up. The consumerization of IT and the growing influence of social networking are going to be major trends that continue to unfold over the next few years and that will define the future of how we work.

The new opportunity this affords us — the ability to work in real time — is a big change from the past. While market shifts happen in real time, deals are won and lost in real time, and data changes in real time, the software we’ve used to run our enterprises has been in anything but real time. New real-time cloud applications, platform, and infrastructure mean that when a market zigs, customers won’t have to wait weeks or months for their software to zag. It’s instant — and that’s a timeframe we’ve come to expect.

Salesforce.com was built on several new models: technology and business are the obvious ones, but we found that we had to establish new models in accounting, marketing, and even philanthropy.

When we first started Salesforce.com, we set aside one percent of our equity, one percent of paid employee time, and one percent of our product earmarked for a separate non-profit foundation. As our company grew, so would the contributions made by our foundation. We call this the 1-1-1 Model, and it has become an integral part of our culture and company.

New hires experience how it works during their first week on the job. The orientation program includes a chance to help replant a forgotten park, paint a school, or help deliver services to San Francisco’s homeless. We give employees paid time off each year to volunteer supporting the charities of their choice, which has resulted in more 165,000 hours donated so far. Because this model is embedded in our company DNA, and because it continues to be wholeheartedly embraced by our employees, we’ve been able to maintain our commitment even in a challenging environment.

We do this because it’s the right thing to do for the communities in which we work around the world, but there’s a secondary gain in that it also benefits our company. The most obvious way is in recruiting.

A fast-growing company like ours depends on its ability to hire the most talented individuals on the planet. It’s very clear that the new generation of employees entering the workforce now expects more from work than just a paycheck. Every executive has the responsibility to deliver the best workforce in the world in order to create the most successful community of customers. The bar is being raised in this area.

When we started with our 1-1-1 model people asked me, “Why are you doing this?” Now they ask, “Can you help me do it at my company, too?” Google has adopted part of our model as have other companies including LiveOps, BlueWolf and iRobot. In the future, I believe that shareholders will pressure companies to articulate their corporate social responsibility programs. The perception of what’s good business is changing. This year, Pepsi dropped running Super Bowl ads and is instead running a $20 million social media campaign to empower people to do good. Every year it becomes more apparent that the successful businesses pursue both profits and purpose; that is going to continue.

It’s incredible to consider what’s happened in the 10 years I’ve been in this business, yet I know that we are just beginning to prove how far cloud computing can go and we are just starting to see the real ramifications. While it is generally accepted that cloud computing can help companies reduce cost and complexity, this is only a fraction of the story. The most exciting part is the potential impact on innovation for small and large businesses and organizations, entire industries, local governments, and even nations.

A new era of enterprise agility is opening up as clouds mature and cloud platforms become more widely used. Google’s AppEngine, Amazon Web Services, and our Force.com take vastly different approaches, but all of them liberate the customer from the time-consuming task of provisioning new hardware and software. There’s no longer a need to fire up a server, worry about where it was going to sit in the data center, or fret over incremental real estate or infrastructure costs.

The significance of that is staggering; in the case of Force.com, developers achieve results five times faster and at half the cost of traditional platforms. We are looking at a very real potential for mass innovation. For the first time, developers across the globe can access unlimited computing power. With a browser and a Web connection, anyone can build applications and deploy them to users anywhere. (People can use these services on whatever they want: Windows, Mac, or any mobile device. All the intellectual property from the first click to the last line of code is stored, tested, deployed, and run in the cloud.)

In the coming decade, thanks to the proliferation of cloud services, ubiquitous, low-cost bandwidth, and cheaper access devices like smartphones, tablets, and netbooks, there are fewer obstacles than ever between an entrepreneur and her idea. (Ten years ago we started Salesforce.com in the dark ages in a rented apartment with a few expensive computers no wireless connection — we had Ethernet cable strung through the redwood trees.) The businesses of tomorrow will be freed from buying infrastructure that goes out of date, depreciates in value (and then requires a hefty investment keep it humming). People will download all the services they need, and have them upgraded without doing a thing. In the next number of years, organizations (large and small) will continue to leave the confines of Microsoft and migrate to Google Apps and Gmail.

And email itself may be an endangered species. Many teenagers today think of email as their fathers’ way to communicate: they text, use Facebook, and tweet, but would not be caught dead on Outlook.

As they enter the workforce, business apps will have to change if they are to hold the attention of a new generation.

In 2020, the “office” need not be much more than an Internet connection. I can’t wait to see what entrepreneurs start in coffee shops, garages, and rented apartments. Right now, we are authoring our own odyssey towards economic recovery. If history serves as a soothsayer, this will be a time of robust business formation and innovation.

I can’t predict what the next great billion-dollar business will be, but I can almost guarantee that it won’t be run on a rickety jukebox full of software hits from the 90s.

Marc Benioff is chairman and CEO of  Salesforce.com .

Post Your Comment




Leave another comment.

In order to post a comment, you must complete the fields indicated above.

Post Your Comment Close

Thank you for your comment.

Thank you for submitting your comment, your opinion is an important part of SandHill.com

Your comment has been submitted for review and will be posted to this article as soon as it is approved.

Back to Article

Topics Related to this Article