InformationWeek 500: SaaS Leader Lives Cloud Computing

Move into the cloud has brought profound changes to IT organization.

Mary Hayes Weier, Contributor

September 10, 2009

5 Min Read

Marc Benioff has been predicting the death of software since he formed in 1999. But until a few years ago, when Salesforce began moving its applications and some IT infrastructure into the cloud, the company ran its own operations using on-premises software.

Now, by living cloud computing and not just preaching it, Salesforce is showing the transformational benefits--and not just the cost cuts that come with paring down data centers and dispensing with software licensing fees. The company's move into the cloud has brought profound changes to Salesforce's internal IT organization, including how developers work with business execs and even who develops the software.

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Salesforce no longer hires database administrators and "patch experts" for its corporate IT team, says Trae Chancellor, who was the company's CIO during its migration to cloud computing. "We scale with business process experts--those are our new developers. IT is becoming more of a business function that helps drive efficiencies in building these apps and consuming services via the cloud." In his new role as VP of enterprise strategy, Chancellor is charged with helping customers move to cloud computing based on his experiences with the Salesforce IT organization.

Sure, there's a self-promotional ring to this transformation--a loud one, in fact, since Salesforce is in the business of selling cloud computing and software as a service. And its IT organization's move to cloud computing was helped considerably by its having such close proximity to the people and infrastructure producing and hosting the "dog food" it's now consuming.

At the center of its cloud strategy is, the platform where Salesforce hosts a range of its own salesforce automation, customer service, and other applications, but also where third-party software companies, independent developers, and customers have built apps using Salesforce's programming language, APIs, and custom interface framework. Businesses can subscribe to more than 800 apps built on and offered through the Salesforce online store, AppExchange. Meantime, has opened up software development and customization to non-technical developers. More on that later; first, some context.


Salesforce's IT transformation began in 2006, when the company moved its IT organization into the R&D department, so that product developers could learn what a typical IT organization needs from, and IT could quickly benefit from the department's innovations. In doing so, Salesforce IT began shedding the on-premises apps the company had been using and moving to application services developed on, including an order-to-cash app, a product life-cycle app for the R&D department, and an app that tracks how and where employees use their company-allotted volunteer time. Salesforce employees also use a company-developed content management app that runs on Among the subscription-based software services it uses from other vendors are Google Apps, which employees can access from their Salesforce CRM accounts; Concur for expense management; Workday for human resources; and Xactly for sales-performance management.

A Decade Of Growth

1999: Marc Benioff, Frank Dominguez, Parker Harris, and Dave Moellenhoff found

January 2006: Company launches AppExchange online store and the Apex development platform, later repackaged under

February 2006: Benioff promises infrastructure investments of more than $1 million per quarter to improve reliability.Salesforce launches for service monitoring.

Late 2006: Salesforce IT begins transitioning internal applications and infrastructure to

December 2008: Salesforce has 51,800 customers, 3,300 employees, and 85,000 applications built on

January 2009: Salesforce service goes down for 40 minutes. Company keeps customers updated via its service-monitoring site.

February 2009: Salesforce surpasses $1 billion in annual revenue.

July 2009: Salesforce opens a third data center, in Singapore,adding to its two in North America.

Data:, news reports

But Salesforce's move into the cloud isn't complete. Like with most non-manufacturing companies, its financials apps (Oracle) are its most critical and deeply rooted. Among the third-party cloud apps Salesforce is considering is Coda's Coda2.Go for accounts payable and receivable, which is now sold on AppExchange. During its cloud migration over the last three years, Salesforce replaced two 800-square-foot data centers it was using for its own operations with a new 600-square-foot facility, mainly to house network equipment and the Oracle Financials apps it still uses.

As a provider of cloud-based services, Salesforce also is delivering on transparency and reliability. After customers experienced several hours-long outages in 2005 and 2006, the company created, a Web site that's updated every four hours and lets anyone view current or past service disruptions emanating from any of 16 system groups, or "customer sandboxes," within the three data centers that support

Disruptions lasting a few minutes and affecting a small number of customers aren't unusual (Salesforce had two such disruptions in August, for instance). They show up as a red circle with an "X" next to the impacted system. When Salesforce experienced an outage on Jan. 6 that affected all of its customers, it used the site to report that the problem occurred at 12:40 p.m. PST when a network device failed and stopped processing data for all customers in Japan, Europe, and North America. When the system didn't fail over to redundant systems, staff had to do a manual recovery. Depending on the customer, downtime ranged from 40 minutes to 2.5 hours.

Overall, Salesforce reports that had an uptime of 99.997% in the second quarter ended July 31. (Anything above 99.99%--no more than about 50 minutes of downtime a year--is considered very good by industry standards, the gold standard being five 9s.)

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