The latest buzz in technology circles is what’s called Cloud Computing. It’s a term for using applications and storing data on the Internet, rather than from your computer hard drive or your corporate data centre.
Salesforce.com has been offering software as a service for some time and is now integrating its core functions with Google’s online applications.
Today on BTalk Australia Phil Dobbie talks to Doug Farber, Salesforce.com’s APAC Director of Operations, who believes that IT managers can’t ignore this emerging trend. Unless, of course, they have their heads in the clouds!
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Today’s Transcript
Dobbie: Good day, I’m Phil Dobbie. Today on BTalk, throw away all your servers — it’s time to have all your applications and information sitting in the clouds. The latest buzz in IT circles is what’s been called “cloud computing”. That means all your applications sit on the internet rather than on your PC or in your own data centre. Microsoft is obviously keen to be part of the action here, but so is their arch-rival Google and so are other software venders including salesforce.com. Doug Farber, salesforce.com’s APAC director of operations joins me. First of all, Doug, is that a pretty good description of what cloud computing is all about?
Farber: Yeah. I’d say it seems to be the sexy topic these days.
Dobbie: It does. Salesforce.com has been an on-demand CRM application for quite some time. And I’m able to use that via a web interface wherever I’m online. So what’s the difference between that and cloud computing? You’ve been doing it for years.
Farber: Yeah, it’s the same thing actually. It’s interesting — we just took part in a region-wide road show with Gartner Group. And Gartner is, as you know, a proponent of technology and they tend to follow all the trends. Their entire presentation was all about what’s happening in the cloud. And what’s gratifying for us is that the main companies that are resonating are Google and Salesforce. Other companies that are heavily involved are companies like Amazon.com and they are doing innovative things like providing infrastructure for companies that want to run their business on Amazon’s infrastructure. So suddenly you’re seeing some really interesting players and new dynamics forming. People are realising that they need to focus on innovation and not infrastructure.
Dobbie: So that’s the key isn’t it? A big part of it is that you no longer have to worry about running your data centre because you’ve got somebody else to do it for you like sales.
Farber: Precisely. And again, it’s more than that. It makes no sense to run your own data centre. IT is not your core confidence. You don’t need to exert so many calories on a non-core function. Why not outsource the key components of that and get a lot more value and focus on the things that drive your business?
Dobbie: Now, what’s the relationship between you guys and Google? And what does Google need from you? I mean they’re a huge corporation, obviously, but seem to be going it alone pretty well.
Farber: Yeah.
Dobbie: In almost every single direction.
Farber: For sure. They are definitely the juggernaut, but what’s pretty gratifying for us is we’ve been kindred spirits for quite a long time. Interestingly, we started our company on a concept of one, one, one — where we gave away one percent of our profit, one percent of our equity, and one percent of our time to a foundation. And, that became a really innovative concept that Google ended up adopting. And now they have the world’s largest nonprofit organisation based on our model. And so we’ve been working together for eight or nine years around that kind of concept.
But for product perspective and from the cloud computing we have a couple of different dimensions to our relationship. We came out with a product a couple years ago for Google ad words — your audience would be aware that the marketing capabilities and the marketing channel fundamentally changed in the last few years. And it’s all about search engine marketing and leveraging and search engine key words and ideas — to be able to drive traffic on the website. Salesforce built out a product that integrates with Adwords that’s able to tract return on investment with Google Adwords. And that was great. And I think they saw the value around that and they since expanded the relation to provide Salesforce with Google Apps. So you probably know that Google is providing a productivity sweep to compete with Microsoft. Now there’s Google word processing,there’re Google spreadsheets, Google presentations — there’s Google talk or chat. All these applications are now natively imbedded and integrated with salesforce.com.
Dobbie: Now I can see the association between Adwords and salesforce.com. I mean I see salesforce.com as a relational database that I use as a CRM — the core of my business perhaps. And I can see the relationship between that and channels. But, when you start looking at tools that you might use in the workplace I start to lose the association.
Farber: Well, it’s all about collaboration. So, within Salesforce if you’ve used the application before, you’ll know our basic end users are people like sales folks who’s marketing people in customer service and support. These guys collaborate around documents they collaborate on spreadsheets and you’re able to embed those kinds of documents within the salesforce.com application and share them across your organisation. So, as an example, you might have a particular product presentation that you might want to store up in the cloud in aGoogle presentation; or maybe you have a proposal that you’re saving in a Google box and you’re able to embed that link within Salesforce.com and share that.
Dobbie: So you’re really talking about using Google elements almost as plug-ins for your core CRM system.
Farber: Exactly. A good example is Google calendars. You can maintain all your calendars just like a lot of people use Outlook — we don’t expect them to abandon Outlook just yet. But Google calendaring is getting pretty slick. And, you know, it’s got some good capabilities. And again it provides a much better collaborative environment in some ways than Outlook, and people are using it. With Google people have an alternative to office productivity tools, which they didn’t have before.
Dobbie: Now, don’t I still need to retain some of my IT infrastructure? There’s going to be elements of my business in the future which are bespoke applications which are particular to my industry or particular to my business.
Farber: For sure. I mean we’re not saying that you’re going to be abandoning your existing infrastructure. It’s a lot like the evolution of the industry itself. When you think about it, you know, we started off you know 30-40 years ago in the mainframe world. And that’s how applications and solutions were delivered — by IBM and Digital and the rest. Then we moved to client/server and are now in the internet world. Did the mainframe go away? No — there’re still quite a few applications that are sitting on the mainframe: a lot of billing systems, Telstra, for example, and some of the booking systems for the airlines. But is it the predominant delivery mechanism? No. It’s been sort of relegated to a niche, which is probably where you’ll see some of today’s productivity applications going in the future. You’re going to see a lot more of these cloud-based collaborative applications than you are more and more spreadsheet capabilities or more and more word processing capabilities that aren’t really being improved very much from release to release.
Dobbie: We’ve seen this whole cloud computing concept described as the birth of Web 3.0. Is it that revolutionary do you think?
Farber: Definitely. I mean this is changing the way people are approaching their businesses. Forget about technology. People are realising that they’ve spent a huge amount of cash. They’ve dedicated a large amount of resources and time to employing systems that didn’t really work. They have basically deployed technology for technology’s sake in a lot of cases, and were sold solutions by vendors that didn’t show any return. So, when we talk about the Web 3.0 and the whole new, revolutionary approach, suddenly the whole vendor-customer relationship has changed from a technology standpoint. Now we have this idea of multi tenancy. People can leverage off of a large infrastructure like Google’s, like Amazon’s or like Salesforce.com’s and take all the innovations that we’ve been able to design and deploy that democratise that across a large group of users. But they can also use a subscription-based model. So people with cell phones or with cable TV subscriptions can sign onto services, but if they’re not happy with them they can bail out and leave. So, again, you’re forced as a vendor to stay on your toes and to provide fantastic service and to focus on your customer’s success for them to adopt your system and continue to buy your products.
Dobbie: Yeah.
Farber: So that’s how it changes. And that’s why Microsoft has a big challenge going forward as Bill Gates rides off into the sunset — realising that the traditional Windows-based design version of a product can take 18 to 24 months to get it to market and then push it out through a channel to retail shelves … I think that’s done. I think Vista will be the last great, you know, product release exercise in our industry. You’re going to see things fundamentally change after that.
Dobbie: So, isn’t it going to squeeze margins in your part of the business? I mean software was a was a great margin business. But, as you say, the competition is going to be a lot more intense now, and the opportunity for a lot of smaller players is going to be hard. Even for companies like Salesforce.com which has acquired a fair degree of size, there’s going to be a lot of smaller houses that are going to be able to produce applications for a fraction of the cost.
Farber: Yeah, again: the victory goes to the swift. You’ve gotta get out there and prove that you can deliver value and get to market quickly and provide high-quality service and and return to people. We’re designed as a web-native application. We’re designed to drive our business over the internet and we’re in a much better position to capitalise than traditional software companies whose business models were predicated on pushing out large hunks of software and get upgrade and maintenance revenues off the back of that. That model’s going away. So those leopards have to change their spots but we, our spots have already been designed to take care of this brand new world. We were born a leopard.
Dobbie: So having applications sitting in the cloud lends itself very much to mobile work as we’re getting pretty excited about the launch of the iPhone 2.0 at here in Australia. How did you see that playing into this into this whole new space of cloud computing and devices like it?
Farber: Mobile computing is definitely the future. We’re seeing a massive migration of organisations empowering their sales folks, their marketing folks, their services folks with mobile devices to make them more effective. They’re selling in the fields whether they’re on airplanes or out talking to the customers. The iPhone is especially sexy. We had a relationship with Apple for a long period of time — we actually have our application deployed on iPhones as a really slick interface that we’ve built out. And, that’s really exciting and that will transform the industry itself. Whenever Apple does anything they tend to raise the water and the boats all rise with it. So that’s exciting. We’ve had a mobile system for quite some time. But what we’re finding now that people are actually adopting it much more readily and much more aggressively. So we’re looking forward to deploying it to our customers in Australia as a logical extension to what they’re already doing.
Dobbie: So, what do you think CIOs and CEOs should be doing now to get the real benefits of cloud computing? If they’ve just not embraced that approach at all what should be the first step they should take?
Farber: It’s interesting. Bruce McCabe who writes for The Australian wrote a few months ago about the fact that if you’re an IT person in the industry and if you’re not assessing cloud computing or software service you’re not doing your job. He was spot on — this is clearly a delivery mechanism that’s compelling. And you need to take a look at ways to outsource and to leverage this to save costs, to deploy applications more effectively and to make your business more effective and more successful.
Dobbie: Okay, but I guess maybe some part of it is job protection for some people.
Farber: We used to, when we first came out about eight years ago we were an anathema to the IT department — I mean they were scared of us. They saw us as a major threat to their existence because they were just worried they’d become obsolete. The reality is we’ve enabled IT folks to evolve into much more strategic positions in the organisation —taking them out of the backrooms and bringing them out into the light to photosynthesise a little bit. They’re not just sitting back there plugging in servers and scurrying around putting in CDs and laptops. They can actually focus on, you know, strategic integration, mobile applications — integration with financial systems and building systems and everything else and they get away from the plumbing.
