Peter Coffee VP & Head of Platform Research, salesforce.com inc.

Social Models and Innovation Ecosystems

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Safe Harbor

In Other Words:

Everything That

You See Here

is Real

• “The typical large organization, twenty years hence, will

be composed largely of specialists who direct and

discipline their own performance through organized

feedback from colleagues and customers.”

• “It will be a knowledge-based organization.”

Peter F. Drucker, in The New Realities

…in 1989

What happened to the future?

Finally Catching Up With Peter Drucker

• Complex legacy IT portfolios made the simplest data

integrations an overwhelming task

• Cumbersome, brittle integrations demoted end users to

information consumers

• Path of least resistance

then over-emphasized

rear-view mirror views of

historical data – or deep

inspection of recent past

• This is what “IT vendors” are still selling

Old IT Did Not Connect Our Knowledge

Why ‘Cloud’ Changes Everything Forever

Server shipment growth rates:

Server market overall, 2011-2015:

7.1% CAGR (TechNavio)

“One of the key factors contributing to this

market growth is the growing adoption of

cloud computing.”

Servers for cloud hubs, 2011-15:

21% CAGR (IDC)

• Since the IBM PC was introduced (Aug.1981 to now)

• Processor speed has risen ~25 per cent per year

• Memory capacity has grown ~40 per cent per year

• Mass storage surging ~50 per cent per year

• Desktop systems are burdened with too much state

• File system technology has not addressed new needs

• Governance falls short of rising demands

• Trends redefine “best practice”

• Bandwidth expansion: ~45 %/year

• Processor road maps favor shared machines

• Data centralization superior governance*

* Knowingly provocative statement with backup to come

Social Bandwidth: More Than Just ‘Sum of the People’ (Arcs Represent Number • Distance of Facebook ‘Friend’ Links)

Pop quiz: where is Beijing?

• Silo Behavior:

– Prospects get content from Marketing

– Buyers negotiate terms with Sales

– Customers raise issues with Support

• Social Behavior:

– Prospects seek insights from customers

– Buyers collaborate on competitor research

– Customers tell the world when they’re not happy

• Organizations need new processes & power models

– Authority to address issues pushed to edge of organization

– Collaborative capability available on demand

When the Served Community is Social

Medicine: sensor-equipped

patients & homes reduce

office & hospital visits

Education: students

in external settings

learn by practice

‘Digital’ Better, Faster Cheaper Box

‘Social’ &‘Connected’ Blow Up the Box

Cloud Connection

New Models of Membership and Value

“One automaker’s chief

financial officer told Sun

COO Jonathan Schwartz

that his company could give

a car away for free, if it

could charge a customer

$220 per month for a

subscription.”

www.zdnet.com/news/sun-puts-java-into-

gear-for-cars/136886

“CE device margins are razor thin, and the

promise of maintaining an always-on connection

to the customer after the point of sale is mighty

enticing. With a connected device, there are all

kinds of new opportunities to present offers and

services that can generate ongoing monthly

revenue. Simply put, connected devices make

connected customers.”

Richard Schwartz, President and CEO

“More than 4,000

photographers access

Canon’s portal site, which

was developed using the

Service Cloud Portal. By

providing information in real-

time, we have strengthened

relationships with our

members and have

dramatically improved

customer satisfaction.”

Canon Marketing Japan

• Collaborative

process creation &

maintenance

• Best practice

sharing

• Integration with

feeds and other

social channels

• Social

process

management

Steve Wood. Great – I can help with the case escalation by linking in the Apple Escalation Process.

New process created: iPad Tier 1 Support Process (Goals: Run time, 5 min)

Andrew Leigh. I need to create a new customer service process for the iPad, can you guys help?

Varadarajan Rajaram. Yes, I know this product well – there are a bunch of solutions I can build into this process.

Experience Delivery: a Model, not an App

Environments are Ripe for Re-Invention

Soft displays adaptive to

urban versus highway,

work versus leisure, etc.

Solo Driver and Driver/Co-pilot modes

with radically different content delivery

opportunities and expectations

Integration of

portable devices

Whose Knowledge Is It, Anyway?

Innovation “goes rogue” when:

– Products are open-source and/or

highly configurable/customizable

– Some users have incentive to innovate

– Some innovators have incentive to share

– Diffusion of innovations is inexpensive

What is the new “intellectual property”?

– Brand equity

– Community loyalty

– Ecosystem diversity and strength

Sift more dirt, find more gold

– With modern machines/methods, gold mines are

viable at 1 g. Au / ton of ore

– Costs of collecting/sifting the crowdstream

continue to fall

The oddly opposite models:

– Delphi Method: people with wildly varying knowledge, exposed to each other’s

opinions, produce consensus surpassing the sum of the parts

– Open-Source Method: Individual contributions, appropriately incented (if only with

ego rewards), yield cost-effective combined results

Can the crowd survive its success?

– “Even mild social influence can undermine the wisdom of crowd effect.” Proceedings of the National Academy of Sciences, 16 May 2011

wired.com/wiredscience/2011/05/wisdom-of-crowds-decline

– Vital elements: diversity, independence,

decentralization, aggregation

What Role for “The Crowd”?

The IntellectualProperty Impact of InternetProtocol Transformation

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What is your value-add?

What is the barrier to competitor entry?

What is the distinctive competence?

What is the defensible intellectual property?

What is the basis of brand equity?

What is the motivation for customer loyalty?

What is the actual product being bought?*

* Hint: it’s rarely what you think you sell

Average time to build a custom app with software is 8 months.

By late 2009, Qualcomm/Android cycle time had dropped to 4.5 months.

Your

App You

Install &

Configure

Stack

Write

Code

Deploy &

Load

Test

Monitor

& Tune

Patch and

Regression

Test

The Value of Velocity

Legacy Stack-Based Process – Wherever It Is

IDC White Paper sponsored by Salesforce.com: “Force.com Cloud Platform Drives Huge Time to Market and Cost Savings”, Doc # 219965, September, 2009

Computerworld, “Is 'Quadroid' the new 'Wintel'?,” 2 December 2010

The Value of Velocity

One developer with no prior

Force.com training built a patient

admission app in just 4 days

Deployed to Medical Directors and

Program Directors in hospitals on

iPhones and iPads

• Eliminated paper forms;

• Workflow reduced response time

by more than 60%;

• Cut process time from 18 hours

to less than 60 minutes

“We’re blown away…a mobile healthcare

app on Force.com with one person in just 4

days… The same app built in [previous

models] would have taken over 3 months”

Trust Attainment Enables Cloud Adoption

• Robust infrastructure security

• Rigorous operational security

• Granular customer controls

– Role-based privilege sets

– Convenient access control & audit

• “Sum of all fears” scrutiny

– Multi-tenancy shrinks attack surface; slashes opportunities for error

– The most demanding customer sets the bar

– PCI DSS Compliance Level 1; FIPS 199 LOW and MODERATE

– Comprehensive, continuing audit/certification

“Despite resource sharing,

multitenancy will often improve

security…

“Our research and analysis indicates

that multitenancy is not a less secure

model — quite the opposite!”

All Assets Secured, All the Time

’50s ’60s ’70s ’80s ’90s ’00s

PC MITS Altair IBM PC

Macintosh

Windows

3.x/9x/NT

& Linux 1.0

Windows XP

& Mac OS X

Mini DEC

PDP-8

DEC

VAX 11/780

Sun

Workstations

& Servers

Sun/ILM

Render Farms

Sun/AMD

x86 Servers

Niagara CPUs

Mainframe IBM 701 S/360 S/370 4300 S/390 zSeries

Nothing Happens Overnight; Nothing Goes Away

’50s ’60s ’70s ’80s ’90s ’00s-’10s

Clouds +

Edge

Devices

X Window Grid

Computing

PC MITS Altair IBM PC

Macintosh

Windows

3.x/9x/NT

& Linux 1.0

Windows XP/7/8

Mac OS X

Mini DEC

PDP-8

DEC

VAX 11/780

Sun Workstations

& Servers

Sun/ILM

Render Farms

Sun/AMD

x86 Servers

Niagara CPUs

Mainframe IBM 701 S/360 S/370 4300 S/390 zSeries

This is No Way to Get to the Cloud

Force.com

Database.com

Chatter

The Framework: Data, Process, Collaboration

• Scalable, secure, socially enabled multi-tenant database

• Proven services to build rich, attractive, ‘anywhere’ apps

• Secure collaboration with any IT asset or process –

person, application, or machine

Force.com

Database.com

Chatter

The Plug-Ins: Content, Scalability, Integration

• Build, run, and scale a world-class website with site.com:

integrated with database and customer social profile

• Agile deployment on Heroku for Ruby, Node.js, Clojure,

Java, Python, and Scala: run anything, see everything

• Collaboration in sales, service, and marketing processes

Heroku Force.com Site.com Communities

Force.com

It Only Matters If It Integrates – Securely

• Bring in the information that matters most: what your

customers and partners are doing, and what they want

• Connect it with the information you already own: all of

your legacy assets become more valuable in more ways

Heroku Site.com Communities Force.com

Database.com

Chatter

AppExchange Apps

ERP

Any System

Finance

Back-end Systems Any Social

Network

It’s About the Corollaries

The bad news is that this is a truly intense technical and business undertaking, and not for the faint of heart.

The good news is that what it makes possible is magical.

Marc Andreessen, “The Three Kinds of Platforms You Meet on the Internet”

Any technology distinguishable from magic is insufficiently advanced.

Gehm's Corollary to Clarke's Third Law

Web 1.0: Discover

Web 2.0: Collaborate

Web 3.0: Innovate

Thank You petercoffee

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pcoffee@salesforce.com