Salesforce CEO: Private cloud is not real cloud

Salesforce CEO: Private cloud is not real cloud

Summary: Companies hosting private cloud architectures don't benefit from economies of scale that "real" cloud offers, says Marc Benioff.

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SINGAPORE--The private cloud model is not real cloud computing and vendors selling private cloud hardware are merely using the cloud to rebrand their offerings, according to Salesforce.com CEO Marc Benioff.

"Beware of the false cloud. The false cloud is not efficient," said Benioff during his keynote speech at the company's Cloudforce conference here Tuesday.

Salesforce.com's 77,000 customers run on 3,000 servers spread over three data centers globally, he said, adding that, theoretically, 77,000 companies of varying sizes would require at least 100,000 servers to run their CRM (customer relationship management) systems.

The ability to deploy on just 3,000 servers translates to an equivalent output at only 3 percent of the infrastructure needed because of economies of scale--a delivery model that company-owned infrastructure cannot replicate, he said.

Benioff's statement echoed that recently made by an Amazon Web Services executive, Andy Jassy, who said internal cloud infrastructures do not carry the same value propositions as cloud computing and still require companies to dedicate staff and power costs to maintaining a data center.

Benioff also touched on Salesforce.com's Cloud 2 line of services, which include a Facebook-like social network for enterprise customers it calls Chatter. The interface pulls in data from sources such as Twitter and is aimed at giving customer service and sales reps an interface similar to the social networks they are familiar with.

He added that companies are missing service requests from users because they are ill-equipped to deal with new sources of information with their "outdated" software, and named competing collaboration offerings Microsoft SharePoint, Lotus Notes and Oracle Siebel as examples.

Cloud more appropriate for Asia
Speaking later during a media session, Benioff said the cloud's "pay-as-you-go" business model is more attractive to users in Asia compared to traditional software because the region's emerging markets are much more price-sensitive.

He was contrasting the cloud model against traditional onpremise software, which requires companies invest in hardware to maintain it and renew software licenses when they upgrade.

Correspondingly, the company's business in Asia is the fastest-growing segment for Salesforce.com, he said. The company added 400 new customers in the first quarter of 2010 to its overall tally of 7,400 in the Asia-Pacific region. Its revenue in the quarter also grew 55 percent over the same quarter last year.

Its regional customer base of 7,400 companies, however, makes up less than 10 percent of the company's global count. Benioff, though, disagreed that Asia is taking longer to get on the cloud bandwagon and reiterated that the region is "hungry for change" in their IT deployments.

Topics: Software, Apps, Cloud, Enterprise Software

Victoria Ho

About Victoria Ho

Victoria Ho is a tech journalist based in Singapore, whose writing has appeared in publications such as ZDNet, TechCrunch, and The Business Times. When she's not obsessing about IT, you can find her tinkering with music and daydreaming about which guitar to buy next.

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7 comments
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  • Private clouds aren't "real" clouds? I don't think so! My virtual/hybrid/private cloud infrastructure is just as real as any group of Amazon machine images. Just because our internal requirements demand we keep our applications in-house doesn't mean we aren't benefitting from cloud computing and our own little slice of economy of scale. This is a really bone-headed statement that shows lack of perspective. "If you're not doing like we say it should be done, you're not really doing it." Technological elitism is what that is.
    J. Brisbin
  • I agree with BrisBin. Private clouds may not be as efficient as "public clouds", it is still a much more efficient way to run things within an enterprise. Marc just wants people to use his cloud rather than your own, ignoring the fact that control, security and privacy is a very real concern for a lot of companies.
    mingnow
  • Brisbin true cloud mean not having to worry about existing infrastructure issues. I'm incline to call your private cloud to quote someone 'false cloud.'
    Using the hotmail/gmail example. If I subscribe to one of these services I have no infrastructure worries. Everything is done for me in the cloud. Everything from maintenance through to backup.
    Having your 'Virtual/hybrid/private' means that you'll still need to send someone to fix that server when its down.
    Sorry but that isn't true cloud.
    guybrush-43828
  • 'Cloud' is being bandied about too loosely. There are industries where the latency effect of any public cloud transaction will lead to unacceptable service levels, loss of revenue, etc. Is a private cloud model here then 'outdated' or 'false'? No, instead, we're probably going to see hybrids - portions of the business where you take it in-house (on-premise, private cloud, etc) and where you tap a public cloud infrastructure. Companies that can offer these options, or enable their customers to, will thrive. Companies like SFDC, who *only* have the public model, must continue to flaunt that.
    guanaman
  • I couldn't agree more with Brisban's comments. Our organization see's tremendous benefit from our private cloud which was specifically designed to meet the requirements of our user's and our business and there is no one sizes fits all solution that is it's equal. The marketing campaigns surrounding cloud have been gearing up for years to support these billion dollar investments and their goal is not to improve customer satisfaction or SLA's it is about expediting the return on that investment. I have one piece of advice to any business centric CIO that is advocating cloud adoption at this stage and that would be to replace your existing infrastructure management and engineering teams with resources that have a solid grasp of technology and more importantly design. With current offerings such as Virtualization, Disk based backup's , 10GB Ethernet, VDI etc..I have not had what you would call a classic infrastructure worry in over 5 years. We are a leader in our industry and to be quite frank my user based would not accept or tolerate hotmail/gmail levels of performance and if I were to advocate that as an option I would be out of a job.
    The Truth-31ef2
  • Jassy and Benioff are way off. In fact, the benfits to private-managed cloud far exceed that of a shared model in our estimation. Our model is to virtualize all apps, files, desktops, and data. That eliminates a huge portion of an enterprise's IT costs because the virtual servers are in another location, NOT onsite. Private-managed cloud does not mean ONSITE virtualization, it means your IT is virtualized in a remote data center in private-managed cloud whereby only YOUR OWN enterprise has access to it's own apps, data, desktops etc. All the major cloud players have experienced massive data leaks in one facit or more of their businesses during the last year, their service is dodgey and those contracts are pretty one-sided and ambiguous. You go private-managed and you will know what your fixed costs are and you shouldn't get nickeled and dimed to death. Gotta get back to work now.
    Kman-635f0
  • There is only one 'cloud' computing concept, and that is a pay as you go system. Anything else is 'false' cloud. Traditional IT guys are just too afraid to embrace this strategy for fear of losing value of their existence, and obviously influence. Times have changed, IT costs has to be justified. A lot of business can be more cost efficient when they stop trying to be an IT Company - investing heavily on hardware, infra, software licenses and endless upgrades; instead focus on what they do best - run the business.

    - Roel Abatayo
    bloggista