Salesforce.com reported a 25 percent increase in sales year over year during its second quarter results call yesterday, but its CEO Marc Benioff also shared a few numbers that explain why delivering Software-as-a-Service (SaaS) and even Platforms-as-a-Service (PaaS) makes sense. In response to an analyst question on the effects of a slowing IT market on cloud computing firms he said:
Well, Kash I’m very bullish on cloud computing and real cloud computing which is the kind of very efficient model that Salesforce.com has been able to deliver us. I mentioned in my script, we have about 3,000 servers and that includes 1,500 that are just standing by in case there is a disaster.
You have to kind of ask yourself, if Salesforce.com did not exist for the 82,000 customers that we have and the [couple-of-hundred thousand] apps that they are running in on our servers, how many servers would they need? You can quickly determine that we are operating at a level of efficiency that’s probably a few percentage points of what they would have had to buy.
His point is an important one for those worried about security and compliance issues keeping people from consuming PaaS offerings for their own apps. It’s simply going to become too cost-effective not to build internal software on platforms and get other software delivered as a service. However, for the Infrastructure-as-a-Service providers, the flexibility and cost advantages of an enterprise not running its own infrastructure are harder to attain, simply because most legacy applications aren’t designed to run in the cloud: public or private. So Benioff with Salesforce’s SaaS offering and its partnership with VMware to create the VMforce PaaS (Salesforce.com’s own Force.com is kind of like PaaS-lite), is skimming the initial cream off the cloud.
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