In the new model, a Cloud vendor is always maintaining a single, coherent codebase which can even support legacy behaviors if the vendor decides to do so – as salesforce.com does. We don’t force customers to accept new behaviors, we offer them new behavior to enable or not as they choose. But the code base is coherent, so we can improve at a more rapid rate and customers have fewer reasons to postpone the acceptance of new function. Everybody winds up moving forward more quickly with less risk at lower cost.

DMR: So the difference is a novel architecture to combine massive economies of scale while retaining rich customizability in ways that don’t just relocate complexity but substantially collapse complexity. In many industries this important message about the Cloud Model often gets confused and reduced into something about cloud computing – what you hear over and over again is a story about virtualization and distributed data centers and Amazon S3…

Peter: … Yeah, I hear that, too. But that’s only half the story. Virtualization is a very important enabling technology. But nobody gets up in the morning and says, “gosh, my business problems would be solved if I could only go buy some virtualization.” What people say is, “I wish that I could innovate more quickly,” or “I wish that my IT costs were more predictable,” or “I wish that I could deploy new capability without capital investment.” And those are the issues that I believe cloud computing fundamentally addresses. Virtualization is one of the important tools that makes that feasible, but that’s a supply side fascination – it’s not why the demand side is actually interested in this.

DMR: Now salesforce.com has always existed in the Cloud – one of your trademarks is “No Software”.

Peter: But it’s more than that. Salesforce.com came into being when Marc Benioff said, “why is it that consumers have capabilities like iTunes, Google, or personal recommendation engines on Amazon that they can find and learn and use and that continually improve, while enterprises cannot get rapid innovation and must tolerate unpleasant costs and unreasonable risks in their technology?” Marc strongly felt that there is something fundamentally wrong with that and set out to take a specific category – customer relationship management – where any business could benefit. Every business from the small high growth business to the mature organization is looking to get more value out of its existing customer relationships. Marc believed that there’s no reason why enterprise capability should not be something you can combine with discoverability and ease of use. That goal and vision was the birth of the company.