Titans of hosted services discuss the demand for on-demand

Marc Benioff, chairman and CEO of Salesforce.com, elucidates his expectations for the hosted-app paradigm.

IW: Why is there resurgent interest in the hosted model?

MB: It’s exciting. It’s about a whole breadth of opportunity for the customer to be more successful than ever before, using a whole new model, [which is] very low cost and very easy to use

IW: To what degree is the attraction the difference in licensing structure versus the difference in technical implementation?

MB: I think it’s really about total cost of ownership and risk-free implementation.

IW: So this is an incremental process?

MB: This is evolution. This is about a new paradigm that’s just lower cost and easier to use than the old paradigm. And traditionally in our industry, that can become a huge success.

IW: What about the argument that this is all IP-based anyway and that IP is becoming client/server? Some see a trend toward IP as the basis of the core of the enterprise. Does it matter where it lives?

MB: It only matters where it lives if it’s the lowest-cost, highest-value solution. Where it is doesn’t exist. It just happens that on-demand is the lowest cost and the easiest to use.

IW: Are there quick make-or-break issues on the technical side?

MB: You’ve got to look at eBay and Amazon. These are the best solutions: written on big database servers with high-performance systems, high-performance hardware, massive amounts of storage, scalable app servers delivering pages under 500 milliseconds. To really analyze if a company has got the on-demand thing down, does their product look like Amazon or eBay from an architectural and a user interface and every other perspective?

IW: With enterprise applications, you’re talking about deep integration. To what degree is SOA [service-oriented architecture] a gating factor?

MB: I’m trying to move you away from that and move you more toward looking at what makes eBay and Amazon so successful. It’s the usability, the pervasiveness, the intuitiveness, the low cost, right? Selling things on eBay is a lot cheaper than setting it up on your store. Forget Salesforce.com. These are the attributes that companies want: low cost, ease-of-use, persistence.

IW: Should IT managers fear you?

MB: I don’t think so. … The CIO’s job overall is going to be more strategic, more about finding the right thing to do for the business and less about the managing of DB2.

Grand Central Communications CEO Halsey Minor extols the virtues of sharing.

IW: What’s the reality behind the buzz? 

HM: Having gone through the whole bubble, it’s clear that you can spend $100 million on enterprise software and get nothing back.

IW: For this model to work, federated identity would need to be in place.

HM: Our 5.0 product provides the ability to federate identity into our infrastructure. We manage identity and tie it to policy from all the different end points. The combination of identity and policy, delivered as a service, allows all these services to interact.

IW: Pull the rip cord; get it as a service?