QUESTION 1). 1 PAGE CASE SUMMARY USING YOUR OWN WORDS.

QUESTION 2) HOW WOULD YOU PROPOSE THE COMPANY ADDRESSED THE PROBLEM? WHAT WOULD YOUR STRATEGIC PLAN BE ?

STRICTLY NO PLAGARISM

THANK YOU

Salesforce.com, a leading software company, was off to a bad start at the beginning of 2009. On January 6, between 12:40 p.m. and 1:20 p.m. U.S. Pacific time, all instances of the companys Customer Relationship Management (CRM) on-demand services were suspended. Three minutes after the outage, a Twitter user shrewdly commented, Love it: Attention all Salesforce.com users... its coffee break time. Please head to Starbucks.

This was the most significant disruption in service in a series of such events (Table 1). More than a million subscribers in North America, Europe, Middle East, and Asia were forced to cease working, as access to their key business information was unavailable. The outage affected not only the direct users of Salesforce, but also their clients. The companys dashboard announced that about 177 million business transactions did not occur due to the outage. The short disruption in service caused a storm in cyberspace and the indignation of thousands of subscribers.

Later on the same day, the status page of the company displayed a brief explanation of the outage (Appendix A). A month later, however, customers and analysts still felt uneasy. Salesforce CEO Marc Benioff faced a pressing issue. He had to find a way to re-connect with the customers and ensure future transparency of services, all while the competition launched new products and was poised to steal market share away from Salesforce.

A Dynamic Company with Dynamic Issues

Salesforce went public at the end of 2004, which marked an era of dynamic development for the company. Its client base started growing with tremendous speed. However, this led to problems that no one had previous- ly encountered. A series of service disruptions during 2005 and 2006 provoked a strong resentment among Salesforces clients, who were not only frustrated by the outages, but also by the lack of real-time informa- tion from the provider. To remedy this, Salesforce developed its CRM SaaS health dashboard in February of 2006, which relayed information on the systems status, such as downtime events and resolution details. Thus, users were enabled to self-identify system wide problems without calling or e-mailing the support de- partment or searching forums like Twitter and other blogs. Many other companies offering SaaS followed suit. This system of virtual communication seemed to be the solution. In fact, it worked quite well until January 6, 2009, when not only all instances of CRM on-demand services were disrupted, but the dashboard was as well. Subscribers completely lost contact with Salesforce as the companys data center went down. This begs the question: is a network service status dashboard useful if it goes down during an outage?

Salesforce.com: The Power of an Idea Not the Power of a Software

The power of an idea not the power of a software. This statement is the driving force behind Salesforce and was adopted from its inception. Marc Benioff, a former Oracle executive, established the company in 1999. He broke new ground with the concept of delivering enterprise applications via a simple website. To- day, the company is the world leader in on-demand CRM services and has distinguished itself in the industry.

In September 2008, Salesforce received the Technology Innovation Award from The Wall Street Journal.1Salesforce is also listed in Fortunes 100 Best Companies to Work For, and Forbes: Turbo Tech2 ranks Sales-

force third in the list of the twenty five fastest-growing tech companies in America.

Salesforce delivers integrated, completely customizable enterprise applications to companies of all sizes. Its chain of subscribers consists of 51,800 customers across the globe and over 1.1 million paying subscribers who manage their sales, marketing, customer service, and other critical business functions through the com- panys platform. Thus, Salesforce contributes to the growth and success of entities of industries worldwide.

The company operates through a single business segment: CRM services. It provides a range of on-demand CRM services which enable its subscribers to record, store, and act upon business data. It helps businesses manage customer accounts, track sales leads, evaluate marketing campaigns, and provide post-sales ser- vice. The companys services are focused on functional areas within CRM such as sales force automation, partner relationship management, marketing automation, customer service, and support automation.

In June 2007, Salesforce and Google formed a strategic global alliance to help millions of businesses lever- age the Internet to achieve success. The newest product resulting from this alliance, Salesforce Group Edition featuring Google AdWords, combined the power of Salesforce on-demand CRM applications with the Google AdWords platform to achieve integrated sales and marketing success.

Software as a Service (SaaS)

SaaS is a model of software deployment where an application is licensed for use as a service provided to customers on demand. On demand licensing and use alleviates the customers burden of equipping a device with superfluous applications and reduces traditional End User Licensing Agreement (EULA) software main- tenance, ongoing operation patches, and patch support complexity in an organization. On demand licensing enables software to become a variable expense, rather than a fixed cost at the time of purchase. Additionally, SaaS enables licensing only the amount of software needed versus traditional licenses per device. SaaS also enables the user to share licenses across their organization to reduce the cost of acquiring EULAs for every device in their firm.

Customer Relationship Management (CRM)

CRM consists of the processes a company uses to track and organize its contacts with its current and prospective customers. CRM software is used to support these processes; information about customers and customer interactions can be entered, stored, and accessed by employees in different company departments. Typical CRM goals are to improve services provided to customers and to use customer contact information for targeted marketing.

Competition

Competition in the CRM applications market is high, especially since Microsoft launched its Dynamics CRM Live in 2008, and SAP prepares its hosted A1S offering for the small-and medium-sized business market. Salesforce currently rivals with enterprise software application vendors, such as IBM and Oracle; packaged CRM software vendors, such as FrontRange Solutions and Made2Manage Systems; on demand CRM ap- plication service providers, such as Oracle, SAP and NetSuite; and enterprise application service providers, including British Telecom and IBM.

Oracle. Oracle is Salesforces largest competitor in the realm of CRM SaaS. In January 2009, the company unveiled its CRM On Demand Release 16. This software was designed for enhanced flexibility in deployment and maintenance. With this release, Oracle wanted to demonstrate that its software can offer companies more options in SaaS CRM than the competition. Over the years, Oracle has developed application and database pods of both multitenant and single-tenant CRM On Demand systems in its data systems. If one pod fails, customers linked to other pods will not be affected. Anthony Lye, senior VP of the division at Oracle, asserts that with Oracles CRM SaaS model, a global disruption in the system becomes practically impossible. The bad thing with multi-tenancy is when it goes down, you guys write about it on the front page, Lye said. I dont

want to be on the front page for anything bad.3

NetSuite. NetSuite continually attempts to lure customers away from Salesforce through aggressive pricing strategies. In the fall of 2008, the company offered a deal that rewarded customers for switching from Sales- force to NetSuite. Under the deal, users would be charged 50% of the cost of their Salesforce implementation. NetSuite has used this strategy before with a similar deal offered in 2005. Despite the significant discount, the effectiveness of the offer is questionable due to immense switching costs for customers.

User Reactions

Salesforces service disruption on January 6, 2009, led to confusion among its clients. The complete lack of information from Salesforce forced clients to turn to cyberspace communication channels, such as social net- works and micro-blogging, to exchange information and express their annoyance. These networks became the only place for communication during the crisis. Twitter was flooded with comments. Initially, people were wondering what was going on and trying to reassure themselves that they were not the only ones experienc- ing a problem with Salesforces service:

Salesforce.com appears to be down. Anyone else having problems accessing it or logging in?

12:42 PM Jan 6, @jarehart

In time, users realized that the service was indeed down for many. Clients began to express their anger as Salesforce failed to provide any information on the issue:

Salesforce.com is down. This never happens. My job is meaningless without it. Ill go make coffee.

12:47 PM Jan 6, @jkjtres

Wow, Salesforce.com is down hard. Never seen that before. Lots of unhappy people 12:50 PM Jan 6, @shinyobject

Great. Salesforce.com is totally down. How much is this going to cost me? 1:07 PM Jan 6, @jon- mrich

From these comments, it is obvious that Salesforces services are essential to the productivity of its sub- scribers. An outage of this magnitude literally halts all of their work and causes much frustration and irritation.

Industry Expectations

The cloud computing industry is in its infancy and the SaaS model benchmarks are in the process of forging. The rapid growth of the SaaS market in the last couple of years led to the appearance of some new serious players like Microsoft and Oracle. The dynamics that followed in technology innovation stirred the sector. It was clearly time for analysts to figure out what this industry was all about and set criteria for appraising the market participants. In 2008, the first consortium, The Open Cloud Consortium (OOC), was established. The Consortium is an alliance of support organizations and technology providers. Its tasks include development of operational models and optimizing business results to improve customers experience.

For now, the industry uses double-sided contracts between vendors and customers called SLAs (service level

agreements). Lenny Rachitsky,4 senior software engineering manager at a premier website monitoring and load testing company compares the SLAs of the major SaaS players: Google Apps, Amazon Simple Storage Service, and Amazon Elastic Compute Cloud service. The result of his parallel study was that the average uptime guarantee of those companies is 99.9% per month. The average uptime of all cloud, on demand and ISPs (Internet Service Providers) was 99.99%. Among the notable exceptions is Salesforce.com.

In 2007, Salesforce published its Standards Of On-Demand Service Delivery that the company committed to follow: world-class security, trust and transparency, true multitenacy, proven scale, high performance, com-

plete disaster recovery and high availability.5 Salesforce is, in fact, trying to comply strictly with its pledges for excellent service. As a result, for almost two years the company did not experience serious problems. Yet, the January 6 outage was indicative that this was not enough to keep client trust intact.

The Ostrich Syndrome

More than a month after the outage, Salesforce had still not made a public analysis of the outage. Anyone seen a blog post from Salesforce discussing their Jan 6 outage? Cant find it, asks a Twitter user on January 23. This question remains unanswered. In response to another inquiry, one of the experts of CRM SaaS in micro-blog on Twitter offered his insight:

Not aware of SF posting about it. Check my blog or @adamkillam or @jpseabury for some perspec- tives, but dont expect official word. 7:38 PM Feb 9, @CRMFYI

Salesforce, however, is not the only cloud-computing firm that has adopted the practice of disinformation when faced with a service disruption issue. In fact, it became quite common for other providers of SaaS to apply the same nonchalance in such instances. Twitter simply displays a cartoon graphic with the banner, Something is technically wrong, to its millions of users during its almost daily outages.

Market Reaction

On the day of the outage, shares of Salesforce.com (CRM) dropped from $34.60 to $32.00, a 7.51% decline in value. Salesforces stock price continued to fall during January 2009, down to $26.07 per share. Thomas Weisel Partners lowered its 12-month price target from $52 to $45. Salesforces performance in the share market began to rise on February 3, but tumbled again on February 6 after the company disclosed the resig- nation of its president and chief strategy officer, and analysts speculated that the company may have strug- gled in the fourth quarter.

Whats Next for Salesforce?

This is the year [2009] of cloud computing for the CRM industry, and Salesforce.com is the undisputed leader, said Marc Benioff, CEO of Salesforce.com. Salesforce.com is helping companies grow their busi- ness without growing costs by delivering a cloud computing solution for customer service and sales with Salesforce CRM Spring 09. In the Spring of 2009 Salesforce will introduce its new CRM release which will combine features of both a service cloud and a sales cloud. The new system will incorporate 50 new features.