Apr25

High Risk Poker: Salesforce.com Unleashes a G-Cloud

It was one of the first companies to start using the term ‘cloud’ which infuriated Larry Ellison at Oracle who originally saw the term as an empty slogan and oversimplified marketing rehash of once-popular virtualization technologies created by IBM.


But, today there is no doubt that Salesforce.com is considered one of the catalysts and elder statesman of cloud technology, extolling its values long before Google, Facebook and others brought it to the broader masses.

And, now it has jumped out of the CRM consumer / enterprise playpen and entered the rarified political IT arena with the announcement of a dedicated Government Cloud and associated app marketplace.

“Salesforce.com already has a broad presence in government. According to the company, 70% of cabinet-level agencies and 80% of states use Salesforce.com,” said Information Week.

The implications for this heavy-duty CRM system are enormous considering some reticence towards the cloud in general with regards security and privacy. It’s a clear signal that Quants and IT division heads in governmental sectors, now consider the cloud to be reaching maturity in terms of bullet-proof security and locked-down privacy.

“The Government Cloud will include a dedicated, multi-tenant instance of salesforce.com’s cloud infrastructure that will allow U.S. federal, state, and local agencies to rapidly deploy the latest social and mobile technologies in compliance with Federal Information Security Management Act (FISMA) requirements,” said Saleforce.

The statement above reflects the growing trend towards mobile technologies, which recently pressured Facebook to purchase Instagram for $1 billion in a preemptive move to head off competition and overhaul its mediocre mobile platform.

The U.S. government has also signed up for Saleforce’s partner program that entails training over 1,000 integrators by the end of 2012 to overhaul government IT with Salesforce’s on-demand platform.

And, when they need more cloud firepower, they will use the Salesforce App Exchange to test drive and deploy new web applications, which are are typical benefit of the cloud.

It’s hard to see whether this is a defensive or offensive move by the Government, which is obviously starved for cash and needs to reduce staff overhead. By its very nature, consolidating on-premise infrastructure into fewer, hosted cloud servers with utility pricing models would obviously appeal to any cash-strapped government.

“We must end the era where government spends millions of dollars and waits years for IT projects that never work.  Now, salesforce.com offers a solution the government needs to break down barriers to innovation and eliminate wasteful IT spending,” said Salesforce.

To many, Salesforce is considered a premium cloud service, especially at the enterprise level. The costs for Government are likely to be much higher. However, in relation to costly on-premise IT and internal resource management, it may well gain economies of scale at lower costs over the next several years.

Caution Cloud Lovers

As with all massive marketing announcements like the one above, there is the need for caution: Salesforce.com will need to scale its internal resources adequately to cope with the increased demands of a G-cloud.  The slightest security or privacy breach could cause big waves that stretch across the world, in much the same manner as that caused by Wikileaks recently.

What today is seen as a majestic move that crowns its place at the pinnacle of the cloud heap, may tomorrow be seen as the pivot point, which hurt its fortunes.

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