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By Renee Boucher Ferguson  |  Posted 2006-01-15 Print this article Print

Downtime Problem"> Bell said hes staying put with Salesforce.com, that the companys new data center will resolve performance issues and that recent issues are "part of their growing up." Bell, however, can be forgiving because outages havent affected his sales. It also has helped that Bell has been in touch with Salesforce.com frequently. "Theyve been pretty good about that," he said.
For First New Englands Caylor, the Dec. 20 outage was a serious matter.
The mortgage broker uses Salesforce.com to distribute and track leads for 90 employees covering 26 states, as well as to receive all the companys Internet leads. First New England also integrates Salesforce.com with its loan-origination system and with its credit vendor. "A lot of our world is in Salesforce, so when it goes out, its bad," Caylor said. "People just basically panicked. They couldnt get to their leads, and thats our main business." Caylors solution: Keep a local copy of Salesforce.coms applications. "If there are outages of a day or less, we probably wont do anything about it [in terms of looking to another vendor], but well have access to our data," Caylor said. Rebecca Wettemann, vice president of research at Nucleus Research Inc., of Wellesley, Mass., said Caylors approach makes sense. Salesforce.com customers also can buy offline editions of the companys applications that provide some capabilities if Internet service is down. "If youre using an on-demand application, uptime is an issue, but its more important to consider how you are going to provide offline access if Salesforce.coms servers are down," Wettemann said. "The Holy Grail is not uptime but how you minimize the impact." Great expectations (for the money) Whether Salesforce.coms growing pains hurt the rest of the hosted application service industry remains to be seen, but peers are watching closely to see if customer confidence is shaken. NetSuite takes aim at Salesforce.com with a new program. Click here to read more. John Webster, executive director of the Center for Remote Enterprise Systems Hosting Inc., of Sioux Falls, S.D., said he is worried that the Salesforce.com outages will hurt his business. Websters organization hosts Oracle PeopleSoft and Hyperion Solutions Corp. applications, primarily for universities and government agencies. The outage "puts a negative connotation on hosted applications," Webster said. "In the hosting arena, you put forth an image of reliability, and it doesnt help when a prominent company has an outage." Nevertheless, Webster bets Salesforce.com will keep its customers due to the prices it offers—as low as $65 per month per user. "The trade-off is dollars for service," Webster said. "Maybe youre willing to accept an outage at the Salesforce price points." Webster said he tries to control growth by adding two big customers each quarter and making sure he has the capacity to support them. Even if providers of hosted services have uptime that exceeds most internal technology departments, a perception issue remains. "Uptime of 99.999 percent means you have about 5 minutes a year of downtime," Webster said. "As a hosting company, thats too much, but at some point things fail." Zach Nelson, CEO of Salesforce.com rival NetSuite Inc., a San Mateo, Calif., software-as-a-service provider, agrees that uptime is a key issue. NetSuite announced 18 months ago a money-back guarantee on application availability that promises an uptime of 99.5 percent per month. The challenge for vendors is balancing uptime and costs. Nelson added that when vendors offer 99.999 percent availability, every nine becomes "exponentially more expensive to deliver" because of the infrastructure needed to build redundancy. Another issue that the on-demand software industry may face is stricter SLAs (service-level agreements). In a November regulatory filing with the Securities and Exchange Commission, Salesforce.com said that it has entered into agreements with "a small number of its customers warranting certain levels of uptime reliability and performance." If Salesforce.com falls short of requirements, it offers credits, but it has set aside only $500,000 to cover credits and, as of November, had paid only one customer. Wettemann said its possible Salesforce.com and its peers will see more SLAs in the future. "SLAs are going to be considered more and more with on-demand software," she said. "Its just another layer of protection." Executive News Editor Larry Dignan contributed to this article. Check out eWEEK.coms for the latest news, reviews and analysis about customer relationship management solutions.


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