Salesforce.com 2011 Annual Report Download - page 28

Our success will depend in part upon the ability of our senior management to manage our projected growth
effectively. To do so, we must continue to increase the productivity of our existing employees and to hire, train
and manage new employees as needed. To manage the expected domestic and international growth of our
operations and personnel, we will need to continue to improve our operational, financial and management
controls and our reporting systems and procedures. The additional investments we are making will increase our
cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in
the short term. If we fail to successfully scale our operations and increase productivity, we will be unable to
execute our business plan.
As more of our sales efforts are targeted at larger enterprise customers, our sales cycle may become more
time-consuming and expensive, we may encounter pricing pressure and implementation and customization
challenges, and we may have to delay revenue recognition for some complex transactions, all of which could
harm our business and operating results.
As we target more of our sales efforts at larger enterprise customers, we will face greater costs, longer
sales cycles and less predictability in completing some of our sales. In this market segment, the customer’s
decision to use our service may be an enterprise-wide decision and, if so, these types of sales would require us
to provide greater levels of education regarding the use and benefits of our service, as well as education
regarding privacy and data protection laws and regulations to prospective customers with international
operations. In addition, larger customers may demand more customization, integration services and features.
As a result of these factors, these sales opportunities may require us to devote greater sales support and
professional services resources to individual customers, driving up costs and time required to complete sales
and diverting our own sales and professional services resources to a smaller number of larger transactions,
while potentially requiring us to delay revenue recognition on some of these transactions until the technical or
implementation requirements have been met.
Professional services may also be performed by a third party or a combination of our own staff and a third
party. Our strategy is to work with third parties to increase the breadth of capability and depth of capacity for
delivery of these services to our customers. If a customer is not satisfied with the quality of work performed by
us or a third party or with the type of services or solutions delivered, then we could incur additional costs to
address the situation, the profitability of that work might be impaired, and the customer’s dissatisfaction with our
services could damage our ability to obtain additional work from that customer. In addition, negative publicity
related to our customer relationships, regardless of its accuracy, may further damage our business by affecting
our ability to compete for new business with current and prospective customers.
Periodic changes of our sales organization can be disruptive and may negatively impact our revenues.
We periodically change and make adjustments to our sales organization in response to market opportunities,
competitive threats, management changes, product introductions or enhancements, acquisitions, sales
performance, increases in sales headcount, cost levels, and other internal and external considerations. In the past,
these changes sometimes resulted in a temporary lack of focus and reduced productivity; these effects could recur
in connection with any future sales changes we might undertake and our rate of revenue growth could be
negatively affected. In addition, any significant change to the way we structure our compensation of our sales
organization may be disruptive and may affect our revenue growth.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary
technology and our brand.
If we fail to protect our intellectual property rights adequately, our competitors might gain access to our
technology, and our business might be harmed. In addition, defending our intellectual property rights might
entail significant expense. Any of our trademarks or other intellectual property rights may be challenged by
others or invalidated through administrative process or litigation. While we have some U.S. patents and many
20