Salesforce.com 2004 Annual Report Download - page 13

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Table of Contents
able to maintain relatively low research and development expenses. Our research and development expenses were $9.8 million in fiscal 2005, $7.0 million in
fiscal 2004 and $4.6 million in fiscal 2003.
Operations
We serve all of our customers and users from a single, third-party Web hosting facility located in Sunnyvale, California, operated by Qwest
Communications International Inc. The facility is designed to withstand an earthquake of magnitude 8.0 on the Richter scale, is secured by around-the-clock
guards, biometric access screening and escort-controlled access, and is supported by on-site backup generators in the event of a power failure. Our agreement
with Qwest provides for Qwest to supply space in its secure facility as well as high bandwidth Internet access, and runs through the end of February 2006. We
regularly rotate tapes of customer data out of the facility and store them in a secure location in the event of data loss at the facility.
We continuously monitor the performance of our service. The monitoring features we have built or licensed include centralized performance consoles,
automated load distribution tools and various self-diagnostic tools and programs. We have entered into service level agreements with a small number of our
customers warranting certain levels of uptime reliability.
Currently, we have an agreement with SunGard Data Systems, a provider of availability services, to provide access to a geographically remote disaster
recovery facility that would provide access to hardware, software and Internet connectivity in the event the Qwest facility becomes unavailable. Even with
this disaster recovery arrangement, however, our service would be interrupted during the transition. The arrangement with SunGard serves as our primary
backup facility and is designed to support our service for all customers. We are in the process of evaluating additional technology solutions and data center
requirements for both improved business continuity and future expansion. These solutions would be designed to minimize the interruption during any
transition to a remote disaster recovery facility.
Customers
As of January 31, 2005, our customer base had grown to approximately 13,900, and we had approximately 227,000 paying subscribers in over 70
countries. As of January 31, 2004, our customer base was approximately 8,700 and our paying subscribers were approximately 127,000.
Our revenues are divided among small businesses (companies with fewer than 200 employees), medium-size businesses (200 or more employees and
up to $1 billion in annual revenues), and large businesses (over $1 billion in annual revenues). The number of paying subscribers at each of our customers
ranges from one to more than 3,000.
None of our customers accounted for more than 5 percent of our revenues in fiscal 2005, 2004 or 2003.
Sales, Marketing and Customer Support
We organize our sales and marketing programs by geographic regions.
Direct Sales
We sell subscriptions to our service primarily through our direct sales force comprised of inside sales, telesales and field sales personnel. Our small
business, general business and enterprise account executives focus their efforts on small, medium-size and large enterprises, respectively. Sales
representatives in our small business group sell to smaller companies, primarily over the phone. We have field sales offices in more than 20 major cities
worldwide.
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