Salesforce.com 2005 Annual Report Download - page 13

Table of Contents
Our service treats all customers as logically separate tenants in central applications and databases. As a result, we are able to spread the cost of
delivering our service across our user base. In addition, because we do not have to manage thousands of distinct applications with their own business logic and
database schemas, we believe that we can scale our business faster than traditional software vendors, even those that have modified their products to be
accessible over the Internet. Moreover, we can focus our resources on building new functionality to deliver to our customer base as a whole rather than on
maintaining an infrastructure to support each of their distinct applications.
Our service is also flexible. Every page is dynamically rendered for each specific user, including a choice of 12 languages and a number of currencies
with dynamic currency conversion support. In addition, our service can display different views of the data based upon a number of factors, including user,
department and area of responsibility in the company. Our service also allows customers to create multiple subtypes or subclasses of our business objects and
tie views to each record type. This customization extends to the data model of our service, as our service allows customers to extend existing tables in our
database as well as create new tables without actually modifying the underlying physical database schema.
We have also developed extensive reporting and analytics functionality in our service that operates on the online transaction processing, or OLTP,
database system to provide real-time analysis of the user's data. While users can customize any report or dashboard in the service, we dynamically tune the
database based upon specific attributes of the user, the data model, the data security layer and the specific customizations to each report or dashboard.
We have built a service-oriented architecture, or SOA, which allows our service to be addressable by other applications on the Internet and by
applications behind customers' firewalls. Through our AppExchange API platform, we allow customers and partners to insert, update, delete and query any of
their information in our service. Our full-text search engine, which allows users to perform natural language queries on all the data through a browser, is also
exposed as a Web service. In addition, we have mechanisms to protect our service not only from malicious abuse, but from poorly written applications that
put undue strain on the service. Each user session is encrypted, and we actively monitor our system to detect intrusion by unauthorized users.
Development
Our research and development efforts are focused on improving and enhancing our existing service offerings as well as developing new proprietary
services. In addition, from time to time we supplement our internal research and development activities with outside development resources. Because of our
common, multi-tenant application architecture, we are able to provide all of our customers with a service based on a single version of our application. As a
result, we do not have to maintain multiple versions of our application and are able to maintain relatively low research and development expenses. Our
research and development expenses were $23.3 million in fiscal 2006, $9.8 million in fiscal 2005 and $7.0 million in fiscal 2004.
Operations
As of January 31, 2006, we serve all of our customers and users from a single, third-party Web hosting facility located on the west coast of the United
States, operated by Equinix, Inc. The facility is built to the same critical systems building codes as hospitals and other vital infrastructure. The facility 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. As part of our current disaster recovery arrangements, all of our customers' data is currently replicated in near real-time in a separate back-up
facility located on the east coast. This strategy is designed to both protect our customers' data and ensure service continuity in the event of a major disaster.
Our agreement with Equinix provides for Equinix to supply space in its secure facilities on the west and east coast as well as power. Bandwidth to the
Internet is provided by multiple private companies. The initial term of the service agreement with Equinix expires on January 31, 2007 with the ability to
renew on favorable terms.
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