One report I read the other day about Salesforce.com's fourth quarter earnings announcement employed the old "best of times/worst of times" approach.
Reporters love this structure: Fill in a couple of paragraphs on the good news, a couple on the bad and head out for lunch. Editors don’t like it because it's a clichéd shortcut.
In this case, however, the reporter got it right—and the editor did, too, by not rewriting it. The best of times element is that Salesforce.com gained subscribers, enjoyed record sales and was able to report other happy results. The worst of times element, of course, is that the company has suffered at least three outages during the past three months.
Make no mistake: The months ahead are crucial for Salesforce.com. If its problems prove to be chronic—and the company may not be more than an outage or two outages away from that label—it will be in for a rough ride.
The fate of Salesforce.com is inextricably linked with the fate of the entire software-as-a-service sector. There is little margin for error: SaaS is the Phoenix that rose from the ashes of the application service provider (ASP) industry which all but died about five years ago. Salesforce.com dominates the reborn industry. It is so big that a black eye for it is more or less a black eye for the category itself. That's why other SaaS vendors—and the companies that have grown to rely on these service providers—should be rooting for the company to get its act together.
SaaS is a great concept. It's a gamble, however. In order to reap the great benefits of SaaS, small companies lose control over key infrastructure elements. It's terrific when things go right. It's a huge problem when they don't.
Salesforce.com, no matter how good the financials look, had a terrible winter. It took a step in the right direction earlier this month by launching a site—trust.salesforce.com—geared at keeping customers apprised of how the system is operating. It's a good move. Let's just hope that all the readings remain dull and uninteresting.