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Marc Benioff's Burden: Outages

Posted by: Steve Hamm on April 27, 2006

It’s like a pesky housefly circling Marc Benioff’s head that just won’t go away no matter how many times he swats at it. Since December, the Web site has been hit by a string of outages. No sooner does CEO Benioff conclude that he has the problem whipped when trouble strikes again. Now, a fix is in the works. He hopes. Within the next several weeks Benioff, plans on installing several new smaller servers to replace one large one that has been the main source of the problem. “I want to be done with this,” mutters a usually unflappable Benioff.

Benioff’s problems started in December after, the leading seller of customer-relationship software as a service, revamped its two data centers in San Jose, Calif., and Northern Virginia. Almost immediately, there was an outage. Since then there have been a string of them, occurring every few weeks, and sometimes shutting the service down for more than an hour. The problems have included faulty hardware installation and a problem with a networking device, but it has mainly been problems with software on that large server. Analysts have hammered him and some customers are grumbling.

In an effort to mollify customers, issued an apology and installed a monitoring device on its service that anybody can view to see how well the system is performing at any given time. Some of its rivals have taken to monitoring the site and sending e-mails to reporters whenever something is amiss.

The outages don’t seem to have harmed’s business—not yet, anyway. Benioff says he hasn’t lost any customers, and his fourth-quarter earnings were unscathed. The first quarter report, due out any day, will tell the tale.

Benioff tends to see the bright side of trouble. In this case, he notes, “Our sales leads have been spiking on the outages. They’re at an all-time high.” In fact, he says, whenever has had problems over the years, it has only expanded interest in the company. “These are huge branding events,” he says. “Every time our competitors say something negative about us, it gives us more girth.”

Just goes to show: Everything’s good when you’ve got the Big Mo.

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Reader Comments

Steve Hamm

April 27, 2006 04:00 PM

This info comes in from

can you put this in your blog? our real time site for reliability information, total transparency

99.92% uptime since 2/1

We are the only vendor who publishes real time information on reliability as well as historical information

Jared Ruckle

May 3, 2006 08:58 PM

You bring up a key point not many people are talking about, namely how most “software-as-a service” companies are still much more software than service.

Technology glitches will happen, but the point is: what kind of recourse do customers have when outages occur, especially under the backdrop of monthly subscription fees? The vast majority of on-demand customers today have not entered into a formal Service Level Agreement with their vendor, because the vendor doesn’t offer them one – a classic software industry practice. Customers simply get an apology email – is all well and good, but it offers businesses no protection.

We've always pushed to deliver a superior experience (i.e. written Service Level Agreements holding our company accountable), because if we don’t customers should be able to walk away. At meetings we often discuss the need to think less like a technology company and more like a luxury hotel chain. This approach institutionalizes the idea that we must win each customer every month, and keep them from going to the figurative competing hotel across the street.

As you aptly mention, the outages don’t appear to have had much near-term impact on – but we’ll know that on-demand has truly arrived when the ‘service’ outweighs the ‘software.’

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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