Marc Benioff: In the same way that when they built a hotel [at the turn of the century] they did not put in a power plant and dig a well - they used modern utilities. Modern utilities have always directly followed the maturity of modern networks and that's the same for the IT business. There is no software to buy... and nobody to hire. We believe we are delivering these solutions at about one tenth of the price that a traditional software manufacturer would sell them for in terms of licensing, hardware, upgrades, updates, virtual private network [VPN] connectivity, and set-up of software on desktops.

Why did the first wave of application service providers [ASPs] fail?

They did not write the software from scratch to be a multi-tenant on-demand system - they did not do what you need to do to create a comprehensive solution. For example, Amazon.com wrote its product from scratch to be scalable, reliable, high-performance, personalised and easy to use. But these first-generation [ASP] systems did not do it. Transitional technologies never succeed - if there is a paradigm shift you have to be ready to lead it.

But won't this result in a loss of control for those companies that rely on third parties to host their software?

IT directors do not have to worry about patches because we will take care of that - they can spend time with the chief executive and with the senior sales people to worry about strategic concerns. They can also keep tabs on [issues such as] whether the sales forecast came in correctly, if the operation is being managed on a global basis, are the users happy, are the PDAs connected to the system properly, and is everything running with the speed and concurrency that the business requires?

If they choose to use hosted services, does this mean firms are locked in?

They are free to leave any time they want - hit one button and all of their data can be returned to them - it's not our data, it's our customers' data. A lot of our customers even have real-time backups of [hosted] data on their own sites.

What about security?

Mostly we find that our systems are a lot more secure and safer that our customers' systems because we have experts to design security at a level that our customers can't afford to do. We can make a shared investment among all our customers that any one of them would not be able to do. We have four years of operating history and we operate at a higher level of uptime than 99 percent of customers. For all intents and purposes we have had 99.99 percent availability over a long period of time.

But how easy is it for these systems to be customised to companies' requirements?

It's much more robust than a template offering - you can fully customise and integrate our system as much as the traditional software product. The system is broken into two pieces. With the user interface you can customise all the fields, and field names and the pick list and the sales process values and interact with the web site - everything you would expect in making a system work for you. On the server side we have Sforce which we have opened up with all of our APIs so you can program multiple user interfaces, integrate with SAP or connect into whatever your internal system is. Sforce is aimed at the IT director. IT directors can begin to use Sforce to store the customer code that they do not want to store in their own servers, to build alternative user interfaces to our servers or to integrate using Sforce to their ERP or in-house systems.

Why is it that you believe traditional software will die out?

We are able to do something with a much more modern architecture, much in the same way that the current vendors Oracle, Peoplesoft, Siebel and SAP put the mainframe vendors out of business. You will see a new generation of vendors put out of business - the software dinosaurs.

About Marc Benioff

Marc Benioff is chairman and chief executive of hosted application specialist Salesforce.com, a company he founded in March 1999

Previously, Benioff spent 13 years at Oracle, holding a number of leadership positions in sales, marketing, and product development.

Before joining Oracle, Benioff worked at Apple Computer and founded Liberty Software.