Dreamforce16 - Salesforce QTC partner Simplus raises $7m for market grab
- Summary:
- Salesforce joins a $7m funding round for Quote-to-Cash partner Simplus, which acquires a Zuora partner in quest to 'dominate' Salesforce QTC consulting.
One year ago, Salesforce consulting partner Simplus made a fateful decision to go all-in on its partnership with Salesforce-native quote-to-cash ISV Steelbrick. That meant walking away from close partnerships with two other ISVs, Domo and Workfront, already worth $1 million in annual recurring revenues. It was a tough call, says Simplus CEO Ryan Westwood:
It was probably the gutsiest move in my entrepreneurial career ... Both CEOs had invested, and we walked away from those partnerships.
The decision was validated within months, when Salesforce announced its acquisition of Steelbrick. Now Simplus has closed a $7.3 million funding round to fuel growth, with Salesforce contributing to the investment. The round is led by Epic Ventures, with Silicon Valley Bank also taking part.
The investment by Salesforce shows that it realizes it needs its partner ecosystem to keep pace with its own growth. Steelbrick had a sales team of 60. Now renamed Salesforce Quote-to-Cash, a sales team that's a hundred times bigger is going out to close deals for the software. If sales soar, the cloud software giant needs Salesforce QTC partners in place that can follow through with robust implementations. Westwood says:
Salesforce felt they had to have a partner that could scale and that's why they came into our round. They need someone to deliver.
The Quote-to-Cash product set includes configure-price-quote (CPQ) software, which salespeople use to select multiple components, options and services when preparing a complex quotation or order, as well as billing software that can handle complex price lists and recurring billing. That makes the implementation more demanding than a standard Sales Cloud project, says Westwood.
If you were to compare it to a typical Salesforce implementation, there's a little more complexity to Steelbrick. It varies from size of customer and whether we're implementing CPQ or billing or both. The customer does have to rely more on the implementation partner than with other products.
When you look at quote-to-cash, it is the heart of someone's business. From how are they quoting to how are they billing, it's right there at the heartbeat of their business.
Coinciding with the funding round, Simplus announced it has acquired billing implementation specialist BaldPeak, which had specialized in Zuora subscription billing. While BaldPeak will continue to service its Zuora customers, the intent of the acquisition was to repurpose that experience of implementing billing for enterprise companies and apply it to the former Steelbrick product. Simplus sees significant opportunity among larger enterprise accounts, says Westwood, and has been recruiting accordingly.
What BaldPeak brings to us is a team that's been implementing the billing component of quote-to-cash from Zuora. We've cross-trained all the employees in Steelbrick billing.
From my experience, we're seeing a lot of enterprise deals. We've been recruiting talent from Accenture, Deloitte and [IBM-owned] Bluewolf to handle these enterprise implementations.
Simplus will be looking for further acquisition opportunities to consolidate its strength in Salesforce Quote-to-Cash implementations, says Westwood, including expansion beyond its home US market into EMEA in one to two years' time.
Getting in very early gives the company an opportunity to become the leading player, he believes.
We want to dominate that market. If there's anyone in that space we want to acquire them. We want to corner that talent in quote-to-cash.
It's a new market for Salesforce. Steelbrick itself, their earliest partners are two years old. So the market is relatively new. The biggest opportunities for partners in Salesforce are in these emerging niches.
Having "sold too early" in past ventures as an entrepreneur, Westwood wants to see Simplus grow to seize a big slice of what could be a multi-billion-dollar market:
I really want to build a big company, so we're in this for the long term. You've got a market that's at least a billion for the software side. Salesforce would like to see 45% penetration and the services are 2x the software. I don't see why we couldn't build a big company in this niche.
My take
Westwood's bullishness is a proxy for Salesforce's hopes for its foray into quote-to-cash. The investment in Simplus makes clear that Salesforce expects to see the former Steelbrick product not only accelerating fast in the midmarket, but also penetrating high-end enterprise accounts.
That news, though expected, will not please existing Salesforce ISV partners offering quote-to-cash, most notably Apttus (which claims to have defined the category) and also subscription billing vendor Zuora, whose partner BaldPeak has just been 'poached' so that its Zuora experts can be retrained to implement Salesforce's own rival billing software.
Another issue that this story exposes is the shortage of consulting skills in the Salesforce ecosystem. The fastest route for a company like Simplus to expand its workforce as it seeks to scale with Salesforce's growth is by hiring and acquiring experts from elsewhere in the ecosystem. But if the skillbase is just being shuffled around between players in a bidding war for talent, that doesn't address the core shortage. Salesforce desperately needs more people coming into its consulting ecosystem from outside, whether by transferring skills from other platforms or by training fresh out of college — a theme we'll be returning to in other Dreamforce coverage this week.