Dreamforce 2019 - the shape of things to come in a $1.2 trillion Salesforce ecosystem

The global Salesforce ecosystem will generate revenues six times as much as Salesforce itself by 2024, with financial services, manufacturing and retail organizations leading the way. 

That’s one of the top line conclusions from The Salesforce Economy in the Next Six Years, a study from market analysts IDC which finds that between now and 2024, Salesforce and its partners will between them create 4.2 million new jobs and $1.2 trillion in new business revenues worldwide.


And it’s the partners that appear to benefit the most according to IDC with each one earning $5.80 for every one dollar that the mothership generates. 

IDC defines the Salesforce ecosystem as: 


All firms that add products and services on top of Salesforce subscriptions, including not only official Salesforce consulting and ISV partners but also third-party providers brought in by those partners or the customers themselves. 

Professional services currently accounts for more than two-thirds of ecosystem revenues (64%), followed by additional cloud subscriptions on 19%. Add-on hardware and networking comes in at 10%, with on premise add-on software on 5% and 2% of spend classed as ‘other’. 

That ecosystem is already four times larger than Salesforce and is set to grow to six times bigger by 2024. IDC comments: 

Successful implementations require concerted efforts on the part of the customer, cloud providers, and providers of ancillary services and products…The maturity model for cloud computing entails migration from ad hoc projects to a "cloud" approach. The breadth and variety of cloud applications and development platforms available today mean that most of an organization's business processes and workflows can be migrated to the cloud. Legacy systems — the large enterprise applications installed in past decades — can become part of the digital transformation.

In terms of the sectors in which Salesforce operates. IDC ranks the prospects of the various verticals as: 

• Financial Services - $224.3 billion in new revenues, 730,900 new jobs .
• Manufacturing - $211.7 billion in new revenues, 765,800 new jobs.
• Retail - $134.8 billion in new revenues, 539,700 new jobs.
• Comms and Media - $129.7 billion in new revenues, 473,800 new jobs.
• Healthcare and Life Sciences -  $68.5 billion in new revenues, 222,600 new jobs.
• Government - $64.7 billion in new revenues, 254,400 new jobs.

IDC notes: 


Manufacturing and finance account for 38% of the total economic benefit from using Salesforce cloud services — but then they account for 37% of IT spending. They account for less IT spending, but more benefit than the four other enumerated industries combined.

Jobs

These growth numbers are driven by the acceptance of the public cloud model, with IDC predicting that worldwide spending here will grow 19% a year, from $147 billion in 2019 to $418 billion in 2024. In stark contrast, spending on non-cloud IT will have an growth rate of 3%.  

In terms of the new jobs created, the research firm adds a proviso that it has not counted “additional jobs created in the supply and distribution chains serving those Salesforce customers and from new company employees spending money in the general economy” in its calculations. 

The IDC report says of the Salesforce ecosystem predictions: 

Yes, these are big numbers, but they aren't unreasonable in a global economy with business revenue over $200 trillion in 2019 and a global workforce adding more than 140 million jobs a year.

By region, the US currently reaps the lion’s share of the benefits, followed some way behind by Western European countries. 

The potential impact of Brexit isn’t cited here, but the UK is expected to generate $71,134,000 between 2019 and 2024, with 143, 700 direct new jobs and 255, 300 indirect ones. That’s behind France, where the comparable figures are $79,028,000, 153,900 and 406,700, but ahead of Germany on $30,329,000, 61,700 and 97,600. 

Asia Pacific follows, with Latin America the most nascent market at present.  This could all change - and quite radically - suggests IDC: 


If IT spending is concentrated in developed economies — and it is — spending on cloud computing is more so. So is Salesforce revenue. It's no surprise then, that the financial benefits of using Salesforce cloud services are as well…Over time, the emerging markets will catch up as they progress up the technology substitution curve. And, with less legacy IT activity to displace, their use of cloud services might open up even more room for IT innovation.

My take

This IDC report has become an annual event and, even with the inevitable caveat of it being a study sponsored by the vendor at the center of it, makes for interesting reading. A cursory wander around the Dreamforce show floor this week reminds you of how expansive the Salesforce partner ecosystem has come since the AppExchange was launched back in 2006. As to how accurate the predictions made here are, that will play out over time, of course, but for the moment, they serve as a reminder of how far the cloud ‘revolution’ has come.