As a pared down Dreamforce kicks off today in San Francisco, Salesforce has published its annual reminder of just how much clout the cloud provider exerts economically, both directly and indirectly, as the firm released the 2021 edition of The Salesforce Economy, a research project carried out by IDC.
This year, the headline data boasts that the combined impact from both Salesforce and its ecosystem of partner companies will deliver $1.6 trillion in revenues globally and be responsible for creating 9.3 million jobs by 2026. In terms of those jobs, 23% will involve “significant digital skills”, a percentage that will rise to 37% by 2026.
In terms of what these digital skills are, IDC says:
They vary by occupation, including dealing with Internet of Things in the trades, new automation tools in medicine, or interfacing with complex applications that require time and attention. These could be learning new collaboration tools, creating chatbots, or working with new AI-assisted programs.
But growing demand for skills could lead to a race to find the right people to fill the right roles, says IDC:
The talent crunch is upon us…The relentless pace of growth of use of cloud services will bring all sorts of challenges for Salesforce customers, from simply integrating new technology with the old to retraining workers or hiring new ones.
From a partner perspective, the IDC research suggests that in total today third parties pull in $4.96 for every $1 that Salesforce makes directly, with a prediction that this will rise to $6.19 by 2026, at which point the ecosystem itself will more than six times as big as Salesforce itself.
With vendors and end users reporting signification acceleration of digital transformation programs during the COVID crisis, cloud adoption grew 22% in 2020, according to IDC’s number crunching. That growth rate will slow down in the Vaccine Economy it seems with the research house pitching an 18% growth rate over the next five years.
Cloud-delivered software will make up 43% of the total software market this year, rising to a predicted 61% by 2026. The analyst firm further suggests that cloud-related technologies will account for 27% of digital transformation IT spend this year, growing to 37% in 2026, arguing that:
Behind the economic engine of Salesforce — and its ecosystem of partners — is the economic engine of cloud computing itself. IDC's underlying premise is that by freeing up IT resources, cloud computing enables IT and business innovation. And while external IT spending typically only accounts for 2–5% of a company's expenses, its footprint easily extends to 50–90% of a company's operations. A small change in the IT department can have a big impact.
As for what end users tap into Salesforce and the ecosystem for, the average customer uses Salesforce cloud offerings in more than four departments, with sales, IT, customer support and marketing teams boasting the largest footprints. IDC notes:
Salesforce customers further classified their implementations as 30% customer facing, 25% targeted at operational improvement, 23% at improving employee productivity, and 22% at R&D and product development.
In terms of ROI, the average customer can look to project payback of around one year, according to IDC’s findings, with 58% of those polled reporting a return in less than that time. But in the ‘new normal’ of the work from anywhere world that Salesforce is aggressively promoting, it’s the less quantifiable benefits that catch the eye.
With COVID having shut down the inner cities, 47% of respondents look to cloud services to allow them to evolve to a less urban workforce. Forty-two percent see such services helping to add to brand value, 41% talk about them making employee education easier while 39% cited improving sustainability initiatives, improving employee satisfaction and enabling them to pivot to meet customer needs faster.
Looking ahead as the Vaccine Economy takes shape, there remain many unknowns. While Salesforce itself looks set on its own growth path to become a $50 billion revenue company by the end of fiscal 2026, the rise of the Delta variant provides a warning shot across everyone’s bows that the emergence of vaccine programs is not a simple reset button. This week’s scaled down Dreamforce, impressive as it is, is evidence of that in itself.
As for the Salesforce Economy, IDC’s ultimate conclusion mirrors the realities that need to be faced, being both optimistic, but striking a cautionary undertone that there may yet be bumps in the direction of travel that need to be navigated:
It's also clear that dealing with growth, the post-pandemic transformation of work, and the need for talent will be challenges — for Salesforce, its ecosystem, and its customers. So far, Salesforce seems to be successfully facing those challenges, but the past may not be a prologue to the future. Knitting acquisitions into the organizations and their offerings into the Salesforce platforms will take work.
That said, this will also bring opportunity and not just for the existing partner ecosystem:
Helping customers deal with not only the transformation of IT in digital transformation but also the transformation of the organization itself may fall outside Salesforce's wheelhouse. But customers will nevertheless look for help.
Customers will be looking inside, outside, and everywhere for help. The first stop will be Salesforce and its partners. But this won't be the last.