In annual revenue terms, they generate at least three times Salesforce's own revenues, or close to $20 billion, according to new research from IDC presented on stage at the morning's partner keynote.
The research, to be published in full next month, found that the value of professional services going through the ecosystem was 2.9x Salesforce's own revenues in 2014, and will rise to 3.7x in 2018.
That adds up to an opportunity worth some $135 billion over the next five years, said Tyler Prince, EVP of worldwide alliances and channels. But that's only part of the story, he added later when we connected for a post-keynote chat.
The IDC research we presented really represents the professional services aspect. If you add the ISVs as well, it becomes much bigger. And if you add on top of that the professional services opportunity on top of our ISVs, it compounds.
ISVs that have built solutions on the Salesforce platform, or that connect into it, add significant extra revenues into the mix. For example, we know from its public filings that Veeva pays 15 percent of its revenues in subscription fees to run on the Salesforce platform. The remaining 85 percent added more than $250 million of revenues into the Salesforce ecosystem last financial year. Add those figures in for the entire ISV population in the ecosystem and the total together with SIs could top $30-40 billion.
We'll find out for certain what IDC has worked out when it releases its report next month. But there's a clue to the scale of its findings in the report title cited at the bottom of the presentation slide:
The Salesforce Economy: How Salesforce, Its Ecosystem of Partners, and Its Customers Will Create More Than 1 Million Jobs and Add $272 Billion to Local Economies in the Next Four Years.
Partners as a priority
The second thing that the partner ecosystem learned was that they're now first-class citizens in the Salesforce universe. For the first time, all of the major product news announcements at Dreamforce have been released on day one of the event, making it possible to include them all in the opening partner keynote. In previous years, major news items have been held back until the main keynote presented by Salesforce CEO Marc Benioff, leaving important details missing from the earlier partner address. There's a clear message that partners are a priority for Salesforce, Prince told me:
Leading off Dreamforce with the keynote for our partners is intentional and by design.
It's important for our partners to understand our message and our announcements because over the course of the coming days, they're going to be meeting with customers. It's important they have a perspective on, 'What is IoT Cloud?' or 'Tell me about Lightning, what that means to me.' By design, it's important to get that message early in the week as opposed to separate from the event.
During the keynote, Salesforce president and chairman Keith Block told attendees that building and supporting the partner base was strategic for the company:
We want to have this incredibly large ecosystem of ISVs and SIs because we want to do the best by our customers.
The final piece of learning came in the announcement that Accenture is acquiring pureplay cloud integrator Cloud Sherpas, one of the largest Salesforce professional services partners. Saideep Raj, global MD of SaaS and emerging platforms at Accenture, later told me this was "one of our most significant acquisitions," reflecting "a tipping point" towards cloud adoption among customers. I'll have more from that interview in a separate story later on.
There have been big changes in the way Salesforce manages its partner community in the past two years, Prince told me.
If you look at other big enterprise software companies, almost all of them have very discrete parts of their partner business. They have a team that manages the big SIs, they have a team that manages their resellers, they have a team that manages their ISVs. There's very little collaboration across those.
We had a unique opportunity when I got here two years ago to put all of that together. We have one partner strategy. That partner strategy ensures that we're working across this to determine how to pull the best solution together for a customer. So I have the opportunity to introduce SIs to ISVs and incorporate ISVs in some of the SI solutions, to educate resellers in our emerging markets on how to incorporate some of these ISV solutions and how they go to market.
This connected partner ecosystem will certainly serve us well in the coming years. Even this event here today — three years ago, this would have been separate events, on separate days, and never the two shall meet. We decided very early, let's pull this together, because a lot of these messages are important to all of our partners.
Salesforce is investing in its support infrastructure for its partners, said Neeracha Taychakhoonavudh, SVP of partner programs and marketing. Partners also help each other, she added, through the vendor's online partner community:
It's really fascinating to watch the collaboration and the dialog going on as partners find each other, help each other and make connnections without needing Salesforce. We enable those connections but they happen organically without us.
More to be done
But more investment is still needed, warned several partners that I spoke to. The rapid growth both in Salesforce's own revenues and in its partner ecosystem is stressing the resources available, said Eric Berridge, founder and CEO of longstanding pureplay Salesforce integrator Bluewolf:
If you look at Salesforce as an organization, they're 25 percent the size of SAP, yet if you look at the SAP ecosystem, it's ten times Salesforce's — it's 200,000-plus individuals. So the revenue base is a quarter of SAP's, but their ecosystem from a resource perspective is only ten percent of SAP's.
To grow it, all of us together, we have to actually go outside of this ecosystem and find people and train people and onboard them. That's the way we can close this gap from a resource perspective, which is critical to our clients. The industry is resource-constrained right now.
Adam Hale, CEO of fast-growing Salesforce ISV partner Fairsail, welcomed the stronger focus on partners, but said there's still more to do. He said that Salesforce should be more proactive in working with ISV partners to raise customer awareness of the solutions available on the platform.
It is a classic 'end of the beginning' situation.
If there's one thing they must do better, their Salesforce needs to have a much better understanding of the full range of particularly ISV solutions that there are.
Money talks, and the money that passes through the Salesforce ecosystem is sounding a message that Salesforce hears loud and clear. As former Salesforce insider and ecosystem player Kraig Swensrund told me on Monday, that ecosystem is crucial to its offerings for SMBs. It's an equally vital part of the strategy with larger enterprises.
The size of the ecosystem is a testament to the importance Salesforce has always placed on encouraging partners to invest in its platform. But it has not always invested enough in supporting and working with those partners. Its priority, for obvious reasons, has been its own growth.
Going forward, it has to get the balance right between continuing its own rapid rise while ensuring that the partner base keeps pace. With help from IDC, it has recognized the scale of the challenge. Now it has to make sure it is doing enough to encourage the healthy growth of an ecosystem that is already as large as the GDP of a middle-ranking country.
Disclosure: Salesforce is a diginomica premier partner. My travel to attend Dreamforce has been funded as part of a paid consulting engagement with Vlocity, a Salesforce ISV partner.
Image credit: Screengrab from presentation.