In the last year, as I built the model for SAP Nation, I have had conversations with several cloud vendors and shared my view that outsourcers/SIs from the on-premise world are looking for new parking places for their massive workforces and infrastructures. Cloud software vendors should leverage this bounty but be careful of the baggage many of those providers may bring along.
Some of those warnings need to be amplified as Phil Wainewright writes about the Salesforce partner ecosystem
“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.”
Time for me to write “Salesforce Nation”?
No.
Let’s put things in perspective. In SAP Nation 2.0, I actually increased the estimate for the economy from $ 200 to over $ 300 billion a year. And the SAP economy has a long track record of massive overruns and failures. The number above does not include amortization/writeoff amounts.
So, the Salesforce ecosystem estimate is not that worrying. Also, unless the cloud model deteriorates dramatically, it will never approach the size of the hosting, upgrade and application management economics which plague the on-premise model.
What is more worrying is the focus on outsourcers as a brand validation and sales channel versus them as a customer delivery support extension. Too many software vendors focus on the former and not enough on the latter.
If cloud vendors do not start tracking and benchmarking success/service levels/economics the partners are delivering, in a few years I may have ammunition to write Salesforce or Workday Nation. I hope not.
