It’s a sign of Salesforce’s growing strength in the enterprise market that today Cloud Sherpas announced its purchase of Innoveer. The two companies provide consulting and application development services around the world to Salesforce customers. The combined company boasts 230 consultants working from major cities like Atlanta, Boston, New York, Chicago, Dallas, San Diego and San Francisco and countries including the UK, Australia and Japan. If you are looking to court enterprise business, these are places you need to cover.
The importance of this announcement, in my mind goes like this: Salesforce is invading the enterprise with customers like Toyota, Rossignol, Burberry, Coke and General Electric. They’ve signed up the very large consulting companies already, which have dedicated practice areas to cloud computing, and Salesforce, though not exclusive to the company.
A second tier of partners including Cloud Sherpas, Apirio and until today Innoveer, just to pick three, should be able to make a tidy living for the immediate future by taking on projects that the bigger names may not be able to get to. Also, Innoveer is a scrappy company that has penetrated the likes of Abbott Labs, Capital Blue Cross and other big names. So if they can demonstrate vertical expertise say, in pharmaceuticals, they’ll do fine.
As I look at it, with Innoveer and Apirio offices in Boston and the proximity of MIT and that school that Mark Zuckerberg and Bill Gates dropped out of in Cambridge, Boston solidifies its position as a center of excellence in cloud computing, especially the consulting end.
Meanwhile, the Salesforce juggernaut rolls on into the enterprise. There is by far too much consulting opportunity for the company to take on by itself and it wouldn’t want to. Too much consulting as opposed to straight delivery of its social and cloud solutions, would give the company valuation problems. Financial wizards think differently about a company that does implementations and custom development compared to one dedicated to selling the dog food.
So, this is all good. Cloud Sherpas and Innoveer have something to celebrate and Salesforce’s business is more solid because it has a beefed up delivery arm and it didn’t have to lift a finger to get it. End customers trying to rationalize legacy systems and cloud computing will be the ultimate winners.
You can gauge the success and financial health of almost any company by looking at revenues. At least this is true in the short term. Since revenue is a lagging indicator — with the exception of monthly recurring revenue (MRR) that subscription companies measure — it only tells you where you’ve been not where you are going.
We could very profitably spend our time discussing various other metrics that can also give us an incomplete picture of how well a company is doing. For example, increases in MRR. While tracking increases is valid though it is incomplete without churn and new bookings. Nonetheless, when I started I was looking for something more macro, which is my tendency, and eventually it dawned on me that one of the better metrics of long-term viability and not simply revenue might be the size and growth characteristics of the partner community or ecosystem.
The ecosystem presents the possibility of multiplier effects that you see in the economy at large unless you are a Neoclassicist, but generally purchases drive other purchases in a virtuous circle that helps ensure the health of all in the ecosystem.
For another good but crude analogy think about baleen whales. Strange to contemplate whales in a piece on the CRM industry but consider this. Baleen whales are a whole class of very large animals that feed on some of the tiniest creatures in the sea, plankton. Baleen is a structure in the mouth that acts as a filter that the animal uses to remove the little critters from a mouthful of seawater. Since the whale depends on plankton, which might be at the bottom of many other food chains, you can infer a direct relationship between the health of the ecosystem at the lowest level by observing the largest predator.
At any rate, that’s my hypothesis and it brings me to the health of such companies as Salesforce.com and many others. But let’s just stay on Salesforce for this. Salesforce has an estimated 30,000 company customers, more than 1.1 million installs, 3,000 partners and thousands of products in the AppExchange. All are growing and in each case, because this is an ecosystem, each has found a way to make a living in Salesforce’s shadow.
The partners provide what Salesforce might not provide or might not wish to, or they provide specialized products and services that form stand-alone businesses. There are numerous examples. Zuora provides a subscription billing and payments system, a business Salesforce has stayed out of. Cloud9 provides an analytics driven sales forecasting solution that takes significant complexity and makes it simple for sales people. Marketo and others provide marketing automation that generates leads — the lifeblood of any enterprise. Xactly does sales compensation, another complex task that Salesforce has decided is not in its wheelhouse. The list is long and it grows whenever the core offering grows and opens up new niches.
Yesterday, a couple of companies announced a merger that will add to the ecosystem. Cloud Sherpas and GlobalOne joined up, retained the Cloud Sherpas name and raised an additional $20 million in funding. The combo fits nicely into the ecosystem. Cloud Sherpas was the Google Enterprise 2011 Partner of the Year and GlobalOne is a Salesforce platinum consulting partner.
Google products run a gamut from word processing to analytics to social networks to who knows what. While Salesforce has been friendly to integration with Google Apps in the past some companies, especially large ones with complex requirements, have sought help in accomplishing it. Having Google and Salesforce services under one roof seems to make sense for large customers with complex requirements.
To be sure, Cloud Sherpas is not the largest implementation partner in the ecosystem but the company’s exclusive orientation on cloud computing and its expertise in Google’s cloud applications should be appealing to many new and existing Salesforce customers.
Cloud Sherpas also bring experience in integrating cloud with conventional applications and you can certainly expect that the company’s customers will have an eclectic combination of conventional, cloud and legacy applications to deal with. To me it’s fairly obvious that for cloud computing to continue to grow more integrations among all types of computing will be needed.
So, even if you don’t know much about software, I think it would still be evident that healthy companies like Salesforce or SugarCRM, with its large open source community or Microsoft and Sage, with their significant partner communities, are likely to endure simply because their ecosystems are so strong.
Companies like Cloud Sherpas need to think and choose wisely because many subsequent decisions hang on whose ecosystem you join. The new funding suggests that other wise people have faith in this pairing.