By Jeff Alderson, Principal Analyst
On April 9, Salesforce held its World Tour kickoff in Boston, and Eduventures was there to take part in the spectacle that is now being called a “mini Dreamforce” conference. With record-breaking revenues of $5.37 billion reported at the end of 2015, Salesforce certainly has the marketing budget to host an amazing event. This one featured appearances by New England Patriots quarterback Tom Brady and the (un)official sound of the Red Sox—Dropkick Murphys. Between new product announcements, a laser light show of epic proportions, and celebrity endorsements of Salesforce’s Customer Success platform, a clear message about the Salesforce Foundation’s mission to give back to the non-profit community emerged.
The timing of this conference was particularly opportune for us. In recent weeks, Eduventures has been meeting with several application developers that use the Force.com platform or are including integrations with Salesforce CRM as part of their higher education offerings. In these conversations, we have heard of some challenges in coordinating activities between application developers, system integrators, and account executives within the Foundation. We wanted to learn more about how these challenges are being addressed directly from Salesforce Foundation staff and about their philosophy of providing free licensing and implementation support to higher education institutions.
Building the Foundation: Philanthropic Focus on Higher Education
To start, we learned from Keith Block, Vice Chairman & President of Salesforce, about Salesforce’s 1/1/1 model and how it is being replicated by other companies, including several Boston startups. A key part of this philanthropic model is that Salesforce donates 1% of its technology products to more than 23,000 non-profit organizations, including qualified higher education institutions. The first ten licenses, estimated at $360/person/year, are available for free to each qualified non-profit institution. Based on their overall revenues, the number of non-profits they serve, and their 1/1/1 model, we estimate the total possible higher education market opportunity represents just 0.17% of Salesforce’s annual revenues.
In our meetings, the team at the Salesforce Foundation confirmed that the initial market size of potential Salesforce CRM users is small relative to the company’s massive annual revenues. They are optimistic, however, that as institutions see the value in their Enterprise CRM offering and as other business units adopt Salesforce, the overall number of licenses in use at the institution will increase dramatically, bringing in real revenue for Salesforce over time. The Foundation is very interested in serving the needs of smaller institutions or of a single business unit, such as enrollment management or advancement offices. Overall, the company says it is very dedicated to the mission of its 1/1/1 model and desire to provide Salesforce tools for free to any and all institutions that need a powerful, cloud-based CRM.
System Integration as an Application Provider Core Competency
The service providers we have been meeting with offer enrollment management and retention solutions that are either built upon or integrate with Salesforce’s Force.com platform. Other Enterprise CRM vendors also build upon Force.com to provide added value services in addition to Salesforce’s base CRM offering (covered in our March 2014 Enterprise SRM Report). All of these vendors require a core competency in system integration with Salesforce in order to maximize the value of their solutions and provide turnkey integration options for their higher education clients.
When we asked about what tools or partnerships an application developer could use when bundling Salesforce Foundation licenses into their proposals to higher education institutions, we were directed to look at Salesforce’s “Find a Partner”. Salesforce makes available account executives and resources to assist application developers in demonstrating Salesforce CRM to prospective clients and in locating the right system integration partners.
However, determining the right approach to building that core competency for a Salesforce partner requires a bit of strategic planning and relationship management with third parties. Each vendor can either hire the skilled resources directly and train them on the Salesforce platform in order to connect their products into the Salesforce AppExchange, or they can partner with a third party from the list of system integrators listed on Salesforce’s website. While there are nearly 750 system integrators listed on the site, they are not organized by which vendors have actual project experience in higher education.
Salesforce should improve the discoverability of vendors on this site soon, with the aim of giving higher education clients and application developers quick access to system integrators in their industry specialization. Since system integrators will be building knowledge of the application architecture as well as the Salesforce platform during consulting and implementation projects, the application provider should not let that experience walk away when the individual projects are done. Application developers might be well served to partner with a smaller system integration firm, with the long-term goal of acquiring that vendor to fold their team of consultants into the parent company. Those resources could be then directed to build out APIs and off the shelf packages for deployment of the next product on the Salesforce AppExchange for that vendor.