Salesforce.com Recruits Channel Assistance For New Vertical Industry Initiative

Salesforce.com is developing industry-specific applications based on its Salesforce1 CRM platform and will step up its use of ISVs, systems integrators and other channel partners as part of the initiative.

Salesforce executives unveiled the vertical industry strategy Wednesday at a company sales event in Boston where President Keith Block also said the company has ambitions to surpass SAP as the world's third-largest enterprise software company.

"We're growing faster than any other enterprise software company in the world," said Block, who was named president of the company 10 months ago. He noted that Salesforce is growing more than 30 percent a year, reaching $1.15 billion in its fourth quarter ended Jan. 31 and forecasting sales of $5.25 billion for the current fiscal year.

SAP, for its part, reported sales of 16.8 billion Euros (about $23.1 billion) for 2013, growing 4 percent year over year.

Salesforce is counting on its new vertical industry strategy to maintain or even accelerate its growth. The company has created an Industries Business Unit overseen by Vivek Kundra, the former U.S. federal government CIO who has served as Saleforce.s executive vice president of emerging markets since January 2012.

Salesforce initially is focusing on the financial services/insurance, health-care/life sciences, retail/consumer products, communications/media, public sector and automotive/manufacturing industries.

To develop in-house expertise in those verticals, Salesforce has been recruiting talent from each industry. Former Comcast CIO Andy Baer will manage the communications/media effort while former Genentech CIO Todd Pierce will oversee the health-care/life sciences program. Shelley Bransten, most recently CRM marketing vice president at Gap, is in charge of the retail/consumer products group, and Patrick Pelata, Renault's former COO, is overseeing the automotive operation.

But Block, in a question-and-answer session with press and analysts, made it clear the vertical industry initiative will rely heavily on channel partners, including independent software vendors, large systems integrators such as Accenture and Cap Gemini, and regional and "boutique" systems integrators.

"One of the things over the last 10 months that I really jumped on was the entire partner strategy," Block said, adding that a key component of the company's growth strategy "is [developing] a very, very close and personal relationship, if you will, with our partners."

Block said "one of the very first things" he did when he joined Salesforce "was to sit down with the partners because the reality of the situation is that these global firms have enormous reach. They're in the boardroom; they're highly influential." He said those partners wanted a strategic relationship with Salesforce and were looking for reciprocation. In the past six months some of those companies have started or expanded their Salesforce practices, even diverting resources from their SAP and Oracle practices, according to Block.

"We have seen a huge uptick in the channel and in our partner relationships," Block said.

"We also doubled down on our creation of ISV resources," Block said, referring to ISVs that develop general applications on top of Salesforce's platform and those that develop apps for specific industries. "We are heavily, heavily, heavily recruiting in the development community, as well as ISVs outside of our portfolio to come in and build their assets on top of our platform. That allows us to go very heavily into the solutions-selling space. One of the pivots we're trying to make is to not just sell product, but also sell a solution."

One ISV partner that's working closely with Salesforce is ServiceMax, which developed its field service management applications on Salesforce's Force.com platform seven years ago. The Pleasanton, Calif.-based company is helping Salesforce develop solutions that incorporate ServiceMax's field service technology while the ISV develops its software for vertical industries, said Stacey Epstein, ServiceMax's chief marketing officer, in an interview.

"We're the natural choice for field service, being the mature app [already] built on their platform," she said.

While Salesforce will be building up its in-house industry experience, Block said: "It's not something where we're going to be building skill sets to compete with our partners. That's not what we're talking about. It's really about thought leadership."

PUBLISHED APRIL 2, 2014