Salesforce.com Overhauls ISV Partner Program, Sets Standard AppExchange Fee

Salesforce.com is overhauling its program for independent software vendor partners, introducing a new tier plan, expanded program benefits and a standardized revenue-sharing model that could mean fee increases for some ISVs.

The changes, disclosed Thursday in a blog post by channel chief Tyler Prince, comes four months after Salesforce.com, based in San Francisco, unveiled similar changes to the channel program that governs the cloud software company's relationships with its consulting partners.

"This brings a lot of structure and coherence to the program," said Neeracha Taychakhoonavudh, Salesforce.com senior vice president of partner programs and marketing, in an interview with CRN. "We're really building that programmatic capability."

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The new program covers the more than 1,000 ISV partners that sell their applications through the Salesforce.com AppExchange online marketplace -- either software they've developed on the Salesforce Force.com platform or software with connections to Salesforce.com's apps. Currently there are more than 2,700 apps on the AppExchange, and in the nine years since the AppExchange was launched there have been more than 3 million installs.

"ISVs are the lifeblood of Salesforce, extending our platform in new and exciting ways," said Prince, who's official Salesforce title is executive vice president of worldwide alliances and channels, in his blog. "Much of the program changes were driven by partner feedback, and I'm confident we've put the right structure in place to support their success, while recognizing the unique value each partner brings to delivering customer value."

Of the changes, the new standard revenue-sharing model may have the biggest impact, at least on some partners.

Partners who sell their applications through the AppExchange will pay Salesforce 25 percent of the net revenue from those sales. Partners also will pay a $2,500 security review fee for each application submitted for sale through the online marketplace. Free applications will continue to have no revenue-sharing requirement.

Until now, the amount paid has varied among ISV partners, based on negotiations with individual companies. Most ISVs today have a formal contract and pay either the 25 percent or close to it, Taychakhoonavudh said.

But she acknowledged that some "grandfathered" ISVs have paid no fees because they joined AppExchange very early on -- some have informal agreements reaching back to its 2006 launch -- when Salesforce was very focused on growing its application ecosystem. Those ISVs will now pay the same fees as everyone else, she said.

"This brings a lot of structure and coherence to the program," she said. "The marketplace has been maturing."

And that's something some partners have been asking for.

"It's a matter of fairness and transparency, quite frankly," said John Stewart, CEO of Cloudbilt, a Charlotte, N.C.-based developer of sales productivity applications, including MapAnything and ezCloudAudit, which are based on Salesforce.com's Force.com platform and sold through the AppExchange.

Cloudbilt has been paying revenue-sharing fees since it began selling its application through the AppExchange in 2012. Stewart noted in an interview that those fees go toward building up the Salesforce.com market from which all ISV partners benefit. "There's massive benefit to being in the Salesforce ecosystem," he said, noting that he sells exclusively in the Salesforce market and he has that relationship to thank for some Fortune 500 customer wins.

And the more revenue the AppExchange generates, the more Salesforce.com will invest in it, he added.

The changes are effective July 1 for new partners coming into the program. Taychakhoonavudh said it might take several months to negotiate new contracts with all of Salesforce's existing ISV partners.

The new program has four partner tiers: Platinum for partners with a contracted annual revenue contribution greater than $1 million; Gold for partners with a revenue contribution of between $200,000 and $1 million; Silver for partners with a revenue contribution from $30,000 to $200,000, and "Registered" for partners with a revenue contribution below $30,000.

The tiers designate the level of benefits and support ISV for which partners are eligible. Silver, Gold and Platinum partners get dedicated partner account manager support, for example, while Gold and Platinum partners receive business and product review services. And Platinum partners are eligible for "executive sponsorships."

"I see this as a significant benefit for us," said Pierre Naude, CEO of nCino, a Wilmington, N.C.-based developer of Force.com-based banking applications for managing loan origination processes. NCino was just informed that it's a Platinum partner, a designation that Naude said in an interview will expand the company's already deep relationship with Salesforce executives and engineering staff.

"Before we were one of thousands of partners competing for those resources," Naude said. The platinum label "will separate the significant players from the smaller players," he said, adding that his company's status also will help him coordinate his go-to-market activities with Salesforce. He also said nCino would not be impacted by the new revenue-sharing requirement.

The new tier structure "let's you know exactly what you're entitled to," said Stewart at Cloudbilt, which has been designated a Silver partner but could reach Gold next year.

The enhanced ISV program "is pertinent because it shows Salesforce has identified the need to extend the core Salesforce platform with specialized partner expertise," said Donal Daly, CEO of The TAS Group, a Dublin-based developer of sales opportunity management applications that work with Salesforce software.

Daly said the joint marketing opportunities the new program provides are especially important for him, given the Salesforce cache among potential customers. He added that he wasn't sure yet whether The TAS Group will be designated Gold or Platinum -- it will hinge on the time frame of the company's contract. "We're growing very rapidly," he said in an interview right after getting off a flight to the U.S. He declined to comment on the AppExchange fee issue.

The new program also offers additional partner licenses for Salesforce's Heroku cloud Platform-as-a-Service and Desk.com customer service and support application.

Cloudbilt has been using Amazon Web Services to host its applications, but the new Heroku licenses have him thinking of making a switch. "That will lower our costs," he said.

The new program also will provide additional development support, marketing resources, enhanced online training and new technical content created for ISVs.

PUBLISHED JUNE 11, 2015