Salesforce and AWS - why their marketplace alliance matters

why their marketplace alliance matters

At AWS re:invent, Amazon Web Services (AWS) and Salesforce announced an expanded partnership to enable customers to more easily and securely manage their data across the two platforms. Key elements of the announcement included:

• Amazon Bedrock will be available through the Einstein Trust Layer. Salesforce will support Amazon Bedrock, a managed service that makes foundation models from different AI companies available through a common application programming interface (API).
• Salesforce will expand its use of AWS to support Hyperforce, its public cloud offering.
• AWS will expand its use of Salesforce Data Cloud to create unified profiles of its customers, enabling it to deliver more personalized services to both business-to-business and business-to-consumer customers.
• Salesforce will begin selling Data Cloud, Service Cloud, Sales Cloud, Industry Clouds, Tableau, MuleSoft, and the Salesforce Platform through the AWS Marketplace. 
• Salesforce and AWS also announced expansion of some previously announced areas of their partnership, such as a deepened integration between Service Cloud Voice and Amazon Connect.

Some of this lengthy announcement is the typical 'we love each other just as much as we always have but want to remind you of it since it’s AWS re:invent'. However, there are a few key points to pay attention to here.

Salesforce gains a big new channel. The past few quarters have seen Salesforce push toward a more profitable operating model, and that includes reducing the cost of sales. Salesforce Starter, introduced earlier this year, and Salesforce Pro Suites, introduced a few weeks ago, were the first steps in providing smaller Salesforce prospects with a more turnkey, self-service approach to trying, buying, and deploying Salesforce – and also a means for Salesforce to compete for smaller prospects at much higher margins.

However, Salesforce isn’t necessarily seen as a choice for SMBs and startups, and plowing a lot of cash into marketing and selling a new product to them would defeat much of the profitability part of the equation. In contrast, AWS is the starting point for many SMBs and start-ups – particularly in tech – who need access to basic cloud infrastructure and services, and AWS’s Activate program provides them with guidance, resources, and AWS credits that can be used on the AWS marketplace to buy services such as Salesforce’s. So, start-ups participating in Activate get credits to burn, and now they can use them to pay for Salesforce subscriptions.

It's important to note that a lot of these start-ups are AI and AI-adjacent ventures, meaning they’re ideal potential customers for both Salesforce’s business-to-business sales capabilities and its Data Cloud. Although there’s no “Starter” for Data Cloud (yet), a big pitch for Data Cloud is simplifying the data integration, unification, and normalization needed for AI to work properly. Much like Force.com in the old days helped startups quickly build and deliver new apps on the Salesforce platform and then sell them on AppExchange, the-Salesforce deal streamlines building an AI-ready technology stack that combines AWS and Salesforce’s strengths – and ostensibly gives them a choice of marketplaces with AppExchange and AWS Marketplace. 

Although AWS has been great at selling compute and foundational technologies to Marketplace customers, its buyers and champions have traditionally been developers and IT types, not sales or marketing leaders. Selling Salesforce and partner applications built on the Salesforce platform and Data Cloud gives AWS an opportunity to expand its buyer base beyond IT and potentially compete more effectively against Salesforce and AppExchange for the business application buyer. It also gives AWS an opportunity to more effectively compete for business application partners.

My take

As the cloud market continues to evolve, there will continue to be co-opetition in the space. Four years ago, Salesforce announced that Microsoft Azure would be its public cloud provider for Marketing Cloud (and Salesforce would build out a broader Teams integration), but that was before Salesforce acquired Slack. Four years is a long time in cloud time. Salesforce has also announced deals with Google in the past that didn’t quite take, but they weren’t as important to helping Salesforce meet its profitability and Data Cloud growth goals.

In the end, ecosystem competition is a good thing, driving more streamlined buying, easier vendor management, and (hopefully) lower prices for customers, and more viable choices for partners. It will be interesting to see how this one plays out.