News Analysis - Salesforce selects AWS as preferred Public Cloud Infrastructure Provider - Good move

Earlier this week we were surprised by a partnership announcement of Salesforce and Amazon Web Services (AWS). The announcement has implications in both regards of best practices where SaaS based vendors may run their computing load, and market share potential in the highly competitive IaaS market. For Salesforce (and all SaaS) customers, this maybe a reflection point in regards of where and how SaaS workloads will be run in the future, so worth some analysis.

So let’s take apart the press release in our customary style – it can be found here (worth to checkout Salesforce co-founder Parker Harris’ blog post here):

SEATTLE – May 25, 2016 – Amazon Web Services, Inc. (AWS), an Amazon.com company (NASDAQ:AMZN), today announced that Salesforce (NYSE: CRM), the Customer Success Platform and the world’s #1 CRM company, has selected AWS as its preferred public cloud infrastructure provider. For the first time, Salesforce will expand its use of AWS to core services—including Sales Cloud, Service Cloud, App Cloud, Community Cloud, Analytics Cloud and more—for the company's planned international infrastructure expansion.

MyPOV – Good summary of the announcement, does not waste time to come to the core aspect – that also non AWS based Salesforce work load is moving to AWS (Sales Cloud, Service Cloud, App Cloud, Community Cloud and Analytics Cloud) – but with an angle of Salesforce’s planned international infrastructure expansion. All SaaS providers are in a tough position in regards of compliance with data privacy regulations, given the mess vendors and enterprises have been left in with the invalidation of the EU / USA Safe Harbor agreement (more here).

Many Salesforce services, including Heroku, Marketing Cloud Social Studio, SalesforceIQ, and the recently announced Salesforce IoT Cloud, already run on AWS infrastructure. Salesforce will utilize AWS to help bring new infrastructure online more quickly and efficiently.

MyPOV – This is what makes the announcement no surprise. Salesforce was using AWS already substantially – with acquired products / services like Heroku, Marketing Cloud Social Studio and Salesforce IQ, but it also took an AWS dependency in a planned fashion when basing its IoT Cloud on AWS. Even if Salesforce would have like to move to another IaaS overall – these 4 services already have created substantial ‘stickiness’ for Salesforce to use AWS for years to come. And given Salesforce’s pedestrian pace in all things platform (e.g. 6 years CEO Benioff announced moving away from Apex / force.com architecture at a DreamForce event) – it is a good move to keep running what is running.

“We are excited to expand our strategic relationship with Amazon as our preferred public cloud infrastructure provider,” said Marc Benioff, chairman and CEO, Salesforce. “There is no public cloud infrastructure provider that is more sophisticated or has more robust enterprise capabilities for supporting the needs of our growing global customer base.”

MyPOV – Good quote by Benioff – can’t get any better for AWS.

“Leading enterprises and ISVs around the world are migrating their business-critical applications to the AWS Cloud to be more agile and efficient, reduce costs, and take advantage of the security, reliability, and broad functionality we offer,” said Andy Jassy, CEO, AWS. “Companies rely on Salesforce to transform their businesses and we are thrilled Salesforce has chosen AWS as their public cloud infrastructure partner, helping them continue to scale, add new services and maintain their incredible momentum.”

MyPOV – Got quote by Jassy, mentioning the basic value proposition of AWS to ISVs: Keep building what you know best – your SaaS / PaaS product – we take care of the infrastructure below (IaaS). A good ‘divide & conquer’ approach.

Overall MyPOV

A good move by Salesforce, formalizing its relationship with AWS, which it was using extensively already. And a key win for AWS, as it not only formalizes existing load, but also gets non AWS load to move to AWS for the international expansion. And there is no larger SaaS property out there for AWS to convince to move to its infrastructure. What us unique that Salesforce has its own cloud infrastructure built on force.com / Apex / Oracle – so this is the first SaaS vendor saying they will not invest (as for international data center rollout) into its existing infrastructure – but adopt AWS. No secret that the writing is on the wall – if running all of Salesforce on AWS works internationally, the days Salesforce will run its (as of today 45 North American instances (see here)) on its own infrastructure – are counted.

The lesson learnt for enterprises is – even in the early stage of cloud – loads are sticky. Salesforce could have tried to bring its existing AWS load to other IaaS – but choose not to. That’s a loos to other IaaS providers who could have run Java byte code compatible loads (Microsoft Azure, Google Cloud Platform, IBM Cloud, Oracle Cloud etc.) and an indication that shifting loads in IaaS remains a tall order – even for a deep pocketed, experienced, cloud pioneer ISV like Salesforce. [Update June 2nd 2016: Salesforce points out to me that the vendor will invest in both existing infrastructure and AWS based data centers for its global expansion. Likewise Salesforce will keep investing in existing data centers on existing infrastructure / architecture.] So place your bets wisely when picking IaaS vendors, as when your load grows, moving it may be non-trivial, hard – or even impossible.

But for now a win for Salesforce customers. Salesforce can save substantial CAPEX for its international expansion. Today the vendor operates 10 instances of its cloud outside North America, a small fraction compared to the 45 North American instances. As Salesforce becomes more global, both compliance and performance demands would have required more investment in an infrastructure that Salesforce ultimately is likely to move off from. So CAPEX savings that can (and are likely) going in the infrastructure changes that Salesforce needs to do to move its older products to AWS Cloud. And for AWS this is a key win as it now only has been able to convinced ISVs to be the go to public cloud infrastructure (most notably Infor) – it has now a case of an existing SaaS vendor moving to its infrastructure. And Salesforce is likely the most standardized, uniform load to move – so a very good move for AWS, getting more load and keeping the famous ‘flywheel’ spinning faster (if not familiar – more load, better economies of scale, lower prices, more load, etc.). Given AWS huge data center footprint, attracting a lot of uniform load and a lot of potential is very strategic to accelerate its own global data center rollout.

Now it will be key for Salesforce to offer roadmaps and timelines on where its international expansion will move to – and which products will run where and when… But for now congrats to both vendors, customers will benefit, the real questions is – what took so long to sign this partnership?

[Insider side note: Good to see AWS brevity in the press release - Salesforce press releases are soo much longer...]

More Apps / SaaS vendor and IaaS vendor partnerships (in chronological order):

Infor runs on Amazon AWS (read here)
SAP on IBM Cloud (read here)
Lumesse on Salesforce Cloud (read here) and
NetSuite on Microsoft Azure (read here)
JDA chooses Google Cloud Platform (read here)
SAP chooses Microsoft Azure (read here)

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News Analysis - Salesforce selects AWS as preferred Public Cloud Infrastructure Provider - Good move

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