Salesforce Partners May Grumble, but it's the Only Game in Town
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Salesforce.com has had some upheaval in its partner channel recently. Rene Bonvanie, the company's much ballyhooed senior vice president and general manager of AppExchange, resigned earlier this week after only four months on the job. Bonvanie's next-in-line left the company as well, as did at least one AppExchange partner rep. At the same time analyst and news reports have made it clear that AppExchange partners are increasingly concerned with Salesforce's formula for dipping in their pockets. While I haven't been able to confirm that there is any line to be drawn between the exodus of Salesforce (AppExchange) employees, the confluence of events - executives leaving; partners grumbling - certainly leads to some questions. Mainly, is the bloom finally fading from Salesforce.com, a company that's long been the standard bearer, the poster child, for Software as a Service? I think not yet. Because here's the thing: When it comes to a viable venue for ISVs to sell their on demand wares they ain't got nowhere else to go. Or at least no other partner with the market breadth and depth of offerings that Salesforce.com has. Salesforce has more than 30,000 customers and nearly 650,000 subscribers; that's one hell of a potential pipeline for partners. And partners get the picture. "If there were some other CRM vendor that were equal in size to Salesforce then we would look at them, said Bill Emerson, a ForceAmp.com executive and AppExchange partner. "Until [other vendors] pass that first bar, I am really uninterested. In the end, I still have to sell in that market. It doesn't matter if they have someone sitting in my office -it really doesn't matter. The Salesforce market continues to be the largest market." Emerson said he got a call from Salesforce after Bonvanie resigned telling him not only of Bonvanie's departure, but of the others as well. The (new) rep explained that Salesforce understood there was some consternation in the partner channel and requested some feedback. The Rep listened to ForceAmp's concerns and said Salesforce would take a couple weeks to mull things over and come out sometime in early July with a restructured revenue sharing program. "The main thing is people that I've worked with at Salesforce called me and said, 'look, we got off the path a bit with the way we work with partners. We heard your complaints; we want to respond.' And that's exactly what I want to hear," said Emerson. And while there are new fee-generating programs coming down the pike - the AppStore that will charge something around 20 percent to handle billing and collections for AppExchange partners; and the Apex programming language - they are, until they're available, vaporware. For now ForceAmp's main complaint with the revenue it pays to Salesforce is not how much - 10 percent of a deal that results from a Salesforce lead, for the first year of the deal - but in how the contract is structured. "Our biggest concern is the calculation of 10 percent, and how we decided what is a lead. That part is very complex," said Emerson. "Ten percent is a fair number. What we're hoping for is a reduction in the complexity of the calculation - maybe adopting more of a click model like Google, or a pay-for-performance kind of thing." Emerson pointed out that the Standard edition contract for AppExchange partners, only about three months old, is optional; there is a Basic edition that doesn't require partners to pay Salesforce any revenue off deals they get from AppExchange. But those partners don't get any marketing services from Salesforce, and when Salesforce does its internal sales training they're not likely to mention the Basic partner's products. "We really wanted that to happen," said Emerson. "For the money, it is worthwhile. (There is also a premier option that charges 25 percent of any deals that are a result of Salesforce.com leads. Emerson said he didn't think anyone ever signed up for the premier level.) There are other perspectives out there. Cowen and Company analyst Peter Goldmacher put out a research note last week that really brought attention to Salesforce's tactics with partners. "While all of the partners we spoke to were complimentary of the technical merits of AppEx [on demand platform], virtually all of them are unhappy about the fees they have to pay for leads they get from [Salesforce.com]," Goldmacher wrote in his note. "ISV dissatisfaction at this pivotal point in the development of the platform could hinder early stage adoption critical to longer term growth. With other platform alternatives out there from Oracle, Microsoft and WebEx Connect, we are concerned that [Salesforce.com] is potentially squandering a significant opportunity to partner with the wide variety of vendors necessary to generate momentum for AppEx. If AppEx fails, an important growth driver will disappear." We'll see what type of revenue sharing program Salesforce comes out in early July, and whether that's enough to temper partner's grousing. If not, what's the next option? |
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Comments (1)
You might also look into the change in the fee structure for becoming "certified" for App Exchange. Even for existing partners, they now want an additional $25K to force them to get certified. We were not happy to hear about that, esp. the cheery way in which our partner rep tried to pass this off as an advantage to us (!).
Posted by Deep Channel | June 27, 2007 5:53 PM