Salesforce Continues Its Joint Marketing Strategy and Lands an Alliance with Workday

On September 18, 2013, Salesforce.com and Workday announced a strategic alliance promising to deliver a lot of the capabilities of the PeopleSoft component of Oracle® entirely in a cloud Software as a Service (SaaS) offer. When I put together this deal with Salesforce’s partnership with Oracle, announced in June of this year, I have to congratulate Salesforce on closing two very potent alliances.

The specifics of the deal, which I am not going to touch on here, can be found in an article, Salesforce and Workday form Cloud Alliance, authored by Quentin Hardy, and published, same day as the announcement, on the New York Times website. What piques my interest in this story is the lesson the chief marketers at Salesforce.com (probably Marc Benioff, the CEO and founder) are giving on how to leverage application scale to boost the revenue torque represented by SaaS cloud subscriptions.

As I’ve written elsewhere, the difficulty in all of this for mature ISVs is precisely the paltry torque of cloud subscriptions. It’s very hard to part with revenue models built on sales of juicy on premises software licenses for cloud subscribers who usually pay a mere fraction of these prices in the form of monthly subscription costs. But what if the same infrastructure, and the same applications, could be promoted to an ever increasing set of enterprise prospects by negotiating alliances with other ISVs with complementary product offers? From what I’ve read of this deal and the earlier deal with Oracle, I think this is where Salesforce.com is taking us.

Of course, if they succeed and start to demonstrate substantial growth in revenue, per subscriber, over the next few fiscal quarters, then mature ISVs looking for a method to successfully attain an adequate revenue base from cloud offers to fuel continued growth and profitability will have a model worth following.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Joint Marketing Deals Look Great, On Paper, But How Do We Make Money With Them?

This is the second in a series of blog posts on the June and July 2013 quarterly earnings announcements of large ISVs in the enterprise computing software market — Oracle®, IBM®, and Microsoft®. Our interest in this topic stems from the clear market shift to cloud computing solutions from long-standing on premises solutions. Clearly this shift has had a dramatic impact on a number of related markets–sales of personal computers, computer operating systems, networking software and gear, etc. So it makes sense to look deeper into it.

Each of our 3 large ISVs pointed to an expected solution to their respective portion of the collective problem either during the quarterly earnings report, or soon thereafter. For Oracle®, the near term solution amounts to pointing current customers to leading cloud solutions from Salesforce® and/or Microsoft®.

As we wrote very early into this blog, in 2011, we have a lot of experience with Joint Marketing deals. These deals work when there is a clear win-win for each participant. One enormously successful joint marketing effort evolved from enterprise business’ burning need, in the mid 1980s, for a method to share then costly laser printers between personal computers and IBM mainframe distributed printing locations. The solution included a high quality, high speed laser printer from Xerox Corporation, an IBM mainframe hardware gateway device, and a printer sharing hardware product. The result was a lot of sales for Xerox and the manufacturer of the printer sharing device and hardware gateway.

But where’s the burning need in Oracle’s deals with Salesforce.com and Microsoft? We can’t find one. There is nothing to preclude any of Oracle’s customers from striking their own deals with Salesforce.com or Microsoft’s Azure service. Therefore, we think these joint marketing announcements have been crafted to assuage the concerns of investment analysts, than for any other reason. Oracle will have to provide more detail as to the real revenue kicker in each of the deals to convince us of a real step forward.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Joint Marketing Programs can Help ISVs Jump Start Channel Sales Programs

Early stage ISVs can find themselves competing against systems integrators who may be prospects for channel partner relationships. It takes no more than a couple of bruising experiences to sour a potential partner. Joint marketing opportunities can present a more favorable channel partner introduction option. Product marketing should pursue joint marketing opportunities with complementary businesses that already have a distribution channel in place.

One of our clients recently landed an opportunity like this one. During the meeting, the other party expressed some interest in actually reselling our client’s products. It makes sense to keep the two conversations separate. Blurry lines between topics in this type of discussion can lead to lost opportunity and lost revenue.

How best to handle a Joint Marketing discussion with channel building potential?
If your business lacks expertise managing channel partners, you should defer to your joint marketing partner on how best to introduce your product to their channel partners. They have already gone through all of the turf wars associated with migrating competitive relationships with integrators into complementary ones. They will know far better how to handle this opportunity for you.

But what about the syndication opportunity?
Keep in mind that syndication is a completely separate subject from joint marketing, or how to use someone else’s sales channel to get wider distribution for your product. Your joint marketing partner may be introducing the topic to try to blur the lines, to establish a favorable negotiating position. We think the best response to a syndication opportunity is to address it only after the actual joint marketing opportunity has been thoroughly discussed and assessed for its value.

In the next post to this blog we will talk further about syndication opportunities.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


ISVs do Well to Nurture Productive Partnership Relationships

Partner relationships broadly breakdown into two types:

  • an affiliation that benefits both barties or
  • an affiliation that serves a purpose, usually with regard to fulfillment, for both parties

ISVs should appropriately respond to either opportunity.

An Affiliation that benefits both parties
In this scenario an ISV produces products or services, which are promoted, directly, to an end customer by a channel partner. When these scenarios bubble up, ISVs should look to nurture them to capture what will likely amount to a much lower cost of product promotion. Usually this type of partner has a clear understanding of how products or services fit into a larger offer, saving an ISV the time and effort required to build a compelling case for target customers to implement products or services. The tacit recommendation represented by the partner’s effort produces a higher level of positive momentum for the prospect. The result is a shorter sales cycle for this type of opportunity.

An Affiliation that Serves a Purpose, Usually with Regard to Fulfillment, for Both Parties
When an end customer is required by procurement policy to go out to bid on any/all technology purchases, an ISV needs to work with whomever lands an order. Under no circumstances does it make sense to try to impede this process. The best way to look at an order of this type is that, without the partner who landed the order, there would be no sale to the end customer. It makes sense to have a pricing policy in place prior to contending for this type of business. This type of partner rarely expects a substantial margin. ISVs should be careful not to extend one.

Sales personnel at ISVs should have experience working with channel partners. Inexperienced personnel can make costly mistakes with either type of partner. Where management is not clear as to how to handle partners it makes sense to proceed very slowly on these opportunities. Better to be guilty of taking forever to finalize a sale, than to inadvertently make an obstacle out of a firm that can otherwise be a productive partner.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved