Why the Salesforce-Amazon cloud partnership is a big deal

Good news for Amazon; bad news for Microsoft and Oracle


This week SaaS giant Salesforce.com and IaaS behemoth Amazon Web Services codified a partnership that the two have been discussing for months.

The move is a coup by Amazon in the public cloud market, particularly against Microsoft Azure, and could turn out to be a big kick in the pants to Oracle.

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Salesforce and AWS actually have a long partnership that goes back years. In 2010 Salesforce.com bought an application development platform named Heroku, which was hosted in AWS and continues to be to this day. Salesforce could have chosen to bring Heroku’s underlying infrastructure in-house post acquisition, but it chose to keep its toe in AWS’s cloud through Heroku.

150914 salesforce dreamforce 2 Martyn Williams

A Salesforce.com logo on the front of the Moscone Center in San Francisco.

In recent weeks we’ve heard rumblings of a potentially deeper partnership between these companies. Salesforce.com CEO Marc Benioff referenced that the two companies were looking to expand ties in his earnings call earlier this month.

This week it became official, with Salesforce.com naming AWS its “preferred provider” in the public cloud. In a blog post announcing the deal, Salesforce says it will use Amazon's cloud to help support its international infrastructure expansion. 

It’s a hookup that makes sense of both companies. Salesforce is a SaaS and needs infrastructure to runs its applications. Amazons is looking for big customers wins to solidify its positioning in the market. It's a tit-for-tat too: Amazon announce earlier this year that it will be increasing its use of Salesforce's CRM SaaS. While it’s not surprising that Salesforce is becoming more open to using public cloud services, it is telling that SFDC chose to work with Amazon instead of say Microsoft Azure.

Benioff and Microsoft CEO Satya Nadella had a coming together last year. That relationship is more about integrating software and applications together. It’s now easier to integrate Microsoft Office 365 tools, like Outlook email, Word documents and other productivity tools into Salesforce’s customer relationship management, marketing cloud and other offerings.

It’s telling that Microsoft and Nadella were not able to expand that partnership from a SaaS-only relationship to also coaxing Salesforce to more heavily use the company’s Azure IaaS. Salesforce does host some apps, such as its ExactTarget app, on Azure.

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The fact that Google, IBM and a whole host of other IaaS vendors didn’t win this deal shows Amazon’s dominance in the IaaS market at this point. If you dig deep enough at Salesforce I’m sure you'd find some workloads running on all the major cloud platforms though.

The move is also sobering for Oracle. SFDC is not very open about its current infrastructure makeup, but it is a heavy user of Oracle (Benioff’s former employer). Every workload running in Amazon’s cloud is one less running on Oracle hardware. With SFDC’s commitment to use Amazon as their preferred infrastructure platform moving forward, that’s harsh news for Larry Ellison and Co.

Let’s not blow this too far out of proportion though. Salesforce.com will still operate much of its own infrastructure. It will likely use AWS for new applications, massive-scale infrastructure needs and new platforms such as its Internet of Things cloud. Salesforce isn’t giving up on its Oracle hardware, nor is it turning its back on Microsoft. It’s just got a new buddy in Amazon now too.


Copyright © 2016 IDG Communications, Inc.

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