ISG Provider Lens™ Salesforce Ecosystem Partners - Managed Application Services for Large Enterprises - U.S. 2022
Since its founding in 1999, Salesforce has shown impressive growth and is now one of the leading providers of cloud-based application systems in the form of Software as a Service (SaaS). The focus was always on implementation using agile methods and a high degree of standardization, giving the company the opportunity to roll out updates at comparatively short intervals.
Salesforce has continued steady growth in recent years, and the restrictions imposed by the COVID-19 pandemic have only had a limited impact on the pace of growth. Although a few project budgets were partially frozen, or the corresponding projects were temporarily put on hold, in general the market growth was not significantly affected. In some areas, the increasing relocation of processes or sub-processes in the direction of online processing has led to additional demand for IT solutions. As Salesforce is functionally largely geared toward customer-related processes, there have been additional growth impulses for the company in these areas during the pandemic.
The high growth also leads to a growing demand for implementation services. Meanwhile, the availability of qualified resources with Salesforce expertise can be seen as a limiting factor for the number of implementations. Specifically, in the U.S., this has resulted in significant consolidation pressure in the market for corresponding services, with large system integrators in particular trying to expand their resource base by taking over other providers. As a result, the number of midsize providers that offer complete scope coverage in the U.S. has shrunken significantly. It will be interesting to see if the few remaining providers will stay independent over the upcoming years, or if new players of this will emerge. In addition to these takeover activities, which ultimately do not generate any additional capacities in the market, many providers are focusing on increased recruiting. On the one hand, young talents are hired and trained to become Salesforce consultants through suitable qualification measures. On the other hand, within some companies, experienced consultants from other areas are requalified to become Salesforce experts. The large system integrators follow this path due to the lack of opportunities for additional growth by acquisitions. In its partnerships, Salesforce itself promotes companies that contribute significantly to additional implementation capacities.
It is worth noting here that Salesforce is also currently building up its own offering of implementation services. Following the acquisition of the midsized provider Acumen, the company is further expanding its own capacities and is also partnering with other providers to implement Salesforce for several customers. This opens additional opportunities for these providers, but also inherits the risk of growing dependence on Salesforce. Furthermore, it is not yet possible to conclusively assess how sustainable the expansion of Salesforce’s own development capacities will be, because as a software business, it requires significant investments and usually has lower margins.
Another key trend is the alignment of the Salesforce offering to different industries. This started a few years ago with the launch of industry-specific products like the Financial Services Cloud and the Health Cloud. In 2020, this focus was intensified with the acquisition of Vlocity, an independent software vendor (ISV) that to date has developed various industry-specific products based on the Salesforce platform. It appears that this is a sustained trend and that Salesforce’s portfolio is continually evolving toward an increased focus on industries. It remains to be seen whether this will lead to restrictions in the functional further development of such classic products as Sales and Service Cloud over the next 12 to 24 months.
In terms of the implementation methods used, the hybrid agile model remains the most common approach for globally operating customers, for whom the integration of Salesforce into a complex system landscape with global operations is a mandatory requirement. The hybrid agile model is a combination of agile elements for the implementation phases with phase-oriented elements related to strategy, design and rollout. Most providers now offer this type of methodology in their portfolios. The purely agile methodology is still suitable for a single implementation of Salesforce; it is primarily used by midsized customers that do not require a global rollout and have limited integration requirements.
When it comes to integrating Salesforce with other applications, the MuleSoft platform continues to be the dominant tool. Comprehensive competence with regard to this platform is now an essential requirement to be able to survive in the market for providers of Salesforce implementations. The large system integrators usually operate a dedicated MuleSoft practice of considerable size, in which the corresponding capacities are bundled.
For all vendors, whether they are systems integrators or boutique vendors, a strong network of ISV partnerships within the Salesforce ecosystem remains of great importance. There is still a significant need to cover requirements that go beyond the standardized range of functions of the Salesforce products with additional products. This applies not only to the implementation, but also to the subsequent continuous support of ongoing operations. To be able to avoid individual developments as far as possible in these cases, the products of the ISVs are used. These solutions are typically offered as independent products, licensed separately and made available through a Salesforce-powered portal called the AppExchange Store. Salesforce ensures that the individual apps meet the basic software quality requirements, including troubleshooting, maintenance cycles, compatibility with Salesforce products, etc.
In this year’s study, the quadrant for implementation and integration for large customers was renamed “Multi-Cloud Implementation and Integration for Large Enterprises” to make the difference to the quadrants for the midmarket even clearer in terms of content. The definition of this quadrant remains unchanged. Furthermore, the support of global rollouts and the coverage of the complex integration requirements are key success factors for providers in this quadrant. The companies Accenture, Capgemini, Cognizant, Customertimes, Deloitte Digital, HCL, Infosys, Mindtree, TCS and Wipro qualified as Leaders this year.
The Implementation Services for Core Clouds Midmarket segment also remains unchanged in terms of content. As already explained, the trend toward consolidation has led to several players disappearing from the market in 2021. It can be stated that, in addition to pronounced development skills, the early phases of development, including strategy development, design and planning of a roadmap, have become increasingly important skills for the success of providers in this area. Birlasoft, Coastal Cloud, Hexaware, Persistent Systems, Silverline and Traction on Demand qualified as Leaders this year. As a Rising Star, Brillio has the prospect of qualifying as a leading provider in the future if its positive development continues.
In the Implementation Services for Marketing Cloud Midmarket segment, which also remains unchanged in terms of content, the following providers have qualified for a leading position this year: Coastal Cloud, Dentsu, Persistent Systems, Silverline, Slalom and Traction on Demand.
The market for Managed Application Services for Large Enterprises, like the corresponding market for implementations, is largely dominated by the large and internationally operating system integrators. Other players occupy significant sub-areas, but usually remain a bit behind the position of a Leader. Accenture, Capgemini, Cognizant, HCL, Infosys, L&T Infotech, Mindtree, TCS, Tech Mahindra and Wipro were able to qualify for this status.
Although they have favorable cost structures due to their global supplier models, the large system integrators do not play a significant role in the quadrant for Managed Application Services for Midmarket. On the one hand, this is due to the usually lower complexity of requirements in this market, and on the other hand, the companies mentioned do not seem to give this market a high priority. The following companies were able to qualify as Leaders: Birlasoft, Brillio, Hexaware, Persistent Systems, Silverline and Traction on Demand.
Compared to the last year, the structure of this year’s study was expanded to include a quadrant dealing with the Implementation Services for Analytics Solutions on Salesforce. For the providers in this still comparatively young segment, there is incomplete information or only little information provided by the companies. As a result, only a few companies could be assessed this year, with the following achieving Leader status: HCL, Infosys, Persistent Systems, Tech Mahindra and Wipro.
In the next few years, the availability of qualified resources and the progressive focus on industry-specific offers will probably have a significant impact on the market for Salesforce-related services. It will also be interesting to follow Salesforce’s further positioning steps.
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