Need for Consulting in the Growing Salesforce Services Market

Clients are starting to look at Salesforce deployments more strategically by aligning their Salesforce strategies with overall business strategy. As a result, Salesforce consulting services that help plan and optimize Salesforce deployments will witness a significant growth throughout 2018 as well as beyond in the Salesforce services market.

This POV is based on an analysis of current and future Salesforce services businesses of 12 providers including Accenture, Bluewolf (an IBM company), Capgemini, Cognizant, Deloitte, Infosys, NTT Data, Persistent Systems, PWC, Tech Mahindra, VirtusaPolaris, and Appirio (a Wipro company). 

Highlights:

• Currently, a majority of the Salesforce services market belongs to implementation services because clients prioritize fast deployment projects. However, plan, manage, and optimize services will grow the fastest in 2018 and beyond.
• Sales Cloud deployments dominate the Salesforce services market. This is followed by Service Could, Marketing Cloud, and Community Cloud. There is also increasing interest in using Salesforce as a platform.
• North America is the biggest market for Salesforce services, but we expect to see growth in the UK and Continental Europe in 2018.
• Financial services and insurance industry clients are the biggest spenders in Salesforce services. However, there are opportunities across industry sectors.

Please refer to the HfS Blueprint Report: Salesforce Services 2017 for an in-depth analysis of the Salesforce services market.

Growing Interest in Plan, Manage, Operate, and Optimize Salesforce Services

The HfS Salesforce Services Value Chain defines the service categories that we track in this market (see Exhibit 1).

Exhibit 1: Approximate Split of Salesforce Services Business by Value Chain Service with Definitions* 

*Aggregate responses of service providers in the Blueprint 

Source: HfS Research, 2017     

• Implement: The majority of the Salesforce services market is implementation services, as clients prioritize fast deployment projects. Moreover, the service providers in the Blueprint expect this to remain the largest opportunity going into 2018. Service providers will continue to face challenges finding highly skilled consultants and engineers to meet client needs.
• Plan: There is a growing interest and an awareness of the need for upfront consulting services. As enterprises enter phase 2 and venture beyond in their Salesforce experience, they begin to realize the importance of aligning their deployments to strategic business needs. Enterprises deploy Salesforce to achieve a consistent CRM process across business units and sites. To be successful, deployments need to be tightly aligned to the enterprises’ overall CRM strategy, which includes business needs as well as technical requirements. In particular, cloud readiness services and organizational change management services are fundamental to the success of a Salesforce deployment. We also expect security services to become increasingly important, especially in global deployments that include local country-specific regulations.
• Manage, Operate, and Optimize: Each service provider in this Blueprint reported that, individually, at least 10% of their Salesforce services business comes from support services. Support services include the three ongoing support services categories in our Value Chain: Manage, Operate, and Optimize. Management services are often an afterthought for many customers. Most of the references we spoke with indicated that they had signed a 3- to 6-month contract with their service provider post-deployment to manage any immediate issues. They either did not envision any further issues or expected to be able to deal with them internally. Enterprises often need external skills to help them with all support issues. Optimize services are particularly important as enterprises often require assistance to navigate the implications of new product releases and functionalities.

Market Dominated by Sales Cloud Deployments

Exhibit 2: Market Size by Salesforce Applications*

* Aggregate revenue estimates of service providers in the Blueprint

Source: HfS Research, 2017

Based on the average Salesforce services revenues across all the service providers in the Blueprint, most business is to consult on, implement, and support the Salesforce Sales Cloud application. Nearly all the references we spoke with have implemented Salesforce Sales Cloud. The second most common implementation is Service Cloud.  There were some implementation examples and an increasing interest in Marketing Cloud, Community Cloud, and Wave Analytics. Leading service providers, such as Accenture, are investing in services to support Salesforce’s latest technologies, including IoT Cloud and its artificial intelligence technology, Einstein, which enhances the Salesforce cloud applications. In June 2017, Salesforce launched Einstein Analytics for advanced analytics capabilities. As Salesforce continues its innovations in technology development, service providers will need to continue investing in training and certifications to stay abreast of all the new changes and opportunities for clients.

Salesforce service providers also report a steady move away from individual cloud deployments to a more holistic approach to meeting business needs and desired outcomes. The Customer Success Platform is Salesforce’s complete CRM offering and represents the software provider’s move away from individual products to an integrated end-to-end CRM offering for clients.  As clients embrace this vision in the next few years, we expect continued growth across the Salesforce consulting, implementation, and support services market.

Salesforce Services Expected to Expand Beyond North America and Financial Services Industry

Exhibit 3: Salesforce Services by Geography*

* Aggregate revenue estimates of service providers in the Blueprint

Source: HfS Research, 2017

The service providers in the Blueprint reported an average of 63% of Salesforce services revenue from North America (See Exhibit 3). This represents more than all the other worldwide regions combined. There are continued opportunities in North America, but service providers also expect to see growth elsewhere in 2018, notably in the UK and Continental Europe.

Exhibit 4: Salesforce Services Business by Industry Sector*

* Aggregate revenue estimates of service providers in the Blueprint

Source: HfS Research, 2017

Clients in the financial services, insurance, and manufacturing industries are the biggest spenders on Salesforce services, according to the aggregate revenues of the service providers in the Blueprint. However, as Exhibit 4 shows, there are spending opportunities across industry sectors. Moreover, service providers expect to see continued interest from across industries in 2018. Clients value service providers’ ability to understand their industry sector specifics and have tools and templates that accommodate industry requirements and regulations.

Bottom Line: Salesforce Deployment is Not the End, It’s Just the Beginning

We expect to see continued growth in the Salesforce services market, including a geographical expansion and the adoption of a wider range of Salesforce applications. Moreover, we expect the Salesforce consulting and ongoing support services market to gain traction throughout 2018 and beyond.

Clients are starting look at Salesforce deployments more strategically. Although most buyers continue to focus on achieving fast implementations, some are starting to realize the importance of aligning their Salesforce strategies with their overall business strategy. In other cases, Salesforce service providers are demonstrating the need to use Salesforce as a platform to bring business solutions, rather than consider Salesforce as individual technical cloud implementations.

To meet the growing demand, Salesforce service providers are investing in hiring and training programs. The challenge is to equip consultants with technical expertise and industry sector business experience. Moreover, consultants need to understand the specific issues of implementing a SaaS solution, which requires a mindset different from that for premises deployments. Existing employees who can make this mindset shift can be cross-trained in Salesforce technologies. Otherwise, service providers have to attract the best talent externally. Leading service providers are increasingly focused on providing interesting opportunities to consultants, which can include job rotations across different parts of the Value Chain (consulting, implementation, and support services). They are also investing in motivation and retention strategies, which include attractive compensation packages, rewards for impactful contribution to projects, and sabbaticals after a certain period with the provider.

HfS has outlined recommendations for Salesforce service providers for continued success in this market in Action for Salesforce Service Providers and provided advice to buyers in Ten Recommendations For Salesforce Service Buyers.