While early adopters of Salesforce services were looking to effectively manage customer relationships, market targeted products, explore sales performance, and drive cost efficiencies, enterprises today seek superior customer engagement and faster RoI from their Salesforce investments. To serve this need, Salesforce has introduced industry cloud products and augmented its capabilities by acquiring Vlocity, a leading provider of industry-specific cloud and mobile software. IT service providers are increasingly making tuck-in acquisitions to plug gaps across their Salesforce services portfolios and enhance their geographic footprints.
In this report, we assess 16 Salesforce providers and position them on the Salesforce Industry Cloud Services PEAK Matrix®. The research will help buyers select the right-fit providers for their needs, while providers can benchmark themselves against each other.
This report features detailed assessments, including strengths and limitations, of 16 providers with a focus on their Salesforce industry cloud services.
The assessment is based on Everest Group’s annual RFI process for the calendar year 2022, interactions with leading providers, client reference checks, and an ongoing analysis of the Salesforce Industry Cloud services market
The assessment includes all industries and geographies
The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.
In February 2021, Microsoft CEO Satya Nadella proudly announced the addition of three new offerings to the company’s growing portfolio of industry cloud solutions: Microsoft Cloud for Financial Services, Microsoft Cloud for Manufacturing, and Microsoft Cloud for Non-profit. In December 2020, AWS introduced Amazon HealthLake, a HIPAA-eligible service for healthcare and life sciences organizations; this service will compete head-to-head against Google Cloud’s and Microsoft Azure’s AI-powered solutions for the healthcare and life sciences markets. And all of these companies have other industry-specific cloud solutions. It has become quite clear that savage competition is budding in this fast-emerging cloud segment. Indeed, industry-specific cloud has become the epicenter of new investments as all major cloud vendors have declared “industry-first” focuses.
In a recent blog, we explained the basics of what constitutes a true industry cloud solution. Now, let’s take a look at the different types of industry cloud solution providers and their go-to-market strategies.
The current industry cloud solutions marketplace broadly has four kinds of players:
Exhibit 1: The converging landscape of industry cloud solution providers
While all of these types of cloud solution providers have chosen verticalization as their preferred differentiation strategy, each of them is approaching it differently:
While service providers currently enjoy an excellent relationship with the hyperscalers and vertical SaaS providers as strategic partners in the cloud, their shared desire to lead the emerging market for industry-specific solutions could cast them as competitors in the near future
Industry-specific solutions will evolve and improve at a swift rate as tens of thousands of businesses across every industry begin to rely on them as the strategic digital link to their customers. An increasing number of enterprise CEOs are prioritizing end-to-end digital businesses, data-driven operations, and customer-centric growth.
In our next blog, we will analyze the vertical cloud trend from an enterprise point of view, discussing the key implications for enterprises and how they can source industry cloud solutions that best suit their needs. Meanwhile, please feel free to reach out to [email protected] or [email protected] to share any questions and your experiences.
Microsoft recently rolled out its first industry cloud, Microsoft Cloud for Healthcare, combining capabilities across Dynamics 365, Microsoft 365, Power Platform, and Azure, to help improve care management and health data insights. Not so long ago, SAP’s CEO, Christian Klein, counted the company’s newly launched industry cloud among its growth drivers, and rightly so. Since its launch, SAP’s industry cloud has seen a long line of suitors rallying to partner in and build different vertical cloud offerings on top of it. In June 2020, there was Deloitte, then Accenture, and, most recently, Wipro.
Having analyzed this specific market trend throughout 2020, we at Everest Group have realized that, with all kinds of cloud providers jumping on to the industry cloud bandwagon, confusion abounds on what truly is an industry cloud.
Simply put, an industry-specific/vertical cloud is a cloud solution that has been optimized and customized to fit the typical nuances and specific needs of a particular industry vertical’s customers. It is designed to tackle industry-specific constraints such as data protection, retention regulations, and operations with mission-critical applications.
We believe that a true industry cloud solution is characterized by four different layers: the infrastructure and platform layers, followed by an application layer, which is further supplemented by customization and differentiation layers.
The infrastructure layer, dominated by industry-agnostic IaaS players such as AWS, provides the hardware, network, scalability, and compute resources. The platform layer, such as Azure’s PaaS offering, is built over this infrastructure layer and becomes the debugging environment for building applications.
The application layer comprises a horizontal cloud application such as Salesforce CRM and, in several cases, hosts development platforms, such as the Salesforce App Cloud, that become the marketplace for building additional functionalities.
The differentiation layer adds vertical nuances to a horizontal application such as built-in industry regulatory compliance. It is here that we see the industry cloud taking shape, but the offerings are still standard and not customized to the needs of specific enterprises.
The customization layer brings in service providers or technology vendors with their vertical expertise and decades of experience in working with enterprises. They partner with providers of differentiated cloud offerings, and build tools and accelerators to further customize them to suit enterprise needs, adding capabilities such as AI and security, personalized dashboards for analytics, and integration services to build a truly industry-specific/vertical cloud offering.
We have illustrated this architecture in the exhibit below, taking the example of Veeva Systems, a popular provider of industry cloud solutions for life sciences. Veeva started as a CRM application built on the Salesforce platform, designed specifically for the pharmaceutical and biotechnology industries. Salesforce provided the infrastructure, platform, and application layers, while Veeva added a differentiation layer with a data model, application logic, and user interface tailored to support the pharmaceutical and biotechnology industries. It leveraged the standard Salesforce reporting, configuration, and maintenance capabilities.
Exhibit: Understanding the industry cloud architecture through Veeva industry cloud
Over time, Veeva has cultivated an ecosystem of partnerships, including service providers such as Accenture (Veeva CRM partner) and Cognizant (Veeva Vault partner). These partners leverage the Veeva development platform to build additional applications customized to enterprise needs, thereby adding the final customization layer to Veeva’s solutions suite.
Industries such as healthcare and banking – which require rapid and auditable deployment of new features or functionalities to comply with regulatory changes – are rapidly adopting industry cloud. Healthcare continues to lead the charge from a vertical standpoint, but many industries are experiencing an uptick in adoption, including manufacturing, financial services, and retail.
The key reasons for this growth are:
With the one-cloud-fits-all-approach reaching maturity, the next decade will be marked by the depth of vertical expertise and customization capabilities that can complement existing applications and address customer pain points. Different kinds of vendors are developing industry cloud solutions, ranging from hyperscalers such as Azure and GCP, to vertical-specific players such as Veeva. We will cover the industry cloud market in further detail in parts 2 and 3 of this blog series, in which we will answer the following questions:
The battle for industry cloud is only going to get fiercer in the near future. Please follow this space for more blogs on the emerging war and warriors in the industry cloud market. Meanwhile, please feel free to reach out to [email protected] or [email protected] to share any questions and your experiences.
A blog I wrote last year discussed the ugly market share war among the three top cloud infrastructure providers – Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP.) Now we need to talk about how Independent Software Vendors (ISVs) like Oracle, Salesforce, and SAP are changing the battle with their industry-specific clouds.
The fact is that AWS, Azure, and GCP don’t really have industry clouds. These cloud IaaS vendors enable clients to run business applications and services on top of their cloud platforms, but haven’t built industry-specific application or process capabilities. They acknowledge that their clients want to focus more on building applications than infrastructure, which defeats their positioning in the industry cloud market. The core of what they offer is compute, data, ML/AI, business continuity, and security, and they rely on technology and service partners to build industry-relevant solutions. For example, GCP partnered with Deloitte for cloud-based retail forecasting, and AWS joined with Merck and Accenture for a medicine platform. They are also partnering with core business application vendors such as Cerner and Temenos.
ISVs have continued to expand their industry cloud offerings over the past few years. For example, in 2016 Oracle acquired Textura, a leading provider of construction contracts and payment management cloud services, SAP introduced its manufacturing cloud in 2018, and in 2019 Salesforce launched its CPG and manufacturing clouds. Further, Oracle and SAP have built solutions for specific industries such as retail, healthcare, and banking by focusing on their core capability of ERP, supply chain management, data analytics, and customer experience. And while SFDC is still largely an experience-centric firm, it is now building customer experience, marketing, and services offerings tailored to specific industries.
So, what will happen going forward?
So, what should enterprises do?
What do you think about industry clouds? Please share with me at [email protected].