Idc Salesforce Economy Report
Idc Salesforce Economy Report
Idc Salesforce Economy Report
John F. Gantz
Senior Vice President, IDC
Alan Webber
Program Vice President,
Customer Experience, IDC
Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cloud Computing to the Rescue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Benefits of Salesforce Cloud to the Economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Benefits of Salesforce Cloud to Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Power of the Ecosystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Talent Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Salesforce Helping Hand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IDCʼs EIM and the Benefits of Cloud Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Salesforce Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Salesforce Ecosystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Key Definitions in Support of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Changing Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exchange Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Preface
For a decade now, IDC has been quantifying the economic
impact of cloud computing in terms of the revenues it
creates for companies and the jobs generated by those
revenues. This White Paper is the fifth major study
conducted for Salesforce during that time.
IDCʼs methodology takes economic inputs from government sources and IDCʼs IT and
cloud market forecasts to feed a model that uses assumptions about the amount of
IT and business innovation cloud computing engenders, the available IT resources
that can be freed up, and the penetration of IT itself in the economy. It also relies
on surveys, in this case a survey of 525 enterprises across eight countries on cloud
deployment and the benefits and challenges of cloud computing.1
Itʼs a well-tested process, and one conducted many times. Update inputs, validate
assumptions, turn the crank.
The good news is that this White Paper has the advantage of all this re-forecasting, with
fresh inputs taking forecasts out to 2026. The bad news is that no useful comparison
can be made between this and earlier studies. The market has taken too many turns.
Executive Summary
The growth of cloud software2 suffered little from the pandemic, growing 22% worldwide
in 2020, while on-premises software growth fell to zero. This year, cloud-delivered
software will be 43% of the software market, and by 2026, it will be 61%.
IDC forecasts that the use of cloud services of Salesforce and its ecosystem will
create new revenues for customers that will add up to $1.56 trillion worldwide by
2026. This revenue will lead to the creation of 9.3 million new jobs, including
3.8 million direct jobs and 5.5 million indirect/induced jobs.
IDC forecasts that nearly two-thirds of those direct jobs will require occupational
skills and that the need for specific digital skills will grow from 23% of those new
jobs this year to 37% in 2026.
When surveyed, Salesforce customers said the top two benefits of the companyʼs
cloud services were support for a more rural/suburban workforce (47%) and adding
to brand value (42%) (refer to Figure 7).
Cloud computing, with its reliance on efficient hyperscale datacenters, can also
help organizations reduce carbon emissions (see How Cloud Computing Cuts
CO2 Emissions sidebar). In fact, as shown in Figure 7, 39% of Salesforce customers
surveyed rated the use of Salesforce cloud services as a top benefit in supporting
their sustainability efforts.
2
Excludes IaaS
Figure 1 shows the relentless growth of cloud as the new paradigm for the distribution
of software.
FIGURE 1
Software Moves to the Cloud
(worldwide versus on-premises software revenues ($B))
$1,097
$986
$890 $672
$807 $570
$737
$676 $483
$629 $409
$346
$291
$244
As shown in Figure 1, while on-premises software will grow at 2% a year over the next
five years, cloud software will grow at 18%.
Not shown is how growth of the two components changed in 2020 as a result of
COVID-19. In 2019, on-premises software grew 5% and in 2020, 0%. Meanwhile, cloud
software grew 25% in 2019 and 22% in 2020.
One of the reasons cloud computing has such blistering growth is its importance to
digital transformation — the process of transforming ad hoc IT implementations into
comprehensive all-digital approaches for every facet of the business.
Figure 2 shows the rapid growth of cloud software in support of digital transformation
and the reason IDC calls cloud computing a “pillar” of what IDC calls the “3rd Platform.”3
3
The 1st Platform was mainframe computing, and the 2nd Platform was distributed computing with PC and networking.
FIGURE 2
Cloud Drives Digital Transformation
(worldwide digital transformation software spending ($B))
$1,425
$1,268
$1,123 $777
$1,001 $650
$898 $542
$759 $816
$449
$371
$264 $311
$618 $648
$527 $552 $581
$495 $505
In the survey for this study, 74% of respondents said they had a formal digital
transformation strategy and 51% said cloud computing was “very important” to that plan.
4
The Impact of Digital Transformation During Times of Change, July 2020;
www.salesforce.com/content/dam/web/en_us/www/assets/pdf/idc-digital-transformation-in-times-of-change.pdf
FIGURE 3
How Salesforce Fuels the Economy
(worldwide business revenues generated from the use of Salesforce Cloud ($B))
If one considers only the new revenues created since last year (2020), the aggregate
above that level comes to $1.56 trillion.
The commensurate job creation driven by those revenues is shown in Figure 4.
Here, the aggregate number of new cloud-generated jobs is 9.3 million.
FIGURE 4
How Salesforce Drives Job Growth
(# of worldwide jobs generated from the use of Salesforce Cloud (M))
14.0
12.0
5.7
10.2
4.9
8.6
7.1 4.1
5.8 3.5 8.3
4.6 2.9 7.1
2.3 6.0
1.9 5.1
4.2
3.4
2.8
Indirect/induced Direct
Note: Total shown may not match the sum of components shown because of rounding
Source: IDC, 2021
“Indirect/induced” jobs are those created in the economy by people filling the direct
jobs (induced) and by spending on local goods and services by Salesforce and its
ecosystem (indirect).
For one, Figure 5 shows how well distributed Salesforce is within its customer base, with
the average Salesforce customer using Salesforce solutions in more than four departments.
FIGURE 5
The Salesforce Reach
(% using Salesforce Cloud solutions by department)
Sales 100%
IT 73%
Customer support 58%
Marketing 56%
Finance/admin 56%
Product development, R&D 51%
Production/operations 50%
n = 264
Source: IDC Survey, August 2021
Those customers also allocated benefits, as shown in Figure 6, along with the
expected improvement — in other words, what percentage expected what type of
benefit, and then by what percentage they expected the use of Salesforce cloud to
improve the activities driving those benefits.
FIGURE 6
How Salesforce Customers Benefit
(% of expected benefits) (% of expected improvement)
8.0%
n = 264
Source: IDC Survey, August 2021
IDC also asked about less quantifiable benefits of using Salesforce cloud services,
as shown in Figure 7.
FIGURE 7
What Salesforce Allows Customers to Do
(% using Salesforce Cloud services allows us to...)
In fact, IDC sizes this global Salesforce ecosystem as five times as big as Salesforce itself
this year and expects it to grow to more than six times as big by 2026.
To be specific, for every dollar Salesforce makes this year, the ecosystem will make
$4.96. And that is expected to grow to $6.19 by 2026.
FIGURE 8
The Ecosystem Fills in the Blanks
(% revenues in 2021 in the ecosystemʼs supporting products and services)
8%
17%
34%
Source: IDC Survey, 2021
These categoriesʼ shares are expected to remain relatively stable over time, although
IDC expects some IT services to migrate to business services as digital transformation
efforts progress. There are also differences by region, with business services being a smaller
share in emerging geographies, and IT services, and hardware and networking being higher.
Figure 8 also gets at the complexity of modern cloud implementations. The applications
touch many parts of the organization and many other IT products. In fact, when given
a selection of attributes of Salesforce partners they valued, respondents reported that
even more valuable than industry expertise or knowledge of the Salesforce products
being implemented was the ability to “integrate across Salesforce solutions.”
Note: The White Paper referenced in footnote 4 has a deep discussion of the
importance of integration and the economic payoff in digital transformation efforts.
But between now and 2026, the Salesforce ecosystem faces a significant opportunity:
$817 billion in net-new revenue above the 2020 level, or 20% growth a year.
Here, IDC has sized the workforce and, along the way, classified this future workforce
by occupation. This data is available via Salesforceʼs Tableau visualization engine.
To access, click here.
While estimating the job counts by occupation, IDC also analyzed both
the percentage needing skills functional to the occupation, such as certification,
schooling, or extensive on-the-job training, and the percentage that will need
significant new digital skills above and beyond the ones they have now.
As a percentage of the total, the two categories turned out to be quite different.
Functional skills come with the occupation — doctors, teachers, skilled craftspersons,
and so forth.5 People arenʼt in the occupation if they donʼt have (or quickly learn) the required
skills. The functionally skilled jobs sit steady at 66–68% of total jobs created
from the use of Salesforce cloud services.
The percentage of new Salesforce economy direct jobs (refer back to Figure 4)
leveraging new digital skills, on the other hand, will grow over time, as shown in Figure 9.
5
And these are workers at companies with computers, companies big enough and sophisticated enough to warrant the use of Salesforce cloud services.
This cuts out whole classes of unskilled jobs.
FIGURE 9
Digital Skills Will Need to Grow
(% of new jobs needing supplemental digital skills)
37%
34%
31%
29%
27%
25%
What are these digital skills? They vary by occupation, including dealing with Internet
of Things in the trades, new automation tools in medicine, or interfacing with complex
applications that require time and attention. These could be learning new collaboration
tools, creating chatbots, or working with new AI-assisted programs.
Here, Salesforce has made some significant moves that should help.
The acquisition of Tableau Software and MuleSoft have added analytical and integration
tools into the product line, key technologies for advancing digital transformation and
taking some of the load off IT departments. The 2021 acquisition of Slack Technologies
adds next-generation collaboration into the mix, again taking the load off customers
facing a radical “future of work.”
According to the survey, more than 80% of customers have used the service to obtain
products or services.
But Salesforce has also invested heavily in its free online user training program, called
Trailhead, which, as of the time of the publication of this White Paper, has issued 35
million training completion “badges” to 3.6 million users from 30+ countries. The survey
showed wide awareness of the Trailhead program, with 74% of responding Salesforce
customers saying they were aware of Trailhead.
Conclusions,
Musings, and Advice
The conclusions are clear. Salesforce and its ecosystem are doing something
right, with a broad positive impact on local economies and within their customersʼ
organizations. Their growth and customer support are indicative of that. So is
leadership in support of customer digital transformation efforts and increased
investment in helping customers upskill their workers.
Itʼs also clear that dealing with growth, the post-pandemic transformation of
work, and the need for talent will be challenges — for Salesforce, its ecosystem,
and its customers.
So far, Salesforce seems to be successfully facing those challenges, but the past may
not be prologue to the future. Knitting acquisitions into the organizations and their
offerings into the Salesforce platforms will take work. And helping customers deal with
not only the transformation of IT in digital transformation but also the transformation
of the organization itself may fall outside Salesforceʼs wheelhouse. But customers will
nevertheless look for help.
Customers will be looking inside, outside, and everywhere for help. The first stop will
be Salesforce and its partners. But this wonʼt be the last.
And thatʼs not even counting the tools Salesforce offers its clients to support their
own carbon reduction emissions, such as the Sustainability Cloud, or its actions as a
vendor asking suppliers to set sustainability goals.
These actions can be seen as force multipliers for the CO2 reduced from the migration
to the cloud.
The data presented in The Impact of COVID-19 sidebar tells the story.
In short, COVID-19 has had a disruptive impact, and from the looks of Figure 10, some
of that impact on society and the economy will be permanent. Yet, not all disruption is
bad — especially for those organizations already working on managing the disruption
entailed in digital transformation.
6
Worldwide CO2 Emissions Savings from Cloud Computing Forecast, 2021–2024: A First-of-Its-Kind Projection (IDC #US47426420, February 2021)
7
According to the U.S. EPA, 1 billion metric tons of CO 2 is the equivalent of the CO 2 produced by 2.5 trillion miles driven by passenger cars
(www.epa.gov/energy/greenhouse-gas-equivalencies-calculator).
FIGURE 10
The Impact of COVID-19 on Remote Work (all respondents)
(% of cloud-using employees working remotely)
51%
37%
26%
6%
Methodology
IDCʼs EIM and the Benefits
of Cloud Computing
IDC maintains an internal model (the Economic Impact Model, or EIM) that takes inputs
from IDCʼs market research on IT spending, spending on cloud computing, exchange
rates, vendor market share, and inputs from external sources on GDP, population,
disposable income, and labor forces. Using research-driven algorithms, the model
forecasts the revenues in a geography created in user organizations from the use
of cloud computing.
IDC then takes those revenues and computes, using research on GDP, gross output,
and disposable income per worker, the number of jobs supported by those revenues
in the current year. IDC uses standard growth rate ratios between revenue growth
and job growth to quantify job creation in future years. Typically, if revenues grow x%
a year, commensurate job growth will be 0.5–0.7 times x. In other words, new jobs
grow more slowly than revenues.8
To compute the Salesforce-specific share of revenues and jobs created by the use of
cloud computing, IDC relies on unpublished estimates of Salesforceʼs future revenues
as a percentage of the revenues of all cloud vendors and IDC estimates of additional
cloud services delivered by the ecosystem.
Note that the ecosystem may include companies that are not formal business partners
of Salesforce but that nevertheless sell products or services associated with the
Salesforce implementations.
8
For example, if revenues grow 5% from one year to the next, job growth would come in at 2.5–3.5%.
Occupational splits in the study were developed using forecasts from the U.S. Bureau
of Labor Statistics on the head count and growth of 800+ occupations. IDC used
previous studies to winnow down occupational counts to workers at companies with
computers, then companies sophisticated enough to be using cloud computing.
IDC then used adjustments based on external data on individual country economies to
adjust occupational share of the workforce for that country. This is under an assumption
that the workforces of companies using cloud computing will be less heterogeneous than
the country economies as a whole.
The numerator is calculated using IDC market studies, bulwarked by past and present
surveys, that show relationships between product and service categories — for example,
the ratio of IT services to application software, business services to IT services, network
line charges to infrastructure hardware, and so on.
System software
Infrastructure as a service
Data services
The aggregate of the revenue components calculated in this way becomes the estimate
of ecosystem revenues and the numerator of ratio.
For simplicity, IDC aggregates some categories for display in the published output
(refer back to Figure 8).
Net gain in jobs is the difference from year-end 2020 to year-end 2026. For revenue,
it is the aggregate difference from each year to 2020.
Business revenues are those created in the Salesforce customer base from the use
of cloud computing. They do not equate directly to GDP.
Exchanges rates used in the modeling for this White Paper are those of full-year 2020.
All views are in constant dollars.
The direct jobs created by the use of cloud computing are from spending in the
region/country studied. The assumption is that those jobs will also be located in that
region/country, but that may not always be the case.
Changing Inputs
Between the modeling done for the pre-COVID 2019 study and the current study,
many inputs changed as the pandemic affected economic activity. The growth in
worldwide revenues went from 2% in 2019 to -4% in 2020. IT spending also dropped,
but not as much.
New third-party data on revenue per head in India that lowered the historical and
forecast job count for India and, because of the size of its labor force, the total
worldwide head count
At the country level, various changes in IDC cloud spending forecasts and
Salesforce revenue estimates that affected individual countries in comparison
to the levels in the 2019 study
Exchange Rates
All IDC modeling inputs and forecasts are in constant dollars at the average annual
exchange rates of 2020.
The Survey
To support the assumptions driving the model and to present current real-world
information about the Salesforce economy, IDC conducted an online survey in
August 2021 of 531 decision makers familiar with their organizationʼs cloud
deployments across Australia, France, Germany, Japan, New Zealand, Singapore,
the United Kingdom, and the United States.
Questions related to the penetration of cloud services in the deployments, the impact
of the COVID-19 pandemic, the expectations of benefits from the use of cloud, and
products and services involved in implementations.
As Senior Vice President of IDC, John Gantz has responsibility for IDCʼs worldwide
demand-side research, global market models, and research quality control and standards.
He is also a member of IDCʼs management committee, chief architect of IDCʼs Worldwide
Digital Marketplace Model (formerly the Worldwide Internet Commerce Market Model, TM)
IT Economic Impact Model, and PC Software Piracy research. He is one of IDCʼs chief
spokespersons on broad technology and market issues at major forums in the United States
and around the world.
More about John F. Gantz
Alan Webber
Program Vice President, Customer Experience, IDC
Alan Webber is Program Vice President for Digital Strategy and Customer Experience. In this
role, Alan leads IDCʼs Customer Experience research program as well as supporting IDC's Chief
Marketing Officer's research efforts. Specific areas of research interest for Alan are the impact
that technology changes have on how business and customers engage and interact, the digital
transformation of the customer experience, and the impact of algorithms and analytics.
More about Alan Webber
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