While Salesforce has already used Amazon Web Services (AWS) for some of its cloud-based needs, it has now confirmed a deal under which it will expand upon that, making AWS its preferred public cloud infrastructure provider going into the future.
The deal is valued at around $400 million over the next four years, according to documents recently filed by Salesforce with the U.S. Securities and Exchange Commission. While the 10-Q statement referred only to a "third-party provider," Fortune reported yesterday that "sources close to both companies" have confirmed that partner is AWS.
The expansion of services to the AWS cloud platform is part of Salesforce's "planned international infrastructure expansion," according to statements released yesterday by both companies, which did not mention the value of the deal. Amazon offers its AWS customers 33 "Availability Zones" across 12 geographic regions, with facilities in the U.S., Australia, Brazil, China, Germany, Ireland, Japan, Korea and Singapore.
Targeting New International Markets
This new deal means that for the first time Salesforce is expanding its use of AWS to such core offerings as its Sales Cloud, Service Cloud, App Cloud and more. The company has previously used AWS for such services as its Heroku app development platform and its SalesforceIQ customer relationship management software.
Salesforce also announced recently that it would use AWS to support one of its newest services: Salesforce IoT (Internet of Things) Cloud. Amazon, in turn, uses Salesforce's offerings for its own customer management services, having signed an agreement to take those services company-wide in the first quarter of this year.
"[T]his is a huge expansion of our relationship with them and we plan to use more Amazon services in the future," Salesforce vice chairman, president and COO Keith Block said of that agreement during last week's Q1 2017 earnings call.
Although Salesforce plans to continue investing in the development of its own data centers to support its services, the company said it will turn to AWS to get services online more quickly and efficiently in select international markets. Salesforce said that it would provide more details about timing and specific locations later this year.
'Meeting of the Minds' on Cloud
The new agreement will enable Salesforce to "continue to scale, add new services and maintain their incredible momentum," AWS CEO Andy Jassy said in a statement yesterday.
Salesforce reported a record number of large transactions in the first quarter of this year, as well as double-digit growth in revenue. Those results led the company to raise its 2017 expected year-end earnings by $80 million, to as much as $8.2 billion.
"[Amazon CEO] Jeff Bezos and I have a great meeting of the minds of the future of the cloud," Salesforce chairman and CEO Marc Benioff said during last week's earnings call. "I think that it's been a great relationship and partnership for us. We want to continue to grow that and expand that strategically. We are definitely exploring ways that we can use AWS more aggressively with Salesforce."