Salesforce enters into $400 million worth deal with Amazon Web Services to expand in Canada and Australia

Salesforce.com has entered into a deal with Amazon Web Services worth around $400 million. As per the deal, Salesforce.com would use Amazon Web Services to expand in Canada and Australia.

Salesforce already uses Amazon Web Services for some of its business. It is for the first time that the company’s key applications will be one someone else’s computers. It is said that Salesforce has entered into a four-year long contract with Amazon.

Though Salesforce has evaluated the similar deals with Microsoft and Google, Amazon Web Services continues to lead when it comes to its range of offerings and low prices.

Marc Benioff, the co-founder and chief executive of Salesforce, said that they review the contract in one year. Amazon has effectively established itself in countries like China that has strict requirements on what data can be sent offshore. Sometimes, it gets difficult and time-consuming to meet the regulations.

Experts said that the deal could be considered as a sign of bigger trend in corporate computing as businesses evaluate whether to keep their own computers or they should work with big public clouds. But for now, the trend has limits as the spending will be restricted to new countries where Salesforce expands, said Benioff.

Down the line, Amazon Web Services might also become competitive on the basis of price. Adam Selipsky, vice president of marketing and sales for Amazon Web Services, was of the view, “Our prices relative to what they can build themselves – we’re already at a stage where it’s competitive. We’re just at the starting point of enterprise adoption”.

Salesforce said that it will continue to build its own data centers, but the Amazon relationship could reduce its reliance on Oracle Corp, which supplies both hardware and software to Salesforce.

“Amazon Web Services, the biggest of the cloud-computing providers, has a new line of work: Taking other cloud-computing giants into other countries. On Wednesday, Salesforce.com announced it would use A.W.S. to expand in Canada and Australia, in a deal valued at about $400 million. If successful, the value of the transaction will most likely get much bigger. “For sure, we’re talking of billions of dollars in services over the next several years,” said Marc Benioff, the co-founder and chief executive of Salesforce,” according to a news report published by NY Times.

Cloud computing uses a massive density of computer servers and sophisticated software to rent data storage, computing and applications to companies. Besides those capabilities, the deal with A.W.S. enables Salesforce to get into new markets faster, since Salesforce doesn’t have to find facilities and recruit talent. Amazon has also established itself in countries like China that have strict requirements about what data can be sent offshore. Meeting those regulations is difficult and time-consuming, and companies like Salesforce put a premium on getting into markets quickly.

According to a story published on the topic by ZD Net, “Salesforce launched an effort called Snap-ins, a new way to add capabilities for its Service Cloud such as two-way video chat and tap-to-call. The bit is that companies can deploy contextual services to service channels such as mobile and the Internet of things. The key addition is that Salesforce’s SOS Snap-in has two-way video chat so agents can resolve incidents.”

Combined with Google’s move to combine Android apps and the mobile web via Instant Apps, the big theme is that there’s a movement to bring more of an app experience into other channels. Eric Bensley, director of product marketing at Salesforce, said Snap-ins allow customers to add more touch points to the Service Cloud. “The idea is that customers wanted to add these experiences beyond apps.”

A report published in WSJ News revealed, Salesforce Inc. is pinning its international expansion plans on Amazon.com Inc. ’s cloud-computing services, a deal that will be worth $400 million over four years to Amazon, according to a person familiar with the matter. The deal highlights the increasingly tight relationship between the two companies. Earlier this year, Amazon agreed to expand its use of Salesforce’s customer-relationship service.

By using Amazon’s infrastructure instead of its own servers, Salesforce will be able to expand into new countries more rapidly and efficiently, the company said. It will give more details on its international expansion plans later this year, Salesforce said. Salesforce said it would continue to build its own data centers, but the Amazon relationship could reduce its reliance on Oracle Corp. , which supplies both hardware and software to Salesforce, and is also a rival.

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