Salesforce signs lucrative four year deal with Amazon

Salesforce has released a public statement declaring that Amazon Web Services (AWS) is now officially its “preferred public cloud infrastructure provider.” Amazon also released a public statement to celebrate the deal, in which AWS will receive $400 million over the course of the next four years.

Last month, both companies agreed to the deal in which Salesforce will pay AWS $70 million during the fiscal year of 2017, $96 million during the next year, $108 million in 2019 and $126 million in 2020.

While the company has decided to officially adopt Amazon Web Services, it will not be abandoning its own data centre infrastructure. Rather, Salesforce has decided to expand into the public cloud and needs the extra resources that Amazon can provide. It's Heroku software development business, acquired in 2010 for $212 million, already operates entirely on Amazon infrastructure and the company would gain more flexibility using Amazon's services as well as access to its global data centres. Many countries require that customer data must remain in the country of its origin which would allow Salesforce to expand as a result of utilising AWS.

Salesforce will not be moving away from Oracle's software and databases which it currently heavily relies on. These databases and software can also run on AWS.

The company released a statement on Wednesday detailing how its partnership with AWS would allow it to globally expand: “For the first time, we'll be able to deliver our core services – including Sales Cloud, Service Cloud, App Cloud, Community Cloud, Analytics Cloud and more – for our international infrastructure expansion. This will enable us to bring new infrastructure online more quickly and efficiently in select international markets.”

Both Salesforce and Amazon are set to gain from the deal. This is also the first major enterprise client AWS has gained since Infor migrated to its platform a few years ago. Salesforce will be able to expand its business and may end up with more capital to invest into research and development.

Image source: Ken Wolter / Shutterstock