5th Annual AppExchange Partners Report Shows What’s Driving 10 Million App Installs
The launch of CodeScience’s 5th Annual State of the AppExchange Partners Report comes at a time of much uncertainty around the ongoing pandemic, yet the Salesforce ecosystem has never been stronger. Case in point: the AppExchange just surpassed the milestone of 10 million app installs on January 14th, 2022.
The theme of this year’s report is A Rising Tide Lifts All Boats. Our research and interviews show that the rising tide of Salesforce’s success is raising up the entire AppExchange ecosystem — from technology, to customer base, to investment.
The State of the AppExchange Partners Report is an annual survey and analysis providing a comprehensive, independent look at the Salesforce AppExchange. For the fifth year in a row, we’ve gathered insights from nearly 100 senior-level executives to uncover trends around growth, technology, platform investments, ecosystem performance and more, allowing partners to see how they compare with their peers and take a look ahead at projections for 2022.
New to the report this year is a special supplement, “Navigating the Channel,” where we’ve distilled key learnings and advice from our recent alliances leader roundtable focused on building Salesforce success from an alliance perspective.
Let’s dive into some highlights.
Product and Company
New and/or improved features for current products rose to the top as the clear #1 product priority for 2022, followed by new product development.
Together, these two priorities accounted for over three-quarters of respondents. Product modifications to reduce churn and improve customer service trailed behind, but together still accounted for 20%.
What do ISVs see as the biggest keys to success in the post-pandemic marketplace? Salesforce’s credibility with customers is the dominant factor, followed by the gateway to the enterprise, access to install base, and the partner ecosystem.
Growth
Amidst the continuing challenges of the pandemic, success was predicated on being customer-centric and offering products differentiated from the competition. A clear understanding of target markets was also seen as essential for the majority.
Almost half of the respondents chose four or more of the eight options as key things that contributed to their company’s success over the past year. What we learned in 2020 was reinforced: in order to thrive, an organization cannot rely on its product or infrastructure alone; it has to work from a customer-centric point of view while valuing its workforce.
Returning to normative levels after a spike in 2020, acquiring new customers continues to rank as the number one challenge to be faced over the next 12 months. While the pandemic is still very much in play, there seems to be a renewed confidence and willingness to return to hiring new employees — a shift likely impacted by “The Great Resignation” of 2021.
Technology and Platform
Our analysis of the entire AppExchange product base revealed that the AppExchange is showing no signs of slowing down. The number of new ISV products per year continues to increase, with 2021 on track to have the most apps ever launched in a calendar year.
Our analysis also found that 67% of apps are Lightning Ready. This is a huge achievement by the AppExchange team and the ecosystem. The majority of the ISVs that have not achieved Lightning Ready status are either OEM apps, where they are largely a single app or apps that are more than 8 years old.
Salesforce as a Channel
Regardless of company size, access to Salesforce’s install base, scalability, and visibility/exposure are the top reasons ISVs choose to participate as an AppExchange partner.
Becoming a Salesforce partner continues to pay off; participation in the Salesforce ISV program resulted in increased revenue for 65% of respondents this year, up from 53% in 2020.
Diversity and Inclusion
Less than half of respondents felt that they have an understanding of their company’s diversity goals or the levels of diversity already realized within their company, demonstrating that there is much room for improvement in this realm.
Consistent with last year, a majority of respondents intend to reach company diversity and inclusion goals by centering on hiring strategies or practices, including internships and mentorships.
Investment (powered by Crunchbase)
For our Investment section, we once again partnered with Crunchbase, the leading platform for professionals to discover innovative companies, connect with the people behind them, and pursue new opportunities. This year, to provide a better frame of reference for the AppExchange data, Crunchbase expanded its analysis beyond the AppExchange to include investment data for the Microsoft AppSource, Google Cloud, and Shopify App Store ecosystems.
Funding significantly increased in AppExchange companies in 2021. As of October 2021, venture funding to those companies reached over $10 billion, double the $5.3 billion invested in 2020. Investment in late-stage rounds accounted for 77% of funding as of October 2021, and funding at seed/angel accounts for $24 million this year, a significant decrease from prior years.
Final Thoughts
Our interviews with ISVs in 2020, for our 4th Annual Report, took place in the heart of the pandemic. It was a tense and stressful time, and our interviews reflected that sentiment: partners were positive, but tempered. This year’s interviews presented a resounding affirmation that the economy is back and the ecosystem is sailing full steam ahead. 2022 is looking to be a record-breaking success for the AppExchange, and kicking the year off with the milestone of 10 million app installs is just the start.
These are just a small sampling of insights from our report. To read the report in full, including key learnings from alliances leaders to help you build your Salesforce success, download it here.
Resources
Download the 5th Annual State of the AppExchange Partners Report
