Since we work with a large number of customers evaluating Salesforce, we see many questions arise about the partner program — specifically around understanding what the right partner type to choose is. Determining the correct license type for your business is a crucial first step. It defines not only your relationship with Salesforce but also the way in which you architect your application.
While there are a number of different partner types, we are going to focus on two — OEM Embedded and ISVforce (both of which are often shortened to OEM or ISV respectively).
Understanding the Terminology
OEM stands for Original Equipment Manufacturer — this term is used when a specific version of software comes bundled with a piece of hardware, i.e., original equipment. However, this term is a bit of a misnomer in the world of Salesforce because the partnership type is called OEM Embedded or Lightning Platform Embedded.
ISV stands for Independent Software Vendor, which applies to a company that builds an application-specific software to function on a platform. ISVforce is the most common partnership type for partners on the AppExchange.
To Put It Simply
On the highest level, when trying to understand the difference between OEM Embedded and ISVforce partnership types, think of the ISVforce partnership as a way to sell your application to existing Salesforce customers via the AppExchange.
For OEM Embedded partners, you are selling your application as a standalone solution that has the Force.com (a specific version of the Salesforce platform) licenses embedded within your application to either new or existing Salesforce customers either independently or through the AppExchange.**
**It is important to note that your application cannot surface Sales and Services Cloud objects to your customers, but it can interoperate within a shared org. Additionally, you cannot rebuild Sales or Services Cloud functionality within an OEM Embedded application.
Why Choose ISVforce
The ISVforce partnership is the most common way to partner with Salesforce. These applications typically expand Salesforce’s functionality in some way — namely, they are an add-on that fills the whitespace within the ecosystem. For many considering developing an app on the AppExchange, they realize that a significant number of their customers and prospects are already using Salesforce and want to bring their application where their target market is. Typically this requires augmenting the Sales or Service Cloud offering (the CRM part of Salesforce) in some way, so it is a win-win for the partner and Salesforce.
Another aspect of the ISVforce partnership is that customers of ISVforce can develop on or extend your application through custom objects. The benefit being greater flexibility and scalability when evaluating your total market opportunity. This is not possible with the OEM Embedded partnership.
If you are building an application that relies on functionality within specific licenses (e.g., Customer Communities), the customer must purchase the license from Salesforce before they can use your app.
Why Choose OEM Embedded
OEM Embedded applications are typically those that focus on changing the infrastructure of an industry vertical (healthcare, finance, manufacturing, etc.), where their customers may or may not be using the Salesforce platform.
The benefit of OEM Embedded applications is that you aren’t limited to selling to Salesforce customers only. Existing Salesforce customers can find, purchase, and install OEM Embedded applications from the AppExchange just like they would an ISVforce application. For new customers, you can spin up new Salesforce org for them via the force.com platform without having to connect them to Salesforce directly.
Where ISVforce applications required the purchase of an additional license from Salesforce, OEM Embedded applications only have three specific licenses that can be made available to customers.
- Lightning Platform (Required) — These licenses enable your customers to use the force.com platform. Also known as the Salesforce Platform license.
- Customer Community (Optional) — Enables customers to interact with their data. Think of an end-user submitting a support ticket and then being able to come back and see that status of that support ticket.
- Customer Community Plus (Optional) — Enables customers to pull reports and to be established as having a “role” within your application. Think of the employees that need to see all the support tickets submitted within their specific org.
Salesforce Communities are used when your customer needs to work with external users like their customers or partners. These customers and partners will require licenses, which are sold through you.
Understanding what PNR is and how it impacts what you sell is the last piece in understanding the nuances between ISVforce and OEM Embedded partnership types.
PNR stands for Percentage of Net Revenue (also known as revenue share). This is the model in which Salesforce makes money off selling applications.
- For OEM Embedded partnerships, the PNR is 75/25 — meaning Salesforce receives 25% of the revenue from each license sold.
- ISVforce partnerships have a PNR of 85/15.
ISVforce and OEM Embedded Aren’t Mutually Exclusive
For some company offerings, a solution may be a blend of both partnership types. This is perfectly acceptable in the eyes of Salesforce.
If you still aren’t sure where to start, consider working with a PDO to guide you every step of the way. Getting started with Salesforce can be a daunting task, and many of your early decisions ultimately influence the outcome of your application.
CodeScience has 10 years of experience helping partners thrive on the AppExchange. We’ve brought 250+ products to market and were the first to receive the PDO Master designation. If you are evaluating Salesforce or the AppExchange, get in touch today!