2012 in summary: social acquisition frenzy, Salesforce.com v Oracle, Microsoft’s missing year, and SaaS’s final victory…
Acquisitions were a big feature of 2012, as the larger CRM software vendors looked to build out their functionality, particularly in respect of social capabilities, and the enterprise players looked to fluff up their cloud credentials. Salesforce.com bought Stypi, Buddy Media ($689M), ChoicePass, Thinkfuse, and GoInstant. Oracle snapped up Vitrue ($300M est.), Collective Intellect, Involver, and Eloqua, and Microsoft acquired Yammer ($1.2B) and MarketingPilot. In other notable, though non-CRM acquisitions, SAP purchased Ariba ($4.3B), and Oracle purchased Taleo ($1.9B).
With Salesforce.com likely to respond quickly to Oracle’s $871 million December move for Eloqua, it doesn’t look as if 2013 is likely to be any quieter on the acquisition front.
The challenge however for 2013 will be how quickly, and how effectively, companies are able to harvest the value of these acquisitions. Microsoft’s $6 billion write down of aQuantive, and HP’s $8.8 billion charge relating to its acquisition of Autonomy, were 2012 examples of the damage that can be done when things don’t go to plan.
The prominence of Salesforce.com and Oracle in the above list of acquisitions is perhaps indicative of the increasing ferocity of the competition between the two companies. This is slightly surprising given the gulf in size between the two organisations ($3 v. £37 billion revenue), but, with Salesforce increasingly emphasising their enterprise credentials and targeting a potentially vulnerable Siebel customer base, Oracle clearly see them as a growing threat.
Ironically, with a broadening product portfolio that included the 2012 additions of the Marketing Cloud, Site.com, Work.com (a potential first foray into the HR market), Salesforce Identity, and Chatterbox, Salesforce.com seems to be acquiring an increasing resemblance to its nemesis – perhaps in the same way a child invariably grows to look like its parent. This presumably indicates the company feels it’s unlikely to maintain 35% growth rates within the confines of the CRM market alone.
It will be interesting to see if Salesforce’s pursuit of broader interests and enterprise opportunities leaves gaps at the lower end of the market for other vendors to exploit. It was certainly a good year for SugarCRM. Without giving specific revenue figures the company reported strong growth in customer numbers, which included an apparent 67,000 seat deal with IBM to replace their Siebel system. The company also landed $33 million in additional funding and was hinting at a possible initial public share offering next year. It looks as if 2013 could be interesting for Sugar.
In fact a lot of CRM companies seemed to be recording high growth rates in 2012. With Salesforce.com, Microsoft Dynamics CRM, SugarCRM, Infusionsoft, and Netsuite all reporting 25%+ growth rates. Considering IDC pegged 2012 CRM market overall growth at 12%, someone is clearly missing out somewhere.
Despite 25% year on year growth, 2012 didn’t seem to go entirely to plan for Microsoft. With the release of Dynamics CRM 2011 last year, the company committed to a twice yearly release schedule. The Q2 release guide published in February looked promising, but a rather casual blog post in early July indicated most of the key new functionality would be postponed to the ‘Q4’ release. This proved not to be entirely true either. It appears that the postponed functionality will be only available for on-line customers from January 2013 and to its on-premise customers in Q2 2013. The mobile strategy outlined in the Q2 release guide seems to have been quietly dropped in favour of a set of in-house developed applications that will start to ship later in 2013.
In last year’s 2011 CRM round up I wondered how easily a company used to delivering new versions every three years or so would adapt to a twice yearly release schedule. Given the apparent struggle to release any significant changes in 2012 the answer seems to be ‘not very’.
On the plus side, the acquisitions of Yammer and MarketingPilot clearly demonstrates a determination not to be left behind by Salesforce, and the speed at which they’ve integrated Yammer, and other Microsoft technology such as Skype and Bing Maps into the forthcoming releases, bodes well for the future. With their release cadence seemingly being reset to twice per year for on-line but only once per year for on-premise, and with the Windows 8, Surface, Windows phone hullabaloo now out of the way, it will be interesting to see if 2013 is the year they got things back on track.
In other 2012 news, Blackbaud purchased competitor Convio for $293M, Kana acquired Ciboodle, and SAP announced SAP CRM powered by its HANA technology.
And finally, 2012 perhaps saw the final acceptance by vendors of the superiority of software as a service (SaaS) as a business model. Oracle announced Oracle Cloud, SAP indicated that a third of their revenues could come from subscription by 2015, Sage introduced subscription pricing, and there were indications that 60% of new Microsoft Dynamics CRM sales were for its cloud based version rather than on-premise. And, if any further persuasion was required, Rimini Street (a third party provider of software support services) was increasingly making its presence felt, and an EU court ruled that software vendors are no longer able to restrict the resale of their software.
Anyway, that concludes my take on the news for 2012. If I’ve missed or misunderstood anything significant please feel free to comment! For those who want to review the year month by month, the links are provided below: