There’s something of a titanic struggle going on between Salesforce.com, Oracle and SAP at the moment, and the chess pieces were flying round the board in May.
Salesforce wants to extend its presence in the enterprise market and sees social functionality as the means to bridge beyond its traditional CRM roots into new areas. In that context Salesforce acquired Stypi, a Y Combinator backed start-up, who produce an online collaboration tool that allows multiple users to make changes to a document at the same time. Presumably with a view to incorporating these capabilities into its own social collaboration tool, Chatter.
Oracle are clearly not keen on conceding ground to Salesforce in their traditional market, and fully understand the implications of Salesforce’s social strategy. The response? The, estimated, $300 million acquisition of Vitrue, a company specialising in social marketing services.
Just as the smoke was clearing on that one, rumours were flying, as yet unconfirmed, that Salesforce.com was about to acquire Buddy Media, which offers a cloud-based social marketing platform, for a rumoured $800 million.
As if that wasn’t enough on the acquisition front, SAP also announced the $4.3 billion acquisition of collaborative commerce vendor Ariba, who offer a rich set of cloud-based procurement, sourcing, and contract management tools. While not a CRM related, it follows on from the December acquisition of SuccessFactors, and is part of SAP’s apparent strategy of making up for its previous tardiness in embracing the cloud through aggressive acquisition.
What Salesforce seems to be very good at, is the speed at which they integrate new acquisitions into their product offering. May provided further evidence of this with new messaging and screen-sharing capabilities being announced for Chatter, building on the back of its 2011 acquisition of Dimdim.
Whether SAP and Oracle can do as good a job will remain to be seen. SAP was certainly talking a good game at their Sapphire 2012 conference event. Cloud, cloud, and more cloud seemed to be the forecast.
As Paul Greenberg very perceptively observed though, the software as a service business is very different from that of traditional on-premise, and, secondly, while the cloud strategy plays well with journalists and analysts, there are a lot of SAP customers with multi-million pound investments in on-premise software, who must be wondering about the future.
It will be interesting to see if SAP and Oracle can reorient their business to the cloud while keeping their existing customer base on board. The vulnerability of which was emphasised by IBM appearing to let slip in April that it was replacing its 67,000 seat Siebel system with SugarCRM.
This was an interesting boost for Sugar who recently secured $33 million of additional funding and returned revenues for the first quarter up 118% year on year. Not only does this give the likes of Oracle and SAP another vendor to worry about, but it also means the CRM mid-market, which was beginning to polarise around Salesforce and Microsoft, is likely to come rather more competitive.
Microsoft, in the UK at least, may have provided further encouragement to SugarCRM, as well frustration to many CIO’s, by announcing a circa 25% increase in pricing, which is due to take effect on July 1.
Microsoft may also be wondering, given the fervour which their competitors are making purchases, how long they can afford to wait before they start to make some acquisitions of their own. Not long I suspect.
Partnerships though may be an alternative way to fill out its product offering. Back in February we wondered what Zendesk’s response would be to Salesforce’s acquisition of competitor Assistly and its reincarnation as Desk.com, given their previously cosy relationship with Salesforce. We didn’t have to wait very long with both companies announcing a two-way integration between Microsoft Dynamics CRM and Zendesk.
With Cisco suggesting that IT spending was cautious because of economic concerns about Europe, Salesforce’s shares dipped over 9% in the run up to the announcement of their first quarter results. With revenues up 38% year on year to $695.5 million, the company however surpassed market expectations. While the company returned a loss of $19.47 million for the quarter, its eye-popping sales and marketing expenses of $369.8 million, suggest its focus will remain growth over profit.
As a further boost to Salesforce’s enterprise credentials Accenture announced plans for more collaboration with Salesforce including new innovation centers in major cities as well as closer research and development cooperation.
Not all news was good from a Salesforce perspective. Reuters released a story casting Salesforce.com’s cancelled campus development project as a ‘costly debacle’ and painting a picture which made Salesforce look anything but sure-footed.
Finally, Infusionsoft confirmed that they’re on something of a tear at present announcing they grew business at a record pace in the first quarter, adding 1,100 new customers, to bring the total to 8,700.
That concludes my take on the news for May. If I’ve missed or misunderstood anything significant please feel free to comment!