What is Happening? This week, Cloud CRM and platform provider salesforce.com announced its intended acquisition of marketing data integration services provider ExactTarget, in a $2.5 billion deal that includes buying outstanding publicly-traded ExactTarget shares for $33.75 each.
Like IBM’s acquisition this week of SoftLayer, salesforce.com’s acquisition of ExactTarget builds on an existing business and technology portfolio, and also extends the vendor’s commitment beyond what it has been best known for, while expanding opportunities for growth into adjoining markets.
Unlike the IBM acquisition, though, Saugatuck also sees the ExactTarget deal as an example of an established, dominant provider (i.e., a Master Brand) needing to play catch-up as its core solution has matured, and its customers’ demands and expectations have increased.
Why is it Happening? On the surface, it’s easy to see how this deal is part of salesforce.com CEO Marc Benioff's announcement last August that the Marketing Cloud is their next "billion dollar business.” ExactTarget is, at its core, a marketing-oriented, data integration platform aimed at enabling access and integration of customer data from multiple sources into marketing campaigns. In short, it’s a Cloud-based, data integration platform that will improve the abilities of Marketing Cloud.
Marketing Cloud and salesforce.com itself, would benefit from a boost. Saugatuck research among sales and marketing executives (including survey and interview research in our 2013 Cloud research program) suggests that salesforce.com – and CRM, Sales automation, and other related applications – may have reached a maturity plateau and lost some luster.
When launched a decade ago, salesforce.com, and its core CRM offering, were dynamic and new, delivering new, better, and unifying ways of tackling what had long been a challenging set of tasks within all types and sizes of enterprises. Flash forward to the present, and the core CRM application/suite value proposition has not changed. It still focuses on software for unification, standardization, automation, and streamlining of sales, customer support, and marketing functions and processes.
But now, salesforce.com has dozens of competitors in CRM (albeit none with their breadth, depth, and presence). And sales, marketing, and customer support executives have moved forward as well – they have implemented salesforce.com (or a competing solution), streamlined processes, and improved management capabilities. Customers want the next step, which we see as integration of useful data into processes that are improved enough, with software resilient enough, to handle it. Customers have raised their expectations of CRM and similar offerings, Cloud-based or otherwise. They want and demand more; they are beginning to move on, beyond the original technologies and tools and applications and platforms. They need to do more, and be more successful, in order to demonstrate their own value, so their solutions and providers must do the same.
Meanwhile, salesforce.com’s Marketing Cloud faces opposition as well. While the move into Cloud-based marketing services is a natural extension for salesforce.com from its core CRM position, it’s a crowded and competitive space. Indian services giant InfoSys has been gaining traction with its Cloud-based BrandEdge digital marketing services platform and portfolio since early last year. IBM’s presence and effort in the space goes back further and wider, having acquired CoreMetrics, DemandTec, and Unica – as well as Sterling Commerce – to enable, manage, transact and analyze the entire digital marketing, sales, and commerce progression. Additionally, marketing automation services providers Eloqua and Marketo and are also established in the Cloud-based, subscription-driven marketing services business.
For an extended version of this Research Alert, visit Saugatuck Technology.