By Srinivas Balasubramanian, Co-founder and CEO, Photon
On April 29th, Bloomberg reported that Salesforce.com has retained financial advisors to “help it field takeover offers after being approached by a potential acquirer.” Salesforce.com and its charismatic founder are larger than life topics; they had such profound impact on the information technology industry landscape that any Salesforce.com acquisition will be the definitive tech industry acquisition in a long time and will reshape the industry.
Customer information and digital mechanisms to engage with the customer are at the core of a business’s digital transformation efforts. Naturally, CRM in general, and Salesforce.com as a prominent instance of CRM in particular, figure significantly in any technology stack required to execute a business’s omni-channel strategy. Photon has helped many big customers integrate Salesforce.com into their instantiation of Photon’s omni-channel blueprint and brought in Salesforce.com based customer information into consumer and associate-facing mobile applications Photon designed and developed for the customers.
So Salesforce.com acquisition talk has implications for many of Photon’s customers and more broadly the omni-channel industry. What are the potential scenarios?
Among potential acquirers I see the software companies that dominate IT and datacenter today – Oracle, SAP and Microsoft. I additionally see as potential acquirers Cisco and Google.
Going in reverse order, Google Enterprise business is large (in excess of $1B) and growing but is experiencing headwind from aggressive moves by Microsoft to offer Office 365 on competitive mobile platforms. Google Enterprise would be considered a success story in any other company but given Google’s mandate that any new product initiative will be killed unless it meets “5 years to a billion dollars” mandate, Google Enterprise has been lackluster performer. A Salesforce.com acquisition will dramatically boost corporate applications presence for Google and through Salesforce.com’s Heroku offering, increase Google PaaS credibility against Amazon Web Services. For Photon customers, I see no significant impact since there are limited to no overlapping product sets in the omni-channel technology stack.
Cisco is going through a major transformation to stay relevant in the cloud age through its Intercloud strategy and major investments in software. Marc Benioff was on Cisco board till recently. And there was always the question about who is next after John Chambers. But the announcement of Chuck Robbins as new Cisco CEO starting this July ends the possibility of Cisco as acquirer given Marc Benioff’s stature in the industry and need for a big theater in which to perform.
SAP’s CEO Bill McDermott has categorically squashed any talk of SAP as acquirer by stating that SAP has “zero interest in Salesforce.com” and implying that Salesforce.com is “impaired and in decline”, perhaps using the opportunity to throw a punch at a formidable competitor.
Microsoft has its own CRM product family – Microsoft Dynamics but its penetration in the large enterprise space of Photon customers is virtually non-existent. Microsoft’s investments in marketing automation software have been very limited and Salesforce.com’s entire marketing portfolio will be complementary. Lastly, some Photon customers are using or are investigating Azure as an option for PaaS and IaaS. While there are significant overlaps in the offerings, for the Photon customer base, the impact of a Microsoft and Salesforce.com combination will be minimal.
Finally and most importantly, Oracle! The ups and downs of the relationship between Larry Ellison and Marc Benioff are part of Silicon Valley lore and tech industry soap opera. Ellison was Benioff’s mentor at Oracle and early investor in Salesforce.com. Oracle also still supplies all the database software and much of the hardware (Sun) that power Salesforce.com cloud infrastructure. Benioff earned the wrath of Ellison, after ridiculing Oracle and Ellison for promoting the “false cloud” and cozying up to Workday whose founders have a bitter history with Ellison. More recently the public pronouncements between the two companies and the CEOs have been more cordial. Ellison likely views Salesforce.com as a crowning and defining acquisition among all the acquisitions Oracle has made to put Oracle firmly in the center of IT industry cloud transformation and a potential CEO successor whose star power rivals his own. For Photon customers, more than any other combination referenced earlier, an Oracle acquisition of Salesforce.com will have most implications. While Siebel is weak in Retail industry, it has significant presence in Financial Services vertical. In addition Oracle’s recent acquisition of Micros brings with it Micros specialized CRM for retail industry. Similarly, there is significant overlap in the offerings between Salesforce.com and Oracle in marketing automation space where each company has made substantial acquisitions in the last three years. Finally the Oracle Commerce team has invested substantially over the years since the ATG and Endeca acquisitions to integrate them with each other and with CRM and marketing automation properties of Oracle to deliver on the promise of unified customer experience. Those linkages will be reopened if Salesforce.com assets were to replace existing Oracle assets in the overlapping areas.
The good news for Photon customers is that in most of our engagements we help customers with API abstraction layer, one important purpose of which is to reduce or eliminate the impact of perturbations of this nature to any component of the overall enterprise omni-channel architecture.