Yesterday Salesforce announced plans to acquire Demandware, a $2.8 billion acquisition that will add commerce to Salesforce’s Customer Success Platform and form the Salesforce Commerce Cloud. But this isn’t the first acquisition of its type, and it probably won’t be the last.
Several technology vendors, mainly ERP or MDM providers, entered the commerce landscape first through partnerships or attempts to build their own platform, before finally buying their way into market. Salesforce is the latest in a series of these acquisitions.
- SAP purchased Hybris in 2013
- Oracle acquired Art Technology Group (ATG) in 2010
- IBM bought Sterling Commerce in 2010
More recently, many of the same players have made heavy investments in building, buying or bolstering marketing clouds, recognizing product catalogues and commerce engines were only components of the commerce experience and what happens on the “front of the glass” is equally important.
Customers, competitors, prospects and partners should consider overarching trends, market drivers that led to this decision and that could shape future mergers, acquisitions and alliances and why these market shifts matter to them.
Why cloud convergence matters to marketers
Every marketer is a digital commerce marketer. According to Gartner’s 2015-2016 CMO Spend Survey, 73% of marketers own or share a P&L; 21% list digital commerce as the leading source of P&L revenue; and digital commerce now makes up 11% of the marketing budget, up from 8% just a year ago.
Marketers are looking for ways to connect marketing to commerce through strategy, tactics, metrics and technology. 64% rank digital commerce as a top area of technology investment. While technology connections can be tenuous, the strategic prioritization and spending make it an imperative for success.
If marketers are accountable for digital commerce revenue and funding digital commerce technology, they can no longer afford to let IT alone make technology decisions. They too need to understand the implications of these types of announcements on pricing, product roadmap and competitive positioning.
Rainstorms don’t always lead to rainbows
Customer expectations of a cohesive commerce experience, combined with senior management’s expectations of marketing’s role in commerce and commerce as growth engine, create the perfect conditions for cloud convergence.
But, when clouds converge, storms happen. Organizations aren’t designed for the level of integration required to deliver a cohesive commerce experience. Multiple platforms are used to run each part of the business, with varying levels of connectivity and a thin presentation layer masquerading as cohesion.
Initially, convergence can add to confusion by giving the impression that a single platform offering cross-functional solutions will cure organizational challenges. The reality is technology integration tends to take longer than expected and it only solves part of the problem.
Weathering the storm
Organizations need an agreed-upon commerce goal, cross-functional strategy and integrated view of data and performance metrics to weather the storm of cloud convergence, assess providers against the technology capabilities they need and use technology to deliver unified commerce experiences.
Unlike vendors that moved from the back to the front of the glass, Salesforce already has marketing, sales and service clouds. Historically, it relied on partners for commerce, but direct commerce capabilities could bring a well-rounded solution and drive competitors to make similar moves.
But, if past is prologue, don’t assume 1 + 1 equals 3, or even 2; or cloud plus cloud equals full coverage. A key complaint among marketers is the level of support needed from systems integrators or internal IT to make commerce and marketing solutions from the same vendor work together as promised.
Marketers often struggle to wrangle internal or external technology resources to support integration or implementation or they fail to factor that into their budget or timeline. It’s a key reason many opt for a best-of-breed approach.
What’s the forecast?
Initially these announcements mean more for vendors than customers. For instance, Demandware was one of few platforms that offered a joint marketing and commerce solution in its own Commerce Cloud. Joining forces with Salesforce brings access to a large client base and partner ecosystem.
At the same time, Salesforce has historically supported and served as the connection between marketing and sales via CRM, without a direct commerce offering. Demandware brings direct commerce capabilities, particularly for the B2C sector and retail and manufacturing verticals.
General topics marketers should inquire about include:
- Total cost of ownership, including necessary point solutions to get to desired outcomes
- Provider support for integration and implementation vs % of clients using SIs
- Availability of internal IT to support integration, implementation and maintenance
- Current capabilities for each provider versus their combined product roadmap
Marketers should be raise these questions with existing and potential providers, systems integrators and IT supporting marketing and commerce teams evaluate individual or joint offerings based on what they can deliver it now or plan to deliver later, and what it will take to get the value out of their investment.