What the CRM Acquisition War Means For You

    By Gareth Cartman | Small Business

    Certain software companies have been doing a bit of a soft sell lately. An increasing trend of growing CRM businesses are selling out to extend their product line-ups. Peoplesoft bought Calico Commerce, Pivotal bought Exactium, the list goes on…

    In this rapidly-paced, quickly evolving business world, it’s hard to keep up so here’s the lowdown on who’s bought who, what they’re up to and why.

    Why Yammer went under the hammer

    Rewind back to June 2012 and you might remember hearing the news that Microsoft bought out Yammer (a leading provider of enterprise social networks) for a cool $1.2 billion – in cash.

    Yammer was launched in 2008 as an online service for making companies and organisations more productive through the exchange of file sharing, knowledge exchange and company collaboration.

    It’s a bit like being able to use Facebook at work, only your ‘friends’ are your colleagues and your ‘wall’ is your workload.

    When it was sold, had a base of 5 million corporate users including 85% of the Fortune 500 workforce. So it’s clearly to see why Microsoft was keen to get on board. They plan to accelerate the company alongside Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype.

    David Sacks, who will remain the CEO of the company, commented:

    “When we started Yammer four years ago, we set out to do something big. We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise ad resources we’ll need to scale and innovate.”

    A few theories on why Microsoft were eager to add Yammer to their string of successes include:

    • Microsoft buying Yammer for the same reasons it bought Skype – it needed a cooler, younger brand to refresh its image
    • Microsoft needs to get involved in the business of social networks before it gets left behind. They were lagging behind competitors in terms of enterprise-level social networking, whereas Oracle, Salesforce and IBM have been leaps ahead
    • Microsoft may use Yammer for advertising. According to TechCrunch, their biggest challenge will be figuring out how to profit from Yammer. They had similar issues with Skype and introduced new advertising strategies to try and resolve the issue

    Unusually for Microsoft, they’ve already started to integrate Yammer into their portfolio – it usually takes much longer, which gives you an indication of how urgent they view the acquisition and its implementation.

    Salesforce not so Dimdim in their strategic acquisition

    At the start of 2011, competition was fierce in the social networking world between two main contenders – Chatter (run by web-software giant Salesforce) and Yammer.

    It was only a matter of time before Salesforce set the pace and announced that they would buy web conferencing provider Dimdim for $31 million to deliver real-time messaging and collaboration tools to Chatter – a Facebook-style networking site.

    Dimdim enables users to set up online and remote meetings cost-effectively and has been promoted widely on popular networking sites such as LinkedIn and Facebook.

    Chief Marketing Officer of Salesforce, Kendall Collins, commented on the acquisition:

    “We really want to follow the Facebook model. Think about that green dot and knowing that people are online and you can communicate in real time, that’s a critical aspect of what Dimdim delivers.”

    Back in the day (which a mere few months in this digital age), Chatter was a pretty expensive service, requiring users to be Salesforce customers or pay $15 a month. Since switching to a completely free service, the company has enticed more users and has been hailed as some as the new Facebook.

    If CRM systems were a monopoly board, Salesforce would be living pretty comfortably right now, snapping up existing hot property that’s crying out for development.

    This is, after all, the third major acquisition by the company in less than a month. Prior to Chatter, they acquired web application developer Heroku in December and spent an ‘undisclosed amount’ on e-mail contact manager Etacts. They’ve also got Jigsaw, Radian6, Manymoon and Asisstly firmly under their belts.

    There have already been rumours that Chatter will rival Facebook because of its new dominant tactics:

    • Chatter can take advantage of Salesforce’s customer-base of 100,000 enterprises
    • Chatter enables people to share everything – communications and apps
    • Chatter is part of a broader social solution for enterprises including Jigsaw/, Chatter/, Radian6 and

    Oracle trumps Salesforce with a stream of acquisitions

    If Oracle had a poker face, it would be near impossible to gauge. Their latest acquisition of RightNow was the latest in a string of successful acquisitions including Sun Microsystems, Datanomic, Ksplice, Endeca, Taleo, Vitrue, Instantis, Eloqua and this year, Acme Packet.

    With Oracle and Salesforce in direct competition in the CRM arena, both companies have recently targeted businesses that will bolster their capabilities.

    RightNow is a CRM provider with an emphasis on multichannel customer service and support. Oracle paid £1 billion for RightNow’s stock at about £28 a share, which is about 20% more than the company’s closing price on October 21st.

    The company has been a major competitor of Salesforce and Oracle’s own CRM services. They most likely acquired RightNow because of its multichannel customer support capabilities that work across call centres, social networks and web self-service applications.

    And according to Denis Pombriant, principal analyst with Beagle Research, which specialises in CRM market analysis, RightNow will “gel well” with their other acquisitions.

    Some have viewed the merger as a win-win for both companies since RightNow are getting the big-company marketing they need, professional services, sales reach of Oracle to grow beyond their current run-rate and the opportunity to compete with Salesforce and Microsoft.

    Oracle, in turn, is getting a full-feature, on-demand customer service solution and also get the chance to build their ‘cloud’ services.

    The latest Oracle acquisition with Acme Packets highlights a growing trend in global communications – the fusion of IT and telecom products. Oracle are underlining their opportunity to strengthen their position in both markets through extending their product lines from every angle.

    We can only assume where Oracle lead, others will follow… but where will this chaotic acquisition frenzy end? Only time and technology will tell.

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