Come 2012 and Salesforce.com (SFDC) will add another lethal ammunition to its stable, taking the cloud wars to the next level. On December 15, 2011, Rypple, an innocuous start-up into cloud based human capital management (HCM), signed agreement to be acquired by SFDC. It will be re-christened as SFDC Successforce (http://www.salesforce.com/company/news-press/press-releases/2011/12/111215.jsp
). This plugs a significant gap in SFDC offering portfolio, and will have significant (upside) impact for go-to market strategy for its enterprise social offerings. While Radian6's acquisition was aimed at improving the social strategy for SFDC client's customer, Rypple's focus will be on employees of SFDC clients.
Triggers for the deal
Dreamforce '11 was all about Social Enterprise Strategy. The social offering is broadly based on two pillars, Radian6 and Chatter. Chatter offering, was in fact, implemented internally by SFDC and anchored by Marc Benioff himself. Radian6 is a social media monitor and engagement tool, which is currently available as independent offering and not bundled with SFDC (plans are in effect to integrate radain6 with SFDC license by 2012 end). SFDC already occupies 'Leaders' quadrant in Gartner's Social CRM magic quadrants. Over 100,000 companies worldwide are using Chatter and Radain6 counts more than half of the Fortune 100 companies in their exhaustive customer list (http://www.salesforce.com/chatter/customers/ and www.radian6.com/about-us/customers/). So, why this need to tread the inorganic route? Well, the following points are the place to start.
Filling the Strategic Gaps
Gartner has forecasted that Social CRM market will be worth more than USD 1 bn by 2012 end.
Source: Gartner Press Release 30 Aug, 2011 (http://www.gartner.com/it/page.jsp?id=1777938)
Spending on cloud computing and social media are the only bright spot in the otherwise gloomy scenario in the technology space. Social CRM solution provider space is highly fragmented, and the opportunity is immense. So, having tested the waters with its Chatter and Radian6 offering, the significant 'whitespace' in the portfolio for SFDC was human resource management (HRM) application. Rypple effectively plugs this gap.
Complementary and Supplementary DNA
Social Goals 2.0 agenda unveiled by Rypple on December 2011 is in sync with the Social Enterprise vision by SFDC. After Sales and Service cloud apps, HRM application is a significant complementary offering, with high levels of potential cross-sell opportunity. The client list for Rypple already includes prestigious and hig-end names like Facebook, Nexius, Zendesk, Gilt Groups, etc. The theme of the offering is to move from a transaction based, infrequently used to a engagement and experience based system, with focus on sharing, collaboration and productivity.
Proven Business Model
The on cloud, get-to go applications with collaborative platforms on Web 2.0, is based on businesses model that drive revenue by selling services. SFDC was the first of its kind firm to implement the business model, and no one understands the viability and potential upside better than them. That is why, even though with less than USD 1 mn in total revenue (and not profits) for FY11, the deal value is estimated at USD 65 mn (www.markevanstech.com/.../rypple-revenue-and-canadian-startups/).
On October 2011, Oracle acquired RightNow Technologies, Inc. for about USD 1.50 bn, paying about 19.60% premium to the listed price (www.oracle.com/us/corporate/press/519740). This gives Oracle a significant presence in cloud spaces (especially service space) and mid-market CRM solutions with 2,000 customers. SAP, whose cloud offering Business ByDesign failed to create any ripple in the cloud space, announced a USD 3.40 bn all cash to acquire SuccessFactors, provider of cloud-based human capital management applications. The premium paid is almost 52% (http://www.bloomberg.com/news/2011-12-03/sap-to-buy-successfactors-for-cloud-offerings.html). What gave in was the diverse customer base (3,500 customers across 168 countries) and sound business model (15 million paying user for repeat business). Hence, when the two of top three package solution companies are growing their footprint in the cloud space, the leader in cloud based packaged solutions needed to respond effectively, and they did by improving their solution footprint (in HRM) and enhancing their strategic offering (Social CRM).
The cloud computing and solutions market place are teeming with seemingly endless and innovative opportunities, and the firm(s) with vision, technological prowess and courage can chart the extraordinary path. The arena is set for the battle among the industry heavyweights and technology leaders.