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A Method to Salesforce's Acquisition Madness?

Salesforce ( CRM ) has been on a buying spree this year, with the company buying no less than three companies in the span of one month. Salesforce is no stranger to acquisitions, but nine companies in under 12 months clearly indicates that the company is either racing to fill a few holes or trying to expand its reach as quickly as it can.

With Oracle ( ORCL ) turning up the heat on the SaaS/PaaS front and pushing hard into the Cloud Enterprise Resource Planning space ( Cloud ERP ), Salesforce is strengthening its own stronghold - CRM - while at the same time steadily expanding its expertise in the sales management side. They seem to be simultaneously moving deeper into the operations services as well.

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Source:

Crunchbase

The $2.8B Demandware Play

Salesforce is the worldAAAs number one Customer Relationship Management software provider, the kind of company that you would bank on to take care of your sales lifecycle. So why would the number one CRM player in the world spend nearly $3 billion to buy Demandware (NYSE:DWRE), an e-commerce software platform and the kind of company that you would rely on to take care of all your online business.

AAAThe capabilities within the Demandware Commerce Cloud are organized into several functional categories: experience capabilities enable retailers to orchestrate content, products, pricing and promotions to engage consumers; with operations capabilities, retailers can extend core functions across all channels, connecting fulfillment and back-office functions; and intelligence capabilities enhance the retailersAAA ability to be data-driven with business insights and consumer personalization. Together, these capabilities power commerce across all channels AAA mobile, web, kiosk, store, call center, and others AAA and from shopping to fulfillment to customer experience.AAADemandware

Note how Demandware highlights operational capabilities, while explaining their expertise. Demandware can take care of all operational work starting from content management to taking care of back office work.

Where is Salesforce.com Headed?

This is a huge strategic acquisition for Salesforce. It clearly shows that the company is moving deep into offering business solutions and does not want to be known just as a CRM player, so it is slowly building its offerings into an end-to-end solution. Businesses have already reached a point where they need to have an online presence to exist and Salesforce wants to position itself as not only a supporter of sales, but also a provider of sales operations solutions.

And that includes analytics, which Salesforce did not have in its quiver of capabilities. That came in the form of Beyondcore , a startup that builds business analytics tools.

Now, I do not necessarily condone the amount of money that Salesforce is spending on acquiring new capabilities when they are already splurging half their revenues every month on customer acquisition. These expenses might appear under a different account head, but with sales and marketing already exceeding 50% of gross revenues, these acquisitions are bound to hit their cash position in a negative way. And with the company running negative on profitability, one could

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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