In July Salesforce officially closed on its purchase of digital commerce platform provider Demandware for US$2.8 billion. Salesforce’s executives were interested in acquiring a digital commerce platform, and they claim that Demandware was routinely mentioned in their due diligence of the market. So out came Marc Benioff’s and Salesforce checkbook, and they paid. Handsomely. For that sizeable investment, Salesforce will add Demandware’s SaaS-delivered digital commerce capabilities to its Customer Success Platform, while Demandware customers will have access to the Salesforce suite of cloud-based sales, marketing, customer service and analytics tools. But savvy business and IT customers are not getting distracted by the details of this transaction or the acquisition’s market impact. Knowledgeable executives expected a significant deal like this for Salesforce, and they were already thinking ahead of laggards who are just now assessing the implications of this transaction.
Salesforce already was a major influencer in sales and marketing and advancing into supporting all forms of customer engagement, and the inclusion of Demandware’s offerings puts Salesforce that could challenge industry heavyweights such as IBM, Oracle and SAP in digital commerce. However, even with the acquisition, Salesforce does not offer a complete package for optimizing customer experiences in digital commerce environments. Providing omnichannel customer experiences requires an integrated product, marketing, sales, service, and billing with recurring support environment, which is much more than the Salesforce-Demandware combination supplies. Alliances will still play a prominent role in Salesforce-anchored offerings. Savvy professionals already knew that, and so, hopefully does Salesforce and its top competitors.
Business leaders who have mapped the comprehensive technical environment they require to be able to deliver a superior customer experience know that even after they combine robust repositories of customer data, intelligence and analytics with creative digital storefronts and commerce clouds, critical components are still missing. For instance, among companies participating in our
next-generation customer engagement benchmark research, a majority said they expect substantial growth in online and mobile communication channels. That anticipated demand can’t be satisfied by the capabilities of conventional CRM systems and current customer-facing digital commerce technologies. In a recent analyst perspective on digital commerce, I noted that software for product information management (PIM) and customer billing and payment systems are two applications required in supporting a great customer experience and are lacking from Salesforce and Demandware. Any robust digital commerce environment also should include product life cycle management and location-based consumer intelligence.
The Demandware acquisition also underscores the importance of having employees with the creativity and technical acumen to manage digital commerce environments. Simply put, a chief digital officer or someone with those responsibilities must be engaged in rolling out any comprehensive digital commerce solution. As I mentioned above, providing a solid customer experience through Web and mobile channels includes effective use of product information management and modern billing and payment systems. Marketers with only conventional skills are most likely ill-prepared to work with PIM and latest in mobile and location technologies for commerce. Moreover, IT staff can’t be expected to write engaging product descriptions or other content for omnichannel marketing campaigns. Indeed, neither most marketers nor IT staff possess the skill set needed to drive modern digital commerce initiatives. A chief digital officer and digital marketing team, however, should be able to do so as well as to identify both the technical and human resources needed to address the rapidly changing opportunities and demands presented by digital commerce. Savvy business professionals focused on commerce and digital innovation already had been looking at such plans before the Demandware acquisition was announced.
Many of us with long experience in the software and CRM industry remember Salesforce’s insistence on “no software.” To this day, Salesforce’s home page asserts that the company offers the “#1 CRM Solution.” But to call Salesforce a CRM company is now becoming more accurate. By necessity it has grown into CRM; it has made the configure-price-quote and marketing automation technology segment through its acquisitions are just more applications on a product roadmap for integration. The Demandware purchase and acquisition of digital commerce technology are simply an incremental step in the evolution of Salesforce. Management’s sights are set on evolving it into a company that offers the end-to-end technologies needed to engage customers throughout the life cycle. That mission is so clear that even the not-so-savvy business professionals will soon catch on.
Regards,
Tony Compton
Vice President and Research Director, Sales and Marketing
Follow me on Twitter and on LinkedIn
ISG Software Research
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