Posted by Warren Raisch – June 8, 2016
Leading vendors including Oracle, SAP, IBM and Microsoft have all been steadily building their commerce capabilities over the years and have been restructuring their offerings into Commerce Cloud offerings. This month Salesforce makes their debut into the Commerce Cloud arena.
Salesforce Commerce Cloud
The new Salesforce Commerce Cloud division is taking from this quarter when on June 1, 2016 Salesforce (NYSE: CRM), the Customer Success Platform and the world’s #1 CRM company, and Demandware (NYSE: DWRE), the industry-leading provider of enterprise cloud commerce solutions, announced that they have entered into a definitive agreement under which Salesforce will acquire Demandware in a transaction worth approximately $2.8 billion (net of cash acquired).
This acquisition represents the formation of what will certainly be another billion dollar cloud solution offering from Salesforce is a smart acquisition and will create the beginnings of a powerhouse commerce competitor against Oracle, IBM. SAP and Microsoft.
According to Salesforce “The Salesforce Commerce Cloud will be an integral part of Salesforce’s Customer Success Platform, creating opportunities for companies to connect with their customers in entirely new ways. Salesforce customers will have access to the industry’s leading enterprise cloud commerce platform, and Demandware’s customers will be able to leverage Salesforce’s leading sales, service, marketing, communities, analytics, IoT and platform solutions to deliver a more comprehensive, personalized consumer experience.”
Even with this acquisition Salesforce does not have as robust a set of commerce solutions as their big enterprise competitors (they still need payment gateways and full order processing management among other things) but they integrate with almost everyone in the space so some of their shortcomings could be overcome for companies considering the Salesforce Cloud solutions.
Four Key Cloud Pillars
The key players have all been conducting aggressive M&A and internal development activity over the past few years building out their cloud frameworks and offerings around 4 key pillars that include Sales, Marketing, Service and Commerce cloud platforms. According to Gartner, worldwide spending on digital commerce platforms is expected to grow at over 14 percent annually, reaching $8.544 billion by 2020 (Gartner, Inc. Forecast: Enterprise Software Markets, Worldwide, 2013-2020, 1Q16 Update, March 17, 2016).
In 2013, SAP acquired Hybris to build out their digital commerce capabilities and SAP changed its messaging from customer engagement to customer engagement and commerce. In 2010 Oracle acquired ATG and also in 2010 IBM acquired Sterling Commerce to enhance it’s Websphere commerce offerings. As the battle for cloud dominance continues the key players are all making investments aimed at winning multi-billion dollar segments that will secure their futures in an ever growing subscription based software industry.
Adobe Integrating Rather Than Competing In The Commerce Cloud Space
A notable exception to the Commerce Cloud strategy is Adobe who is primarily focused on their Creative Cloud and Marketing Cloud solutions for the time being. Alternatively Adobe seems to be opting to integrate rather than to compete in the commerce space. As with the other key players Adobe is focused on winning their share of the $5.5 billion CXM (Customer Experience Management) sector. Adobe has a long history of working with marketers which plays well to the shift in technology budgets from CTO’s to CMO’s with 35% of Marketing budgets now being earmarked for technology acquisition.
Adobe has had their share of acquisitions to build out their Marketing Cloud capabilities and are doing a good job on presenting the value of these acquisitions to enterprise marketing organizations. In particular the Day Software WCMS acquisition that is now Adobe Experience Manager and the Omniture acquisition that is now Adobe Analytics. They have done a good job of crafting their cloud storyline around these two areas of Creative and Marketing Clouds. As enterprise level companies review the “One-stop-Shop” Cloud options offered by all of the other leading vendors, Adobe does come up short in several key areas including CRM, commerce and a true marketing automation tool. Their acquisition of NeoLane in 2013 really does not stand up against more robust solutions like the Oracle acquired offerings of Eloqua and Responsys or the Salesforce acquired ExactTarget and Pardot capabilities or IBM’s Silverpop solution. But they did integrate some of the NeoLane capabilities into Adobe Campaign which is adding differentiation and value to the Adobe capabilities. In the long run I think Adobe has the market penetration to still maintain their leadership in the cloud sector in their selected battlegrounds.
In my book “the eMarketplace ” I pointed out a number of years ago that the key elements of success for digital and physical business were centered on mastering the three “C’s of Content, Community and Commerce. This still holds true today and is reflected in the Cloud offerings of the leading vendors.
Frictionless Commerce Integrating Online and Offline Customer Experiences
integrated and creating Frictionless commerce is the holy grail. The key for all of these vendors is going to be how well they integrate between their Sales, Marketing Service and Commerce platforms.
Amazon is a bit of an anomaly in the mix. Of course Amazon as a destination is the undisputed leader in mastering the ultimate consumer centric commerce experience online and they are quickly moving to penetrate the offline consumer commerce buying journey as well.
Amazon provides a great depth and breadth of product ranges as well as providing customers with innovative tools, a highly engaged community, ratings and reviews and the expertise (Amazon Q&A with potential buyers and owners) in a way that is easy to engage with. They have a customer interaction engine that is able to make recommendations based on buying habits and analysis of transactions and web interactions. Depending on the size of your company and product type they could represent a complete alternative to developing your own commerce platform and distribution center.
Further separating Amazon from the classic vendor platform arena is how Amazon moves to integrate online and offline commerce as they have developed and bring to market industry leading products such as The Kindle Fire, Dash ( wireless purchasing buttons) and the amazing Echo product. I was an advanced beta tester of the Echo product and it has become an indispensable part of our daily life at home for music, news, weather, shopping list and voice activated instant shopping through our Amazon Prime account. They have also come out with the Echo Dot and Echo Tap derivatives. Amazon is a formidable consumer product company.
Amazon is well positioned to maintain their dominance in consumer commerce experiences in the quickly integrating online and offline commerce journeys. Amazon’s innovation has kept it at the forefront of commerce though its platform and products as well as content with their original and distributed media and technology infrastructure, through it’s highly successful and affordable Amazon Web Services, and commerce driven communities.
Full Customer Experience Management Is Key
Overall we are seeing a mass consolidation of the leading commerce platforms and solutions making it clear that enterprise companies will be faced with a handful of choices when selecting their Commerce Cloud provider partnerships. The selection will become driven not only by the key features and functions of the commerce platforms themselves but more importantly how well they integrate with the Sales, Marketing and Service Cloud offerings to make a full customer experience management platform.