We’re used to Salesforce.com making acquisitions these days but the latest one stands out for its strategic importance because it is the first time the native cloud front office applications provider will have directly stepped into the back office space.
It has signed a definitive agreement to acquire Rypple, who provides a web-based performance management application with a social twist in the human capital management space. The deal is expected to close by the end of April (the end of Salesforce.com’s Q1). Terms were not disclosed but with a customer base described in the ‘100’s’ (including Facebook and Rackspace) and the planned acquisition not expected to have a material impact on revenue in fiscal 2013, it will be a fairly small financial deal.
It will not be small strategically however. Renamed Successforce (how similar is that to SAP’s SaaS HCM SuccessFactors acquisition!), it will form the basis of a new HCM unit within Salesforce.com led by John Wookey, who joined the company last month. Our call at the time (see here) was that he was going to play a big part in Salesforce.com’s big strategic and product areas and that is panning out with this dual social and new HCM division play. The company is planning a heavy move into HCM and is looking to expand into talent recruitment, team building and applications to empower employees, which we believe will come via acquisition.
Throughout its history Salesforce.com always said it was not interested in the back office. It has shifted stance over the last few years (e.g. the joint venture investment in FinancialForce, this year’s ERP components agreement with Infor) and got involved indirectly. Now it is all up front and direct.
So what prompted the move? A slowing of growth probably drove it to look for new business areas but I suspect increased SaaS competition from SAP and Oracle who are building and buying their way into its space was the final kicker. We are looking at interesting times – in many ways Salesforce.com has had the SaaS business applications market to itself, but that has all changed and the ‘incomers’ have more resources than Salesforce.com.