Acquisitions and technological collaborations appear to be on the agenda of the cloud computing major Salesforce.com (CRM). With this strategy in mind, the company has announced its intention to acquire marketing company Buddy Media for $689 million.
We believe that the growth in social media and the new process of delivering software over the Internet has influenced the cloud computing major to acquire Buddy Media, as Salesforce has been able to identify the business potential of this segment.
Buddy Media helps customers create content on social-media sites. This, when combined with the Radian6 products, will help Salesforce deliver the package to customers, which will provide them total solutions.
Salesforce has always adopted new technology from different companies. It has either been involved in technical collaboration or through acquisitions. The company has also acquired human resource software company Rypple, which specializes in performance management and goal-setting. Salesforce is of the opinion that the cost of acquisition will have a negligible impact on its fiscal 2013 revenues.
Rypple offers a cloud-based platform that provides feedback to the employees regarding their performance and also helps management in evaluating employee performance. The acquisition has also facilitated recruitment, management and employee empowerment in the social world.
Moreover, we believe that the completion of this acquisition will mark Salesforce’s entry into the human resource management module of the social enterprise.
This apart, the company has extended its technical ties with Accenture plc (ACN). This is expected to strengthen its long-standing business relationship with the ace cloud vendor Salesforce.com. In an attempt to expand its breadth of cloud offerings (which will be developed by Salesforce) via its global delivery network, Accenture recently announced that it will open new Cloud Centers of Excellence across the U.S. and the U.K.
The relationship between Accenture and Salesforce goes back to 2004, when the former identified the relevance of cloud computing for businesses and tried to deliver suitable services in conjunction with Salesforce. Accenture delivers various Software-as-a-Service (SaaS) solutions developed by Salesforce.
Although new technological tie-ups are helping the company to move ahead, Salesforce is facing tough competition from Google Inc. (GOOG) and Microsoft Corp. (MSFT), since they are making aggressive moves to win government clients at local, state and federal levels to deploy their online e-mail and other applications that fit into the cloud-computing space.
The company has a Zacks #3 Rank, implying a short-term Hold rating.
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