Salesforce acquires Demandware…what does it mean? Thoughts from a Demandware Partner

Salesforce acquires Demandware…what does it mean? Thoughts from a Demandware Partner

Goodbye Demandware. Hello Salesforce Commerce Cloud.

For those of us in the digital experience and commerce industry yesterday’s news that Salesforce had acquired Demandware came as a bolt from the blue in respect of the timing, the buyer and the price ($2.8b) – but I think it was expected that Demandware would be acquired at some point based on the huge consolidation in the vendor market over the past few years. So what does it really mean for customers, partners and the industry?

 

Customers

I think this is good news for existing customers of both Demandware and Salesforce. In fact they share many customers because there is very little solution cross-over from both technology vendors. This coming together of best-of-breed CRM and digital marketing together with omni-channel commerce features will allow Salesforce to create an offering that supports retailers in all parts of the customer engagement and purchase lifecycle. This will be further realised when the Demandware acquisitions of Mainstreet Commerce order management (OMS) and the Tomax Point-of-Sale (POS) solutions are integrated and rolled out globally.

 

Partners

It is always a strange time for a technology partner during an acquisition. Greenlight Commerce knows what it is like to go through a transition with most recent experience of SAP’s acquisition of hybris. We have the challenges of changing partner terms and agreements, new relationships being made due to organisational restructuring and the competition of new partner entrants to the market who are experts with the acquiring technology but typically know nothing about commerce and its complexities. However with this acquisition comes new opportunity to deliver complete end-to-end digital engagement solutions on the full suite of the Salesforce cloud offering. There will also be a much wider reach in terms of customer engagement opportunities as Salesforce will be able to come to market with some creative commercial offerings to a customer base Demandware may not have been able to get before. So overall I feel positive about what this means for Greenlight Commerce and the partner community we are in.

 

The Industry

I am not going to comment on the price paid by Salesforce as there are commercial analysts much smarter and diligent with Excel than me to say if they paid too much or not. However comparing it to the $1.3B paid by SAP for hybris isn’t a useful comparison as Salesforce had to pay against an open market share price rather than negotiating with a VC or owner of a private business. As with SAP Hybris I think Salesforce will have challenges in getting used to how to sell transaction based systems rather than the user based systems it has built its model on. Quoting for a solution of 50 seats with different licence tiers to use a cloud based platform is a bit different to quoting for a transactional commerce solution that could range from a customer selling 20 orders a day to 200 orders a second. Although this is made easier with a cloud platform as they don’t have to worry about getting infrastructure sizing wong, which is a bigger issue for traditional CPU-license models.

Also the further consolidation of the commerce tech industry means there is one less choice of provider in the marketplace. However, it does shake things up for the remaining vendors like SAP Hybris, Oracle and IBM, putting pressure on them to be more competitive in either price, innovation or solution suite integration and that can only be a good thing for the future of digital experience and commerce landscape.

The question is for those large digital experience vendors without a commerce platform – who is left to acquire?

 

In summary 

I, for one, am sorry to see the Demandware brand disappearing. There was great equity in the name and the message and I thought this would have been retained. No doubt Salesforce has enough marketing power and money to build on its new Salesforce Commerce Cloud branding to ensure it becomes synonymous with pure cloud commerce digital experiences and customer growth. Overall I think it is a very good deal for all concerned, not least Salesforce and Demandware shareholders.

 

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