Big Blue Acquires Bluewolf – IBM Invests in the Salesforce and SaaS Services Market


On March 31st, 2016 (although it will already be April Fools Day in many parts of the world, it is no joke), IBM will announce the acquisition of Bluewolf, in a deal that according to Re/code is a US$200M plus investment. (IBM to acquire Bluewolf – Re/code) 

This is one of the least surprising deals in the Business Services sector that we have seen in recent times. From the moment that Accenture acquired Cloud Sherpas, (see – https://capioit.wordpress.com/2015/09/16/accenture-acquires-cloud-sherpas-cloud-services-provider-consolidation-reaches-new-heights/) it was only a matter of time before Bluewolf and Appirio (the other two major independent Salesforce integrator) would be acquired.

In fact, when we announced the Cloud Sherpas and Accenture acquisition we finished our research with the following – “Finally, what does it mean for the remaining “born cloud” providers. Firstly, their price is now a bit higher than it was yesterday. The potential list of suitors for the remaining two providers is easy to develop. IBM, NTT Data, Fujitsu, Infosys, TCS et al are all relative subscale in the space and need to do something quickly if they are to retain leadership.”

Until the investment was announced,  IBM has lagged badly in the Salesforce Services market specifically, and in the SaaS services market more broadly. Unlike Accenture and Deloitte, it did not make the transition from traditional IT and Application services provider effectively enough. The old model of IBM did not suit the new world. It was questionable if IBM actually had the capability to deal in the SaaS Services market, with a new type of engagement model, platform and customer. The acquisition of US based Workday provider Meteorix in September 2015 was a critical indicator that IBM would start to do something serious in the space. Bluewolf was the next logical step.

For the $200M it spent, IBM gets a very substantial  boost in capability. In the 2014 capioIT Capture Share report for the Global Salesforce Services Market, Bluewolf was ranked as an overall leader in the market, and of the 14 vendors included in the study, it was placed 2nd behind Accenture. By contrast, IBM was ranked very much in the bottom rung of capability. – For more of this study –  https://capioit.wordpress.com/2014/09/17/capioit-announces-the-global-salesforce-com-systems-integration-and-services-market-leadership/   – (note, capioIT is currently undertaking research to replicate this study, details as it is finalised in mid 2016). Geographically, Bluewolf has strength in  traditional Salesforce focused markets of the USA, UK, Australia and France.

As with all acquisitions, regardless of the scale, the proof will of course be the integration, keeping the customer happy and scaling up the capabilities. IBM has to prove all of this, ensure key staff are retained, and organically build out capability. Acquisitions at IBM have been more focused on Software in recent years, so the investment in Services as highlighted is overdue, but will present some integration challenges.

It is worth understanding the cultural differences that the acquisition will present. Bluewolf is very much born of the SaaS world, offices are urban, the fact that it will sit in the IBM iX (Interactive Experience) group is a good starting point. Further to the cultural differences, capioIT research and analysis points to the fact that IBM and Bluewolf do not have a lot of historical employee overlap. The opposite worlds that they have lived in will be of some concern for integration.

IBM is, and always will be, an acquisitive company. Some of the acquisitions such as the Weather Company are lateral at first to the core business but play out over time. For legacy IBM, the Bluewolf acquisition maybe another left field move, but it is well overdue to position IBM in the Salesforce and SaaS Services space. As ever, it is now on IBM to execute, integrate and maximise customer satisfaction.

The market may now turn attention to Appirio and the unique crowdsourcing model it deploys. It is the last of the three remaining independent providers. Either Deloitte will look to maintain its competitive position, or one of the remaining providers, NTT Data, Infosys etc will spend money. To be fair, NTT Data has already spent $3B this week on Dell Services, it may have attention focused elsewhere.

Capture Point 

IBM is, and always will be, an acquisitive company. Some of the acquisitions such as the Weather Company are lateral at first to the core business but play out over time. For legacy IBM, the Bluewolf acquisition maybe another left field move, but it is well overdue to position IBM in the Salesforce and SaaS Services space. As ever, it is now on IBM to execute, integrate and maximise customer satisfaction.

If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology and their customers as the world becomes Digital. Phil may be contacted by email below,

phil@capioit.com

About capioIT - Phil Hassey

capioIT is an advisory firm focused on helping organisations to understand emerging technology in emerging markets. CEO Phil Hassey established the company in 2010
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