At Dreamforce 2018 today, DXC announced the acquisition of Australian based Salesforce Platinum partner, System Partners. System Partners is one of the leading integrators in Australia, with a focus on Financial Services and the Public Sector. Firstly, congratulations to both parties. Acquisitions are a tough, but ultimately and hopefully worthwhile exercise for all parties.
The acquisition is not a surprise. It was industry knowledge that the founders of System Partners were looking for an exit strategy, and DXC has had a longterm acquisition strategy in Australia, both as DXC and previously with CSC, most significantly acquiring UXC.
The acquisition provides DXC with the first significant foray into the Salesforce ecosystem. Despite only having offices in Australia, according to data in the Salesforce App Exchange, System Partners will double the number of certified consultants. Salesforce capability has long been a significant hole for DXC. The lack of a SaaS/Cloud practice has been a critical issue in limiting the power of DXC to offer clients an end to end capability. Inside the Australian market, the deal makes good sense. It is in alignment with the former UXC businesses and has a complimentary industry coverage with the focus on public and financial services sectors.
There will be a transition issue for the team at System Partners, and this will need to be addressed with a suitable incentive to stay in the firm. capioIT has identified that the more substantial consolidations in the Salesforce ecosystem have been marked by a loss of skills from the acquired firm as the reality of being part of a significant global entity takes hold. DXC will hope that the UXC experience will be the key benchmark in this regard.
From a global perspective, DXC is still going to be significantly underweight in the Salesforce ecosystem. It hasn’t been able to replicate the DXC Australian model, underpinned by the UXC model. Unfortunately for DXC, due to the lack of a mid-sized Solution providers market the scale race is going to take time, and need substantial organic investment. The lack of momentum to date may be challenging to ignite given this track record.
It is also worth commentating on the Australian market, and the broader Asia Pacific Solutions and SI market for Salesforce. Consolidation is accelerating. In August Cognizant acquired SaaSFocus, an Australian and Indian based integrator. capioIT is confident that the scramble for scale by larger providers will continue throughout 2018 and beyond. That is excellent news for the smaller integrators, but it cannot be seen as an easy way out. The larger SI’s are not naive. They will acquire for quality and the best people. Valuations certainly have come down from the heady days of the acquisition of Cloud Sherpas by Accenture.
DXC has finally entered the Salesforce ecosystem through the acquisition of System Partners in Australia. This is significant globally and in the Australian context for DXC. It is very complimentary for Australia and provides the opportunity for DXC to launch a global SaaS/Cloud ecosystem. The critical issue will be skills retention and scaling up. Success in these factors will be the measurement of success for the deal in the long term.