The real surprise about Salesforce acquiring B2B commerce platform CloudCraze is that it hasn’t happened earlier. As we’ll discuss, it’s a logical move that dovetails with other past acquisitions — and gives some clues to Salesforce’s thinking about where next to expand its product footprint.
The deal was signed yesterday and announced in a blog post by Jeff Barnett, CEO, Salesforce Commerce Cloud. Terms were not disclosed.
CloudCraze boasts a strong enterprise customer list including big brands such as Coca-Cola, Cummins, Ecolab, Land O’ Lakes and WABCO. Its management have extensive professional services and product backgrounds in digital commerce. It’s also a good technology fit, as it has been built to run natively on the Salesforce platform.
As is the case with many of its ecosystem partners, Salesforce was already an investor. In January last year, Salesforce joined a $20 million venture funding round in CloudCraze, which had been bootstrapped by its founders for six years before new management bought the business in August 2015.
Different needs of B2B commerce
At the time, Salesforce was still busy digesting its $2.8 billion acquisition of B2C e-commerce platform Demandware, which it rebranded as Commerce Cloud. As CloudCraze CEO Chris Dalton explained to us back then, Demandware addressed a different market with different needs:
The acquisition of Demandware allowed [Salesforce] to secure the retail B2C space for Commerce Cloud. But it doesn’t allow them to address the more complicated needs of the business market, who need a more complex pricing scheme and more complex array of products …
We deal with highly complex global organizations with many different business units within them, each with their own pricing schemas.
So what has changed since then so that the deal makes sense today? The first factor is that Salesforce is evidently now ready to expand the Commerce Cloud to embrace those more complex, multi-layered needs of B2B commerce, although this is not the aspect Barnett emphasizes in his blog post:
With the addition of CloudCraze, our customers will be able to create the same richly branded commerce experiences for business buyers that they do for consumers, all from a single platform.
The acquisition of CloudCraze will enable Salesforce and its customers to take full advantage of the shift to digital commerce.
Of course the need to deliver “richly branded experiences” is an important consideration even in the B2B world. One CloudCraze customer, a Kelloggs brand called Bear Naked, has even been using the platform to sell customized granola mixes direct to consumers. But what counts more for B2B customers is whether a commerce platform performs well with all the complex permutations of their product sets and customer relationships.
Rounding out quote-to-cash
The second factor, therefore, is the need to offer sophisticated B2B commerce that integrates well into other components of the Quote-to-Cash spectrum — configure-price-quote (CPQ) and contract lifecycle management (CLM). And this is where it’s perhaps surprising that Salesforce has waited quite so long before bolstering its commerce capabilities.
It’s now more than two years since Salesforce entered the quote-to-cash (QTC) market with its acquisition of CPQ vendor Steelbrick, another Salesforce-native ISV. That product was rebranded as Salesforce Quote-to-Cash, but it has no built-in commerce capability beyond a limited subscription billing and revenue recognition engine. Therefore, as Salesforce has sought to move the product’s appeal further upmarket into larger enterprise accounts, where it has needed to provide a B2B commerce capability, it has had to bundle up offerings from CloudCraze or other contenders.
So the acquisition of CloudCraze will significantly round out Salesforce’s Quote-to-Cash offering and should enhance its ability to compete in those larger enterprise accounts.
The acquisition therefore raises a new hurdle for rival quote-to-cash player Apttus as it readies itself for a long-awaited IPO. Originally a dedicated Salesforce-native ISV, Apttus has since extended its platform to also run on Microsoft Azure and most recently IBM. But the thinking behind that IBM partnership gives a further clue to the importance of Salesforce’s acquisition of CloudCraze.
Apttus believes that there’s a new market opportunity brewing in what it calls the enterprise middle office. Perhaps Salesforce is aiming for a slice of that emerging new market too. In which case, look out for a further acquisition by Salesforce to plug the CLM gap in its QTC story — with longstanding ISV partner Conga being one of the candidates to keep an eye on.
Image credit - Hand from cloud picks up leaping business man © Sergey Nivens - Fotolia.com
Disclosure - Salesforce is a diginomica premier partner at time of writing.