Exclusive - Bluewolf CEO on why the Salesforce services pureplay's future is as part of IBM

Once upon a time, not that long ago, the services giants looked somewhat askance at the Salesforce world.

No more. That customer base is now big business. The likes of Capgemini and Accenture have plowed time and money into building and skilling-up their Salesforce-dedicated practices as the cloud vendor sells into more and more high-end enterprise customers.

Today IBM confirmed the importance of having enterprise skin in this game with the announcement of the acquisition of Salesforce services pureplay Bluewolf Consulting for a rumored (if unconfirmed) $200 million.

Bluewolf is a long-time presence in the Salesforce world. It was founded in San Francisco in 2000, and has been a Salesforce partner since 2002, growing its customer footprint to over 9,500 enterprise users worldwide. It’s also the author of the State of Salesforce annual market survey that appears in the run-up to the Dreamforce conference.

Bluewolf will be rolled into IBM’s Interactive Experience division, with Bluewolf co-founder and CEO Eric Berridge heading it up. I’ve spoken with Berridge on a number of occasions across the years and on every occasion, we’ve discussed what the long term game plan for the firm would be - a continued status as a pureplay services market distruptor or a future role as part of a larger technology and service operation?

That question has now been answered, but to find out why this outcome has been arrived at, I spoke to Berridge earlier today. He told me that he regards this as the start of what he calls “a brand new world” for Bluewolf:

We have found ourselves where we need more scale, more access to resources, more innovation. We still have our focus on Salesforce, but we need to tie multiple things together. One of the key motivations with IBM is that there’s an enhanced focus, bringing Salesforce into their model.

We are a services business. We have 500 people globally and my primary role is to make sure those people are motivated and work well together. That culture is our secret sauce. It’s become clear over the past couple of months that IBM shares that same philosophy and that our culture will survive.

According to Matt Candy, Vice President & European Leader for IBM Interactive Experience:

The absolute intention is to keep Bluewolf whole and to protect that secret sauce. The culture, the DNA and how they operate with Salesforce is incredibly special. I think we’ve used the word ‘bubblewrap’ here. We will make sure that we bubblewrap the Bluewolf piece. It will be Bluewolf, an IBM IX Company.

The benefit of being part of IBM is that Bluewolf will more easily engage with wider digital transformation programs where the client may want capabilities, such as content management or deeper analytics, than Bluewolf could have provided on its own.

There’s also synergy, says Berridge, across the Enterprise and Consumer business markets, with IBM having expertise and footprints in both. Candy adds:

It is imperative that we drive into both. We are seeing larger companies pushing into the whole digital transformation that goes beyond just the Salesforce platform.

That said, the purity of the Salesforce focus has been one of Bluewolf’s major selling points, so I wondered whether this would be maintained as part of IBM or will Bluewolf now build out skills in the Oracle, NetSuite or Workday markets? Berridge makes the point that it’s early days:

The strategy will unfold as it unfolds. But we want to go deeper into Salesforce. We want to take things like Watson and cognitive computing and see how they work with Salesforce. But we want to be number one in Salesforce.

We have been been following the Salesforce story for 15 years. Their eco-system has become more complex as they have become a bigger company. But one of the reasons that we have been successful and maintained growth over those 15 years is that we keep going back to the customer. The customer doesn’t really care about what’s going on in the wider ecosystem. The confusion in the eco-system will work itself out. What’s important is our ability to innovate while staying pragmatic.

Eco-system equilibium

That ecosystem confusion is something that is increasingly being seen in the Salesforce world as the firm pursues its $10 billion run rate ambitions and its functional footprint extends to step on the toes of third party partners that have built businesses on the Salesforce platform. Ask Marketo, Apttus or ServiceMax about that, to name but three Salesforce eco-system partners now in 'co-opetition' with their cloud platform provider.

Bluewolf isn’t in the exact same position, of course. From its perspective, the shift in market balance has not come from Salesforce moving into its sphere of operations, but from larger SI and consulting players, such as Accenture and Deloitte, deciding it’s essential to court Salesforce and Salesforce in turn welcoming their advances. That said, Berridge insists that Bluewolf remains agnostic:

We have an objective voice in the market. We don’t have to make bets. As Salesforce has launched Marketing Cloud and purchased SteelBrick, it has created conflict and confusion. But I think that the companies that stay pure to their vision, like Marketo, will do fine. Marketo has done very well in the face of Salesforce’s ExactTarget acquisition.

In the coming weeks and months, the IBM/Bluewolf deal will close and the process of integration will take place. As that works itself out, Berridge is clear that two things won’t change. Firstly Bluewolf will still be tipping up as a major presence at the Dreamforce conference in September.

Secondly, the firm will be producing its annual State of Salesforce report, which provides a third-party perspective on buying and deployment trends among Salesforce users worldwide. This is a study that the media and analyst communities look forward to every year, although one that I suspect isn’t entirely welcomed inside Salesforce itself with as much enthusiasm.

Berridge says that the question of whether the report will be published this year is one that he’s been asked a lot over the past 24 hours. Given that this year’s study will come with the additional clout of IBM backing and branding, that’s hardly surprising.

My take

While my previous conversations with Berridge have always resulted in his affirmation of a pureplay, independent future for Bluewolf, the enterprise customer growth on the part of Salesforce made it increasingly likely that the firm would become part of a larger mothership, one that was keen to carve its own slice of the lucrative Salesforce market. You could have picked a number of names out of the hat as prospective suitors, but in the event it’s IBM that’s won the day.

What becomes increasingly interesting here is how Salesforce balances these relationships. It’s got the likes of Accenture, Capgemini and Deloitte all growing their Salesforce practices and now it’s got IBM ramping up its interests. It’s a good position to be in, but it’s increasingly the case that partner management is going to play an ever larger role in the firm’s growth trajectory.

In the services space, this is a case of ensuring a level playing field, probably an easier task than in the product space where Salesforce morphs from platform provider to competitive rival. This is inevitable given the firm’s ambitions, but how it works itself out will be interesting to observe. I suspect we may see an increasing number of hitherto Salesforce-centric firms broadening their field of vision in the near future. Watch this space. 

But meantime, a good deal for Bluewolf I think and for IBM. Certainly it’s one that will be subject of some debate inside the likes of Accenture and Deloitte for some time to come - and that can't be bad.