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Summary:

Enterprise software companies, eager to soak up more of their customers’ IT budget are building out sales and marketing suites to do just that.

Oracle’s intention to buy BigMachines, a provider of cloud-based sales automation services, fills in yet another box in the software giant’s application wish list. This deal, announced Wednesday and for which terms were not disclosed, comes less than a year after Oracle’s $871 million buyout of Eloqua, a marketing automation company. And by that time Oracle had already purchased the assets of Market2Lead, a demand generation specialist and Vitrue which focused on social marketing.

If there’s any doubt as to the strategy, Oracle’s press release on BigMachines lays it out pretty clearly:

“In combination with Oracle’s enterprise-grade cloud solutions, including Marketing, Sales, Social, Commerce and Service Clouds, Oracle and BigMachines will create an end-to-end smarter selling cloud solution so sales personnel are more productive, customers are more satisfied, and companies grow revenue faster.”

Integrated cloud applications could wring more sales out of existing customers

Oh, and if successful, that would mean more of a given customer’s IT budget would flow to Oracle. Except,that is, if more of that budget flows to Salesforce.com or IBM or Adobe Systems, all of which have been a tear filling in their own suite checkboxes.

Two years ago, Salesforce.com bought  Radian6, a social media monitoring company, for $326 million and then spent $800 million for Buddy Media, a social marketing specialist, and lthe coup de grace came in June when it dropped $2.5 billion on ExactTarget, a marketing automation company. In that deal, it also  got Pardot, a well-regarded marketing automation company that ExactTarget had already acquired.

Over the past few years, Adobe has purchased Omniture for analytics, Efficient Frontier Technology for social advertising/search and most recently spent $600 million on Neolane for digital marketing.

So it’s clear the big software vendors are suite-crazed but none of them has a complete suite covering all marketing, sales, social networking and other functions yet, so point solutions remain viable, Okta co-founder and CEO Todd McKinnon told me recently. And for a company like Okta, which provides identity and access management (IAM) for businesses, that’s an opportunity — although the big guys including Salesforce.com are targeting IAM as well. McKinnon’s argument is, companies need that security across all their applications not just one or two, he noted.

CMO power

One factor driving this trend is the belief that chief marketing officers (CMOs) of companies are getting a much bigger say in how IT budgets are spent. After all, the advent of easy to try and pay-for SaaS applications takes a lot of the wear and tear out of application deployment so the argument is — why should the CIO get involved.  (Whether putting the CMO in charge of IT decisions really makes sense or is even actually happening is another discussion.)

And the consolidation of this category means challenges for marketing software companies  like Boston-based Hubspot and Marketo, which went public in April.

Mike Volpe, CMO for Hubspot, said all this interest in the marketing automation category shows that Hubspot got into a big game early. “I’d rather be competing with Salesforce.com and Oracle than companies our size,”  he said.

Volpe is aware that there’s a risk that smaller independent companies may end up disappearing, but he obviously wouldn’t put Hubspot in that category. Whenever there’s consolidation like this some smaller companies get bought, others disappear, but there’s usually one or two of the smaller guys who prevail, he said.   “With 10,000 customers, I think we’ve reached the escape velocity … we’ll be one of the winners,” he said.

And, as these big companies buy technologies and teams they have to integrate Hubspot can focus on its platform and adding features. Still, Salesforce.com is an investor in Hubspot but spent more than $2 billion buying a competitor. That’s got to be a little weird.

  1. I think we’re slowly reaching a point where there aren’t going to be any major players that cater exclusively to one need. With the huge expansion of the social technology, every brand is going to need and want a suite that is all inclusive. This extends to small businesses as well. We’re hardly out of private beta, but our customers already want more from Agile CRM despite the fact that we offer CRM and marketing automation and a fully functional social suite. Customer information is spread across the internet and intelligent automation is the demand of the day.

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