The news

Today, May 22 2024, SugarCRM and sales-i announced the acquisition of sales-i by SugarCRM. sales-i is leading provider of a revenue intelligence solution that helps businesses maximize their revenue and profitability. It targets at making sales professionals more efficient and effective by providing actionable insight into every customer, product and sale.

The acquisition comes nearly a year after Sugar announced a partnership with sales-i to improve business-to-business (B2B) sales performance by delivering AI-powered revenue intelligence that leverages the data of a business's enterprise resource planning (ERP) system and CRM. This combination provides businesses with actionable insights that improve sales, marketing, service and support, resulting in greater revenue and higher levels of retention.

You can read the full announcement here.

The combination of SugarCRM and sales-i combines the detailed transactional data residing in ERP systems with the rich sales data in SugarCRM. According to the release information, his shall create an intelligent data hub enabling customers to successfully execute impactful sales strategies to improv revenue, maximize profitability and increase customer satisfaction.

In this combination, sales-i delivers the revenue intelligence, while SugarCRM delivers the CRM data; both of which are needed for a better sales enablement.

Together, SugarCRM and sales-i intend to deliver the most innovative intelligent account management solution in the marketplace by utilizing leading edge sales enablement technologies provided by both companies and the rich revenue intelligence capabilities provided by sales-i.

The bigger picture

The market for CRM and CX solutions is crowded while only few vendors enjoy significant mindshare. And what is more, both terms, CRM and CX, get increasingly fuzzy as many vendors use them to endorse their own offerings. This results in oddities like a customer service software vendor claiming to have a “complete CX solution” or the term CRM used synonymously to sales force automation.

The same holds true for the term “platform”. Nearly every vendor claims to be a platform vendor – regardless of the breadth or width of the offering. And every single one of them is saying that the platform makes easier for employees and delivers better results for customers.

In addition, triggered by the enormous success of Open AI, every vendor jumped on the AI bandwagon – with most of them delivering more or less the same feature set.

The consequence is a cacophony. There is nearly too much noise to identify any signal.

At the same time, customers start to look more into margin and profitability, which requires targeted solutions that are ready to run without a lengthy or complicated implementation program.

For vendors this means that they need to increasingly concentrate on easy-to-implement business scenarios that deliver a fast return on investment. By nature, these business scenarios must work along and supporting, corporate value chains. Delivering to these business scenarios that show real business value, along with adequate and distinctive messaging, is one important way for vendors to get heard again.

My analysis and point of view

Why am I not surprised about this acquisition?

For one, the partnership has been deep. Second, the combination of SugarCRM and sales-i fulfills exactly the need for easy-to-implement and valuable business solutions that I described above.

Both, SugarCRM and sales-i share a focus on manufacturing industries and have a good standing partnership with a number of common customers. The short-term opportunities for SugarCRM lie in the ability to tap into the mutual other client base to increase its footprint, plus the ability to use sales-i as a door-opener to place SugarCRM in companies that run an ERP but not yet a sales-oriented CRM solution.

Implemented right – of which I do not have any doubts, the incorporation of sales-i into the SugarCRM fold also addresses one of the analytics weaknesses that SugarCRM has. While it is simple to create reports and to display them where it matters also in a graphical representation, the analytics system itself is fairly limited by being ‘in-module’. sales-i should give SugarCRM the capability to deliver more immediately useful, as it is directly actionable, analytics, along with the predictions and recommendations based on it. This complements and enhances what is currently available with Sugar Predict. The combination of Sugar Predict and sales-i does open up some interesting avenues for SugarCRM customers.

The longer-term benefits for both, SugarCRM as well as customers, lie within the data – and AI – realm. The combination of ERP- and CRM data allows for the far more specific and accurate identification of revenue potentials – and the way to realize these potentials.

Having the ability to combine and use both ERP and CRM data natively is something that not many vendors can offer. Top of mind are actually only suite vendors and not CRM (or ERP) specialists. This ability sets SugarCRM quite apart from the CRM/CX competition, which is something that becomes increasingly important in a CRM/CX world that increasingly lacks differentiators, both functionally and messaging-wise.

Plus, given customers’ consents, there is a treasure-trove of data that can be used for additional services, including the comparison of a company vs. an industry or a sector. This could help businesses adding to existing strengths and mitigating weaknesses.

Lastly, SugarCRM now has now increased its ability to get out of the cacophony of vendors. There are now some ways to communicate and demonstrate actual business value that should help in lifting the “let the platform do the work” message to the next level.

This acquisition opens exciting prospects, not only in the short term. Kudos to both, the SugarCRM and the sales-i teams.

The News

On January 20, 2022 Medallia announced that it has entered into a definitive agreement to acquire Thunderhead, the leader in customer journey orchestration, or like the press release states it, leader in every-channel journey orchestration.

The transaction is expected to close in the first quarter of this fiscal year.

The stated benefit for customers is that “with the combination of customer experience insights and journey orchestration, organizations can have a single view of the customer journey and use real-time interactions to improve experiences and loyalty.”

Thunderhead is expected to “strengthen Medallia’s ability to power individualized journeys and conversations at scale, across all online and offline channels, helping Medallias’s thousands of customers continue to increase their brand loyalty, sales and growth.”

Thunderhead founder and CEO Glen Manchester says that “the acquisition heralds the next era of customer experience. We pioneered the idea of the customer operating system, with our closed-loop customer engagement platform powered by continuous listening, feedback and learning, all actioned through our unique fusion of journey orchestration and real-time interaction management (RTIM). With Thunderhead, Medallia can ensure that every single aspect of the customer lifecycle – marketing, commerce, sales and service – will be a seamless, relevant, and frictionless experience.”

Tl;dr

Watch my snap analysis - or read on. 

The bigger Picture

The name of the game is CX (platform). As with any platform game, it is crucial to have enough scale. On top of this, the markets for CDP, segmentation, personalization, real-time interaction management and customer journey orchestration are converging.

A CDP provides the persistent and transactional data foundation that allows the delivery of the additional value that insight and action can deliver. Structured and unstructured customer feedback are important components for the identification of the next best action or next best (part of) the conversation. This incremental delivery of value is what the diagram below demonstrates.

There are not many independent leading customer journey orchestrations left. Leading specialists have been Kitewheel (now part of CSG), Usermind (recently acquired by Qualtrics), Pointilist (just acquired by Genesys). All these acquistions have been “in the name of” CX. There are some smaller specialists like Roojoom, BryterCX, InQuba. These are VC funded. I guess their owners are already looking forward to further consolidation. Alterian, NICE, Coveo or Engage Hub are no journey orchestration specialists but offer a broader portfolio of solutions.

My PoV and Analysis

The delivery of this additional value through making incoming data actionable is exactly where the value of the combination of Medallia’s and Thunderhead’s capabilities lie. Medallia has its roots in the enterprise customer feedback (i.e., service) world whereas Thunderhead works pretty much agnostic to the company’s functions.

Thunderhead had and has a series of strategic partnerships with Microsoft, Salesforce, and now SAP, that did not prove to be overly successful. Especially the partnership with Salesforce went sour when Salesforce acquired Evergage to become its new “Interaction Studio”. The partnership with SAP is still active and it remains to be seen how it is affected by this acquisition. On the other hand, I am still asking myself in how far Thunderhead benefited from these partnerships.

Thunderhead pioneered journey orchestration based upon behaviours. To my knowledge, the company is the only one that follows this approach (happy to be corrected, shoot me a message). In addition, Thunderhead is the only company that does not only have real-time interaction management capabilities but is also – as the only company – recognized as a leader in both, real-time interaction management and customer journey orchestration.

In brief, Thunderhead is a diamond in the market, maybe a not yet fully polished one, but still.

I am not surprised about the fact that Thunderhead did get acquired, just by whom. I would have thought that it’ll be a bigger company than Medallia. But then, both companies are swimming in the CX pond, which is full of sharks. This makes a privately owned company with a unique technology like Thunderhead, which naturally has fairly limited finances, an interesting candidate. As for Medallia, the Thunderhead technology helps the company getting out of the enterprise feedback and voice of the customer corner and into the open of the CX pond.

Qualtrics is the main competitor of Medallia and the Qualtrics acquisition of Usermind may very well have forced Medallia’s hand. This is on top of Genesys moving out of the call center corner and repositioning as a CX brand as well. Medallia itself having just been acquired by a finance investor should have helped.

Which also raises the question what benefit lies for Thunderhead in this acquisition. More and/or better/bigger customers? For one, there is the hopefully soon to be productized integration into the Medallia stack as a key data source and information/action destionation. Many interaction points and therefore journeys short and long can be informed and fed with the combined solution set.

Second, and that is probably more important, in the words of a colleague: Thunderhead desperately needs a CDP type of solution, a system of record, underneath its stack. One of the challenges always was an overlap with the partner solutions while not offering the foundation. This can now be changed. Medallia can act as a system of record.

It is up to the joined forces of Medallia and Thunderhead to deliver the possible synergies. And there is no reason to expect that this is not going to happen.

Congrats to both, Medallia and Thunderhead!

The News

On January 18, 2022, Microsoft announced the intention to acquire Activision Blizzard with the vision of bringing the joy and community of gaming to everyone, for $95 per share, which equals a transaction value of $68.7 bn. This is a bit more than eight times of the revenue that Activision Blizzards expect to have in the fiscal year 2022.

With this acquisition, Microsoft can add 400 million monthly active users to the already existing 25 million Game Pass holders.

Until the acquisition closes, the companies will run independently. After completion of the transaction, Activision Blizzard wil report to Phil Spencer, the newly appointed CEO of Microsoft Gaming.

This acquisition makes Microsoft the third largest gaming company by revenue, after Tencent and Sony.

The stock markets reacted with a sharp increase of Activision Blizzard shares to about $87, while Microsoft stock largely followed its pre-existing slight downward trajectory.

Here my analysis in a brief video.

The bigger Picture

We have currently around 3 billion people and growing, who are actively gaming. Millennials and younger do not even know a world without social media and smart phones. They often play using mobile devices. Microsoft, on the other hand, is available on basically every device and offers quite some hardware, too, either directly or via partners. Additionally, Microsoft already before was a known entity in the gaming market, e.g. owning gaming platforms like Minecraft and Doom. Still, according to Shacknews, Microsoft seems to have missed the own growth targets, even though an increase of Game Pass holders from 18 million to 25 million in the year 2021 is quite significant. 

Apart from the ubiquitous blockchain, NFT, DAOs, VR and other technologies, gaming is also one of the key ingredients to any upcoming metaverse, not in the least because of the widely offered possibility to create (and monetize) own worlds in the gaming engines that allow for immersion and the built-in offered possibility to virtually meet in the forms of avatars. 

And as “Metaverse” is largely uncharted land, there is a move to set standards by various companies, Meta, Nvidia, Sony, Tencent, Google, Apple, to just name a few heavy hitters. Following common business rationale, these standards need to be set fast, before someone else does, and especially before regulation kicks in.

This requires scale.

My PoV and Analysis

$68.7 is a whopping number that not many companies are able to pay. However, with a multiple of around 8, this is technically not an expensive acquisition. Yes, it still is a lot of money. It easily dwarfs the price that Take Two paid for Zynga ($12.7 bn) or the acquisition of LinkedIn by Microsoft ($26 bn). Or Microsoft’s 2021 acquisition of Nuance Technologies for about $20 bn. 

Both companies are highly profitable and complement each other in the gaming world. And, as said, together they are number three in a platform market. This is the short-term play.

As Microsoft CEO Satya Nadella is quoted in the press release: “Gaming is the most dynamic anc exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms. We’re investing deeply in world-class-content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive, and accessible to all.”

This shows the long-term game: Defining “Metaverse”.

Fellow analyst Jon Reed agrees. He considers this acquisition a “gaming play with a semi-trojan-horse long game as a “metaverse” play for Microsoft. Microsoft has the $ to place a big metaverse bet without facing too much downside.”

As gaming is, “Metaverse” is a platform play. Platform plays are about access to huge numbers of people and masses of personal data. This deal ties a massive community of gamers to Microsoft and therefore strengthens Microsoft’s access to this personal data. Microsoft without Activision wouldn’t have enough critical mass in terms of the size of its gamer community while Activision Blizzard would have been small fry by valuation. Tencent and Sony are the numbers one and two with valuations of $570 bn and $154 bn, respectively. Having said this, Electronic Arts, Epic are even smaller than Activision Blizzard. Even Roblox is smaller, but then this company is on a different trajectory.

All these companies will feel the pressure. Other companies with “Metaverse” aspirations, too. Microsoft just upped the ante.

One of the big remaining questions is: Will this merger succeed? Apart from regulatory considerations that seem to be partly addressed by forming a unit “Microsoft Gaming” with an own CEO?

The main obstacle here lies in company culture.

Looking at this topic, two very different ones collide with Microsoft and Activision Blizzard. While Microsoft is very strong on compliance, inclusion and non-discrimination, Activision Blizzard has exhibited a very toxic work culture. Analyst (and gamer) Marshall Lager says that “the company has seen the departure of several executives and development leads due to allegations of improper behavior, and the company as a whole has been implicated in union-busting and other unfair labor practices.” He continues: “If this deal goes through, Microsoft will have some delicate juggling to do. On the one hand, it should not mess with Activision Blizzard’s creative or marketing efforts, because that company’s brands are among the most popular and lucrative in the industry, with considerable fan support. On the other, it needs to do something in those very areas, because it’s where all of the sexual harassment and abusive labor practices have occurred over the years . How do you change the people and the behavior while maintaining the quality of their output?”

The success of this merger will largely depend on successfully bridging exactly this gap. 

One other thing is for sure. This acquisition clearly shows that the dream of a Web 3 as being an open decentralized version of the Internet just tanked. Remember: Web 2 or the original Internet have started with the idea of being open and decentralized and see what happened. Three times is not the charm here. At least not without strong regulation.

The News

On July 18, 2021, Zoom Video Communications, Inc. announced the acquisition of Five9, Inc. in an all-shares transaction. The transaction values Five9 at around $14.7 billion.

According to the press release “the acquisition is expected to help enhance Zoom’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the $24 billion contact center market.”

According to Eric S. Yuan, CEO and founder of Zoom, the company is “continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers”. He continues with “enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers”.

Rowan Trollope, CEO of Five9 adds that “businesses spend significant resources annually on their contact centers, but still struggle to deliver a seamless experience for their customers”. Trollope will become a president of Zoom and continue as CEO of Five9.

Zoom expects the acquisition of Five9 to be “complementary to the growing popularity of its Zoom Phone offering The combination of both firms also offers both companies significant cross-selling opportunities to each other’s respective customer bases”.

As especially Rowan Trollope emphasizes upon repeatedly in the acquisition briefing, this acquisition is about accelerating growth by combining the respective assets, software as well as customers.

The bigger picture

The trend towards call centers in the cloud has been there before and it has been amplified with the Covid pandemic. Connecting phone lines from diverse and independent locations into one telephony system gets greatly simplified with a cloud-based infrastructure and the required upfront investments are far lower.

At the same time, the desire and need for unifying personal as well as corporate communication have increased tremendously, for the same reason.

Last, but not least, it can be assumed that workforces will stay in a hybrid mode, with people having the ability to work from anywhere.

Zoom profited from the Covid pandemic in a phenomenal way and was probably one of the biggest winners. However, since October 2020, its stock price went down from a peak of nearly $560 to around $360 (July 22, 2021). This can be largely attributed to businesses having invested into communications tools and strong competition. Especially Microsoft has upped the ante considerably and invested heavily into its Teams software.

From an economy point of view, we are looking at the conversion of some markets in the ongoing platform game. We have the call center software landscape and the communications and collaboration software landscape – usually referred to Call Center as a Service and Unified Communications as a Service.

My Analysis and PoV

Zoom itself has evolved a lot from its beginnings.

Looking at the Communications as a Service landscape, one can see that most of the major vendors have messaging, telephony, and meetings in their portfolio. A small number, e.g. Fuze or 8x8 also offer call center functionality. Microsoft Teams offers collaboration and Cisco’s Webex supports collaboration and call center.

Zoom, without Five9, offers neither of these functionalities, which makes it vulnerable, especially in direct competition with a software that is as ubiquitously available as Microsoft Teams. The vulnerability is the risk of being pushed into a niche instead of staying the top dog that Zoom still is at least in the videoconferencing/video meeting market. Zooms reduced, yet still impressive, growth, is indicating this vulnerability.

On the other hand, the company is awash in cash and can draw off its still high valuation, which it did to acquire Five9.

Zoom is a top dog when it comes to meeting solutions, with its additional solutions it plays pretty strong, but not decisively so, in the market of communications solutions. Five9 is a serious player in the cloud call center software space.

With these areas merging, both players have lots of parts that the respective other does not have. Think video call centers, or video assisted support and remote control. Combining this is a strong value proposition in the short- to midterm.

I do not fully buy in to the story of the proposed “omnichannel engagement platform” as I do think that some crucial aspects, like the ability to identify and profile a customer and her complete context, are missing. I rather see an omnichannel engagement execution platform. Add the profiling part, as Twilio did with acquiring Segment, and we have a really compelling story, especially if Zoom Phone takes off. Having access to the call center, consented customer profiles, and the access to the consumer customers’ devices via Zoom Phone could totally change the game.

Until this happens, I do not see much that hasn’t been done before, although the respective offerings of Zoom and Five9 may well be better than the ones offered by the companies I mentioned earlier.

Still, a good, yet expensive, move that raises the appetite for more.

The News

The Bigger Picture

My PoV and Analysis

• SAP now is a considerable CIAM player
• CiAM adds important glue to the current offerings

The News

The Bigger Picture

MyPoV and Advice