Acquisitions Heat up Cloud-based Social Marketing and Collaboration Space: Enterprise Platform Vendors vie for Valuable Market Share

By David A. Kelly, Upside Research

Four recent acquisitions in the social marketing and collaboration space highlight the move by enterprise platform vendors to take a bigger piece of the action. First, SAP announced its $4.3 billion acquisition of Ariba, which provides cloud-based collaborative commerce applications as well as facilitating a B2B e-commerce market. Next, Oracle Corp. announced its plans to buy Vitrue, a provider of tools for running marketing campaigns through social media, for $300 million. Salesforce.com responded by announcing its acquisition of Buddy Media, a competitor of Vitrue, for $689 million. Not to be outdone, Oracle then announced plans to buy Collective Intellect (terms not disclosed), a social marketing platform that has capabilities similar to Radian6, a company Salesforce.com acquired last year. The three companies are spending more than $5 billion collectively to gain the advantage in the hotly contested market of cloud-based social marketing and collaboration.

Ariba, which was one of the early e-commerce vendors that focused on the B2B market, has amassed a global trading network that is valued at $319 billion in commerce transactions representing more than 730,000 businesses. In contrast, SAP as an enterprise platform provider most notably for ERP solutions that power the back-office transactions of companies in all verticals, has 190,000 customers worldwide. This move will solidly place SAP in a position to leverage the relationships Ariba already has, and move SAP’s enterprise software into new markets, including the cloud and SaaS markets that are becoming the new playing field for enterprise vendors.

Both Vitrue and Collective Intellect are intended to help Oracle shore up its social relationship management offering. Oracle has its strengths in database and analytics, which are integral to being able to leverage all of the data surrounding e-commerce interactions among customers and brands. Vitrue is a tool for marketers at brands to better reach their customers via targeted campaigns through popular social media sites like Facebook and Twitter. And, Collective Intellect is a “listening” technology that helps marketers monitor and respond to on-line interactions with consumers. The combination of these technologies and Oracle’s solid enterprise analytic technology will form a powerful social relationship management platform. The cloud-based nature of both technologies is a key aspect of this play for Oracle.

Salesforce.com has been working on its own social relationship marketing (SRM) offering. While Salesforce.com is already known for its cloud-based CRM offering, the acquisition of Buddy Media will reinforce its efforts to be seen as an enterprise social media powerhouse. All of these moves highlight two very important themes in enterprise software today: cloud and social. Enterprise vendors realize they need to have a cloud story in order to reach new markets and satisfy the growing desire of companies to reduce some of the overhead and maintenance associated with enterprise software purchases. At the same time, social is driving CIOs in all vertical markets, as they scramble to find the best way to incorporate social tools into reaching and influencing their respective audiences.

Enterprise vendors want to capitalize on the social tools to bring their platforms into the future and offer a one-stop-shop to customers. These latest acquisitions are not the end of consolidation in the market. I expect this trend to continue for some time, as new technologies come to the forefront and enterprise platform vendors use acquisitions to complement their existing offerings. What will be telling is how well the new technologies can be integrated into offerings and how easily they can be adopted by existing customers and new ones.