IBM has opened its wallet twice in recent weeks to acquire Salesforce.com and Microsoft Dynamics cloud consulting expertise. The twist? IBM isn't alone in its quest to acquire IT consulting firms within the Salesforce and Microsoft Dynamics CRM and ERP markets.
IBM's buyout of Bluewolf Group LLC, announced this week, involves one of Salesforce's top partners. Although the financial terms were not disclosed, the deal was likely in the $200 million neighborhood, according to re/code. In mid-March 2016, IBM also acquired Optevia, a privately owned Software as a service (SaaS) systems integrator specializing in Microsoft Dynamics CRM solutions for public sector organizations. Financial details were not disclosed.
The purchases surface amid two rounds of IBM layoffs, as the company seeks to load up on cloud and cognitive computing talent while shedding traditional hardware and software talent.
IBM Cloud Consulting Rivals
Still, IBM's strategy in the cloud consulting market isn't unique. Global systems integrators also are ramping up their cloud consulting bases -- both organically and through M&A. Capgemini, for instance, is training 1,000 IT consultants on Amazon Web Services. And Accenture in January acquired CRMWaypoint, another Salesforce.com consulting firm. Best known for enterprise-class consulting, Accenture sees M&A as a way to move down into the SMB IT market.
The M&A activity involving Salesforce and Microsoft Dynamics cloud consulting firms doesn't end there. Additional examples include:
- RSM US — which provides midmarket audit, tax and consulting services — acquired Junction Solutions, a national technology consulting firm focused on Microsoft Dynamics AX. That deal surfaced in November 2015.
- HCL Technologies acquired PowerObjects in October for $46 million. PowerObjects had trailing 12-month revenues of approximately $37 million as of September 30, 2015. Over 250 PowerObjects employees joined HCL. PowerObjects is a professional services firm completely focused on providing service, support, education and add-ons for Microsoft Dynamics CRM. The company has won Microsoft’s ‘Partner of the Year’ award three of the last four years.
- Sonata Software acquired IBIS Inc. for a reported $14 million or so. That deal allowed India-based Sonata to expand its U.S. footprint. IBIS is a two-time winner of Microsoft Dynamics Outstanding Partner of the United States Award, and a Worldwide Finalist for the Microsoft Dynamics AX Partner of the Year.
- Several additional Salesforce.com and Microsoft Dynamics buyouts appear on the ChannelE2E 100 list for 2016.
Project Consulting or True Recurring Revenues?
Among the additional challenges facing IBM: Making sure the Salesforce and Microsoft Dynamics engagements involve more than project work. Activating and customizing third-party SaaS applications can generate plenty of revenue. But that approach typically lacks the predictable recurring revenues that Wall Street and IBM shareholders now crave.
The big opportunity likely involves connecting the dots between third-party SaaS systems (like Salesforce and Dynamics) and IBM's own cloud services -- particularly the IBM SoftLayer cloud.