Many M&A deals present more opportunities (and challenges) than may first appear. Brian ran some of his thoughts about the strategic value of this deal with Eric Berridge, CEO of BlueWolf, a big cloud and CRM implementer. Here are their insights regarding this potential deal.
Yesterday, Oracle announced its intention to purchase Eloqua for approximately $871 million (USD). Oracle, a purveyor of ERP application software, database software and computing hardware would acquire a firm that specializes in Marketing automation software.
Eloqua traditionally competes with firms like Marketo, Pardot and others. From the experience of my firm’s clients, products in this space have been exceptionally strong in:
Tracking the effectiveness of marketing campaigns across several media types (e.g., mail, email, events, etc.)
Scoring leads and successfully moving them from raw leads to educated prospects
Tightening the relationship and handoffs between Sales and Marketing
Driving better leads to Sales (and, as a result, improving top line revenue results)
Eloqua has had a strong linkage to Salesforce.com, a long-time cloud CRM (customer relationship management)/SFA (sales force automation) vendor. Their presence at the annual DreamForce events that Salesforce.com hosts has almost always been big, front & center. Their booths at these events are heavily trafficked and on par with those of Marketo and the biggest integrators. To say that Salesforce.com users know who Eloqua is would be a gross understatement.
It’s this connection to Salesforce.com that makes this deal interesting. Late yesterday, I chatted with Eric Berridge, CEO of BlueWolf. BlueWolf is a big cloud consultancy with a lot of experience in implementing Salesforce.com and other cloud solutions. Eric confirmed that the Eloqua/Salesforce.com connection was significant even speculating that “70-90% of Eloqua’s customers are tightly integrated to Salesforce.com”.
Eric and I discussed whether Oracle will be able to influence Eloqua’s customers to abandon their Salesforce.com solutions in favor of Oracle’s sales automation products. Remember, Oracle acquired CRM products from Siebel, Peoplesoft (nee Vantive) and JD Edwards (nee YOUcentric). They also created their own CRM products (e.g., Oracle CRM On Demand) and recently made a Fusion CRM product available. We jointly concluded that any conversions, if they happen at all, would likely go to the Fusion CRM solution.
I would further speculate that it would be unlikely that a cloud solution user from Salesforce.com would want to revert to an on-premise solution unless some significant event (e.g., the customer was acquired by a firm that had standardized on Siebel) forced this. Once you go cloud, it’s hard to justify the re-purchase of hardware, systems software, etc.
Bottom line: I just don’t see this causing mass changeouts of Salesforce.com software within the Eloqua customer base. The strategic value of this deal must have more to do with building out Oracle's marketing software offerings than buying the customer base of Eloqua.
Eric and I also discussed whether the Eloqua deal will shove Eloqua competitor Marketo closer to Salesforce.com. It just might. Eric thinks the Marketo folks must be dancing in the streets as it makes their firm the biggest independent in their space and enhances their acquisition chances. I’d suspect that SAP, Salesforce, IBM and maybe others will be working this holiday season to determine what their marketing automation technology portfolio should contain. This deal only accelerates M&A activity and interest in this market. 2013 should see a lot more action here.
We also pondered how well the Eloqua and Oracle cultures will mesh. Eric is ex-Oracle and has a very personal bent to this. We both agree that this is one deal where Oracle needs to leave well enough alone. While Oracle has a finely tuned machine when it comes to acquisitions and integration of acquired companies, this is a deal in a space where Oracle is not the #1 or #2 player in the market. No, in this case, Eloqua is a leader in its market. Oracle would do well to retain the talent, customer relationships, etc. for as long as possible if it is to really learn and exploit the marketing sector.
I believe it was Gartner that posited that by 2017 the CMO (chief marketing officer) would have a bigger technology budget than CIOs. This point hasn’t been lost on Marc Benioff (CEO of Salesforce.com) and its apparently worrying Oracle, too. However, buying Eloqua doesn’t automatically give Oracle street cred with CMOs. Oracle will need to earn its way into this buyer segment and leveraging Eloqua can help. But, as I stated in the prior paragraph, Oracle will need all of Eloqua’s people to pull this off.
To put a finer point on this, remember that Eloqua’s talent has passion for branding, marketing and unstructured data (thanks for reminding me of this Eric). Oracle’s passion is more around on-premise data center and back office technologies. While I applaud Oracle’s significant push into a new space, they’ll need to change and grow, too, to make it successful.
One other observation here bears mentioning. Deals like this point out that the lines between B-2-C and B-2-B are really getting blurred. The best businesses today don’t just understand their customers, they also seek insights around their customers’ customers. Marketing now utilizes insights across the entirety of the value chain. Eloqua and its technology has been particularly effective in both B-2-C and B-2-B spaces. They could probably teach Oracle a lot about the other side of Marketing.