Salesforce Shows Off Its Rypple Acquisition, Analysts Applaud
First there was SuccessFactors, which went to SAP for $3.4 billion in December. And last month, Oracle stepped up to take out Taleo for $1.9 billion. These deals took place against the backdrop of the expectation that Workday, another cloud-based HR software outfit that last year raised $85 million at an eye-popping $2 billion valuation, is well on its way to going public this year.
Amid all of this there was a much quieter and smaller deal: Salesforce.com acquired the cloud HR start-up Rypple.
Yesterday, we saw the first fruits of that acquisition, integrated in an impressive six weeks. In one of his heavily produced keynote addresses at Salesforce’s Cloudforce event in San Francisco, CEO Marc Benioff showed off how the Rypple acquisition is being integrated directly into Salesforce’s main service as an add-on app in the company’s App Exchange. He’s something to see in action, and manages to bring together numerous strands as a way of making his arguments for the cloud and the social enterprise.
The video below is about two hours long, but one section caught my attention: Salesforce has landed Hewlett-Packard as probably its biggest customer, and has been talking about it since it last reported earnings. At about the 90-minute mark, Benioff starts talking about Salesforce’s relationship with HP, and chats with HP EVP John Hinshaw. HP will be live on Salesforce.com in May, and will have its entire sales force of 35,000 using it by the end of the year. Look for Salesforce to play up this relationship as often as it can in the coming year.
So what did the critics — and by that I mean the analysts — think of it all?
One key observation came from Karl Keirstead of BMO Capital Markets: “We spoke with HP’s CIO, who said that the recent deal with Salesforce was for sales force automation and partner management modules only and that there was no existing plan to replace Jive Software with Chatter as its employee collaboration platform.” Ouch. Jive: 1. Chatter: Zero. Even so, Keirstead raised his target price on Salesforce shares to $190 from $175, and maintained his “outperform” rating.
Keirstead also said he expects to see Salesforce move into the “social recruiting” space as a natural extension from the Rypple acquisition. I’ve written about one upcoming company in the space, called Jibe (not to be confused with Jive).
Other Wall Street analysts appeared to like what they saw. Brian Schwartz of ThinkEquity Partners conducted a survey of 50 corporate IT managers and found that they plan to increase their spending on Salesforce products by an average of 12 percent this year. That, he argues, could lead to a 30 percent increase in annual billings by the end of the year, when combined with the addition of new customers and gains from other CRM vendors.
Salesforce is winning acceptance in many large enterprises, and that’s a good sign for its business, writes Brendan Barnicle of Pacific Crest Securities in a note to clients today. The social enterprise is real, and Salesforce is playing a pretty big part in making it happen at large companies. “It appears that Salesforce is at a tipping point where deals are getting larger and the product mix is getting more diverse,” Barnicle wrote. Now that Salesforce has 15 million end users at 100,000 customers, it’s starting to upsell those customers on new things beyond its core Customer Relationship Management service, including the new Rypple service, Chatter, and other things. He rates Salesforce a “buy,” with a $200 price target.
Anyhow, here’s Benioff’s keynote from yesterday, if you have two spare hours to watch it: