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Salesforce's acquisitions lead CX tech buying spree in 2020

Most CX vendors acquired new companies to enhance their platforms, none bigger than Salesforce buying Slack. Facebook's Kustomer buy might be the most intriguing.

It was a blockbuster year for customer experience vendor acquisitions, led by the $27.7 billion Salesforce-Slack deal this month -- its biggest ever.

Salesforce wasn't the only vendor to bolster its CX platform, though. A host of other buys from Adobe, Twilio, Microsoft and SAP could change the market landscape.

A pattern emerged around customer service acquisitions, said Forrester Research analyst Kate Leggett. Vendors aimed to deliver whole CX clouds to capture customer inquiries on digital channels, provide an environment for agents to work on the inquiries, and to staff contact centers.

Where vendors didn't have all that, they bought it -- such as Cisco's $730 million acquisition of IMImobile, which will form a foundation for a future customer experience as a service platform. Cloud communications provider Twilio is building something similar and bought the Segment customer data platform (CDP) for $3.2 billion. Salesforce's Slack buy may eventually play into this as well, Leggett said. It could eventually foster collaboration between customer service agents and among internal service, sales and e-commerce teams.

You need contact center infrastructure, customer service and workforce management. These three large software categories are on a collision course, converging quickly.
Kate LeggettAnalyst, Forrester Research

"You need contact center infrastructure, customer service and workforce management," Leggett said. "These three large software categories are on a collision course, converging quickly."

Early this year, Salesforce also bought Evergage, a marketing personalization platform, and Vlocity, an integrator that offered Salesforce customizations for vertical industries. The Vlocity buy quickly gave rise to the release of new Salesforce Energy & Utilities Cloud in September as well as Media Cloud and Communications Cloud, with more industries planned for next year.

Facebook's Kustomer gambit

The Slack news in late November overshadowed another significant acquisition in the CX market. Facebook that month acquired Kustomer for a reported $1 billion. Kustomer's customer service tools will enable sellers on Facebook, WhatsApp and Instagram to communicate with customers before and after a sale.

For many companies, spending $1 billion represents a big investment. For Facebook, it's a small acquisition compared to WhatsApp, acquired in 2014 for what turned out to be $22 billion when the deal closed. Facebook redoubled its commitment to revenue growth for e-commerce on its social sites, partnering with Zendesk to help build business-grade messaging capabilities for its 175 million business users.

Facebook CEO Mark Zuckerberg at Facebook Communities Summit 2019
Facebook CEO Mark Zuckerberg, shown here at Facebook Communities Summit 2019, looks to expand burgeoning WhatsApp and Instagram e-commerce services, where much of Facebook's new revenue will come from.

"They use Facebook, WhatsApp and Instagram as a way to interact with their customers," Leggett said. "They want to keep those businesses using Facebook and not going to TikTok, SnapChat -- or whatever's next -- by offering them customer service capabilities."

Facebook faces antitrust litigation under the Trump administration that is expected to continue under incoming President Joe Biden's Justice Department. That likely won't affect Facebook's continued buildout of e-commerce capabilities across its social network, Instagram and WhatsApp, Leggett said.

Other acquisitions hit the news

Other large vendors bolstered their CX application sets through acquisitions as well. Adobe bought Workfront for $1.5 billion, ostensibly to enhance collaboration between designers and the marketing teams for which they create materials. Microsoft bought Softomotive, a robotic process automation (RPA) company, to enable users to build integrations between its CX application and back-end business applications via the Power Platform.

In a move similar to Salesforce's Evergage acquisition, SAP bought marketing personalization technology from Emarsys, a deal that closed in November. Both Evergage and Emarsys had CDPs among their assets, but by the time they were acquired, both Salesforce and SAP had built their own CDPs on other technology bases.

Perhaps more interesting, though, SAP plans to un-acquire a company it had bet big on in 2018. The company intends to spin off Qualtrics, a voice-of-the-customer platform it acquired in 2018 for $8 billion, but will retain some ownership in the new independent unit. This came a year after significant turnover in the SAP C-suite, especially the team running SAP's CX platform.

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