Quote-to-cash provider's move to Microsoft raises concerns

Following the purchase of SteelBrick by Salesforce, CPQ partner Apttus branches out with a move to Microsoft Dynamics.

The move by quote-to-cash software provider Apttus to support the Microsoft Dynamics platform is likely a reaction to Salesforce's recent acquisition of SteelBrick, another configure, price, quote player. But it may also be viewed as a natural next step to diversify its own presence in the market.

While large technology vendors purchasing competitors of its partners aren't unique to Salesforce, it is a trend that concerns customers and technology analysts alike, with analysts calling the move risky.

"I think those kinds of acquisitions hurt the partners like Apttus more than they hurt Salesforce," said Kelsey Mason, an analyst at Technology Business Research Inc.  "If you're looking to build an app, Salesforce is a great distribution channel. But if Salesforce decides to get in to that space on their own, that's the risk you're taking becoming a Salesforce partner. It's just the nature of the game."

Kamal Ahluwalia, Apttus' chief revenue officer, said the decision to launch on Microsoft platforms, which was more than a year in the making, was driven by a need to become more competitive in the market.

"Looking at our size and scale, a lot of investors have been saying, 'You're looking at a $40 billion opportunity,'" Ahluwalia said, referring to expanding to another CRM. "We needed to start monetizing and addressing the rest of the market opportunity."

Salesforce declined to comment about the Apttus expansion, but it provided a link to a press release written by Apttus CEO Kirk Krappe announcing that the quote-to-cash software provider renewed its original equipment manufacturer agreement with Salesforce through 2023.

Salesforce is very interested in squeezing Apttus out.
Michael McKiernanvice president of IT, Citrix Systems

That could be reassuring to Apttus customer Citrix Systems Inc., a wide-reaching software company that, according to vice president of IT Michael McKiernan, uses Apttus for roughly 10,000 transactions per week with 2,000 employees using it significantly.

"About two years ago, we implemented CPQ [configure, price, quote] and CLM [contract lifecycle management]," McKiernan said. "We wanted to automate that rather than have our sales people practicing the dark arts of Excel macros."

McKiernan said Citrix adopted Apttus because of its history on the Salesforce platform, which matched nicely with Salesforce-based Citrix.

"We're a total Salesforce-based shop for CRM," McKiernan said. "Having that compatibility and partnership with Salesforce was very reassuring for us."

When asked whether he thought Apttus' expansion to Microsoft would negatively affect Citrix's use of the software, McKiernan was cautiously optimistic.

"No would be the answer, but I'd be very vocal with them in terms of diverting their attention," McKiernan said. "Whenever a company says they're going to support another platform, whether it's Android, iOS, or in this case, Dynamics, if that diverts technical resources or executive attention, that would give me cause for concern."

McKiernan also expressed concern that Salesforce might eventually squeeze Apttus, which is scaled for large companies, from the market if it chooses to build up its newly acquired SteelBrick -- a similar quote-to-cash system designed for small to medium-sized businesses.

"As much as Salesforce may say publicly, 'Oh, no, they're different markets,' Salesforce is very interested in squeezing Apttus out," McKiernan said.

At the end of the month, Salesforce is sponsoring SteelBrick's Customer Success Summit in San Francisco, calling it "The premier quote-to-cash event."

It's a concept that Mason agrees with.

"I think Salesforce will beef up SteelBrick to be enterprise-grade," Mason said. "Salesforce would much rather sell its own CPQ than a partner's. That's the reality of it."

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