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Salesforce unveils Commerce Cloud with latest purchase

Demandware's technology opens a new avenue for Salesforce, yet leaves gaps in back-office capabilities.

There's a new cloud in the Salesforce sky, as the CRM vendor's purchase of e-commerce software company Demandware Inc. paved the way for the introduction of Salesforce's Commerce Cloud.

The $2.8 billion acquisition helps fill a gap in the Salesforce portfolio, allowing it to be a part of the entire customer journey, including the point of the sale.

With the Demandware purchase, Salesforce has the technology for its customers to create e-commerce stores on their websites using the Commerce Cloud.

"Salesforce software was hitting all the customer touch points, except at the moment of the exact sale," said Kelsey Mason, an analyst for Technology Business Research Inc., based in Hampton, N.H. "When that exact sale happened, Sales Cloud could execute and track that sale in the back end, but couldn't do the actual sale itself. Now, Salesforce can power a customer's entire front office, customer engagement functions."

By allowing customers to complete sales in the Salesforce platform, companies can then integrate that information back to sales, marketing and customer service teams.

"An integrated Salesforce front-office suite complete with Commerce Cloud will allow companies to get orders through their online stores [and] have that information be recorded in Sales Cloud, so sales teams can follow up," Mason said. "This can also trigger Marketing Cloud to send a targeted email recommending other relevant products a customer may want to purchase. Service Cloud can also be triggered to have a support person follow up."

The acquisition of Demandware, based in Burlington, Mass., is Salesforce's largest acquisition, and its fourth this year, after acquiring several artificial intelligence (AI) companies and a quote-to-cash software company.

Salesforce CEO Marc Benioff said he expects the investment to pay off, calling it another billion-dollar cloud in a prepared statement.

"With Demandware, Salesforce will be well-positioned to deliver the future of commerce as part of our Customer Success Platform," Benioff said in the statement. In other public reports, Benioff also said the recent AI acquisitions will be featured heavily in the Commerce Cloud, possibly for recommended purchase features.

While the development of the Commerce Cloud and purchase of Demandware help complete the front-office sales funnel, Mason said there are still gaps to be filled in Salesforce's ERP software.

"What Salesforce doesn't have is the inventory management and order-fulfillment capabilities that other e-commerce vendors, like SAP, Oracle and NetSuite, have," Mason said. "So, while I think that Salesforce bundling e-commerce with its broad portfolio of front-office apps and ancillary apps like analytics and IoT [Internet of Things] is a differentiator, Salesforce also lacks the key back-office piece."

Depending on how [Salesforce] decides to fill the ERP gap, it may set itself up for increased competition with SAP and Oracle.
Kelsey Masonanalyst, Technology Business Research

Mason said she expects either a growing partnership with Microsoft or a couple smaller acquisitions to complement the ERP functions.

"Essentially, it seems like Salesforce is filling one gap and creating a larger gap in the process," Mason said. "Depending on how it decides to fill the ERP gap, it may set itself up for increased competition with SAP and Oracle."

The introduction of the Commerce Cloud could also benefit from the partnership with e-commerce software giant Amazon. Salesforce recently partnered with Amazon Web Services as its public cloud infrastructure provider for international expansion plans.

"I wouldn't be surprised if Salesforce hosted Commerce Cloud on AWS, given the high traffic generated by e-commerce sites," Mason said.

The sale of Demandware is expected to be completed by July 31.

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