IBM Culls the Pack of Salesforce Partners by Buying Bluewolf

It can’t be easy running the Salesforce Partner Program at the moment. Just when you start the program for the new fiscal year there is further consolidation of what was an ever shrinking pack of “Global Strategic” service partners to begin with. IBM’s announced intent to acquire Bluewolf represents an effort by IBM to strengthen capabilities by picking off one of the healthier members of the service provider pack in the very hot salesforce services market.  Overall, HfS likes the intent behind this acquisition but we do think there are some significant risks to getting the value out of the deal.  

Bluewolf placed in the “Winners Circle” in the 2015 HfS Salesforce Services Blueprint significantly ahead of IBM when measured against criteria related to execution and innovation.  A Salesforce partner since 2001, Bluewolf brings to IBM a deep bench of Salesforce consultants (the combined is now over 1,000) and the extensive experience arising from more than 9,500 delivered projects to-date with a significant mid-market component that will significantly enhance IBM’s credibility in the Salesforce market.

IBM and Bluewolf have both developed strong technical skills across Salesforce Clouds with Bluewolf bringing particular depth in Service Cloud.  The new combined entity will also have an impressive portfolio of accelerators, tools, templates and platforms for horizontal processes and industry sectors and a shared focus on the user experience. IBM has solutions for the banking, automotive and telecommunications sectors.  Bluewolf’s industry investments include Salesforce certified FullForce Industry solutions for financial services and the public sector. Both service providers intend to continue investments in tools and technologies which are important differentiators in this market and which help drive the HfS Blueprint assessments. Additionally, the team behind Bluewolf’s annual ‘State of Salesforce Report’ which surveys more than 1,500 global Salesforce customers will now have access to IBM Research arm for continued innovation.

The merged capability will also strengthen the complete value chain offering of services, including plan, implement, manage, operate and optimize for clients. While both service providers deliver most of these services, Bluewolf will benefit from IBM’s interactive skills and experience in the areas of Marketing and IoT services. IBM in turn should strive to benefit from Bluewolf Beyond services which provide management and optimization services in a flexible commercial model.

Achieving the business case behind this $200 million+ acquisition is fundamentally dependent on a smooth cultural integration, which is where we see the greatest risk ahead for IBM. In our Blueprint we identified a lack of relative consulting scale as being a key challenge for IBM.  But you can’t solve for scale if the cultures don’t synch and Bluewolf’s innovative approach to engagements, marked by a willingness to challenge client thinking is seen as refreshing in the market. It is a different way of working to how IBM is seen today in this market. That through the post merger integration Bluewolf will join IBM’s Interactive Experience (iX) practice implies that IBM is well aware of the creative and innovative nature of Bluewolf, facilitating the cultural integration. This is also an interesting contrast to the approach of Accenture when it acquired Cloud Sherpas last autumn and created the CloudFirst technology delivery team.  That was an organizational model focused on technical skills alignment whereas the IBM approach has a greater focus on user experience and design led integration.

It is a good time for Bluewolf to sell as valuations appear to be healthy in the market.  Also, the ever increasing breadth and sophistication of the Salesforce Community Platform requires more investment and capability to deliver on complex client requirements and Bluewolf on its own would be challenged to invest in the same way that an Accenture or Deloitte can today to meet these needs.

IBM needed to step up its capabilities in the Salesforce services market in order to better compete with the market leaders including Accenture, Deloitte and Capgemini. Bluewolf was the most attractive of the remaining large scale independent service providers in this market from our perspective so we can see the strategic logic behind the deal. There appears to be real demand in the Salesforce market for experience led solution so let’s see how this cull of market skills is integrated into IBM iX by Dreamforce ’16 and how Salesforce clients respond.