The recently released spreadsheet hacked from Salesforce board member Colin Powell's email names multiple companies that Salesforce was at least considering acquiring. In the aftermath of the initial reports, it's worth noticing that there were at least two enterprise resource planning/back office companies on the list: Workday and NetSuite.
Salesforce CEO Marc Benioff for many years has been resolute in saying that the company would not buy a back-office company -- but times have changed.
There are plenty of reasons to dismiss acquisition talk. For example, there are lots of ERP companies, like Financial Force, already on the Salesforce AppExchange. Many of them are platform native, meaning that they're built with many of the same objects as Salesforce.
That makes them easily integrated for any customer instance, as well as easily maintained, so there's no current reason to pick one of them -- to the chagrin and consternation of all the others in the stable.
While watertight, this logic misses an important aspect of how the marketplace is changing. As the digital disruption accelerates, the line between front and back offices is blurring. Moreover, some traditional back-office apps are migrating, one vendor at a time, to be closer to front office data. Think about HR/HCM and compensation management.
The evolution of the market drives at least the need for reconsidering Benioff's stand.
The business model that goes with digital disruption is business agility, a new idea, and not the model involving sustainable differentiation from the late 20th century. Now, from what I can see, business agility has a lot of overlap with some back-office systems and ideas, as well as a crying need for more new apps that can support better governance models.
I don't think Salesforce has the internal resources to go after business agility, and that's why I suggest that it consider buying NetSuite -- assuming Oracle's offer of US$109 per share is rebuffed by T. Rowe Price.
Of course, there are other possible candidates -- such as Workday and Financial Force, already mentioned. From my vantage point, I can't tell you which of these three companies would be the best fit. Workday is growing a little faster, but NetSuite is more profitable. Financial Force is already as much a part of Salesforce as can be.
What's really important is the in-house expertise and the ability to conceptualize and develop systems supporting the agile model, and I have no visibility there either. However, I think that an ERP acquisition with the aim of leading in business agility would pay dividends, in that it would make Salesforce a more dominant player in the enterprise space, while simultaneously giving it another new category to lead as the rest of the field plays catchup.
Last thought: One reason to acquire companies is to continue growing your own, which often happens when a business' organic growth rate slows. Larry Ellison of Oracle has played this game for many years, and he's been very successful.
I can't see Salesforce slowing just yet, but the time to think about such strategies is well before you need their contributions. Time to think about it.