CRM: A critical enterprise digital transformation component

Consulting firms adding strategic value to CRM through custom software solutions and strategy remain highly sought-after M&A assets. 7 Mile Advisors provides M&A advisory services to help clients navigate the buyer universe and properly position the Company strategically in front of prospective buyers.

CRM is core to enhancing the way an enterprise engages with a customer throughout the customer journey. It allows an enterprise to maintain relevance and brand loyalty, which ultimately leads to a superior customer experience, driving customer stickiness and satisfaction, and ultimately increasing revenue. The channels through which a customer engages with a brand has only become more complex due to the rise of mobile solutions. This not only has given way to a number of new technologies, but has allowed clear leaders to emerge.

At this stage, there is a clear market-leading platform in Salesforce, which commands a high teen market share. The next major players in the ecosystem are Oracle and SAP, estimated to be commanding a high single digit ownership, while Microsoft Dynamics is likely in the low to mid-single digit market share. While market share is an important metric to understand who owns the market, it is crucial to not lose sight of year-over-year growth trends and the implications that has on market share trends. Case in point, Salesforce has grown dramatically, posting ~30% YoY growth recently, upping its market share over the last 10 years while Oracle and SAP have seen its share decline on muted growth, and Microsoft Dynamics has remained flattish to slightly increasing, allowing it to roughly maintain its share of the market. The read through to a consulting firm is that the high levels of growth in the Salesforce platform bodes well for consulting firms specializing in this ecosystem, particularly through the lens of M&A.

It is clear how to find a winning software platform in the market, but how do you pull that value through to a consulting firm?

Invariably, the follow-up question that 7 Mile consistently fields that is related to the technology partnership discussion is, “Do we diversify our technology partnerships, or, stick to one? What will give us the most value in the market?”

In some respects, this is a loaded question, but can be classified in three buckets:

1) Build a platform-specific expertise only if you are choosing a winning technology that has a clear vision and road map for growth.

2) Pick two winning platforms. Ideally, these come as complementary technologies (i.e. blending marketing cloud with e-commerce, or, utilizing a BI technology and accompanying that with big data platforms, for example). Another angle: Be a service expert that has ties to multiple technologies (i.e., marketing cloud (Adobe, Sitecore), BI/Analytics (Qlik, Tableau), CRM (Salesforce, Dynamics), etc…). The crucial aspect to the latter is creating discipline in how the sales channel and relationships are managed.

3) If you pick an emerging technology, ensure it is recognized at the enterprise level, has successfully raised a few rounds of capital, and is on a growth trajectory. One example of this is the Robotic Process Automation (RPA) space where emerging technologies are gaining momentum (Automation Anywhere, Blue Prism, and UiPath).

7 Mile Advisors has delivered value to clients in each of the prior scenarios.

Most recently, 7 Mile Advisors advised Sonoma Partners in its sale to Ernst & Young. This was an example of a high-end, well-managed, CRM-focused boutique consulting firm that began as an exclusive Microsoft Dynamics CRM consulting firm before broadening its exposure to Salesforce. Management was highly successful in managing its sales channel, producing very successful results (example 2 from above).

This transaction brings 7 Mile’s deal count in the Salesforce ecosystem to 10. A majority of the prior deals in this ecosystem were Salesforce-exclusive shops, primarily on-shore, and highly competitive when taken to market (example 1 from above).

Another recent example of 7 Mile advising a firm in an emerging technology is the transaction 7 Mile advised Premier Logic on its sale to Alten (Euronext: ATE). Premier Logic was a strong Microsoft and Sitecore partner with a budding RPA practice tied to Blue Prism. Blue Prism has emerged as a leader within the Gartner Quadrants and is a leader in the RPA space alongside Automation Anywhere and UiPath (example 3 from above).

7 Mile Advisors holds an expansive view of the current market and buyer knowledge to add value in a sell-side process through its unique approach to valuation drivers.

Author: John Cooper, Director at 7 Mile Advisors


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