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Salesforce.com (NYSE:CRM) announced its intention to acquire Jigsaw today and is once again redefining the role of the software vendor and nature of software applications.

Jigsaw, a Best of SaaS Showplace (BoSS) winner, provides lead generation services via the aggregation of third-party data service feeds combined with a cloud–based, ‘crowd-sourcing’ model.

Jigsaw taps lead gen data from D&B, Hoover’s, LexisNexis and other data sources, and makes it available to sales organizations who in turn clean the data and share their own contact lists in hopes that they will build greater and better quality contacts as a result of participating in Jigsaw’s user community.

Jigsaw’s tight API integration with Salesforce.com makes it relatively easy for users to import third-party contact information into their Salesforce.com’s CRM system. The company’s CEO also told me that its API will be extended to connect to other CRM solutions, including Siebel (SEBL) and Microsoft (NASDAQ:MSFT) Dynamics.

Jigsaw’s community-oriented, social network boasts 1.2 million members, which has created a contact database of more than 21 million professionals at nearly 4 million companies. The company has also built a customer base of 800 companies, generating GAAP revenue of approximately $10-$15 million and non-GAAP revenue, excluding the deferred revenue write-down related to the transaction, is expected to be approximately $17-22 million.

Salesforce.com is paying a healthy premium for Jigsaw of $142 million, plus a performance-based contingent earn out of up to 10% of the purchase price. As I see it, Salesforce.com will easily generate a far greater return from this substantial investment in the following ways:

  • A CRM system is only as good as the data which it houses. Making quality contact information more easily available, will increase the value of Salesforce.com’s CRM system and increase customer satisfaction, loyalty, etc.
  • Jigsaw’s data-as-a-service (DaaS) gives Salesforce.com a new revenue stream and gives it access to an estimated $3 billion cloud-based data services market. This enables Salesforce.com to further diversify its product portfolio.

  • Adding Jigsaw’s DaaS to its portfolio also raises the bar to Salesforce.com’s competitors who will now have to tighten their relationship with third-party data sources or make similar acquisitions.

Salesforce.com is already gearing up a new layer of marketing efforts around this acquisition centered on a new tier of services which it will brand as the “Data Cloud”. However, it also intends to retain the Jigsaw brand for the time being to ensure that its services are viewed as vendor-independent.

Source: With Jigsaw Purchase, Salesforce.com Jumps Into Data-as-a-Service