Software-as-a-Service (SaaS) and Cloud Computing market consolidation appears to be heating up with the second important acquisition announcement of the day coming from SuccessFactors (NYSE:SFSF). The company plans to buy CubeTree, a “social business platform” which permits greater communication and collaboration across organizations.
This is also SuccessFactors’ second acquisition, following its purchase of Inform in February.
Integrating social networking software into enterprise environments has been a hot topic since the idea of Web 2.0 first emerged. It has gained even greater urgency as Facebook and Twitter have become mainstream communications tools among business professionals on an ad hoc basis and corporations in a more concerted fashion.
But, the utopia that everyone is seeking is an integrated approach to social networking which embeds its capabilities into broader enterprise applications in a ’seamless’ fashion that eliminates the integration issues, alleviates compliance concerns and encourages end-users to take fuller advantage of the applications from a productivity standpoint.
Salesforce.com (NYSE:CRM) has been doing a terrific job demonstrating the potential of this idea with its demonstrations and aggressive marketing programs promoting Chatter. They have also used acquisitions to accelerate the development and rollout of their social networking capabilities.
As a privately-held company, CubeTree’s revenues are not publicly available. Nonetheless, as a relatively young company which was only beginning to demonstrate its revenue potential, CubeTree has been able to convince SuccessFactors to give its team and investors $20 million in SuccessFactors stock initially, plus a contingent cash payment three years from the transaction closing date which will bring the total value to $50 million based on the long-term promise of enterprise social networks.
Although this isn’t a significant transaction from a financial standpoint, it is an important deal from a market point of view.