News Analysis
Sitecore’s undergoing a makeover of sorts. And fast. The digital customer experience software provider has fired off a series of Software-as-a-Service (SaaS)-based product acquisitions the first half of this year. And it's heated up over the past 70 days with three alone in that span.
Sitecore’s latest acquisition came this month. The San Francisco-based company made its fourth product acquisition since 2018 on May 8, Moosend, a marketing automation platform. Sitecore acquired Customer Data Platform Boxever and Four51, an ecommerce solution, on March 3. It acquired content marketing platform Stylelabs in 2018.
Why the Acquisition Onslaught?
All of these acquired SaaS-based components represent a marked departure from the old Sitecore strategy of the 2010s. While competitors pieced together digital experience platforms (DXPs) via acquisition route, Sitecore touted its predominantly natively-built platform with underlying components of a .NET programming language.
“The Adobe suite is more of a loosely coupled set of technologies than an integrated platform,” according to literature on the Sitecore website. “This not only adds significant complexity and cost to the implementation but may also inhibit the ability to derive full value from your investment.” Adobe's done OK, though, in its digital experience business unit, which pulled in $3.13 billion in 2020, up 12% from $2.8 billion the year before.
So why should buyers believe Sitecore can pull off the acquire-everything-in-sight strategy? It’s not as if Sitecore’s making acquisitions for the first time, but it is a large flurry of activity in a short period of time.
“We’re not trying to reinvent the wheel,” said Sitecore CEO Steve Tzikakis, a former SAP executive who got the company's top job in September. “But we're trying to achieve the same disruption and transformation that happened in the back office or in the front desk. What is this? Easy to integrate. Very flexible. Low footprint. Common data set. Common workflows. What does this mean? I’ve got to buy the best tools that are out there: modern, sleek and API-first so I can integrate them quickly with Sitecore assets... and have everything in a modern public cloud so people can deploy them very very quickly.”
Related Article: Should I Upgrade to Sitecore 10.1? 10 New Features to Consider
Sitecore's SaaS Strategy
Cloud-based DXPs are becoming commonplace. Gartner in its Digital Experience Platform Magic Quadrant report in January only reviews DXP providers that are available for cloud deployment. DXP buyers want cloud-native DXP technologies built on mesh apps and service architecture (MASA), microservices and serverless and containerized architectures, according to an upcoming DXP Buyer's Guide report by CMSWire. There's even an alliance that supports this strategy.
Organizations must find the right flavor of the clouds on the continuum of Infrastructure-as-a-Service (IaaS) to Platform-as-a-Service (PaaS) to Software-as-a-Service (SaaS), Gartner analyst Irina Guseva told CMSWire earlier this year. According to Guseva, the ideal spot is to be between PaaS and SaaS, with SaaS becoming increasingly more pervasive. Guseva said many practitioners report a desire for “real clouds” and not PaaS because they want to avoid building their own open-source container environments through Kubernetes.
Where does Sitecore fit in here? Gartner noted Sitecore’s DXP is available as a PaaS, with a transition to SaaS planned for the next three to five years.
However, Tzikakis said, Sitecore has accelerated this with its recent SaaS-based acquisitions post Gartner analysis. It has “leapfrogged” other digital customer experience providers because it now has a CDP, experience management, experimentation, optimization, marketing automation and commerce and because everything is headless, API-first, microservices-based and pure SaaS. Sitecore already had SaaS products in its portfolio, including Sitecore Content Hub™ and Sitecore AI, according to a SaaS FAQ on its website. Sitecore promised to move to SaaS at its 2019 Sitecore Symposium.
CEO: Total Integration Coming
Tzikakis said Sitecore will be the only digital experience player of global scale that will have all of its components totally integrated, something he promised by the time Gartner puts out its next digital experience platform report. Gartner issued its latest report in January and had Sitecore as a leader alongside Adobe, Acquia, Optimizely and Liferay.
A validator of Sitecore's strategy is Google’s and Apple’s moves away from third-party data tracking and emphasis on first-party data, Tzikakis said. “Basically," he said, "the whole industry is going from third party data to first party data. We've been exceptionally busy with Boxever, and Moosend will just cook into Boxever and to the rest of the Sitecore stack and will give (customers) that edge they want contacting the right customer who is now in the first-party database as opposed to the third-party database.”
The acquisitions are part of Sitecore’s $1.2 billion investment strategy that has three pillars:
- Opening up addressable markets: “We hear our customers,” Tzikakis said. “They want to innovate. They want to be in a headless, API-first environment. We're delivering that both organically and inorganically.”
- Developer, employee growth: Sitecore is hiring more than 300 developers and it’s building co-innovation labs and is working with customers. Tzikakis promised Sitecore will have around 2,000 employees by month and 2,500 employees by this time next year.
- Doubling down on global presence: Sitecore’s following increased customer demand and accelerating field personnel in the US, UK, Germany, France, Italy, Spain, the Middle East and Japan.
Related Article: Sitecore Set to Acquire Moosend as Part of Ongoing $1.2B Growth Plan
More Acquisitions Equal More Complexities?
The strategy as a whole to move to SaaS-based components in the Sitecore stack makes sense, according to marketing technology advisory firm Real Story Group’s Apoorv Durga, vice president of research & advisory who blogged about the Moosend acquisition May 10.
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However, he cautioned that for Sitecore customers, “this is going to get very messy, with divergent architectural models, development patterns, API sets, and wildly different tiers of sophistication across the suite. Moreover, licensees will need to navigate functional overlaps across these acquired services.”
There's going to be a strong market for the all-in-one DXP for quite some time, according to Dennis Augustine, partner at Konabos, which provides Sitecore implementation and optimization services. “It would be a mistake for Sitecore to overcompensate by stitching together all these disparate purchases to create an integrated XaaS (Experience-as-a-Service) offering in less than a year. Connect? Yes. Integrate? No. It's a subtle distinction that makes all the difference. One is composable; the other is a Franken-duck.” (Augustine said Sitecore once put out an ad comparing itself to a healthy-looking duck next to the "other guys," represented by a odd-looking duck composed of artificial parts).
Pressure's on To Be 'Composable'
When Sitecore announced its SaaS strategy announcement at the 2019 Symposium, Augustine said many in the Sitecore community wondered how they would make the transition to SaaS. Sitecore, after all, wasn't built as a cloud-native platform, he added.
The move to SaaS is the only reasonable thing to do given the direction of the marketplace, according to Augustine. He noted Gartner started touting the “Composable DXP” as the future in 2020. What is “Composable DXP”? Most DXPs are monolithic in architecture, according to the report by Gartner. They need to be broken down or decomposed into a set (or sets) of packaged business capabilities (PBCs), defined, according to Gartner, as “discrete, task-oriented and independently deployable capabilities.”
“Sitecore was so far behind that these SaaS acquisitions seem like the only way to catch up in time not to fall off the Gartner DXP MQ leaders quadrant,” said Augustine, who added he’d like to see more clear messaging about the platform's direction.
“So far, Sitecore has bought Stylelabs, Boxever, Four51 and now Moosend and seem to be signaling that they're not done spending yet,” Augustine added. “All this in the context of their promise to deliver an integrated XaaS offering in 2021. What's up? Is Sitecore creating a pseudo-monolithic, integrated SaaS DXP, the very sort of thing they used to ridicule?”
Dave Michela, VP of digital solutions for Sitecore consultancy Horizontal Digital, said in a May 3 blog post (before the Moosend acquisition) that Sitecore is through its recent acquisitions (Boxever, Four51) wants to “create decoupled options for their clients so that they don’t necessarily have to buy a monolithic suite of capabilities. They can buy pieces of capabilities that intersect with their own stack and their own suite very readily and easily. So it’s not just about buying one big massive thing, it’s about buying pieces of things. That’s where we see the market heading and that’s clearly where we see Sitecore heading with these acquisitions.”
More Support for Developers, APIs
The Moosend acquisition establishes a continuation of a pattern established with the earlier elements (Boxever, Four51) in Sitecore's recent acquisition spree, according to Eric Bradford, senior technical manager at Sitecore consultancy Cylogy. “And that is a focus on products with strong, sophisticated API support,” Bradford said. “Sitecore continues to show their focus on developers and API.”
It's tough to predict the form of the eventual Moosend integration, Bradford added, noting Sitecore has a strong email platform in EXM with sophisticated marketing automation. Therefore, this is likely less about Moosend filling a big hole in Sitecore's offerings and more about extending/deepening their existing capabilities.
“It's important to not overlook the organizational aspects,” Bradford said. “This acquisition isn't just about the products and existing IP, but it's also about bringing on a seasoned and focused staff from Moosend.”
