Blockbuster Buy: Accenture Snaps Up Cloud Sherpas, Sets Its Sights On Cloud Growth
Steven Burke And Jimmy Sheridan
Systems integrator behemoth Accenture Tuesday stepped up its cloud game considerably by moving to acquire Cloud Sherpas, one of fastest-growing and most respected cloud solution providers in the world.
The deal provides $30 billion Accenture, an outsourcing giant that was No. 2 on the 2015 CRN Solution Provider 500, with one of the largest Salesforce.com and Google cloud application provider businesses in the world. Cloud Sherpas was No. 3 on CRN's 2015 Fast Growth list with a 289 percent two-year growth rate.
"Accenture is the cake and Cloud Sherpas is the cloud opportunity frosting," said Martin Wolf, president of Martin Wolf M&A Advisors, Walnut Creek, Calif., one of the top channel investment advisory deal-makers. "Strategically this makes a lot of sense for Accenture. It is a very glamorous, very strategic and very forward-thinking deal. Clearly, what Accenture is doing is hedging their bets as the market moves more toward cloud services. They will have a foot in both camps."
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More than 1,100 employees from Cloud Sherpas will become part of Accenture's new Cloud First Applications team following the completion of the deal. The team focuses on delivering cloud services for Salesforce, ServiceNow, Google, Workday and NetSuite as well as other "pure-play" technologies. Terms of the acquisition were not disclosed.
The deal adds another 500 Salesforce.com certified experts to Accenture, the premier global Salesforce.com provider with more than 2,700 certified Salesforce.com professionals. Accenture revealed the deal to coincide with the first day of Salesforce.com's blockbuster Dreamforce 2015 conference in San Francisco. Accenture is the exclusive diamond sponsor of Dreamforce. Salesforce.com President Keith Block, for his part, called the joining together of the two companies "proof positive" of the success of the Salesforce.com model.
The deal strikes at the heart of the differences between the traditional systems integrator outsourcing model -- with several hundred million-dollar multiyear global enterprise deals -- and the off-premise cloud services recurring revenue model with much lower-priced, shorter-term subscription-based deals with business units.
"Cloud Sherpas is a high-flyer and fast grower in an extremely desirable market," said Wolf. "This shouldn't be surprising to anybody. This is a reinforcement of the fact that the more product-centric your business is as a solution provider, the more focus you need on growth and earnings. It is a cash-flow business."
The acquisition of Cloud Sherpas further expands Accenture's cloud capabilities, improving its ability to deliver cloud services across both established and emerging platforms, moving the tech giant closer to its goal of becoming the industry's largest enterprise cloud company.
’We’ve reached a tipping point in cloud as our clients rapidly adopt cloud solutions,’ said Accenture CTO Paul Daugherty in a prepared statement. ’Accenture’s Cloud First agenda is a game-changer that offers transformational cloud services to help clients move their businesses to the cloud and achieve significant business results more quickly. I look forward to welcoming the talented professionals of Cloud Sherpas to Accenture.’
The CEO of one of the top Solution Provider 500 companies, who did not want to be identified, said the deal is just one more sign of how rapidly the cloud services model is taking hold in businesses of all sizes.
"We are hitting the knee of the curve of the cloud market," said the CEO, commenting on the deal. "On-premise IT is melting like the polar ice caps. The CIOs and internal IT teams are losing control to the CFOs and financial teams. What you are seeing is more and more is being done in the cloud rather than on premise. The value we have been providing as plumbers has shifted to the cloud. It is all about the application and the value that is delivered to the customer in the application layer. We are reaching the point where computing is going to be supplied like electricity. You just stick your plug in the wall and you get it. "
The CEO said the deal is a sign of one of the immutable laws of the solution provider business -- survival of the most adaptable. "It is not survival of the fittest, it is survival of the most adaptable," he said. "Dinasours are extinct because they couldn't adapt to the environment. Sharks are still here because they did adapt."
PUBLISHED SEPT. 15, 2015