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IBM To Buy Salesforce.com Channel Superstar Bluewolf

IBM is continuing its services acquisition spree, saying Thursday that it plans to acquire Salesforce.com solution provider superstar Bluewolf for an undisclosed amount.

IBM is continuing its services acquisition spree, disclosing plans Thursday to acquire Salesforce.com solution provider superstar Bluewolf.

Terms of the deal were not disclosed, although Re/code is reporting the price to be a little more than $200 million.

New York-based Bluewolf, No. 240 on the 2015 CRN Solution Provider 500 list, is one of the country's top and longest-standing Salesforce partners, growing organically over the past decade and a half to more than 500 employees and 12 offices. The company has made a name for itself in that time for its leading Salesforce.com consulting practice and for driving the market around cloud consulting services.

[Related: Channel Co. Exclusive Research: Strategic Service Providers Are Driving A New Era Of Business Outcome-Based Cloud Services Growth]

Bridget van Kralingen, senior vice president of IBM Global Business Services, said in a statement that the addition of these types of capabilities will help propel IBM's services and cloud-based capabilities to the next level, in particular helping it capture a piece of the multibillion-dollar midmarket and enterprise business in the Salesforce.com professional services industry.

’There is no question that the consumer-grade experience has emerged as a fundamental element in modern business strategy,’ van Kralingen said in the statement. ’Meeting that expectation defines next-generation differentiation and competitive position, and with Bluewolf, we add expertise to scale that capability to the cloud-based capabilities of Salesforce.’

The move to acquire Bluewolf comes just two weeks after IBM's purchase of U.K.-based consulting firm Optevia, which specializes in solutions and services around Microsoft Dynamics for government agencies.

As part of the planned acquisition, Bluewolf will be folded into IBM's Interactive Experience (iX) practice, which is part of IBM Global Business Services, which IBM touts as offering hybrid consultancy and digital agency solutions. As part of that group, Bluewolf will develop solutions around Salesforce.com implementations, according to IBM, Armonk, N.Y.

For Bluewolf, working with iX will help propel the company's solutions to a more global scale, said Bluewolf CEO Eric Berridge in the statement.

’I believe we have the perfect alliance as part of the IBM iX team -- equally sharing our passion, discipline and desire to be a global leader in the Salesforce partner ecosystem with the scale, skills and expertise of IBM iX to catapult us there," Berridge said.

Some solution providers see the deal as a reaffirmation of the value of strategic service providers charting a path for customers to derive high-impact, business outcomes from cloud offerings.

"This shows bigger companies like IBM are looking to smaller, more nimble organizations to transform themselves to grab a bigger piece of the cloud market," said Chris Pyle, CEO of Champion Solutions Group, No. 215 on the 2015 CRN Solution Provider 500 list. "For me, this shows the market for companies willing to buy solution providers just got bigger. If anything, it shows the value of the channel. Companies like IBM are no longer focusing on buying $1 billion companies. They are buying small integrators specializing in the cloud."


Champion Solutions Group's Pyle said he does not see the acquisition as a threat to his IBM partnership. "There is enough business out there in the world for everybody," he said. "The majority of the channel will be able to provide just as good or better quality of service to end users at a better price."

Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., one of the top channel investment advisory deal makers, called the deal a services-driven expansion, noting that Bluewolf has little recurring revenue or intellectual property (IP) of its own.

"What is IBM doing buying a $200 million services company?" Wolf said in an interview with CRN. "That is the larger question here. I am not sure how this ties into high-value, high-margin recurring revenue and IP."

One of the challenges IBM is sure to face, said channel executives, will be retaining the Bluewolf talent. "These are people that generally don't want to work for a company like IBM," said one channel executive who asked not to be named.

The acquisition is expected to close in the second quarter of 2016, IBM said.

STEVEN BURKE contributed to this story.

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