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Why IBM Was Drawn to Bluewolf Group

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Apr. 5 2016, Published 4:56 p.m. ET

Salesforce prominence in SaaS space

Previously in the series, we discussed IBM’s (IBM) recent acquisition of a leading Salesforce (CRM) Consultant, Bluewolf Group. Now let’s see how the prominence of Salesforce in SaaS (software-as-a-service) and CRM (customer relationship management) space shaped the business and destiny of Bluewolf.

SaaS is a subscription-based service that enables companies to access software online and only pay for the services and applications used. Salesforce pioneered the SaaS model, which serves as a cost-effective solution for companies with limited IT budgets. Employing SaaS can help companies save on the cost and time involved in purchasing, installing, and upgrading expensive software packages.
Why IBM Was Drawn to Bluewolf Group

Salesforce’s CRM solutions enable enterprises to track and plan sales, marketing, and customer service activities. Salesforce leads the CRM space, but SAP (SAP) and Oracle (ORCL) are also prominent players.

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Enhancing the consulting and services business

Salesforce’s cloud applications include solutions spanning from digital marketing management and sales analytics to customer services, which are increasingly being preferred by IBM’s conventional customers.

Since Salesforce’s formation in 1999, consulting firms have entered the market to enable companies tailor its offerings and assimilate them with other corporate systems. Bluewolf Group was built on the same notion and has offered Salesforce-related services since 2002, specializing in the integration of Salesforce’s CRM into organizations’ existing IT (information technology) structures.

Strong synergy

Thus, with an eye on improving its consulting and services operations, IBM has added Bluewolf Group to its acquisition portfolio. In words of Paul Papas, Global Leader of IBM’s Interactive Experience practice, with Bluewolf, “the synergy was too strong to pass up.”

Investors interested in gaining exposure to IBM can consider investing in the SPDR S&P 500 ETF (SPY), which has an exposure of 8.7% to application software and invests ~0.7% of its holdings in IBM.

Continue to the next part for a closer analysis of IBM’s iX Unit.

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