Digital experience platforms (DXPs) had a big moment this past week.
With Wednesday’s simultaneous announcements, Acquia acquired the open source marketing automation platform Mautic and rival Sitecore acquired the digital consultancy Hedgehog .
Phase2 squarely operates in the business of implementing and integrating DXPs—so naturally I have thoughts on these announcements.
While there is a huge ecosystem of products and providers in this space, there are really three standard platforms that the majority of large-to-medium sized enterprises are centered on: Adobe, Sitecore, and Drupal/Acquia. And while we may be accustomed to the non-organic “growth of the Adobe platform via acquisition”, we haven’t seen many major acquisitions among contender platforms.
So what is driving this consolidation?
What does that signal for the market?
And what does it mean for our clients and our company?
Acquia Acquires Mautic
Over the last few years, Acquia has begun an aggressive strategy to compete with the DXP product offerings of Adobe and Sitecore because digital experiences are not built on Content Management Systems (CMSs) alone. Sophisticated clients, that are in touch with customer needs, also have an overwhelming need for marketing technology that can drive results beyond building, hosting, and powering websites and content. That includes key components like commerce, CRM, and “martech” including: personalization, journey orchestration, marketing automation, and customer data platforms (CDPs).
Phase2 and Acquia share a perspective that the best way to serve those clients (and their wide range of design, technology, and brand needs) is through digital experiences based on open technology viz. open source, and an open API architecture that allows for greater integration, portability, and customization.
In addition to a cloud-based hosting platform and support for Drupal, Acquia offers a variety of products focused on completing the DXP including a personalization engine, a customer journey orchestration tool, and a digital asset manager. But this leaves several components of a complete DXP unaddressed; and traditionally, Acquia customers filled those gaps with alternative, best-of-breed solutions. Most notably absent was marketing automation. Enter Mautic.
Mautic was a necessary acquisition target for Acquia because:
Building a stronger connection between Mautic, Drupal, and the Acquia platform should provide superior integration of customer data over using Marketo, Eloqua, Pardot, or Hubspot.
Today, Mautic is the only viable open source product that could fill this gap and should appeal to customers who prefer open alternatives to proprietary software.
It’s a (not-so-subtle) counter to Adobe’s acquisition of Marketo which could be an entry point into the Adobe Marketing Cloud for shared customers.
Since it’s open source, it’s particularly appealing to many Acquia customers already on Drupal. But also, there’s a natural fit from the perspective of Dries Buytaert, Acquia CTO and Chairman (and the creator and leader of the Drupal project), who envisions the Acquia platform as an “open” alternative to both Sitecore and Adobe—an important option in the market which secures the credible statement that they are building the “First-Ever Open Marketing Cloud”.
This acquisition also continues the trend I highlighted in an October post, when IBM acquired RedHat—where I argued that open source’s time in the enterprise has come-of-age and consolidation and adoption of open source software was the “new normal”.
Sitecore Acquires Hedgehog
Meanwhile, the move by Sitecore to acquire one of their leading services partners is unusual. And it could indicate that along with expanding revenue, control over the implementation of their software is an objective.
Ultimately, I suspect this move is going to enable them to control more successful implementations, but potentially at the cost of the loyalty and health of their partner ecosystem. It could be a step into the slippery-sloped-world of “channel conflict”.
Look no further than giants like Oracle and IBM that have long struggled with this balance. They believe they need a services component to ensure successful adoption and guide tricky and leading implementations, but they inevitably face backlash from both partners and customers who want a healthy and flourishing ecosystem of implementation partners to choose from.
In my opinion, Acquia’s pursuit of product over services is a healthier direction for all players in the ecosystem. While they have more components still to develop or acquire in their pursuit of a complete DXP offering, the open nature of the platform and the driving direction from its open source roots allows customers to componentize a heterogeneous DXP that has already become the standard.
Upon taking the CEO position at Acquia in December 2017, Mike Sullivan made a very important statement to the Acquia partner community, the Drupal community, and Acquia’s investors when they redirected the professional services (PS) team at Acquia to staff-up the product engineering team. The company has pledged to limit the growth of their PS team to a defined percentage of revenue to ensure ample opportunity for partners and focus their PS efforts on enablement, unique challenges, and high priority adoption projects.
In fairness, Acquia did have a larger PS group than Sitecore. But, using some very back-of-the-napkin calculations on both companies, I would conclude that this move likely puts Sitecore’s total PS size above that of Acquia’s. It will matter, of course, how and where they deploy this team—in terms of implementations vs. training/enablement.
It was just over a month ago, that in similar fashion, Salesforce and Adobe announced (also in the same week) that they were acquiring competing Customer Data Platform (CDP) products. So this is all still far from over; we are going to see more acquisitions and consolidation.
We may also see the DXP solution components themselves like CMS, CRM, DAM, commerce, personalization, marketing automation, CDP, MDM and campaign management merging into more consolidated categories of software. This is increasingly likely in light of the fact that key industry players like Adobe will want to blend these distinctions to create platform stickiness. It is easier to sell a “Marketing Cloud” than independent types of software.
Personally, I believe that while consolidation of the DXP market will help with customer confusion, there will be (and should be) a place for heterogeneous, de-coupled DXPs that use an API-first architecture to combine different components. These will give customers greater choice, “best-of-breed” functionality, lower (or more controllable) costs, and more opportunity to cater to the uniqueness of each digital experience.
And finally, despite the power of software as the building blocks for digital experiences, the real key to success is how the true experiences are brought to life—beyond underlying platforms. In other words, success of complex digital implementations remains dependent on the services necessary to plan, execute, integrate, design, and polish the user experience of the product. And services companies—like ours—will continue to play a key role in guiding the success of implementations and experiences themselves.