Veeva is a Business Software and Solutions vendor that has grown rapidly in just 7 years to dominate the CRM space in Life Sciences. The rapid rise of this vendor in such a short period of time is inspirational to any budding entrepreneur as it follows some of the foundational rules of business and economics. As I immersed myself in Veeva's story, I started to contemplate how the company would evolve over time and then started to question whether Veeva's relationship with Salesforce.com (SFDC) would stand the test of time.
Given Veeva's roots within SFDC, it was a natural progression for its CRM product to be hosted on the Salesforce1 platform and needless to say, it has been a great success as it expects to top $300m by the end of this year [1]. To this day, Veeva remains SFDC's preferred worldwide partner for the Life Sciences industry. In fact, in March 2014, Veeva announced that it would be extending its global partnership with SFDC through to 2025 [2]. Their partnership agreement includes minimum payment commitments from Veeva, which has been a successful financial model thus far as it benefits both parties although it does not restrict them from competing against each other should an opportunity arise [3].
Not only has Veeva proven its worth but it is also being touted as potentially bringing in a new wave of cloud due to its industry focus:
“Marc Benioff [Salesforce's chief executive] led the first wave of cloud computing, and there have been a series of leaders like him spending plenty of money to grow their businesses. Peter [Gassner, Veeva's CEO] is leading the next wave, which is focused on industries and real customer successes.” - Gordon Ritter, Founder and General Partner of Emergence Capital Partners [4].
Ritter's company, Emergence Capital Partners invested $4m in Veeva in 2007; an investment which is now worth $1.2b, a 300-fold return. Its prediction that the next wave of cloud is going to be focused on industries seems to be ringing true and so global multinationals must adapt to exhibit that they are in touch with industry requirements. This is exemplified by Veeva surpassing a goliath by the name of Oracle in Life Sciences CRM. This trend needs to be given attention across all verticals as this is also a common criticism of other global multinationals across various industries and service areas.
In April 2014, SFDC announced a new industries strategy aimed at 'accelerating the company's growth and transforming the way companies across key industries connect with their customers.' [5] With a similar solution focus to Veeva and a rejuvenated industry specific strategy, it'll likely to be competing with Veeva in the future whether they are still bound by the partnership agreement or not. Although SFDC is receiving payments from Veeva as a part of its partnership agreement, it is likely to see the impressive growth rates and want a bigger piece of the pie, especially if its business starts to expand.
Naturally, the question arises of whether or not SFDC could try to acquire Veeva. SFDC's $4b acquisition spree over the past four years was topped off with its July 2014 acquisition of analytics-based CRM platform provider, RelateIQ. Organizations such as SFDC are looking to invest in digital marketing and other customer experience initiatives and grow inorganically through acquisitions. Previous acquisitions by SFDC have primarily been horizontally focused and so taking on Veeva would potentially start a chain of acquisitions based more on serving specific industries. The question is whether SFDC believes it now has enough clout to compete with an industry-based vendor like Veeva [6] [7].
What are your thoughts on the future of both vendors? Do you think SFDC could potentially acquire Veeva? Do you think Veeva will continue to concentrate on Life Sciences or expand out into other big industries? Leave your comments below.
Best Regards,
Jonathan Cordwell
Research Analyst, Healthcare Strategy
ResearchNetwork, CSC
- JPMorgan, North America Equity Research
- Yahoo Finance, Veeva Systems Extends salesforce.com Partnership Into 2025, March 4, 2014: http://finance.yahoo.com/news/veeva-systems-extends-salesforce-com-210600001.html
- Veeva, Form 8-K: http://veeva.q4cdn.com/32d16ba7-6a25-47d4-a188-a4576fc7ed87.pdf
- VentureBeat, Gordon Ritter: Veeva Systems is the next Salesforce, October 16, 2013: http://venturebeat.com/2013/10/16/gordon-ritter-veeva-systems-is-the-next-salesforce/
- Salesforce.com, Salesforce.com Announces New Industries Strategy, April 2, 2014: http://www.salesforce.com/company/news-press/press-releases/2014/04/140402.jsp
- Market Realist, Must-know: Salesforce.com’s 2Q15 earnings, September 10, 2014: http://marketrealist.com/2014/09/must-know-salesforce-coms-2q15-earnings/
- Cloud Socius, 4 Billion Dollars Well Spent? Salesforce Top 5 Acquisitions, July 15, 2014: http://www.cloudsocius.com/top-5-salesforce-acquisitions/
