Salesforce’s Traction on Demand Acquisition Is Unsurprising and Not Significant for Higher Education

On February 25, 2022, Traction on Demand announced that it had signed a definitive agreement to be acquired by CRM market leader Salesforce. Traction on Demand is currently a Salesforce partner firm specializing in Salesforce consulting, application development, and implementation services. The statement indicated that the company would become part of Salesforce Professional Services with no disruptions to current client services during the transition.

Tambellini is not surprised that Traction on Demand was open to acquisition. Consulting and service providers within the current Salesforce ecosystem are highly competitive and are struggling to stand out. This challenge is particularly true in industries like higher education, which exhibit high price sensitivity and volatility. Additionally, more higher education institutions want cloud-based CRM solutions to support mobile, social, digital marketing, and personalized communications. The de-support of legacy applications and the desire to modernize have caused significant churn in the higher education CRM market, especially in the last 24 months.

Traction on Demand has not performed well against other leading Salesforce service providers in the higher education market.

During this time, Traction on Demand has not performed well against other leading Salesforce service providers in the higher education market. It has also experienced turnover at the leadership and bench levels across business practices. Traction on Demand consultants have been leaving for positions in other competitive firms.

While the acquisition may have significant meaning to other markets, it will not impact many higher education institutions. Traction on Demand self-identifies as Salesforce’s largest North American dedicated service partner, but Tambellini research indicates that less than 10 percent of its business is focused on higher education. Salesforce service partners leading in the higher education space are Apex IT, Attain, Cloud for Good, Deloitte, Huron, and KELL Partners. These providers have a more prominent higher education market presence than Traction on Demand.

The most interesting aspect of this acquisition for higher education is how it signals Salesforce’s current needs and growth strategy. Over the last five years, the company has experienced notable growth in higher education. It now owns more than 36 percent market share, far exceeding its competitors. While Salesforce has a history of expansion through acquisition, its focus has been on acquiring complementary technologies like MuleSoft, Slack, and Tableau. Traction on Demand is one of two acquisitions for Salesforce Professional Services since 2021, indicating a desire to provide deeper platform and vertical expertise to support customer demand.

Salesforce reports that it anticipates the transaction will close in early spring 2022, subject to customary closing conditions.