Two weeks back, the tech celebrity grapevine went into a frenzy with news of a possible acquisition of communication platform favorite Slack by CRM leader Salesforce. By Dec 1st, the official announcement was out! Salesforce had bought Slack in a massive $27.7 billion cash and stock deal, ending the short-lived chapter of Slack’s journey as an independent, publicly traded company. This was also the largest acquisition for Salesforce in its 21 year history. For a company that has seen 60 acquisitions under its CEO Marc Benioff, out of which 27 were in the past 5 years, it’s an important milestone! What surprised many was the premium paid by Salesforce in the deal. Prior to the announcement, Slack’s valuation was just over $25 billion. But was it really that high a price when you consider the value that it adds to the Salesforce product suite and roadmap?
How does Slack fit into the Salesforce Vision?
For Salesforce, the road to building a social enterprise was never far away. In 2009, Salesforce introduced Chatter – a social network of sorts. Though Chatter never really held up to its objective perhaps due to the huge roll-out effort it asks of customers, Salesforce continued to have its eyes set on the social enterprise dream. Recent acquisitions from Salesforce such as Mulesoft in 2018 and Tableau in 2019 also point in this direction. Both additions to the Salesforce toolkit are focused on areas outside of traditional CRM strongholds. It aligns with the Salesforce vision of having wide-reaching collaboration capabilities and becoming ‘more than just a CRM’. However, Mulesoft and Tableau gave Salesforce access to only a small subgroup of power users. Salesforce’s intent to create (or buy, as they typically end up doing) a digital network for businesses to interact is evident in its earlier attempts to acquire Linkedin and Twitter. With the 2016 Quip acquisition, Salesforce inched closer to omnipresence in business processes through company-wide collaboration features.
In 2020, we also saw the launch of Salesforce Anywhere, Salesforce Meetings, Einstein Call Coaching (ECC), ECC for Video and Work.com. And this is when Slack came knocking on Salesforce’s doors! Once the acquisition is through, we may eventually see some amounts of portfolio rationalization at Salesforce, but the vision is crystal clear.
Decoding the Slack-Salesforce Deal
Interface of the future for Salesforce Customer 360If any of you were waiting for a ‘Chat Cloud’ release, you may very well be disappointed! Salesforce has much bigger plans for Slack. The Workstream Collaboration (WSC) tool will become the till-now-almost-absent communication layer across all Salesforce products. It will be integrated across all Salesforce clouds. Slack’s easy setup and configuration will make the user adoption process much more simpler than Chatter.
Ability to tap into Slack’s integration capabilitiesSlack integrates with over 2000 apps in the communication, collaboration and task management space. The opportunities that this opens up for Salesforce with its already hot and happening app marketplace is limitless.
Organizational agility through simpler approval processesWith Slack as the interface, users can enjoy simpler approval processes through a single message notification. They may no longer need to worry about moving out of their current workspace while logging into a new app or system. It saves time, improves automation intelligence capabilities and speeds up business operations manifold.
Break organizational barriers through shared channelsRemember Slack’s product pitch of being email’s replacement? Turns out they were not kidding! We already know that Slack is one of the best out there for internal communication. Similarly, with the Slack Connect and the shared channels feature, you can now connect two organizations and enable instant communication between them. This means you can work securely, seamlessly and productively with your external stakeholders such as partners and vendors.
Inroads for Salesforce into the SMB market spaceSlack holds a huge market share in the SMB space – a market that Salesforce is keen on tapping into. Additions to the Salesforce product suite such as Salesforce Essentials are testimony to this. The acquisition opens up further access for Salesforce into the small business space that many big players are eyeing.
Access to Slack’s loyal fan base/communitySalesforce has always thrived on its loyal and burgeoning partner ecosystem and the ever-growing Trailblazer community. Many of its acquisitions have been on point as well. As you’ve seen, the acquisitions of Mulesoft and Tableau have brought in large chunks of their own loyal customers. And Slack promises to be no different with a reported user base of 12 million daily active users in 2020!
More firepower to the war with MicrosoftSlack has had a rocky relationship with Microsoft in the past. Earlier this year, they had filed a EU Competition Complaint accusing Microsoft of unfair bundling of Microsoft Teams with their Office suite. With the onset of the pandemic, Teams had been eating into Slack’s market share and hitting its revenues. At a time when their arsenal was arguably drying up, the renewed support from a behemoth like Salesforce may just be what Slack needed. Needless to say, Salesforce has also had a love-hate relationship with Microsoft, so they share common ground there.
Perception change for Slack from developers’ favorite to an enterprise communication toolSlack started its journey as a favorite among the developer community. Ever since, it has had a tough time shaking off its reputation as a purely developer-centric application. This is in spite of the fact that they have some cross-industry heavyweights as enterprise customers. With Salesforce’s enterprise customer base on their side, Slack may very well have found a way out of this ‘dilemma’. It essentially means more enterprise customers and more market share!
Flexibility for Slack to retain its brand identityAs a brand, Slack’s identity will now be closely watched by its stakeholders and customers. Judging by past acquisitions of Mulesoft and Tableau and how their brand identities have remained intact following Salesforce acquisitions, Butterfield and his team will most likely have nothing to worry about. As Salesforce President and COO Bret Taylor said in a recent TechCrunch article “We want to make sure we have a real integrated value proposition, a real integrated platform for developers, but also maintain Slack’s technology independence, technology agnostic platform and its brand,”
The Slack-Salesforce combo is one that will inherently come with a lot of expectations from the technology community. So what DOES the future hold for those of us invested in the cloud.
Open ecosystem of apps and workflows
“Together, Salesforce and Slack will create the most extensive open ecosystem of apps and workflows for business and empower millions of developers to build the next generation of apps, with clicks not code.” This line out of the acquisition press release is one to be highlighted. What this translates into is that any business evaluating a digital transformation initiative can now leverage the user adoption prowess of Slack and the enterprise-first focus of Salesforce to get the best of both worlds. Truly a ‘match made in heaven’, don’t you think?
More from the Salesforce-AWS tango
At this year’s Dreamforce keynote, Salesforce announced Hyperforce – a revamped architecture that delivers the whole of Salesforce 360 including Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud and industry-specific offerings on major public clouds. Though they stopped short of actually naming these public clouds, Salesforce already has deep ties with Amazon Web Services, Google Cloud Platform and Microsoft Azure. With the Slack infrastructure running on AWS, Salesforce may turn out to be one of the largest technology companies running on AWS. It’s a safe bet that we can expect more from the Salesforce-AWS mash-up!
Time for other players to up their game
With remote working culture picking up this year because of Covid, collaboration has been a key focus for most, if not all companies. Tech behemoths have been creating waves (some being more of a ripple) with power moves all throughout. Google has dabbled, somewhat unsuccessfully in the communication and collaboration space with their services like Allo and Duo. The Adobe acquisition of work management platform Workfront for $1.5 billion in November, and Atlassian’s move for automation expert Code Barrel, asset management firm Mindville and help desk platform Halp (another platform using the Slack interface) over the past two years all point towards this. With Slack off the table, we could very well see Google, Microsoft, Cisco, IBM and Oracle turning towards potent WSC platforms such as Airtable, Asana, Box, Smartsheet and so on.
The Slack-Salesforce deal is as good as it gets for the cloud computing space – its all eyes on both powerhouses to see how it plays out.