- December 6, 2020
- Posted by: Ramkumar
- Category: Mergers And Acquisitions
My analysis of The Salesforce Acquisition of Slack
At $27.7 Billion, the Salesforce- Slack deal is 2020’s largest tech acquisition, beating last year’s mega acquisition deal of Tableau ($15.7 billion). In this article, I am presenting my analysis of the Salesforce acquisition of Slack. Salesforce has always been excellent at mergers and acquisitions, targeting the app economy that could further reinforce Salesforce Connected Economy benchmarks. The $27.7 billion deal is an investment that would yield a greater return to meet the current work-from-home scenario and growing demand for 100% secured Cloud-based apps for the digital economy. However, one thing is definite: connecting Slack’s collaboration functionality with Salesforce’s sales productivity tooling signifies a monumental step forward in enterprise software history.
Slack launched in 2014, and just 18 months after it started, it reached more than 1 million daily users. However, Slack’s exit to Salesforce is the end of an age in productivity-focused business apps. Slack first worked with small teams who desired to accelerate their work and was regularly drawn into organizations by early adoption. However, now, streams of consolidation are leaving people with less real choices. Slack’s effort to succeed as an independent company sadly reflects that of several one-time innovators in enterprise productivity. Mailbox slumped, and Acompli sold to Microsoft, where it became the mobile Outlook app. Evernote is a feeble shadow of its previous self. Of that first cohort, only Box and Dropbox continue to be public companies.
Slack vs. Microsoft
Microsoft had one. Slack didn’t. The bitter truth in the enterprise business segment is that you can have the most incredible product, but that’s not good enough. “You need distribution. And Salesforce has all of the paraphernalia you need to communicate with to sell software, and they have it for the best 100,000 corporations around the globe. That is why I am bullish on the acquisition because it places Slack and Salesforce on equal ground. The only lead Microsoft has is distribution, and so now they’ve offset the power that Microsoft has. Now Slack has ten times the number of salespeople who can distribute this product to enterprises worldwide.
How Slack Suits great with Tableau and Mulesoft Family
Acquiring Slack is a game-changer for Salesforce. It allows them to turn themselves into a digital network where businesses can interact (like they have attempted in the past with previous M&A interest in Twitter and LinkedIn). Beyond that, Salesforce has aggressive plans to grow beyond the Sales, Service, and Marketing teams. Mulesoft and Tableau’s acquisitions were an initial step in unifying back office and front office data, but both tools have a relatively smaller power user base. Acquiring Slack would signify a crucial second step in this direction by extending Salesforce’s reach to all employees across the organization.
Slack’s Entry Could Develop Salesforce’s Service Cloud Workforce Engagement Platform
Salesforce lately declared the launch of its Service Cloud Workforce Engagement platform. With Service Cloud Workforce Engagement, Salesforce will fortify the contact center with a connected solution — all on one platform so that its customers can remain resilient and agile.
In the future, I anticipate an uptick in startups looking to challenge Microsoft Teams and Salesforce Slack. But for now, Salesforce should concentrate on making the acquisition a success. Salesforce and Slack must learn from Yammer’s earlier mistakes and be aware of Slack Cloud’s product roadmap, as its lack of independence may be a turn-off for users.
Salesforce could plan to use Slack within its service cloud workforce engagement as Slack has a redoubtable presence in the enterprise segment, which only lately got a significant shake since the advent of Google Hangouts, Microsoft Teams, RingCentral Glip, and Atlassian. Now, most business owners need a dynamic workforce planning product that will help service leaders organize their complete workforce from anywhere and distribute the right work to the right agents based on skills and service channels. With Salesforce, Slack has the opportunity to cope with market demands.
By integrating Slack into the Service Cloud Workforce Engagement platform, Salesforce aims to defend the risks of the COVID-19 crisis that took a significant toll on the existing and established contact center frameworks. Service teams now have to handle a volley of questions across various contact points, including Website forms, telecalls, online chats, SMS, text, and social media.
In today’s all-digital, work-from-anywhere world, companies require technology that gives a connected view of the employee and customer, all on one cloud-based platform. The Salesforce Service Cloud Workforce Engagement with Slack could support businesses to deliver excellent service by using artificial intelligence (AI) to predict customer service demand, allowing companies to staff the right agents, with the right ability, at the right moment.
With Service Cloud Workforce Engagement, agents will have a single workspace that connects to all critical contact center and service tools, such as as-.
- Core Service, Digital Engagement,
- Service Cloud Voice,
- Salesforce Field Service and
- Customer 360
Retaining Slack independent
Slack’s existing customers would follow to understand how Salesforce manages the acquisition. Salesforce will have to tread a fine line between upholding the Slack brand and product independence on the one hand, while discovering ways to design and develop upon existing hooks into Salesforce to enable them to take full benefit of its substantial investment.
It won’t be straightforward to do, but I notice a comparable level of autonomy in some of Salesforce’s new big-money acquisitions like MuleSoft and Tableau. Mulesoft and Tableau have sustained their brand identity and independence, and Slack should ideally follow the same route.
Effect of Transaction on Market
With this acquisition, there would be three main competitors – Microsoft, Salesforce, and (in a distant third) Google. And with that, the golden era of worker discretion in productivity tools appears to be getting to an end.
However, I am not saying the incumbents won’t forever encounter new challenges. However, I wonder whether Slack’s low ceiling turned out to have connotations for some of the other fast-growing productivity companies. Should Slack’s exit reduce expectations for Airtable or Notion or Coda? No — I’m sure their investors will all get their money back, and but they do not have a genuine prospect outside the arms of a monolith?
The productivity market will become as consolidated as any other space on the internet, from app stores to search engines to social networks.