Tag: Salesforce

Will Every Enterprise Platform Become a Data Company? Salesforce Acquires Own Company in a Deal That Will Now Send Ripples Through the Sector | Blog

Salesforce has announced the acquisition of New-Jersey based Own Company, a prominent provider of data protection and data management solutions, for approximately $1.9 billion, with this move underscoring Salesforce’s strategic commitment to expand its capabilities as a comprehensive enterprise platform.  

Originally focused on backup and restore, Own offers a comprehensive suite of data-centric solutions, including security, compliance, sandbox seeding, archiving, and a new artificial intelligence (AI)-powered product for extracting insights from historical data.  

Its product portfolio extends to other specialized Salesforce solutions like nCino and Veeva Systems, with Own’s capabilities complementing Salesforce’s existing data security offerings. Notably, Own Company was also recently recognized as one of the preferred data ecosystem partners for Salesforce newly established Zero Copy Partner network. 

With this acquisition causing ripples through the tech, AI and data sectors, we have used our insight and knowledge to decipher what this acquisition may mean for the future of Salesforce, as well as the rest of the marketplace. 

Reach out to us to discuss this topic further with our expert analysts. 

Strategic intent behind the acquisition: 

Salesforce has doubled down on building data-centric product capabilities. This strategic shift, primarily focused on developing new products and forging strategic partnerships. In the process reflecting the company’s recognition of data as a cornerstone for its ‘Data + AI + customer relationship management (CRM)’ vision. 

On the product side, Salesforce has consistently innovated its data-specific offerings. Its ‘Genie’ offering, introduced in 2022, has evolved into the Data Cloud, which has since become its fastest-growing product and is the very core of its AI revolution, in addition to sustained growth from Einstein and Tableau. 

Following this, Salesforce has plans to launch one of its key offerings at the upcoming Dreamforce event, notably its new autonomous agent platform, Agentforce. Salesforce has made significant strides in product evolution, from the initial launch of Einstein in 2016, to the Einstein 1 Platform and the recent introduction of autonomous AI agents – Service Agent and Sales Agent. 

On the partnerships, Salesforce has been actively forming data-centric partnerships with service providers, data companies, platforms, and enterprise platforms. Its recent Zero Copy Network brings together a wide range of ecosystem partners to deliver superior data integrations to enterprises while eliminating data duplication and dynamic data changes. 

Salesforce’s recent partnership with Workday aims to establish a unified data foundation by leveraging back-office data from Workday and front-office data from Salesforce. This will enable new AI-powered use cases to enhance employee experience and introduce a new employee service agent offering. The partnership also includes seamless integration of Workday into Slack to facilitate easier access to core employee human resources (HR) and financial records within Slack. 

Data will become increasingly pivotal for the successful scaling of enterprise AI initiatives. As businesses assess their AI investments, concerns around data-related topics such as management, readiness, privacy, and security are growing.  

Overall, for Salesforce, the acquisition of Own Company at this juncture is strategic, addressing the growing data-specific concerns in the market. Notably, this move comes amidst a period of challenge for Salesforce. 

The company has been actively seeking new avenues for growth, including expanding its international presence and targeting the small and medium-sized business (SME) segment to diversify its revenue streams. Given Own’s synergistic product portfolio and substantial customer base of over 7,000 clients, this will make sure to add to Salesforce’s growth ambitions.

Acquisition implications –  

  • For enterprises, this partnership will instill more trust and confidence in their generative AI (gen AI) investments with the Salesforce platform, in terms of data security and compliance, which may encourage them to make further strategic investments towards their AI-specific objectives 
  • For service providers, it will become important for them to proactively build capabilities and focused partnerships across such independent software vendor (ISVs) and take these to the market through their Salesforce-specific go-to-market (GTM) activities. This also presents an opportunity for them to collaborate with similar partners and jointly identify and address whitespaces in areas such as talent, internet protocol (IP), and market education to further augment their Salesforce services capabilities 
  • For ISVs and solution partners, the potential for additional and similar partnerships and acquisition opportunities is going to increase from here on. ISVs seeking to be acquired, should present a compelling case to Salesforce to position themselves for inclusion in the company’s ongoing acquisition spree  

Going forward, we can expect Salesforce to make additional acquisitions of other successful ecosystem partners such as the previously mentioned nCino and Veeva Systems, as well as the likes of Conga, Copado, Pimly, Provar, and Flosum, to fill the existing gaps in its product portfolio and augment it further. 

This will not just be limited to Salesforce either, as we expect other large enterprise platforms such as SAP, Oracle, Microsoft Dynamics, ServiceNow, and Pega to follow suit. Moreover, the marketplace can now anticipate Salesforce to acquire some of its specialized service providers such as Coastal, OSF digital, and Slalom to bring life to its dying professional services arm, which the firm seemed to be struggling with for quite some time.  

Our analysis and insight see us conclude that Salesforce’s acquisition of the Own Company is as a prominent one for the industry as a whole and will be sure to now start a domino effect globally, especially across major enterprise platforms with lofty AI ambitions. 

If you found this blog interesting, we have recently published an in-depth analysis of key Salesforce service providers which analyses their key capabilities and the impact they deliver to the market through their Salesforce services https://www2.everestgrp.com/reportaction/EGR-2024-50-R-6551/Marketing. 

If you have any questions or want to discuss this acquisition and the effects it’ll have on the sector in the future, please contact Arun Prateek [email protected] and or AS Yamohiadeen [email protected].  

Salesforce Acquires Slack: Salesforce Stands to Gain Much More Than Slack in the Long Run | Blog

There was much excitement on December 1, 2020, when Salesforce announced that it has entered into a definitive agreement to acquire Slack, and Salesforce CEO Marc Benioff called the US$27.7 billion deal a “match made in heaven.” In the days since, however, the market has significantly dampened that excitement, with Salesforce losing more in market valuation than the price it paid for the acquisition.

But we at Everest Group are bullish on the deal; we believe Salesforce has much to gain in the long term.

Microsoft’s erstwhile involvement

Microsoft considered buying Slack for US$8 billion in 2016, but ultimately decided to take this market on organically, releasing Teams within a year. Microsoft used the US$8 billion to invest in Teams growth through:

  • An ecosystem play – Microsoft leveraged its Office 365 ecosystem to increase the Teams user base. It effectively provided Teams for free as part of multiple Office 365 packages, providing a more holistic value proposition.
  • Aggressive sales – Microsoft started a price war with Slack by offering Teams as a free product or at a highly discounted price. With its deep pockets and bundled offerings, Microsoft effectively contained Slack, turning the market against it, causing its valuation to decline.

Slack’s story

They say necessity is the mother of invention, and Slack is the poster child for that. What began as an internal tool, developed out of necessity turned into a wildly popular chat and productivity offering. Then Microsoft set its sights on the space, effectively crushing Slacks’ growth. In terms of market adoption, before Slack stopped reporting daily active user numbers in 2019, it was able to grow to about 12 million users in seven years; Teams matched that number in only three years. Moreover, Teams continues to expand its presence with a daily active user base touching 115 million in October 2020.

In terms of market valuation, despite achieving robust revenue and user base growth, Slack has not been profitable, reporting a loss of US$138 million in 2019. Additionally, its market valuation has eroded significantly since its IPO listing: From its IPO price of US$38.50, Slack was trading at $25.89 on October 31, 2020, a valuation loss of ~33%.

In many ways, its rivalry with Teams and its ensuing market valuation loss made Slack desperate for an acquisition. Slack needed a partner to sustain itself and compete with Microsoft. Salesforce to the rescue!

How can Salesforce help Slack compete with Teams and Zoom?

One’s immediate reaction may be that Slack should be able to arrest its slide given its ability to reach into Salesforce’s deep pockets. However, our take is that Salesforce is good at selling to business units and sales and marketing folks, not to enterprise IT and tech, who would be the primary Slack buyers. That is Microsoft’s power alley – the area it rules. In addition to money, Salesforce will have to make big changes to its sales model to make a dent in Microsoft’s tight control of that space.

How does Salesforce benefit from this acquisition?

The acquisition comes at a time when Salesforce recognizes its need to build integrated suites for enterprises. Most of its competitors – Microsoft, of course, and SAP and Oracle – have been talking about integrating the front and back ends, especially as enterprises have started to realize the importance of end-to-end integrated suites cutting across ERP, CRM, and HCM.

This acquisition gives Salesforce the opportunity to move beyond the sales and marketing area and gain access to other parts of the organization. If integrated well with the Salesforce platform, Slack could potentially act as a unifying thread across ERP, CRM, and HCM, while also solving for the missing piece in their customer-360 value proposition.

Salesforce has made a couple of failed forays in the collaboration space with Chatter and Quip; the third time may be the charm with Slack, given its more robust offering and positive customer sentiment.

What does the acquisition mean for the market?

The acquisition highlights the fact that the industry is going through consolidation, and standalone products are finding it difficult to compete with larger players that offer bundled products. Moreover, the collaboration space is gaining significant traction among enterprises as remote working becomes the new norm. We wouldn’t be surprised to see Amazon or SAP getting into this space, and we’re wondering if we might see Atlassian, Splunk, or some other similar organizations in the acquisition news sometime soon.

If you’d like to share your thoughts on the acquisition or on Salesforce’s strategy, reach out to us at [email protected] or [email protected].

 

Salesforce Acquires Acumen: The Likely Ripple Effects in Professional Services | Blog

The news of Salesforce’s acquisition of Acumen Solutions on December 1, 2020, was completely buried under Salesforce’s whopping $US27 billion acquisition of Slack the same day. But don’t discount the Acumen acquisition – I believe it will be the cornerstone of Salesforce’s professional services strategy over the next several years.

Why this acquisition is unusual

For starters, tech vendors in general do not leverage M&As to enhance their professional services capabilities; most tech vendors’ M&A activity is driven by their technology arms. The Acumen deal is the only pure-play professional services partner acquisition that has happened in the past three years among big tech vendors, based on an analysis of 51 acquisitions by AWS, Microsoft, SAP, and Salesforce over that time period.

The acquisition comes at a time when most tech vendors are in a state of flux over their professional services strategies. For example, AWS grew its professional services arm by an eye-popping 40% over the past 12 months, while peers and other vendors were still figuring out the implications of the pandemic and whether they should be aggressive with their professional services offerings.

The acquisition is also important given the fact that Acumen was one of the few remaining pure-play Salesforce System Integrators (SIs) that was competing head-on with the larger SIs as a major contender in the market. Thus, the acquisition adds significantly to Salesforce’s professional services strength, as Acumen adds approximately 1,000 FTEs to the existing base of 1,000-1,200 FTEs currently working in Salesforce’s professional services arm, effectively doubling the overall headcount.

What’s in it for Salesforce?

Salesforce gains significant advantages from the acquisition, chief among them:

  • Bridging the talent demand-supply gap – Everest Group’s recent talent study suggests that the demand-supply gap for Salesforce services talent has widened over the past two years and now stands at more than 20% for areas such as Lightning, Mulesoft, and Einstein Analytics. Also, Salesforce is getting pushed out by other vendors such as Oracle, SAP, and Pega and needed to have talent to help clients increase adoption, an area where service providers have been struggling. The acquisition strengthens the footprint of Salesforce’s professional services arm in North America especially in areas such as Einstein, Lightning, and Service cloud.
  • Catering to demand for industry-specific expertise – More than 70% of Acumen’s current portfolio is concentrated in three industries: federal; Banking, Financial Services, and Insurance (BFSI); and, manufacturing. The acquisition boosts Salesforce’s industry-specific agenda, which it has been driving on the technology side with Vlocity and the launch of industry cloud offerings. The acquisition also will have significant positive impact on Salesforce’s ability to serve the federal services space, where Salesforce has been able to capitalize on multiple opportunities post-pandemic.
  • Getting a nimble service partner – The acquisition also highlights Salesforce’s recognition that it needs to get more involved from a services standpoint. Pure play and niche SIs, in general, are faster to react to vendors’ technology innovation, and they are more flexible in meeting clients’ demands. The need for nimble service partners is more pertinent for Salesforce today given the volume of innovation that they have been bringing to the market.

What are the key implications going forward?

The Acumen acquisition has implications for enterprises, service providers, and, of course, Salesforce itself:

  • For enterprises: According to our Salesforce Services research (see our report, Salesforce Services – Solving for the Missing Link) more than 80% of clients said their vendor’s professional services arm is their go-to partner in defining the adoption roadmap when it comes to emerging products such as Mulesoft and Lightning. There is a clear time lag in the service provider’s ability to deliver on to the tech vendor’s innovation. This acquisition is a step in the right direction as strengthened professional services gives Salesforce an ability to deliver innovation faster in specific industries.
  • For service providers: Once the dust settles, this acquisition will force service providers to demonstrate their ability to think ahead of Salesforce’s innovation curve and be at the top of their game as truly agile partners. Service providers should think beyond the core platform and invest proactively in the marketing and commerce cloud and cross-skill talent in Mulesoft and Tableau. They should further develop a structured program to build industry and functional expertise in the existing Salesforce talent.
  • For Salesforce: As a result of this acquisition, some large SIs may perceive Salesforce Professional Services as a competitor – which might not be totally untrue – but could work against Salesforce. Even today, large SI partners believe core platforms (sales and service cloud) are not growing as fast as they want, and so they have curtailed proactive spending. Thus, the onus falls back on Salesforce to allay these fears and continue expanding its partner network.

It’s early days yet; only time will tell how this acquisition will actually shake out. But I have no doubt it will provide food for thought for other big tech vendors as they work through their professional services strategies over the next year. If you want to share your thoughts on the acquisition or on Salesforce’s strategy, reach out to me at [email protected].

Spotlight on Salesforce’s Acquisition of Tableau | Blog

On June 10, 2019, Salesforce announced an agreement to acquire Tableau, a leading interactive data visualization company, for US$15.7 billion in an all-stock deal. Here’s our take on it.

Strategic Intent behind the Deal

The announcement is a masterful move to aid Salesforce’s hyper growth agenda to become a US$28 billion company in three years’ time. In the past 15 months, Salesforce has accelerated the data pivot through its acquisitions of Mulesoft in March 2018 and now Tableau, for a combined value of $22.2 billion.

Given its ambitious topline growth goals, Salesforce has hedged its bet against a pure cloud play. Tableau, which is not a cloud company, runs most of its products on-premise, with over one-third deployments in the cloud. However, last year, Tableau announced that its products will also be available on hyperscalers’ cloud platforms (AWS, Microsoft Azure, and GCP.) Addressing the ubiquity of data in a modern enterprise and recognizing the transition in software consumption pattern, Salesforce is taking an “anytime, anywhere” analytics approach to cater to enterprise’s hybrid cloud-first mandate.

In addition, Tableau’s strong performance against rivals including IBM Cognos, MicroStrategy, Oracle BI, and QlikView makes a strong case for the acquisition, given Salesforce’s big bet on its Customer 360 initiative and its broader foray into empowering clients with data analytics and visualization capabilities.

Enhancing the Data Analytics and Experience Pivot

Salesforce, a veteran in the CRM space, is repositioning itself as a digital experience (DX) platform, wherein it intends to become a one-stop, end-to-end solution for enterprises’ DX needs. It has been making strategic acquisitions over the years to plug in the gaps in its DX platform portfolio to achieve this goal.

SFDC Acquisition blog DX image

Because Tableau and Salesforce’s in-house analytics tool, Einstein Analytics, can easily interoperate, the company will be able to sell a well-packaged data analytics offering. Tableau’s niche capabilities in data analytics will not only deliver an improved data management solution but will also help enterprises form data-intensive strategies and optimize the overall stakeholder experience. And, the acquisition gives Salesforce new up- and cross-sell opportunities, as enterprises will be able to purchase CRM and business intelligence (BI) capabilities from a single vendor.

Gaining a Full View of Enterprise Data

Looking at the timeline of Salesforce’s acquisitions, we see a strategic shift from targeting digital marketing and commerce space toward enhancing enterprise data lifecycle management. Since 2018, Salesforce’s top deals have been to expand its coverage in the data and analytics space. Undoubtedly, the move has given Salesforce a shot in the arm when it comes to showcasing its capabilities across the data management value chain. Tableau sits atop of its acquisitions, plugging in multiple outside data sources and offering an easy to use UI for data visualization.

SFDC Acquisition blog CRM image

Indeed, Salesforce’s acquisition of Tableau is a strategic next step after its 2018 acquisition of MuleSoft. While Salesforce leveraged Mulesoft to create a “Salesforce Integration Cloud” that allows different cloud applications to connect via APIs, Tableau can help it gain deeper insights in this data, in turn driving enterprises toward data-driven decision making.

Data Orchestration Meets Cognitive

We give a thumbs up to this deal, particularly for what it means to the market going forward. Why?

The move fits well with Salesforce’s agenda to move into machine learning-driven analytics. Essentially, it will now have a strong BI tool, underpinned by AI, that will democratize enterprise access to next-generation data modeling and analytics capabilities.  A Tableau-integrated Salesforce Einstein Analytics offering should be able to deliver an intelligent, intuitive analytics and data visualization platform that leverages enterprise-wide data to help enterprise customers, employees, and partners with well-curated insights.

Salesforce Acquires MuleSoft Proving APIs Hold the Key to the Digital Enterprise Kingdom | Sherpas in Blue Shirts

In a major statement that reaffirms its vision of becoming the backbone of the modern digital enterprise, Salesforce acquired MuleSoft, a leading application network platform, for a hefty US$6.5 billion. This is the software giant’s largest ever acquisition.

Strategic Intent Behind the Deal

It is evident that MuleSoft will complement Salesforce’s PaaS agenda, per Salesforce’s statement that it will leverage MuleSoft to create the “Salesforce Integration Cloud.” MuleSoft’s AnyPoint Platform, which connects different cloud applications via APIs, is a good fit with Salesforce’s platform offerings.

In addition to strengthening Salesforce’s PaaS portfolio, the acquisition will enable the combined entity to:

  • Enhance its value proposition: Drive a more compelling digital transformation story across enterprises around personalized customer experiences, a single platform for a 360˚ enterprise view, and an enhanced industry-specific suite of solutions
  • Derive synergies from focus on the API economy: Aid enterprises’ need for faster time-to-value by enabling ease of data access across cloud and legacy systems, as well as enhance revenue by cross-selling / bundling across MuleSoft’s 1,200+ customers

Gain a stronger competitive foothold: Salesforce has been competing with Oracle and Microsoft in the CRM space. With players such as ServiceNow and Workday pivoting towards platform services, this deal enhances Salesforce’s platform play.

Crunching the Numbers

Salesforce CEO Marc Benioff has been chasing hyper-growth, with ambitions to nearly double the company’s current revenue to US$20 billion by 2022. While Salesforce’s growth has been relatively muted growth recently (~25%), he application network platform business grew by an impressive 37 percent YoY in Salesforce’s Q418. This presents a strong opportunity for Salesforce to enhance its PaaS portfolio, beyond the headway it’s been making in infusing AI and IoT capabilities across its platform to deliver a more personalized experience for customers.

SFDC blog

Naturally, the next smart move for Salesforce would be building or acquiring a strong API integration engine that helps it access and connect data across enterprises, regardless of its location. Evaluating its acquisition chronology, it was time for Salesforce to start owning the integration experience as well, while also trying to stitch together an integration cloud and potential iPaaS offering. The acquisition of MuleSoft gives it just that, with the added advantage of ensuring a faster time to market and a broader customer base. Additionally, MuleSoft was growing at a fast clip, clocking revenue of US$297 million for FY2017, 58% YoY growth, with guidance of US$405-415 for FY2018 (with an aim to reach US1 billion in revenue by 2021).

The growth story notwithstanding, Salesforce is paying a premium for MuleSoft, with an enterprise value to sales multiple over 20x, which is a reasonably high compared to typical deals in the segment. Salesforce is not alone to tap into the API ecosystem. Google acquired Apigee in 2016 for US$625 million, while Red Hat acquired 3Scale in 2016.

You Can’t Just Patch-fix in the Digital Era

This interest in tapping into the API and integration economy is not accidental. Enterprises have realized that they cannot move the needle meaningfully when it comes to digital transformation if they don’t get their technology estate in order. As we’ve opined before, creating the next breakthroughs in digital requires collapsing the stack to eliminate friction across the value chain. Digital needs to be enabled through convergence of emerging technology themes to drive efficiencies across back-office and core mid-office business processes and enhance competitive advantage by impacting market-facing front-office processes. To do this, it is not enough to invest in a solitary mobile app for customers or an internal gamification initiative, it requires efficient plumbing (e.g. DW/BI, creating data lakes, etc.) as a precursor to meaningful digital transformation. Our recent enterprise research also indicates that front office digitalization or Digital for Growth (DfG) is just the tip of the proverbial iceberg (less than a fourth of the spend), while a significant share is focused on the nuts and bolts (Digital for Efficiency / DfE and Digital enablement).

SFDC-DfG blog

A Word of Caution for Ecosystem Stakeholders

Although there is a general optimism around the business value of the acquisition, the stakeholders need to be wary of some of the potential roadblocks that will emerge:

  • Enterprises: With Salesforce aiming to be their digital transformation partner, the threat of lock-in becomes stronger and their bargaining power dynamics change
  • Competitors: The deal allows Salesforce to look beyond the CRM landscape and aid the digital transformation push, increasing competition with Microsoft, Oracle, ServiceNow, etc. MuleSoft’s peers, such as Sensedia and WSO2,will also be looking to compete with the might of the merged entity and evaluate their strategic growth options
  • Salesforce-MuleSoft: Managing enterprise lock-in concerns, anti-incumbency, and talent integration will be crucial to unlocking significant value through this ambitious deal. Also, integration in the modern enterprise, while a fundamental success requirement, is often riddled with tricky organizational inertia, data silos, fragmented systems, and change resistance

The Way Forward

The size and intent of the deal has certainly piqued the market’s interest. With the aggressive stance Salesforce is taking to expand its PaaS portfolio while playing the customer experience card, it wouldn’t be surprising if we see it forging more acquisitions and/or partnerships, including other companies in the API economy. Enterprises will need to keenly evaluate this landscape to choose the right partner in their digital transformation journey.

What is your take on the Salesforce-MuleSoft deal? We would love to hear from you at [email protected] and [email protected].

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