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The acquisition of Slack announced on Tuesday is by far the largest in Salesforce’s 21-year history.
Pioneer of the business software Salesforce. com is buying the Slack chat service for $ 27. 7 billion in a deal that aims to give the two companies a better chance of competing against longtime industrial powerhouse Microsoft.
The acquisition announced on Tuesday is by far the largest in Salesforce’s 21-year history. The San Francisco company was one of the first to sell software as a subscription service that could be used on any Internet-connected device instead of the cumbersome process of installing programs on individual computers.
Marc Benioff, the extravagant founder and CEO of Salesforce, welcomed the “cloud computing” concept as the wave of the future, initially too much ridicule.
But software as a service has become an industry standard that has become a gold mine for long-time software manufacturers. Microsoft has developed its own thriving online suite of services known as Office 365 that includes a team chat service that includes many of the same features as Slack’s 6 year old application.
Slack filed a complaint in the European Union in July accusing Microsoft of illegally pooling teams in Office 365 to block removal by customers who prefer Slack.
Microsoft also poses a threat to Salesforce’s core products, a set of tools that other companies can use to manage their customer relationships.
« For Benioff, it’s all about Microsoft, » said Dan Ives, an analyst at Wedbush Securities. “It is only clear that Microsoft is moving further and further away from Salesforce when it comes to cloud wars. ”
Salesforce has built on its success in the past few years to diversify into other areas, mostly through a series of acquisitions that included the largest deal to date, a $ 15 deal. 7 billion purchase of data analytics specialist Tableau Software last year.
Salesforce was also among the companies that applied to buy LinkedIn in 2016 before Microsoft hired the professional networking service for more than $ 26 billion in 2016.
Many of the transactions were funded in Salesforce stock, which is worth nearly seven times more than a decade ago.
Slack, on the other hand, hasn’t proven that popular with investors, although its publicly launched service, launched in 2014, is increasingly being used by companies and government agencies looking for nimbler alternatives than email. Before news of a potential deal with Salesforce surfaced last week, Slack’s stock was still hovering around its original listing price of $ 26 when the company went public nearly 18 months ago.
« This is a great exit strategy for Slack, » said Kate Leggett, an analyst at Forrester Research. « Microsoft Teams is eating Slack’s lunch. ”
But Leggett said it was also « really good for Salesforce » to add a popular collaboration tool to its own suite of software that focuses on customer relationship management for businesses and government agencies. She said the need for account managers and other Salesforce users to focus on one topic and collaborate remotely only grew with the coronavirus pandemic that sent so many office workers home and excited many about new online tools.
« I think the pandemic played a huge role, » said Ives to pave the way for the deal. « The Zooms, the Slacks, the Microsoft teams, this will be a new part of the workforce. ”
Ives said Benioff also ran out of time to reach Microsoft, which remains a secondary player in Salesforce’s core customer relationship management business known as CRM, but in delivering a wider range of cloud based services is way ahead.
Slack and Salesforce are headquartered in San Francisco about a block away from each other. Slack’s office is in the shadow of the 62-story Salesforce Tower, the tallest building in the city.
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If you would like to write a letter to the editor, please forward it to letters @ globeandmail. com. Readers can also interact with The Globe on Facebook and Twitter .
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Salesforce, Slack Technologies, Customer Relationship Management, Stock, NYSE: CRM, Cloud Computing
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