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Second, Salesforce competes with the giant in customer-relationship management, where it plans to make Slack the user interface, and other business functions. Then there is the bigger battle over. That disparity helps to explain why Slack sold itself this week to Salesforce. The deal, which values Slack at $27.7 billion on revenues of $833 million over the past year, has largely been greeted. Salesforce is among the world’s leading customer relationship management tools, while Slack is one of the most popular workplace communications apps. Using both of these products together can streamline communication across your key organizational teams and drastically improve customer relationships. In this detailed tutorial, I’ll share how to integrate Slack with Salesforce, the things.
Last week, news broke that Salesforce was thought to be in advanced talks to acquire Slack. This inevitably fuelled much excitement and debate, not least because of the scale of the potential acquisition. Slack’s market capitalization was about $17 billion before the news broke and jumped to almost $23 billion soon after.
And with Saleforce’s earnings call scheduled for tomorrow, we could be in for an official announcement soon.
There’s no doubt this would be a major acquisition for Salesforce. It wouldn’t be its first of this scale — Salesforce acquired Tableau in 2019 for over $15 billion in an all-stock deal — but there would need to be a rock-solid argument for such a decision.
Why would Salesforce buy Slack?
To maintain the high rate of growth that it has achieved for the last few years, Salesforce has been investing in various initiatives that enable it to expand its reach in customer organizations. Some of this has been happening organically, for example improving its cross-selling and upselling within each customer. However, acquisitions have played a significant role here too.
Salesforce’s most recent acquisitions, MuleSoft and Tableau, were both designed to build out the Salesforce platform, enabling it not just to become embedded in CRM processes but to extend across customers’ entire operations. Despite these growth efforts, the bulk of Salesforce’s current applications portfolio doesn’t give it significant reach beyond sales and marketing teams.
The company wants its applications to be critical to every employee with an organization; to be the place they go to get their work done. And it has long been eyeing the collaboration software space as a way to achieve this.
Salesforce Slack Integration
It launched Salesforce Chatter in 2010, followed a couple of years later by Community Cloud, but neither really provided that extended reach outside sales. Salesforce’s $750 million acquisition of real-time document creation company Quip in 2016 was another step in this direction, but although the product has found a strong purpose in enabling work in the CRM environment, Quip hasn’t significantly expanded Salesforce’s reach.
Acquiring Slack, however, would finally give Salesforce the boost it’s been looking for. Although Slack was initially successful in tech-savvy IT teams, usage has spread significantly over the last couple of years — something that has accelerated dramatically with the increase in remote working due to the pandemic. The Slack team also has a good understanding of how to drive adoption and business change within customers, which would augment Salesforce’s customer success organization.
Plus Slack has made investments in areas that would be interesting to Salesforce. It has a large developer community, and is strong in bots and app development. And, much like Salesforce, Slack has been investing in low-code technology with its Workflow Builder tool, which enables individual, non-technical employees to automate day-to-day tasks. Finally, Slack Connect enables B2B collaboration and is gearing up to allow the creation of a B2B business network, which would be another great opportunity for Salesforce. Alongside Slack’s extensive list of customers, each of these areas provide differentiation and growth opportunity that could underpin a potential acquisition.
Why would Slack agree to a deal?
There have been rumors about tech companies wanting to acquire Slack for several years — arch-rival Microsoft was reportedly considering a purchase back in 2016 — for a much lower price, needless to say. However, the deal never came to anything. Microsoft decided to build its own competing solution, and Slack continued to grow at an astonishing pace.
Things are a bit different now.
Slack’s revenue growth has been starting to slow over the past 18 months, with its fiscal 2021 (which ends January 31) expected to show about 38% growth, versus 82% in fiscal 2019. It has seen a significant boost in 2020 in terms of adoption of the Slack application, with paid customers up 20,000 in the past six months, compared with an increase of 15,000 in the whole of 2019. Slack has also seen its number of large-ticket customers (with over $100,000 in trailing 12-month revenue) double since 2019.
Despite this, Slack has disappointed investors who were hoping for Zoom-like revenue growth in response to the pandemic. Although Slack and Zoom were the same size a year ago, Zoom is expecting to have grown 280% this year, dwarfing Slack’s 38% guidance.
Slack is also facing ever-stronger competition from Microsoft Teams. Slack still has some considerable points of differentiation over Teams, not least the two areas I highlighted above. But the effects of the pandemic and the shift to remote working have made the competition with Microsoft even tougher, especially given Microsoft Teams’ strength in video meetings, an area that has become business critical this year.
With strong ambitions, Slack now needs a way to step up its market reach and product investment, but doing that as an independent can be very challenging. Salesforce could provide a great platform for Slack and has plenty of experience and success in integrating major acquisitions, which would give Slack’s customers confidence if the purchase does go ahead.
If it does acquire Slack, Saleforce would likely continue to operate Slack as an independent business unit, in the same way it has done with Tableau or MuleSoft. An acquisition would inevitably mean much deeper integration across the breadth of Salesforce’s portfolio, which will only be positive for the many Slack customers that are already Salesforce customers. Slack already integrates with Salesforce in multiple ways, including with Sales Cloud and Service Cloud via Chatter, and with Quip for document collaboration. However, there’s scope for integration with the rest of the portfolio, and the Chatter capabilities could even be completely replaced by Slack.
An opportunity to team up against Microsoft
Overall, if they can agree on a deal, this could be a very positive and exciting move for both Slack and Salesforce, and one that would see them joining up against Microsoft — not just in business applications, where Microsoft is increasingly challenging Salesforce with its Dynamics 365 business, but in employee productivity and collaboration as well. One thing’s for sure, with such a big price tag, the pressure is on to make sure the impact on growth lives up to investors’ expectations.
Angela Ashenden is Principal Analyst of Workplace Transformation at CCS Insight.
VentureBeat
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact.Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:- up-to-date information on the subjects of interest to you
- our newsletters
- gated thought-leader content and discounted access to our prized events, such as Transform 2021: Learn More
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Join Transform 2021 this July 12-16. Register for the AI event of the year.
Last week, news broke that Salesforce was thought to be in advanced talks to acquire Slack. This inevitably fuelled much excitement and debate, not least because of the scale of the potential acquisition. Slack’s market capitalization was about $17 billion before the news broke and jumped to almost $23 billion soon after.
And with Saleforce’s earnings call scheduled for tomorrow, we could be in for an official announcement soon.
There’s no doubt this would be a major acquisition for Salesforce. It wouldn’t be its first of this scale — Salesforce acquired Tableau in 2019 for over $15 billion in an all-stock deal — but there would need to be a rock-solid argument for such a decision.
Salesforce And Slack Integration
Why would Salesforce buy Slack?
To maintain the high rate of growth that it has achieved for the last few years, Salesforce has been investing in various initiatives that enable it to expand its reach in customer organizations. Some of this has been happening organically, for example improving its cross-selling and upselling within each customer. However, acquisitions have played a significant role here too.
Salesforce’s most recent acquisitions, MuleSoft and Tableau, were both designed to build out the Salesforce platform, enabling it not just to become embedded in CRM processes but to extend across customers’ entire operations. Despite these growth efforts, the bulk of Salesforce’s current applications portfolio doesn’t give it significant reach beyond sales and marketing teams.
The company wants its applications to be critical to every employee with an organization; to be the place they go to get their work done. And it has long been eyeing the collaboration software space as a way to achieve this.
It launched Salesforce Chatter in 2010, followed a couple of years later by Community Cloud, but neither really provided that extended reach outside sales. Salesforce’s $750 million acquisition of real-time document creation company Quip in 2016 was another step in this direction, but although the product has found a strong purpose in enabling work in the CRM environment, Quip hasn’t significantly expanded Salesforce’s reach.
Acquiring Slack, however, would finally give Salesforce the boost it’s been looking for. Although Slack was initially successful in tech-savvy IT teams, usage has spread significantly over the last couple of years — something that has accelerated dramatically with the increase in remote working due to the pandemic. The Slack team also has a good understanding of how to drive adoption and business change within customers, which would augment Salesforce’s customer success organization.
Plus Slack has made investments in areas that would be interesting to Salesforce. It has a large developer community, and is strong in bots and app development. And, much like Salesforce, Slack has been investing in low-code technology with its Workflow Builder tool, which enables individual, non-technical employees to automate day-to-day tasks. Finally, Slack Connect enables B2B collaboration and is gearing up to allow the creation of a B2B business network, which would be another great opportunity for Salesforce. Alongside Slack’s extensive list of customers, each of these areas provide differentiation and growth opportunity that could underpin a potential acquisition.
Why would Slack agree to a deal?
There have been rumors about tech companies wanting to acquire Slack for several years — arch-rival Microsoft was reportedly considering a purchase back in 2016 — for a much lower price, needless to say. However, the deal never came to anything. Microsoft decided to build its own competing solution, and Slack continued to grow at an astonishing pace.
Things are a bit different now.
Slack’s revenue growth has been starting to slow over the past 18 months, with its fiscal 2021 (which ends January 31) expected to show about 38% growth, versus 82% in fiscal 2019. It has seen a significant boost in 2020 in terms of adoption of the Slack application, with paid customers up 20,000 in the past six months, compared with an increase of 15,000 in the whole of 2019. Slack has also seen its number of large-ticket customers (with over $100,000 in trailing 12-month revenue) double since 2019.
Despite this, Slack has disappointed investors who were hoping for Zoom-like revenue growth in response to the pandemic. Although Slack and Zoom were the same size a year ago, Zoom is expecting to have grown 280% this year, dwarfing Slack’s 38% guidance.
Slack is also facing ever-stronger competition from Microsoft Teams. Slack still has some considerable points of differentiation over Teams, not least the two areas I highlighted above. But the effects of the pandemic and the shift to remote working have made the competition with Microsoft even tougher, especially given Microsoft Teams’ strength in video meetings, an area that has become business critical this year.
With strong ambitions, Slack now needs a way to step up its market reach and product investment, but doing that as an independent can be very challenging. Salesforce could provide a great platform for Slack and has plenty of experience and success in integrating major acquisitions, which would give Slack’s customers confidence if the purchase does go ahead.
If it does acquire Slack, Saleforce would likely continue to operate Slack as an independent business unit, in the same way it has done with Tableau or MuleSoft. An acquisition would inevitably mean much deeper integration across the breadth of Salesforce’s portfolio, which will only be positive for the many Slack customers that are already Salesforce customers. Slack already integrates with Salesforce in multiple ways, including with Sales Cloud and Service Cloud via Chatter, and with Quip for document collaboration. However, there’s scope for integration with the rest of the portfolio, and the Chatter capabilities could even be completely replaced by Slack.
An opportunity to team up against Microsoft
Overall, if they can agree on a deal, this could be a very positive and exciting move for both Slack and Salesforce, and one that would see them joining up against Microsoft — not just in business applications, where Microsoft is increasingly challenging Salesforce with its Dynamics 365 business, but in employee productivity and collaboration as well. One thing’s for sure, with such a big price tag, the pressure is on to make sure the impact on growth lives up to investors’ expectations.
Salesforce And Slack Integration
Angela Ashenden is Principal Analyst of Workplace Transformation at CCS Insight.
VentureBeat
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact.Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:- up-to-date information on the subjects of interest to you
- our newsletters
- gated thought-leader content and discounted access to our prized events, such as Transform 2021: Learn More
- networking features, and more