Salesforce on Monday announced an all-stock deal to acquire analytics powerhouse Tableau Software. Under the deal Salesforce will pay 1.103 of its shares for one Tableau share. The deal is expected to finalize by the end of October, about a month before Dreamforce.
A number of questions arise from this deal. For instance, why do it at all? Why keep the companies separate, and what will their relationship be like? What’s Salesforce’s end game?
Why the Deal?
Salesforce always has had an appetite for expanding its footprint and previously often did its initial building in-house. At some point, though, the effort often swelled, making it clear that buying a company with built-out technology was the best way to a timely solution.
I think that thinking went into this acquisition. Salesforce has been into the analytics game for several years now, and perhaps it was not making progress as fast as it wished to, or maybe market conditions accelerated certain demands.
Salesforce Einstein was supposed to be its analytics answer, but it appears now that the company’s appetite for insights goes deeper than what Einstein supports. Today’s announcement seems to position Einstein as a sales and marketing solution, and Tableau as a more general purpose one.
Also, Salesforce has begun using digital disruption terminology more, which seems to indicate this arrow has a great deal of wood behind it. Digital disruption is about more than analytics in sales and marketing, and it’s even about more than coming up with a snappy answer to a customer inquiry.
Digital disruption is about managing by data rather than gut, and it applies to all sorts of situations and conditions not associated with an in-the-moment interaction with a customer. So perhaps Salesforce is flashing a signal that it wants to be the trusted advisor to boardroom decision-making, and that will require more horses than Einstein.
Why Keep the Companies Separate?
The two entities will retain their independent natures, Salesforce said. Tableau has 86,000 customers, some of which are not Salesforce customers. It makes some sense to keep the entities at arms-length to signal to customers that while they may purchase Salesforce at any time, they won’t have to.
Another reason might be that despite the acquisition, this is still going to be a trial relationship. Keeping the entities more or less separate is a way to make a possible future split more feasible.
Lastly, there’s good cultural overlap between the two parties, but Seattle culture is different enough from San Francisco culture to warrant some respectable distance.
Salesforce’s End Game
It’s hard to say what the end game is since that script is still being written. If the world continues its voracious appetite for information culled from existing data, it makes all the sense in the world to marshal as many resources as possible, and Salesforce is doing this.
There’s also a sizable backlash against data, analytics, and algorithms in the culture as well, driven by avaricious incompetence at Facebook and other social media firms, as well as international players. Having best-in-class analytics may become a necessary tool for ferreting out and suppressing bad actors.
Salesforce has a big interest in being the vendor that can help its customers to imagine a different future driven by information. One of the areas it has been effective at is helping businesses see the difference between systems of record and systems of engagement.
That’s the essence of digital disruption, upgrading systems of record to become systems of engagement, and that takes a lot of information to pull off. So, acquiring Tableau may be nothing more than a way to sharpen the engagement discussion.
One final idea. Analytics is critical to identifying fraud and intrusion. Oracle has done a lot to add its own analytics to its Autonomous Database to foster better security. Salesforce is an Oracle customer and perhaps its largest customer.
Salesforce is not exclusively an Oracle shop, however, and it might need the analytics to support an independent security regimen portable to other databases to ensure uniformity throughout its platform.
My Two Bits
All of this speculation is not exclusive, meaning there are likely multiple good reasons for the acquisition, and we’ll see them evolve.
It’s always hard to see the value of an acquisition like this, because we don’t have access to the imagination of the parties putting the deal together. Press releases don’t often help much, because they’re full of platitudes aimed at investors who want to know how a deal will affect their stock in 90 days. It’s a terrible way of investing, but it’s what we have.
For the time being we have something that more or less makes sense, and new tools for imagining a better future. Dreamforce will be full of deeper explanations for this and other recent announcements, like blockchain. It almost makes you wish summer was already over nah.
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