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What Does Salesforce Need to Make Slack Acquisition Work?


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As the tech world is well-aware, Salesforce has made a $27 billion offer for Slack, which would be the second-biggest software acquisition to IBM's $34 billion purchase of Red Hat in July 2019. With such a gigantic number being thrown around, one simple question looms: Will Salesforce get what it is looking for?
It's easy to say that Salesforce is overpaying for Slack based both on the raw numbers and the immediate market response that led to a 10% drop in its stock price. But beyond the immediate response, consider the history leading up this proposed acquisition.
Salesforce has a long history in social business, as over the past decade it has consistently hyped the power of collaboration and has invested in social media and internal collaboration tools. Examples of these investments are best seen in Salesforce Marketing Cloud social media monitoring capabilities, based mainly on the 2011 acquisition of Radian6, as well as in Salesforce Quip, which serves as Salesforce's content collaboration platform and is based on Salesforce's 2016 acquisition of Quip. A third major relevant move in this vein is the 2018 acquisition of MuleSoft, through which Salesforce gained strong integration capabilities.
Slack would provide Salesforce with a key collaboration-driven user interface. Not only does Slack facilitate discussions for millions of users, but it also provides a broad array of integrations that support workflows, converge communications with text discussions, and deliver a natural language interface to a variety of applications and services.
So, back to the original question: Is Slack enough? To answer this question, let's take a common sense look at how people communicate.
In the workplace, we use a combination of alerts, process automation, documents, messaging, email, voice, and face-to-face discussions to communicate with each other. Leaving out any of these channels leads to an incomplete view of employee collaboration. So, to get the 360-degree view of employee efforts and activities, Salesforce needs to cover its bases across all of these areas.
Slack will help enormously across the areas of alerts, process automation, and messaging, where it has been a market leader even in the face of Microsoft Teams' massive growth rate over the past year. However, Slack still lacks market leadership in the areas of voice and video, along with the related process automation that would typically be associated with contact center and unified communications suites.
So, Slack will help fill a key gap for Salesforce, but it alone will not be enough for Salesforce to eliminate the gaps between its current state and its proposed state of having a "next generation" user interface that brings employee input into the sales conversation.
In an age with an abundance of voice and video solutions, Salesforce needs to figure out either how to purchase a dominant market leader or to support them all. From a practical perspective, networking and conferencing options such as those from Cisco and Zoom are too expensive to purchase. And from a software perspective, Salesforce needs a bridge to translate calls and services into actions. The logical next step for Salesforce to finish its vision is to look at a communications platform-as-a-service (CPaaS) provider to add video and voice.
This idea is not necessarily new, as Microsoft seems to be thinking the same thing with its recent launch of Microsoft Azure Communications Services. But Salesforce has invested heavily in AI, especially for parsing and translating language inputs into suggestions that align with customer information, service cases, sales deals, and other key Salesforce data. Although Salesforce has rudimentary WebRTC support through its 2012 acquisition of GoInstant, cloud communications has matured greatly since then and a CPaaS would provide Salesforce developers with greater access to communications technologies.
This combination of communications, collaboration, and messaging is necessary to provide the next-generation interface Salesforce would like for enabling salespeople to ask for and receive help without having to access a separate contact center or UC solution. This combination would empower Salesforce developers to create better applications and potentially allow salespeople to avoid one of their least-favorite tasks: updating the CRM application. Why should they need to update the application when their combination of calls, messages, emails, and other communications can be linked to account information, transcribed with good-enough accuracy, and used to initiate alerts and processes?
By bringing CPaaS and Slack together with Salesforce's strong AI and data management capabilities, we would finally achieve the decades-old promise of old buzzwords service-oriented architecture, social business, and communications-enabled business processes together through the more modern phrases of APIs, collaboration, and CPaaS. The combination of natural language, data, application integration, and work outputs could provide an end-to-end value chain.
One major challenge that Salesforce faces in this regard is that CPaaS companies are not cheap, either. Purchasing either a CPaaS pure-play like Twilio or a UCaaS provider like RingCentral, which offers a CPaaS solution on its developer platform, would be even more expensive than purchasing Slack. Twilio would likely be too pricey at its current valuation of almost $60 billion, but RingCentral’s $35 billion price tag might be more palatable. 8x8 is a dark horse candidate as it provides much of RingCentral’s functionality at a much lower valuation of about $4 billion, but 8x8 lacks the growth rate that Salesforce has been seeking in most of its larger acquisitions.
Is Salesforce willing to make such a large investment in its vision of creating a more usable, open, and modern application suite? Although the numbers are staggering, never say never when it comes to Salesforce's appetite for ambitious acquisitions to drive future growth.