Salesforce $15.7 billion mega acquisition will add revenue and blunt a Microsoft competitive threat, but long-term benefits will depend on deeper integration and additive innovation.
Salesforce is spinning its mega acquisition of Tableau Software as the number-one CRM vendor buying the number-one business intelligence (BI) and analytics vendor. It's a big deal that was likely hastened by last week's acquisition of Looker by Google. In the short term, it will give Salesforce more revenue, but in my view, the success and ultimate value of the proposed $15.7 billion deal will depend on what Salesforce and Tableau can do together and whether Tableau can accelerate its move into the cloud.
Tableau fills a competitive gap for Salesforce that Einstein analytics hasn't filled. Einstein Analytics (which originated as Salesforce Wave Analytics in 2014) is still very new, and it's not widely adopted by Salesforce customers. What's more, Einstein Analytics has been largely aimed at CRM-centric analytic needs, whereas Tableau gives it broad, multi-purpose analytical capabilities that are already widely adopted and highly regarded.
A key challenge, however, is that only one third of Tableau customers, at best, are running in the cloud. So either Tableau has to accelerate its move into the cloud or Salesforce has to develop more of a hybrid strategy. The latter would go against Salesforce's longstanding "no software" ethos, although even cloud player Amazon Web Services (AWS) has made accommodations for on-premises deployments in recent years.
One thing that Salesforce and Tableau have in common (other than tens of thousands of customers) is Microsoft as a formidable rival. Microsoft goes after Salesforce primarily with Microsoft Dynamics 365 and it goes up against Tableau primarily with Power BI. In both cases, Microsoft stresses its broader platform, including Office 365, Azure, the LinkedIn graph, and its broad data-management portfolio, but the real weapon on both fronts is the blunt instrument of competitive pricing. Microsoft effectively discounts its CRM and analytics offerings knowing it can count on long-term benefits, stickiness and profits from each customer and byte of data that ends up on Azure.
Competing against Microsoft Power BI is one thing, but cloud competition is about to get tougher with Google's acquisition of Looker, announced last week. And with both Google and Microsoft now strongly pursuing the BI and analytics market, it likely won't be long before AWS steps up its game from its current, less-than-competitive QuickSight offering.
Tableau needed a deep-pocketed parent to help it compete against these new competitors. A key area of investment important to both Salesforce and Tableau is augmented analytics and artificial intelligence (AI). Microsoft has been adding augmented capabilities to Power BI, and it highlights the connection to the rest of its AI portfolio. Leveraging one set of AI and augmented analytics investments across Salesforce and Tableau should provide economies of scale that will help both parties innovate.
