Salesforce is the undisputed market leader in the Customer Relationship Management (CRM) industry that brings customers and companies together through their Customer 360 platform. Consequently, Salesforce has been named as a Leader in Gartner Magic Quadrant for CRM Customer Engagement Center for the 12th consecutive year. This makes one question: How has Salesforce been so successful and consistent, despite rapidly changing technology, amidst the era of the digital revolution?
Source: Salesforce – Company Quarterly Report Q1 FY21
Salesforce has a two-pronged approach to create focused innovation and mitigate any disruption risks. Over the last few years, Salesforce has made various acquisitions that complement its offerings and technologies. Salesforce is focusing largely on acquiring businesses to reinforce its product portfolio.
Salesforce acquired Tableau Software, leading a data analytics platform, in an all-stock deal for a whopping $15.7 billion. It is Salesforce’s most expensive acquisition to date, surpassing the $6.5 billion acquisition of MuleSoft in 2018. Acquiring ClickSoftware Technologies was another notable deal for $1.4bn in October 2019.
But, is money all you need to make a buying decision?
Salesforce had money and means to buy Twitter in 2016, which was a troubled social media platform then. The investors, however, questioned the rationale behind the deal in the context of how the purchase will drive its relationship with the customers. It did offer real-time data which is a plus for a company pushing artificial intelligence, but then again the price has to be right, the cultural fit has to be great, and it surely needs to be worth the financial risk.
The kind of acquisition spree Salesforce has been on, for the last few years, one could always question their method in this madness. Turns out there are a well-drafted methodology and a list of companies that they could be interested in at any given time. To get on this list, they evaluate the criteria and balance that the target company could bring to Salesforce as well as any possible risk of buying it. They think about how to balance the integration v/s innovation in their goal to drive growth and experimentation.
Past Acquisitions; Source: Dreamforce 2019 Presentation
Let’s consider some other Salesforce acquisitions:
In 2018, Salesforce acquired Rebel, a marketing technology startup that develops interactive email services for businesses to improve their direct marketing services and further expanding their Marketing Cloud. In the same year, they also bought Datorama, an Israeli cloud-based AI marketing company, for a massive $800 million. Datorama leverages Artificial Intelligence and Machine Learning to provide marketing intelligence and analytics for campaign optimization strategies.
In 2017, Salesforce acquired a New York-based UX design agency, Sequence to build interactive experiences and to enable rethinking the implementation of bigger branding concepts. In 2016, a cloud-based e-commerce service, Demandware, was purchased for $2.8 billion. This acquisition was made with a purpose to spearhead a new business unit – Salesforce Commerce Cloud. The CRM company also bought a data-management platform, Krux for $700 million in 2016. This acquisition was made to strengthen consumer relationships across all touchpoints and create custom solutions for its Marketing Cloud, which already includes social and audience tools.
In April 2016, Salesforce purchased MetaMind, a deep learning startup founded in 2014, planning to utilize its technology to further automate and personalize customer support and enhance marketing automation. MetaMind was supposed to boost the data science potential by immersing deep learning within the Salesforce platform.
So, what do we learn from this series of acquisitions?
With each and every one of the Salesforce acquisitions, the company augments the capabilities of its platform and offerings. Hence, expanding the ecosystem of enterprise cloud companies and strategic partners, accelerating the adoption of cloud-based technologies and creating the next-gen AI engine, mobile applications, and related products.
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Pratyush Kumar
