by Jim Lundy
Salesforce is in talks with Slack about a merger deal, which is expected to close at the end of trading Tuesday, December 1. If this deal goes through, its impact will be dramatic. One thing is clear, it will put Salesforce on a direct collision path with Microsoft.
Why Would Salesforce Buy Slack?
The main reason Salesforce would purchase Slack is to improve its overall functionality for remote work tools. Salesforce has been experimenting with remote work applications since it bought Quip a few years ago. For those that don’t remember, Quip was a pseudo-Google Docs and Sheets knock off. Its founders actually came from Google.
Salesforce has had tremendous success and some recent acquisitions, such as Tableau and MuleSoft, but the collaboration market is different than Salesforce’s traditional CRM market. We also expect that some of these recent acquisitions are driven by Mark Benioff, the cofounder and CEO of Salesforce. Salesforce competes with Microsoft in CRM, going up against the Microsoft Dynamics CRM offering.
The Race to UC&C: Slack Versus Microsoft Teams and 365
I just don’t know that Slack beats Microsoft Teams. Both offer all the functionality for team collaboration, otherwise known as enterprise messaging. However, in a remote working context, it’s not enough just to have one collaboration functionality anymore.
Unified communication and collaboration platforms have emerged and Microsoft is well positioned there. Microsoft Teams offers voice calls, meetings, and messaging. Additionally, it competes against best-of-breed application offerings, such as Slack for team collaboration and Zoom for web and video conferencing.
The simple fact is that Microsoft offers both capabilities as part of Microsoft Teams, positioning it in large enterprises as an alternative to a combination of Slack and Zoom. There are many others that also have a complete communications platform such as 8x8, Atos, Avaya, Cisco, Fuze, Ring Central, and Vonage just to name a few. So, the venture capital pitch of Slack and Zoom together works well for small enterprises, but large enterprises need a more unified approach, hence the rise of UCC platforms (see the Aragon Research Globe for Unified Communications and Collaboration).
While it has been known for its Salesforce CRM offerings, its purchase of Slack would put Salesforce on collision course with Teams and other offerings that have received Microsoft updates in recent months.
What Would Salesforce Do if It Bought Slack?
The first thing Salesforce would need to do if it bought slack would be to buy other firms to round out the Slack apps platform. We’ll talk about this more after the deal goes through, but suffice to say the concern is that the Slack deal would be a distraction for Salesforce.
Bottom Line
Salesforce has been on an acquisition streak and is now fighting the war on many fronts, including the recently announced expansion of its industries solutions. Entering into direct conflict with Microsoft might not be in its best interest, as it is a diversion from its core business. Slack may be a good fit for sales teams that need to communicate but Salesforce would need to beef up the rest of the Slack portfolio to be competitive with the larger and more centralized UCC platform offerings, which includes Microsoft Teams and many others.