Salesforce should (and probably will) buy Slack

Slack and Salesforce announced an integration recently: https://slackhq.com/slack-now-with-more-salesforce-and-vice-versa-9d842a5b1706#.l1a72gcr1. Essentially, Salesforce objects will be easily and contextually accessible from within Slack. Slack is a wonderful system of engagement for the enterprise and continues to execute it’s strategy masterfully.

The last few months have seen a lot of interesting M&A activity.

  • Microsoft acquired LinkedIn to bolster their sales and marketing software business. Salesforce actually out-bid Microsoft for LinkedIn but Microsoft won due to its all-cash offer.
  • Salesforce acquired Quip which provides them with documents, chat and collaboration play.

 

Business Operating Systems

Microsoft, Salesforce, Oracle, Google and Apple are the primary contenders to be the leading business operating system. Below is a quick evaluation of each company’s strategy.

Microsoft

With Windows, Microsoft has led the enterprise OS market for many years. Microsoft then proceeded to build business software: Office, Dynamics, Azure, etc. Microsoft’s strategy is: operating system -> platform -> multiple domains -> apps. Microsoft’s recent releases/acquisitions of applications (Wunderlist, Office, GigJam, etc.) on multiple platforms including iOS/Android indicate that they are shifting away slowly from dependence on the core Windows OS.

Salesforce

Salesforce started with sales software and since then has expanded to become a broad platform that provides sales, marketing, development, support, customer success, social media and vertical SaaS software. They are executing a strategy where they go from: apps -> platform -> multiple domains -> business operating system.

Oracle

Oracle has been competing aggressively with Microsoft and Salesforce on the business software front. They have been going toe-to-toe buying up PaaS, OpenStack, vertical SaaS companies. Oracle’s strategy seems to be: data operating systems (databases, OLTP, OLAP) -> apps -> multiple domains -> business operating system. It is very interesting that Oracle has very limited focus on platform and apps. They prefer to provide customizable end-to-end solutions which is different than Salesforce’s strategy.

Google

Google Apps has been successful, primarily, due to low cost and “good-enough” software. They could have led the business software race but they only used Google Apps as an additional channel for their core search/ads business. I think they have largely ceded the battle for enterprise business software dollars. I do not think they have a strategy for business software, they only have one for their core search business and moonshot projects.

Apple

Apple has been happy to build upon its walled garden and is primarily a consumer hardware and software platform(AppStore) business. They have not shown great intent to own business software like enterprise email, sales, marketing and productivity software.

 

Salesforce + Slack = synergies!

Slack has been positioning itself as the operating system of the enterprise and has the engagement numbers to show for it. Most of the leading business software companies have built “bots” for Slack, thereby making Slack a leading “interface” / “gateway” into various enterprise applications. Think about some examples:

  • Developers get Slack notifications from a variety of tools like Jenkins, Github, Jira, etc. and then proceed from Slack into the product.
  • Sales teams get notifications about CRM updates and wins into Slack which leads to collaboration about that activity or a click to go to Salesforce.
  • Marketing teams get updates about campaigns and can respond to them via Slack notifications.
  • Slack is being used by customer support with Intercom chats directly conducted from Slack as an example.

So even if Slack will not replace HR, sales, marketing, expense, customer support software; it will become one of the primary interfaces for these applications. Anyone who wants to own the SaaS application space, would love to own Slack and be able to control the interface or gateway to competing apps. If Salesforce owned Slack, it would be able to understand which SaaS products are getting great usage and engagement via Slack plugin metrics of that product. Salesforce applications will be able to integrate tightly with Slack. Salesforce will continue to the leading system of record(SoR) and Slack will be the system of engagement(SoE). Imagine a CIO or business leader comparing Oracle or Microsoft apps with Salesforce+Slack. Most of the companies employees would not want to switch away from Slack unless Oracle or Microsoft came up with a credible competitor. The enterprise software space is abuzz with innovation at the SoE layer rather than SoR layer anyways.

Slack has added video calling and group calling features already. They have also acquired a screen sharing company which has implications for collaboration as well as customer support usecases. Slack will build a horizontal platform and then will focus harder on vertical use-cases. All of this gels nicely with Salesforce’s strategy to become the business operating system — something that they cannot achieve unless they own the leading system of engagement in the enterprise space.

Instead of bidding for Twitter, Salesforce should make a strategic investment in Slack or buy it outright at a premium.