Market weighs in as Salesforce acquires Tableau for a whopping US$15.7 billion

Analysts see CRM giant's purchase of the data analytics and visualisation platform as just in a series as tech vendors look to shore up their digital transformation capabilities

Salesforce has taken a huge leap forward in the data visualisation and analytics space, picking up Tableau for a whopping US$15.7 billion.  

The all-stock acquisition was confirmed on 10 June and already has the approval of shareholders. It’s being described as a way for Salesforce customers to unlock greater value from their data, as well as drive the vendor a further step forward in what IDC identifies as the $1.8 trillion digital transformation space.  

In a statement, Salesforce chairman and co-CEO, Marc Benioff, said it was bringing together the world’s number one CRM platform with the number one analytics offering.  

“Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It’s truly the best of both worlds for our customers – bringing together two critical platforms that every customer needs to understand their world,” he said. “I’m thrilled to welcome Adam [Selipsky, Tableau president and CEO] and his team to Salesforce.

While the companies were quick to highlight the possibilities for customer experience management and business decision making by uniting Tableau with Salesforce’s artificial intelligence (AI) engine, Einstein, Tableau will remain an independent operation under its own brand, and stays headquartered in Seattle, Washington. There are also no changes planned to the leadership team, with Selipsky remaining as Tableau’s CEO.  

"Tableau is a phenomenal company, one I have always admired. The mission is to help people see and understand data – those seven powerful words drives everything at tableau. And the company has done extremely well from that," Benioff said during an investor presentation on 10 June. 

Salesforce said Tableau was expected to increase FY20 revenues by $350 million - $400 million, based on reducing unearned and unbilled revenues by about 30 per cent. This would bring Salesforce’s revenues to between $16.45 billion - $16.65 billion, an increase of up to 25 per cent year-on-year. The deal is expected to be completed by 31 October.  

“Salesforce’s incredible success has always been based on anticipating the needs of our customers and providing them the solutions they need to grow their businesses,” said co-CEO, Keith Block. “Data is the foundation of every digital transformation, and the addition of Tableau will accelerate our ability to deliver customer success by enabling a truly unified and powerful view across all of a customer’s data.”  

Tableau founders, Christian Chabot, Patrick Hanrahan and Christopher Stolte, entered into the agreement with Salesforce as part of the transaction and will tender all of their shares as part of the exchange offer.  

Selipsky said joining forces with Salesforce gave it a massive leg-up in terms of market reach. Tableau boasts of 86,000 customers globally, from Charles Schwab, Verizon and Schneider Electric, to smaller and medium sized organisations, and has been operating for 16 years.  

In the statement, both vendors also noted their community of users – 1.4 million Trailblazers on the Salesforce side, and 1 million data enthusiasts on Tableau’s.  

“I’m delighted that our companies share similar cultures and a relentless focus on customer success,” Selipsky said. “I look forward to working together in support of our customers and communities.”  

Data analytics tech star rises

The Salesforce-Tableau deal signifies just how important data analytics and visualisation has become with the tech stack, and comes just one week after Google acquired Looker, another data analytics firm, paying US$2.6 billion in cash. In its statement announcing the deal, Google said a fundamental requirement for organisations wanting to transform themselves digitally is the need to store, manage and analyse large quantities of data from a variety of sources.

Commenting on Salesforce’s and Google's purchases, CEO of data analyst consultancy firm, Cognetik, Daniel Herdean, said both show the degree to which data analytics is vital to future platform growth.  

“Salesforce just made it clear that it is very serious about investing in the data analytics space and that we should expect its analytics business to drive a significant amount of revenue in the future,” he said.  

 “Salesforce has been making a number of moves recently around trying to grow its footprint and influence within the data analytics space - and this is one of the first real indicators that we need to be taking it seriously in the analytics space.  

“Another thing to note is that Tableau is incredibly user-friendly. Having this type of intuitive technology will have a huge impact on how companies are able to understand the data they collect from Salesforce.”

Gartner analyst, Andrew Frank, wasn’t surprised by Salesforce’s purchase, saying it’s consistent with the vendor’s goals, and offers high magnitude market impact.  

“It’s more a reinforcement of analytics credentials that complements Datorama and puts to rest questions about Salesforce relevance to business analysts,” Frank told CMO.  

He agreed Salesforce and Google’s purchases reinforce the perception data visualisation is one of the hottest battlegrounds in martech, but added “Salesforce has clearly raised the stakes” .  

“I expect the focus on data visualisation and related tools will continue to drive competitive investments, but large-scale acquisition is not the only strategy to watch. Organic development is still a viable option, and the topic is ripe for disruptive innovation,” Frank said.  

Constellation Research founder, principal analyst and chairman, Ray Wang, also wasn't surprised by the deal and said Salesforce had Tableau on its acquisition list for some time. He also didn't expect the deals to stop with Tableau and Looker, and noted Qlik as another prospective company now in the market for a buyer. 

"This is about getting multi cloud and hybrid access to data visualisation and embedded analytics technology," Wang commented.

Pund-IT principal, Charles King, also saw momentum for analytics and visualisation shifting into overdrive. he noted the pricetag paid by Salesforce for Tableau was more than 10x revenues in the last four quarters.

What's more, Tableau's focus on easy-to-use and accessible data analytics and visualisation solutions as quite different from Salesforce's existing Einstein AI platform, King said.

"That should fit well with Salesforce strategically, and it's also likely that many of Tableau's 80k+ clients are also Salesforce customers," he added.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu   

   

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