Salesforce acquisition: What Slack users should know

The mega-deal makes sense for both vendors, but what does it mean for Slack customers?

Slack logo/wordmark [2019]
Slack

Salesforce’s $27.7 billion acquisition of team chat software vendor Slack was announced last week, with CEO Marc Benioff heralding the deal as a “match made in heaven” for the two companies.

There are some clear upsides for both vendors. Salesforce can tap into a collaboration platform used daily by millions of knowledge workers and open a new front in its battle with Microsoft, while Slack gets to reignite its slowing growth under the ownership of a cloud giant with a global network of enterprise sales staff.

But what does the acquisition mean for the 142,000 businesses already using Slack, and the 12 million users who fire up the application each workday?

Any acquisition involves a degree of uncertainty for existing customers, and Salesforce’s buyout of Slack is no different.

Stuart Melling, business development director at 34SP.com, a UK-based WordPress hosting business and longtime paid Slack customer, welcomed the deal, with the caveat that he hopes “little changes about the product experience itself.”

Slack built its business on attractive design and openness as a platform, with its 2,400 third-party integrations a key part of its appeal for existing users. That Slack retains its position as an independent connector of apps is vital for Melling.

“We chose Slack for its simplicity and neutrality, for want of a better term,” he said. “We would definitely review our options if the nature of the platform changed, requiring us to integrate more tightly into a different ecosystem of products.”

What does the deal mean for Slack’s product road map?

While some changes are inevitable, it’s unclear precisely what impact the acquisition will have on Slack’s road map at this stage.

Initial comments from Salesforce indicate that Slack will become the new interface for Customer 360, the data platform that connects Salesforce’s various apps spanning sales, marketing, analytics, workflow integration and more.

The statement announcing the acquisition put it this way: “Slack will be deeply integrated into every Salesforce Cloud. As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences.”

(Asked for comment, Slack officials declined to comment except to cite last week's statements.) 

There are clear benefits for organizations that are already using both Slack and Salesforce. There’s plenty of crossover here: Benioff stated in Salesforce’s Q3 earnings call that 90% of Slack’s customers are already using Salesforce tools in their organization too.

“From a buyer's perspective it will be seen as a positive, because it actually reduces the number of vendors that they have to manage,” said Angela Ashenden, a principal analyst at CCS Insight. “From an end user’s perspective, it might be slightly different because the road map will certainly change as a result.”

There are many intriguing possibilities for connecting Slack with Salesforce’s various applications. As well as integration with sales or marketing software, this could mean that Salesforce’s productivity tool Quip could be more tightly integrated with Slack, offering access to word processing and spreadsheet documents, for instance. 

For existing users of both apps, integration between all of the Salesforce products and Slack will be extremely valuable, said Ashenden. “It will just make life easier for them if they don’t have to do all of those integrations and enable the capabilities themselves. That saves time, saves effort, and it’s easier to manage,” she said.

One implication, however, is that features and functions currently on Slack’s development road map could be put on the back burner as efforts are aimed at linking into the Salesforce portfolio.

“Over the next 12 months, a lot of what would have been in the road map will probably have to be put aside to allow for the integration with Salesforce platform,” said Ashenden. “There may be some things that people wanted that they’re not going to get immediately as a result of this.”

Another Slack customer, Sean Chou, founder and CEO of digital process automation company Catalytic, doesn’t expect drastic changes in product strategy in the short term but has concerns that the focus on integrating the applications could be a distraction in terms of feature development.

“It doesn’t impact us in the short term. In the long term, however, we’ll examine our needs relative to Slack’s direction,” said Chou. “Their resources could be tied up for some time integrating products, and with the workplace changing so much, it will be a good time to explore other collaboration products.”

How will the acquisition affect Slack pricing?

Details of Salesforce’s plans for Slack’s pricing and product tiers have yet to emerge, though it’s unlikely that Salesforce would want to make major changes to the free product in the foreseeable future.

“It's not in their interest to take away the free option, because that is what has driven the growth of Slack over the last six years,” said Ashenden.

A key part of Slack’s success has been its ability to create bottom-up, viral adoption within organizations, which offers a different route to adoption than Salesforce’s typical direct sales model.

“I think that the low end [tier] is not likely to be significantly impacted, in the short to medium term at least,” said Ashenden.

Ownership by Salesforce could even lead to more competitive pricing for Slack, said Raul Castanon, a senior analyst at 451 Research / S&P Global Market Intelligence.

“There is more of a possibility that it could help Slack with pricing. They have a reputation for being an expensive enterprise software service compared to Microsoft, which bundles everything and basically offers things for free. As part of a larger product, it could give Slack more flexibility on the pricing side,” Castanon said.

Will Slack continue to operate independently?

One of the biggest unknowns around the acquisition is to what degree Slack will continue to operate as a separate, standalone application. While some level of integration into the Salesforce tools is inevitable, the level to which the application will embedded is not yet clear.

“From Slack’s perspective, what remains to be seen is if it will continue to exist as a standalone product or if it will be absorbed into Salesforce,” Castanon said.

In his NoJitter column, Nemertes Research analyst Irwin Lazar posits a scenario where Slack is folded into Salesforce entirely, acting solely as an interface for Salesforce tools. The probability of this is low, he says. “This would mean a winding down of Slack’s non-Salesforce customer base. Given what Salesforce is paying for Slack, I don’t see this is a likely outcome,” he wrote.

Salesforce’s top brass have been clear that keeping Slack independent is the plan right now, and Slack CEO and co-founder Stewart Butterfield will continue to lead the business under Salesforce ownership. A further encouraging indication of stability for existing Slack users is the involvement of Bret Taylor, former CEO of Quip, who played a pivotal role in the acquisition of Slack.

Although previously acquired companies including Demandware (bought for $2.8 billion in 2016) and ExactTarget ($2.5 billion in 2013) were rebranded as Salesforce Commerce Cloud and Marketing Cloud respectively, others have kept their branding. Among these are Tableau, bought for $15.7 billion last year; MuleSoft, acquired the previous year for $6.5 billion; and Quip for $750 million in 2016.

While it is relatively early days for Tableau in the Salesforce fold, Quip and MuleSoft have been gradually integrated more deeply into Salesforce’s platform while remaining standalone products.

“Some companies, when you see an acquisition you worry about them, because you think they'll sink without a trace and we'll never see them again,” said Ashenden. “That doesn't happen with Salesforce acquisitions. Salesforce tends to buy a company where it can do more with it, rather than just buy it because it's already an established business.”

Copyright © 2020 IDG Communications, Inc.

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