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Salesforce Acquires Slack – A Workplace Messaging App For $27.7 Billion

By Chitiz Agarwal

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Salesforce Acquires Slack – A Workplace Messaging App For $27.7 Billion

Salesforce is known for carrying out powerful integrations and acquisitions to increase its overall functionality since it was launched twenty-one years ago.

The latest acquisition by the renowned CRM giant is that of Slack, a workplace messaging app. While the rumors were creating a wave for a week prior to the official announcement, it all became official on Tuesday, 1st of December, 2020.

 

Salesforce And Integrations

Salesforce is a highly customizable platform that can be easily integrated with a variety of third-party platforms to provide users with a centralized platform for carrying out different processes.

Salesforce integration allows the users of both the platforms to work seamlessly without having to switch between different platforms while working. Powerful Salesforce APIs make sure that Salesforce users can integrate their data with a suitable third-party application in a seamless and efficient manner.

The acquisition of Slack is one such integration where a CRM platform comes in contact with a workplace messaging application to provide a unified interface and experience to the users of both the platforms.

Before getting to the Salesforce Slack integration, let us briefly understand what Slack really is.

 

What Is Slack?

Slack is a six-year-old workplace messaging application. It is essentially a combination of a social networking platform and email platform developed for workplaces.

Slack allows the users to send messages and files across their organization in an effective manner and connect with their team hassle-free by making individual and conference calls. It aims at making virtual communication within an organization more efficient by connecting the team members with each other.

With Slack, the users can be a part of a virtual office environment. They can reach out to their colleagues and seniors, host and be a part of meetings and discussions, and transfer important files for specific purposes within the company.

Slack simplifies the transfer of messages and data across an organization by providing the users with a simplified and straightforward interface that can be accessed by technical and non-technical users.

 

Salesforce’s Second Biggest Acquisition Since Quip

The Salesforce Slack integration is the second biggest purchase carried out by Salesforce in its twenty-one-year-old run in the industry. The first big acquisition remains that of Quip made in 2016 for $750 million.

This integration had resulted in the emergence of an integrated platform where Salesforce users could work with a collaboration tool with built-in office suite functionality which included word processing, spreadsheets, and presentation software.

The last acquisition of Salesforce before Slack was that of Tableau last year for $15.7 billion. This merger gave an impetus to Salesforce development services as the platform tied up with a powerful data visualization and analytics tool.

 

Microsoft – The Common Competition

As Salesforce acquired Slack, it has helped both the platforms to put up a firm stand against the common competition posed by Microsoft.

As Microsoft launched the Team chatting services for its Office 365 Suite, it ventured into effective communication within the organization with features highly similar to Slack.

Also, Slack had reportedly filed a complaint in the European Union last July for bundling Teams into its Office 365 Suite in such a way that it does not allow customers preferring to use Slack to remove the suite from their devices.

Microsoft has affected Salesforce by venturing into the CRM market as well. Its suite has been posing direct competition to the line of CRM products provided by Salesforce to their clients for helping them manage their CRM processes. These products include Salesforce Marketing Cloud, Sales Cloud, Service Cloud, Commerce Cloud, and many more.

Salesforce and Microsoft had also locked horns when both the platforms wanted to purchase the professional networking giant, LinkedIn. However, Salesforce has lost to Microsoft here.

According to Wedbush Securities Analyst Dan Ives, the Salesforce Slack integration was all about Salesforce standing up to Microsoft. He says, “For Benioff, this is all about Microsoft. It’s just clear Microsoft is moving further and further away from Salesforce when it comes to cloud wars.”

 

How Has Salesforce Benefitted From The Acquisition?

Salesforce seems to be doing extremely well in spite of the global economic crisis due to the global pandemic. The CRM giant recently announced that it has surpassed $20 billion in its annual revenue.

For acquiring Slack, Salesforce is reportedly using half of its stock, with the remaining amount being covered with cash and money borrowed when the interest rates were incredibly low.

With the addition of Slack to the CRM platform, Salesforce support services and its core functionality is set to see a positive change. Every organization, big or small, has employees communicating with each other and Slack provides the much-needed power of seamless communication to Salesforce users.

Also, Slack facilitates efficient external communication with customers and partners, further improving the overall functionality of Salesforce and its communication prowess.

On this acquisition, Salesforce CEO Marc Benioff said, “This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in an all-digital, work-from-anywhere world.”

 

How Does Slack Benefit From The Acquisition?

By all means, Slack was in a need of such an acquisition as it was not proving to be popular amongst the investors in the market. Since it went public, Slack reported having lost 40% of its value as it entered 2020. 

Before it was acquired by Salesforce, the workplace messaging app had lost its value, making it worth only a few dollars per share more than the direct listing reference price. 

The acquisition has worked out fairly well for Slack as its stocks shot up since the rumors about it being acquired by Salesforce started doing rounds. According to Google and Yahoo finance, Slack’s current valuation is a little over $25 billion. Fortunately, as the merger with Salesforce was announced, its valuation went up by 48%.

Also, Slack has found a decent number of users since people started working from home. Due to the ease of use and effective communication provided by the app, it is being used by a good number of people and the number has only increased over time. It topped the count of users last year with 12 million.

The Salesforce Slack integration seems to be coming at just the right time for Slack. In an official statement, Slack CEO Stewart Butterfield said, “As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power, and flexibility, and ultimately a greater degree of alignment and organizational agility. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

 

Need For The Merger In The Current Times

The entire world has been dealing with a pandemic for more than a year now. Several small, medium and large enterprises have suffered in more ways than one.

One of the biggest issues faced by almost every business is that of being connected with the team. As people have stopped venturing out of the house while the work cannot stop, businesses have adopted a virtual system of staying connected within the organization.

Without a doubt, this is the best time for such a merger to take place as it would give a further positive push to the companies relying on virtual communication and the employees working from home. The work from home culture is at its peak and Salesforce Slack integration will only be a step in the right direction.

The loyal users of Slack have claimed that the application’s ability to integrate with third-party platforms is what sets it apart from its peers. Combining this seamless ability with the automated functionality of Salesforce will result in a win-win situation not only for both the companies but also for the users of both the platforms.

The integrated platform will help users in working on a centralized platform for carrying out an array of business processes and communicating with their peers and seniors with ease. They no longer need to work on a separate platform and switch to a different platform for communicating with the people they work with.

As Marc Benioff mentioned, we are living in a work-from-anywhere world. The pandemic has taught people how to make their work more flexible and communicate with each other virtually without losing the essence of the work done.

Effective communication is the soul of Salesforce. All its offerings deal with personalized communication of businesses with the customers and tailoring their services according to the needs and preferences of the customers.

In such a scenario, an app like Slack is an ideal partner to Salesforce because of its powerful services and offerings that make communication faster, more effective, and wholesome.  All the SaaS offerings of Salesforce can effectively integrate with the messaging application for providing improved services to the clients.

This way, the integration revolutionizes the way in which Salesforce users go ahead with their work and reach out to their peers in the age of virtual communication.

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