With its annual Salesforce Connections conference right around the corner, the industry’s leading CRM outfit Salesforce decided to give attendees something to talk about.
Last week, the company forked out $15.7 billion to acquire data-visualization company Tableau in a move that comes on the heels of similar mergers in the cloud computing space. The marketing cloud provider’s acquisition aped Google’s recent purchase of Looker and brought spending on such companies to nearly $20 billion in under a week, but it’s leaving analysts and experts pondering exactly what Salesforce is getting for its $16 billion.
“You buy companies for different reasons,” said Alan Bonde, a research director at Forrester. “[Often,] you’ll buy a company because it’s part of your narrative, and you want to signal to the market that you’re all about … customer experience, or all about analytics. So you might overpay because you need it at that point in time and it’s a seller’s market.”
And from the looks of things, this is the time for folks looking to get into data visualization. Earlier this month, Google acquired the similarly situated business-intelligence tool Looker for $2.6 billion, announcing at the time that “a fundamental requirement for organizations wanting to transform themselves digitally is the need to store, manage and analyze large quantities of data from a variety of sources.” Meanwhile, German enterprise software company SAP acquired “research and experience software” company Qualtrics for a healthy $8 billion this past January.
All of this has left Salesforce playing something akin to a game of catch-up, explained Alex Yoder, the executive vp of analytics at Merkle. “The knock on Salesforce for the last decade has been directly related to their analytics—namely that they had none, or that it was very weak,” explained Yoder. “I think Salesforce has done a great job of building a stack of assets that help collect data and activate it. Ultimately, CRM and media will be coming together, and there are a number of players that could begin to encroach on this intersection.”
Not making moves in the data modeling space, he added, would “severely limit” their trajectory in the years to come.
According to financial analysts and investors, Salesforce’s acquisition strategy in the months leading up to Tableau shows how it wants to compete. First came its $6.5 billion integration with SaaS platform Mulesoft last year, with the acquisition of the AI-powered marketing intelligence platform Datorama for an estimated $800 million not long after. Both of these play a part in powering Salesforce’s AI-powered sales forecasting tools that were released this week.
According to Kris Tait, managing director at digital marketing agency Croud, such moves spell out a company that “must be worried about the state of the market in terms of cloud solutions, like the one Google’s offering. [W]hen you think about Google, for example, it holds a lot of the first party relationships with these customers, whereas Salesforce might not have as many. They plug into all of these data sources instead.”
However, according to multiple sources, $16 billion ultimately isn’t that high of a price for what Tableau has to offer, especially since marketers start to want to better visualize the multiple sources of data such providers can help them tap into. For instance, its software is deemed a go-to for a large swath of the marketing industry, particularly on the brand side, said Tait.
Tableau is “agnostic” about the data that it works with, meaning that marketers can use data from Google, Adobe or Hubspot and get the analytics they need, unlike others in the market. Its pricing strategy also appealed to both larger enterprises such as Verizon and Netflix, as well as smaller companies, some even with less than 50 employees, according to the B2B intelligence platform Enlyft.
“These acquisitions are a massive statement of intent in terms of cornering that data visualization market,” Tait added.
Sources across the board agreed that more tech giants are going to be clamoring for a slice of the data visualization market which is estimated to hit roughly $7.8 billion by 2023, per Marketwatch.
“You can see a lot of what’s happening in the market right now is all about securing data,” explained Tait. “Think about the Google/Looker acquisition; for Google … 95% of their business is search … but a huge growing element of this is having all of those services and all of that data in the cloud.”
For Joseph Antelmi, a principal analyst at Gartner, marketers aren’t asking about the strength of individual analytics tools. Instead, they want an entire analytics ecosystems—a point that was echoed by multiple sources, who forecast more mergers and acquisitions activity this year.
“There’s a lot of money on the sidelines and people are building their shopping lists,” Bonde said. “I think we’re going to see more of these kinds of deals for a while.”