Salesforce’s Slack Acquisition for $27.7 Billion – A Match Made in Heaven?

Salesforce Acquires Slack
  • By Sakshi Arora,
    Published on: Feb 18, 2021
  • Updated on: Sep 13, 2023
  • Salesforce

‘A match made in heaven’ is what Marc Benioff, CEO of Salesforce, has dubbed Salesforce’s $27.7 billion Slack acquisition. The deal has set speculations in motion, and it seems that it is a deal with upsides for both companies. 

Salesforce gets a collaboration platform used by millions across the globe into their technology portfolio, and Slack gets to reignite its growth plans by teaming up with a cloud giant having a proven network of enterprise sales staff. 

So, if you are one of the 142,000 businesses with a collective user base of 12 million employees using Slack, what does Slack acquisition mean for you? Let’s discuss.

Much like in the case of any acquisition, there is a degree of uncertainty among Slack’s existing customers. 

Slack’s key differentiator is its attractive design and its openness as a platform. It offers 2,400 third-party integrations, and it must retain that position as an independent connector of apps following its acquisition.

The current clients are carefully looking at the nature of the changes that will follow. While many companies chose Slack for its simplicity and neutrality, they will review their options if the platform integrates intimately with a different ecosystem of products

Definition of Salesforce Slack Acquisition:

The Salesforce Slack acquisition refers to the merger of two industry giants – Salesforce, the global leader in customer relationship management (CRM) software, and Slack, the popular workplace communication platform. This acquisition involves Salesforce's purchase of Slack, bringing together the powerful capabilities of both platforms to create a unified and comprehensive solution for businesses.

Importance of the acquisition for the enterprise software market:

The acquisition holds immense significance for the enterprise software market, as it combines CRM and communication tools into a single platform. This integration will allow businesses to streamline their operations, enhance collaboration among teams, and foster stronger relationships with customers. With Salesforce's unparalleled expertise in CRM technology and Slack's exceptional collaboration features, the acquisition promises a revolutionary shift in how organizations operate and communicate.

Join us as we delve into the details of this game-changing acquisition and explore the benefits it will bring to businesses seeking to thrive in the modern digital landscape.

Understanding the Acquisition

The acquisition deal between Salesforce and Slack has taken the business world by storm. Let's delve deeper into what this deal entails and why Salesforce made the decision to acquire Slack.

A. Explanation of the acquisition deal between Salesforce and Slack

The acquisition deal between Salesforce and Slack represents a strategic move to strengthen Salesforce's presence in the collaboration software market. Under this deal, Salesforce will acquire Slack for a whopping amount, bringing the popular workplace messaging platform under its umbrella.

B. Rationale behind Salesforce's decision to acquire Slack

There are several reasons behind Salesforce's decision to acquire Slack. First and foremost, Salesforce aims to enhance its suite of cloud-based business tools by incorporating Slack's robust collaboration features. By merging Salesforce's CRM capabilities with Slack's messaging platform, both companies anticipate offering a more comprehensive and integrated solution for businesses.

Moreover, Slack's large user base and strong customer loyalty make it an attractive acquisition target for Salesforce. By joining forces, the two companies can leverage their combined strengths to compete more effectively against other major players in the market.

C. Overview of the financial details and transaction process

The financial details of the acquisition deal between Salesforce and Slack are impressive. Salesforce plans to acquire Slack for a staggering amount, reflecting the value it sees in the platform's potential for growth and future success.

In terms of the transaction process, both companies have engaged in thorough negotiations and due diligence to ensure a smooth acquisition. The deal is subject to regulatory approval and is expected to be completed by the middle of next year.

D. Anticipated impact and benefits for both Salesforce and Slack

The acquisition is expected to yield numerous benefits for both Salesforce and Slack. For Salesforce, incorporating Slack into its platform will enable a more seamless collaboration experience for users, driving increased customer satisfaction and loyalty. Moreover, the acquisition will enhance Salesforce's competitive position in the enterprise software market, allowing them to attract new customers and expand their market share.

As for Slack, the merger with Salesforce presents an opportunity to leverage their resources and expertise to accelerate growth and innovation. With Salesforce's robust sales and marketing capabilities, Slack can scale its platform and reach a wider audience, further solidifying its position as a leader in the workplace messaging space.

Overall, the acquisition holds great promise for both Salesforce and Slack, showcasing their commitment to delivering cutting-edge solutions that empower businesses to collaborate and thrive.

How Will This Deal Affect Slack’s Product Roadmap Now?

Salesforce-Slack acquisition definitely comes with big plans for Slack, and we cannot deny that some changes are inevitable. But it is tough to predict Slack’s product roadmap at this stage. 

Based on Marc Benioff’s Dreamforce to You 2020 keynote, we can expect Slack to become the new interface for Customer 360 - the data platform that connects Salesforce’s analytics, marketing, app spanning sales, and workflow integrations, to name a few. 

The official statement by Salesforce places the acquisition as: “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.”

The Slack acquisition by Salesforce has clear benefits for the organizations that use both Salesforce and Slack. During Salesforce Q3 earnings call, Benioff stated that the crossover is already strong. 90% of Slack customers are already using Salesforce tools for their operations. 

There is a wide range of possibilities when we think about connecting various Salesforce apps with Slack. Quip - Salesforce’s productivity tool can be integrated more tightly with Slack to offer access to spreadsheet documents and word documents. 

The integrations will make life easier for existing users of both platforms when they don’t have to complete the integrations and enable the capabilities manually. 

However, one implication is that Slack’s current features and function development roadmap can be put on a back burner while they focus on linking it within Salesforce’s portfolio.

What Does the Deal Mean for Salesforce?

Slack acquisition can prove to be the silver bullet that Salesforce needs to bolster the social enterprise vision of the company. And though there have been several acquisitions in the company’s history, none of the deals have connected all the dots. 

As the world transitions towards a more remote working style across the globe, the Salesforce-Slack acquisition can be a game-changer in meeting the virtual sales and service demands. With their forces combined, Salesforce and Slack can innovate new ways to support businesses that are adapting to the new normal.

Salesforce’s competitors have already moved into the domain with products like Microsoft Teams, and Workfront. Salesforce is trying to gain a competitive footing with them and the Slack acquisition can further prevent other competitors from entering the market.

Will it Affect Slack Pricing?

No details have been revealed about Slack’s pricing and product tiers yet. Since Slack has driven its growth with the free option over the years, Salesforce won’t make any significant changes to the free version in the foreseeable future.

Slack has always followed a bottom-up approach to promote viral adoption of the platform in organizations. It is a different route as compared to Salesforce’s direct sales model. So, the lower tier of the platform won’t be affected significantly. 

But we should not count out a competitive pricing strategy for Slack as Salesforce gets ready to compete with the likes of Microsoft, which bundles all the products and offers them for free. Since Slack is now a part of a bigger brand, it can offer a lot more flexibility in terms of pricing.

Impact on Customers

The Salesforce Slack acquisition is expected to have a significant impact on both Salesforce and Slack customers. With this strategic move, customers from both companies will benefit in various ways.

A. Benefits for Salesforce customers

  • Enhanced collaboration and communication capabilities: Salesforce customers will now have access to Slack's robust messaging and collaboration platform. This integration will allow teams to communicate seamlessly, share files, and collaborate on projects in real-time.
  • Integration of Slack features within Salesforce's ecosystem: Salesforce customers can leverage Slack's powerful features directly within Salesforce's platform. This integration will streamline workflows, simplify project management, and improve overall efficiency.
  • Improved productivity and efficiency for users: By combining forces, Salesforce and Slack aim to provide users with a seamless experience. With a unified platform, users can access all relevant information, conversations, and updates within one interface, increasing productivity and reducing the need for switching between platforms.

B. Benefits for Slack customers

  • Access to Salesforce's extensive customer base and resources: Slack customers will now have the opportunity to tap into Salesforce's vast customer network. This opens up new avenues for collaboration and potential business opportunities.
  • Integration of Salesforce CRM functionalities within Slack: By integrating Salesforce's CRM functionalities into Slack, customers can easily manage customer relationships, track sales, and access important data without leaving the Slack platform.
  • Potential for expanded features and services: With the acquisition, Slack customers can expect access to a wider range of features, services, and integrations. Salesforce's vast ecosystem and resources offer the potential for enhanced functionality and expanded offerings for Slack users.

Impact on Companies

The Salesforce Slack acquisition will have a significant impact on companies in various ways. Let's explore some of the key effects:

A. Salesforce's expansion strategy

1. Strengthening its position in the enterprise software market:

With the acquisition of Slack, Salesforce is taking a bold step towards consolidating its position as a leading player in the enterprise software market. The integration of Slack's collaboration tools with Salesforce's robust CRM platform will provide companies with a comprehensive solution for enhancing productivity and streamlining workflows.

2. Increasing competitiveness against other CRM providers:

By acquiring Slack, Salesforce aims to stay competitive in a rapidly evolving market. With the ability to offer integrated collaboration and communication features, Salesforce can differentiate itself from other CRM providers and attract more customers who value efficient teamwork and seamless connectivity.

3. Diversification of Salesforce's product portfolio:

With the addition of Slack, Salesforce expands its product portfolio beyond CRM, diversifying its offerings. This move allows Salesforce to provide a more comprehensive suite of tools and services to meet the evolving needs of its customers, ultimately strengthening its position within the industry.

B. Slack's future under Salesforce

1. Maintaining Slack as a standalone brand and service:

Following the acquisition, Salesforce has expressed its commitment to maintaining Slack as a standalone brand and service. This means that existing Slack customers can continue using the platform they are familiar with, while also benefiting from the potential integration with Salesforce's products and services.

2. Leveraging Salesforce's resources to accelerate Slack's growth:

As part of Salesforce, Slack gains access to the extensive resources and expertise of one of the industry's giants. This can significantly accelerate Slack's growth by allowing for enhancements in technology, customer support, and market reach. The acquisition opens up new opportunities for Slack to expand its user base and compete more fiercely with other collaboration tools.

3. Potential for integration with other Salesforce products:

The merger between Salesforce and Slack holds great potential for integration with other Salesforce products. This integration can result in seamless connectivity between collaboration and CRM tools, allowing companies to have a holistic view of their customer interactions while collaborating efficiently. The innovation that emerges from this integration will provide companies with a more unified and efficient solution for managing their operations.

Overall, the impact of the Salesforce Slack acquisition on companies will be considerable. It brings together the strengths of Salesforce's CRM capabilities and Slack's collaboration tools, empowering organizations to work smarter and more efficiently in an increasingly connected business landscape.

Implications for the Software and Cloud Industry

The acquisition of Slack by Salesforce has significant implications for the software and cloud industry. This deal marks a shift in the landscape of team collaboration and communication tools, as well as consolidation of major players in the industry.

Consolidation of major players in the industry

With this acquisition, Salesforce, a leading customer relationship management (CRM) platform, is further establishing itself as a dominant player in the software and cloud industry. By acquiring Slack, a popular team collaboration tool, Salesforce is expanding its suite of offerings and enhancing its capabilities in providing comprehensive solutions for businesses.

This consolidation of major players in the industry not only strengthens Salesforce's position but also has implications for competitors. The acquisition puts Salesforce in direct competition with other tech giants, such as Microsoft and Google, who offer their own team collaboration tools.

Impact of the Salesforce Slack acquisition on competitors

The Salesforce Slack acquisition poses challenges for competitors in the team collaboration and communication space. With their combined resources, Salesforce and Slack have the potential to deliver a highly integrated and seamless experience for users, making it harder for competitors to compete.

Competitors may need to reevaluate their strategies and offerings to stay competitive in the rapidly evolving market. They may need to invest in innovation and develop new features to differentiate themselves from the Salesforce Slack offering.

Future trends and developments in the software industry

This acquisition is indicative of larger trends and developments in the software industry. The demand for comprehensive solutions that streamline workflows and enhance collaboration is growing rapidly. Companies are seeking integrated platforms that provide seamless experiences across various applications.

As the software and cloud industry continues to evolve, we can expect more consolidation and acquisitions as companies strive to meet the increasing demands of businesses. The Salesforce Slack acquisition sets the stage for future developments in team collaboration and communication tools.

Will Slack Still Remain a Standalone Application?

Salesforce-Slack acquisition - Will Slack remain a standalone application

Perhaps the biggest unknown of the Slack acquisition is the extent to which Slack will continue to operate as a standalone application. Some integration with the Salesforce tools is inevitable, but the degree of integration is not clear.

The probability of Slack being folded into Salesforce entirely is low. If Slack functions solely as an interface for Salesforce tools, it would mean losing on Slack’s non-Salesforce customer base, and the high price tag of the acquisition makes such a move highly unlikely.

For now, Salesforce’s top brass agree to keep Slack as an independent platform, and Slack CEO and Co-Founder Stewart Butterfield will continue to manage the platform under the new ownership. 

So far, companies acquired by Salesforce have had mixed roadmaps. Demandware was bought for @2.8 billion in 2016, and ExactTarget was taken over for @2.5 billion in 2013, and they were rebranded as Salesforce Commerce Cloud and Marketing cloud by the company. 

On the other hand, other acquisitions such as Tableau ($15.7 billion), Quip ($750 million), and Mulesoft ($6.5 billion) have retained their branding. Since their acquisition, Quip and Mulesoft have been integrated deeply into Salesforce platforms but still remain standalone products. 

In a nutshell, Salesforce is very careful about its acquisitions. Their proven track record of buying companies and then taking them forward to do more is a sign that Slack will continue to remain an essential cornerstone of their portfolio.

Did we miss out on any information? Feel free to share your thoughts in the comments section below.

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Sakshi Arora

Sakshi Arora is a seasoned content writer and editor with extensive experience across various industries including B2C, B2B, travel, e-commerce, and IT. In her free time, she enjoys expressing her creative side through painting and writing poetry. She also finds solace in nature and has a deep spiritual connection. Music brings her immense joy.

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