Salesforce seems to be on a cadence of making a big (and I mean BIG) acquisition each year.
Last year it was MuleSoft, an integration platform for $6.5 billion. I wrote a blog about this at the time questioning the impact for the average customer. I’ll follow that pattern with this more recent acquisition.
For what it’s worth, last year’s MuleSoft acquisition seems to have panned out pretty well. MuleSoft had its biggest quarter at $181 million and contributed $431 million directly to Salesforce’s top line exceeding expectations by about 20%. That revenue number doesn’t factor in any additional Salesforce licensing that they were able to generate based on synergies between the two organizations. And the beauty of the subscription platform is that the numbers should continue to grow nicely even without record-setting volumes. All in all, the MuleSoft acquisition looks like the best thing in Salesforce’s financials for the year.
And now onto this most recent purchase: Tableau, a very respected and accepted provider of data analytics and reporting services, especially in the “big data” space. Salesforce paid a whopping $15.7 billion for Tableau – over twice MuleSoft’s previously high-water mark. However, Tableau is a much larger fish. Revenues for last year were $1.16 billion with a little over 4,000 employees and 86,000 customers. I’m sure Salesforce has high hopes regarding Tableau’s impact to their topline.
A couple observations come to mind. First is that 86,000 customers certainly give Salesforce a good place to grow their own licensing – although a significant number are likely already Salesforce customers. Another is that Salesforce has had a data analytics suite for quite a while with Analytics Cloud (sometimes called Wave Analytics). Recently Salesforce reworked this with their Einstein AI capabilities, so I am not sure how this is being positioned now, and in the future, given the Tableau acquisition. Based on the MuleSoft acquisition to-date, they have kept operations mostly separate and market it as a complimentary tool that often went to other third parties. For Tableau I would expect that to be the same, at least for a couple of years, but it would make sense, at some point, to offer a blended solution.
So back to the underlying effect on Salesforce users … from a market position standpoint, both Tableau and Analytics Cloud are positioned for medium to large businesses that are generating vast numbers of records and transactions. Salesforce has many Enterprise accounts that are already using some sort of big data analytics tool now. Those customers, and especially those who are using subscription-based analytic tools, should be expecting a very aggressive push to switch to Tableau. Note that until recently Tableau sold one-time licenses for $1,999 but in 2016 went to a subscription model that starts in the $75/user/month range (which was also the start of their very successful financial rise).
For other medium to large businesses that are just beginning their big data journey, this is a very good fit, and it would likely take a pretty compelling argument to look elsewhere. However, the App Exchange has hundreds of alternative solutions (with a wide range of ratings).
That brings us down to the bulk of Salesforce customers: the small to medium orgs. Based on positioning and price, I would suspect very few were using Wave Analytics before, and only a small number of tech leaders were using anything beyond Excel and a few of the more popular AppExchange tools like QlikView. I don’t really see Tableau as being a strong fit for these smaller folks unless Salesforce decides to market a low-end version, something that Salesforce does not historically do. However, these folks should consider dipping their toe in the water with some of the less expensive options on the AppExchange that have prices that range from free (or free as bait anyway) to $20 to $50 per month per user. Later they can be ready to take a more serious look at Tableau (or wherever the Salesforce Analytics Cloud ends up) as their data volumes increase.
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