After buying 10 companies in 2016, analysts are keeping an eye on Salesforce’s next move – whether it’s more acquisitions or more integrations. SQDM shares an article published by the Techtarget portal, which reviews possible avenues for Salesforce and the technologies it has been acquiring.
Few software companies did more than Salesforce in 2016.
After seeing Salesforce spend more than $5 billion on acquisitions last year, analysts are beginning to piece together the puzzle of Salesforce’s plans.
One analyst believes that by integrating Salesforce acquisitions with existing products, Salesforce aims to become a software platform that its customers rarely have to abandon.
“I think they’re surreptitiously building a strong collaboration platform,” says Alan Lepofsky of Constellation Research Inc. “We don’t necessarily think of Salesforce versus Office365 or GSuite, but I think you can think of it that way in 2017.” They want people to do their work within Salesforce as much as possible.
Salesforce’s string of acquisitions seems to support such sentiment – to the extent that acquisitions of document manager Quip and an evolving SalesforceIQ have helped robust the company’s offerings.
However, with more than $5 billion in acquisitions in a single year, the question of how well such acquisitions will integrate with existing applications is still being answered.
“When you look at one end of the spectrum, you see the Frankenstein that the Oracle platform is after 20 years of acquisitions,” Lepofsky comments. “To penetrate larger swaths within a company, [Salesforce] had to grow and go into other markets. They’re doing very well building a layer that expands everything.”
The recent purchase of Twin Prime, which helps mobile apps perform better, is the latest example of a Salesforce acquisition spreading across its products.
Several Salesforce products have already been integrated including the transformation of SteelBrick to Salesforce CPQ; the HeyWire messaging app to Salesforce LiveMessage; and the integration of Quip within the Salesforce platform.
In 2016 most of Salesforce’s acquisitions were tied to artificial intelligence-which eventually helped build Einstein, Salesforce’s AI offering. While Einstein is Salesforce’s biggest rollout since Wave, it’s too early to see the benefits offered to customers-Einstein is supposed to be of most benefit to enterprise companies. “You need a lot of data to exploit those functionalities and you have to have hundreds of thousands of customer records and support interactions. You won’t be able to get any strategic artificial reasoning with small amounts of data.”
Whether Salesforce continues with acquisitions in 2017 will be very helpful in detailing whether they are satisfied with their product portfolio or if they still spot gaps to fill.
“How they continue to innovate and achieve their vision will likely be through purchasing decisions as well as the level of integration success,” commented Karl Becker of The Carruthers Group. “If the technology market continues to be attractive with respect to acquisition opportunities, we should then expect continued strategic acquisitions by Salesforce.
Addressing financial analysts in August during a financial results conference call, Salesforce CEO Marc Benioff attributed the 2016 buying spree to changing market conditions and “some incredible opportunities” to buy “out-of-the-box companies with unique technologies.” Benioff also described Salesforce Einstein technology as an example of that “combining organic innovation with some incredible acquisitions.”
One area that could benefit from more product development is real-time communication. While the addition of Salesforce LiveMessage to the Service Cloud helps address that space, Lepofsky believes there is more work to be done with respect to customer communication.
“Customer support is an area where they are somewhat weak,” Lepofsky comments; “I’d like to see Salesforce elevate their proposition there – no certainty if it will be through development or some partnership, but real-time communications is missing from their portfolio.” It is also believed that more innovation is possible within Salesforce’s existing products; “There is a lot of potential and they own a lot of the customer experience. Collecting all the information from an account or a customer and using Einstein to establish patterns – that’s what I don’t see yet,” Lepofsky concludes.
There’s no denying that this past year has been a pivotal one for Salesforce-as it moves from being primarily a marketing and sales software company to a company with broader goals. Whether Salesforce focuses on building a platform that understands the entire customer experience or continues to acquire companies to achieve the same goal have to be two possible scenarios in 2017.
“I think Salesforce will evolve from being a marketing and sales platform to a customer lifecycle ecosystem, focusing on delivering the most timely and relevant experiences,” says Becker; “Salesforce is going to continue to compete through innovation and a futuristic vision.”
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