Salesforce could see value both in how Slack is used to collaborate with co-workers and in how it’s increasingly used to engage with customers.
With Salesforce.com’s (CRM) stock up 60% on the year going into Wednesday, it’s not surprising to hear that Marc Benioff & Co. are once more in the mood for M&A.
Multiple reports emerged on Wednesday that Salesforce — a company that has made dozens of acquisitions over the years — is in advanced talks to buy chat/collaboration software vendor Slack (WORK) . CNBC and The Wall Street Journal both report a deal could be announced as soon as next week, with the WSJ stating an announcement could happen at the time of Salesforce’s Tuesday earnings report.
1. Salesforce Likely Sees a Lot of Value in the Slack Connect Platform
Why would the world’s biggest CRM software company be interested in buying a firm whose software is most commonly used by people to message their co-workers? It probably has a lot to do with how that software is now also increasingly used to interact with people at other firms via shared messaging channels, and will soon support direct message conversations between individuals at different companies as well.
The Slack Connect platform, which now lets up to 20 businesses communicate through shared channels, was used by more than 52,000 of Slack’s customers at the end of its July quarter, up from 20,000-plus 12 months earlier. And Slack execs have noted that Connect is often used by salespeople and customer support workers — the kinds of workers who are potential users of Salesforce’s Sales Cloud and Service Cloud platforms.
For the moment, Microsoft’s (MSFT) Teams platform has nothing comparable to Connect, which required a lot of behind-the-scenes technical work to address corporate security and compliance needs. And Salesforce probably sees the benefits of integrating its CRM apps, as well as its Customer 360 platform for getting an integrated view of customer info, with Connect as the latter’s network effects continue growing.
2. Salesforce Might Also See Value in Slack’s Internal Collaboration Features
Back in 2016, Salesforce bought Quip, a developer of cloud-based office suite software, for $750 million. And in 2019, the company integrated Quip’s software with Sales Cloud and Service Cloud, with the goal of improving collaboration within sales and customer support teams.
Along similar lines, it’s not hard to imagine Salesforce, which already offers an app integration for Slack that users of its CRM apps can leverage, seeing collaboration use cases for integrating Slack’s software with Sales Cloud and Service Cloud, as well as Quip.