Sales­force’s $15.3-b buy of Tableau Soft­ware marks grow­ing im­por­tance of busi­ness an­a­lyt­ics

The Hindu Business Line - - IT & TELECOM - NEW YORK TIMES

Tech­nol­ogy ven­dors have been go­ing on for years about the ris­ing value of data. But in­for­ma­tion that can’t be un­der­stood is not worth much.

That recog­ni­tion is now driv­ing some costly bets, topped on Mon­day by Sales­force’s $15.3-bil­lion deal to buy Tableau Soft­ware, a Seat­tle-based maker of widely used tools for turn­ing ar­rays of num­bers into more un­der­stand­able charts, graphs and maps.

The all-stock trans­ac­tion is the largest in a string of ac­qui­si­tions by Sales­force, which is based in San Fran­cisco. Less than a week ago, Google an­nounced plans to pay $2.6 bil­lion for Looker, a fast-grow­ing start-up that also helps cus­tomers an­a­lyse busi­ness data.

“Busi­ness an­a­lyt­ics and in­tel­li­gence is on fire,” said Howard Dres­ner, chief re­search ad­viser at Dres­ner Ad­vi­sory Ser­vices, which spe­cialises in the data an­a­lyt­ics in­dus­try. If a com­pany isn’t able to make sense of all its data quickly, “you are at a com­pet­i­tive dis­ad­van­tage.”

The ac­qui­si­tions are the lat­est evidence of a steady sort­ing of the soft­ware in­dus­try into a few ma­jor camps, gen­er­ally clus­tered around a ma­jor ven­dor bent on adding more weapons to counter other big ri­vals.

In the case of Google — which is hop­ing to ex­pand be­yond its core search fran­chise — Looker’s soft­ware could help dif­fer­en­ti­ate Google’s cloud com­put­ing ser­vice from rapidly ex­pand­ing tech­nol­ogy sys­tems be­ing built by Ama­zon and Mi­crosoft.

Sales­force, whose web ser­vice has long helped man­agers track the sales process, also faces stiff com­pe­ti­tion from Mi­crosoft. Mi­crosoft com­petes with Sales­force’s core busi­ness and also has a pop­u­lar data an­a­lyt­ics of­fer­ing that jock­eys with Tableau. In 2016, Mi­crosoft beat out Sales­force in buying pro­fes­sional net­work­ing ser­vice LinkedIn, which pro­vided a valu­able source of data about cor­po­rate em­ploy­ees and hir­ing.

All of the tech­nol­ogy giants have in­vested heav­ily in adding ar­ti­fi­cial in­tel­li­gence abil­i­ties to help find in­sights in busi­ness in­for­ma­tion. In 2018, Sales­force pur­chased Mule­soft for $6.5 bil­lion — a move to help con­nect dif­fer­ent en­ter­prise ap­pli­ca­tions so they can share data — and be­gan of­fer­ing a tool called Ein­stein that helps users an­a­lyse data gen­er­ated by Sales­force soft­ware.

Marc Be­nioff, Sales­forces’ chair­man and co-CEO, said many cus­tomers were al­ready avid Tableau users. Its tools will help users of Sales­force soft­ware vi­su­alise data from more sources to pro­vide a more com­plete pic­ture of the cus­tomers they hope to reach, part of an ef­fort called Cus­tomer 360, he said.

That abil­ity is cru­cial for Sales­force to keep grow­ing, said By­ron Matthews, CEO of sales con­sult­ing firm Miller Heiman Group. While Sales­force soft­ware is con­sid­ered es­sen­tial for sales man­agers to track their teams, many sales rep­re­sen­ta­tives aren’t keen on us­ing it un­less it helps them ac­tu­ally close deals, he said.

From Tableau’s per­spec­tive, the pres­sure to align with a big­ger tech­nol­ogy provider was be­com­ing in­tense, said Re­becca Wet­te­mann, vice pres­i­dent at mar­ket re­search firm Nu­cleus Re­search. “I think we’ll see very few of them stand­ing alone by the end of the year,” she said.

Sales­force said Tableau was likely to add up $400 mil­lion to its 2020 rev­enue but would de­crease ad­justed profit by about 37 cents to 39 cents a share. Shares of Tableau jumped 32 per cent on the deal. Sales­force stock slid 6 per cent.

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