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