While analytics sector consolidation had been ongoing in dribs and drabs, we’ve now seen five BI acquisition deals in a period of less than ten weeks. Data mavens Brust and Baer share their thoughts on why, and what’s next.
In just under the last 10 weeks, the BI/visual analytics world has seen no less than five acquisition deals completed or announced. The most significant of these, Salesforce’s intention to acquire Tableau, was announced yesterday. And it followed quickly on the heels of Google’s announcement on Thursday that it would acquire Looker and make it part of the Google Cloud family.
Other news includes Logi Analytics’ completed acquisition of Zoomdata, which also broke yesterday, Sisense’s merger with Periscope Data, announced less than a month ago, and Alteryx’s April acquisition of ClearStory Data.
Larry Dignan provided a good rundown of the Salesforce-Tableau deal yesterday, speaking of opportunities for cross-selling, fears about Tableau’s independence, and the need to respond to providers that are adding heft to their analytics stacks, as is Google in the aforementioned deal with Looker.
But looking broadly across all of the deals, why has there been so much M&A activity, in such a condensed period of time? Beware of platitudinous justifications here. For example, during yesterday’s financial analyst call, Salesforce chairman and CEO Mark Benioff pointed to the vast overlap in the Salesforce and Tableau customer bases. While certainly not trivial, the breadth of the Tableau installed base could make that true for almost any enterprise application, database, or cloud platform provider.
In reality, there are multiple factors in play here, ranging from an overabundance of pure-play vendors like the industry had in the previous decade, to the particulars of today’s cloud-driven market dynamics. We explore these factors below and identify which factors surfaced most prominently in which deals.
1. Cloud providers can derive direct revenue from data and analytics services but, more important, can use those services to pull through broader core platform revenue.
This was key in both the and Google-Looker and Salesforce-Tableau deals, even if both have pledged to keep their acquisitions multi-platform. Microsoft already has its Power BI platform in place, and it’s a key revenue driver for the Azure cloud. Google’s only counterpart offering thus far had been Google Data Studio, which was little more than a query tool with some integrated charting capability. Salesforce’s Einstein Analytics platform had bigger chops, and some interesting pieces like the Einstein Discovery component, based on technology acquired from Beyondcore.
If Google is to cut some of the distance between itself and Azure, and if Salesforce is to fend off losing territory to the Microsoft Dynamics 365 platform, they both need visual analytics offerings that are competitive, if not top-notch. With these deals, both companies got what they needed there.
2. The self-service data visualization/analytics space has commoditized.
Tableau was so effective in making its style of self-service visualization ubiquitous and desirable that it has grown somewhat commodity, as virtually every BI tool has adopted ease-of-use style features. This has impacted the viability of smaller players and even made Tableau a victim of its own success.
BI vendors need to offer the self-serve data viz baseline, and then some. That’s why Sisense wanted the data science-oriented integration of Python and R in Periscope Data, and why Google and Salesforce – not to mention Alteryx — needed better visualization offerings than they’ve had.
3. Self-service visual analytics has had an overabundance of vendors. A shakeout was inevitable, if not long-overdue.
This was arguably a facet of all five deals, but especially in the cases of ClearStory Data, Periscope Data and Zoomdata. All three products were interesting and had merit, but they seemed to lack sufficient market share to make the cut on their own. Periscope and Zoomdata also came a bit late to a party that was already crowded and running low on refreshments. Meanwhile, each one of these vendors’ technologies will help bulk up and build out their acquirers’ platforms, to keep them in the game. If you can’t beat ’em, join ’em.
Viewed this way, this recent series of acquisitions resembles the BI consolidation of 2006 to 2008 when IBM acquired Cognos, SAP acquired Business Objects, Oracle acquired Hyperion and Microsoft acquired ProClarity. Our 2019 dealmakers should learn from the past, however, and not destroy the value of the purchased goods. While the Cognos brand is still around, the products acquired in the last decade have largely been subsumed into the parent companies’ stacks or, in some cases, simply discontinued. Such an outcome would significantly sour these deals, especially in the case of Tableau, which commands unprecedented customer loyalty based on its unique brand and reputation.
4. Single-product companies eventually need to diversify or be acquired.
This was a big factor in the Salesforce-Tableau deal. While Tableau had enhanced its core database engine and added capabilities around cloud, data preparation, natural language query, and data management, these have each manifested as feature sets, add-ons, or components of specific seat licenses. As a result, the company name has continued to refer to its one eponymous product throughout the company’s history.
Compare Tableau’s situation here with that of its closest competitors: Qlik and Microsoft. Qlik revved its original QlikView product to create its modernized Qlik Sense platform, and has added numerous products to its portfolio, through acquisition of companies like Idevio, Attunity and Podium Data. Microsoft, meanwhile, has the product diversity of a broad-reaching enterprise software company, with numerous product lines to match.
All of this had put downward pressure on Tableau, but now it will be part of the broader Salesforce analytics stack, and the Salesforce platform overall. Tableau will be able to create value on its own and add value to the rest of the Salesforce portfolio. Meanwhile, the cultish enthusiasm that Tableau’s customers have for the product is at risk if Tableau is integrated too tightly into the Salesforce stack and brand identity. But we don’t doubt Salesforce’s intention to keep Tableau’s multi-platform, cloud and on-premise capability intact, as its track record with MuleSoft attests.
Amazon Web Services (AWS) could be the one to make the next move. Its QuickSight BI offering had already lagged behind the competition. Now, with Google and Salesforce coming on strong, the A-list public cloud provider should really make a move. With or without Amazon, there’s more consolidation to come, of course. Even the likes of Oracle or SAP may do well to come back to the market and scoop up a modern provider.
And regardless of further consolidation, data continues to be critical to business and to software. That’s why it’s critical to the cloud, and to digital transformation overall. AI/machine learning is just the latest corollary, and would seem to be the next destination for investor dollars, making the temperature in that pocket of the industry is due for a major increase. And when the inevitable consolidation comes to that neighborhood, we’ll likely look back to this one, for a roadmap.