Salesforce this week announced its intent to acquire data visualization company Tableau Software for $15.7 billion. Along with Google Cloud’s acquisition of Looker and Logi Analytics’ purchase of Zoomdata, it’s looking like the consolidation trend in big data and business analytics is back.
Customer relationship management (CRM) provider Salesforce on Monday announced its intent to acquire analytics and data visualization company Tableau Software for $15.7 billion in stock. This makes it the largest and most significant acquisition by Salesforce to date.
“We are bringing together the world’s number one CRM with the number one analytics platform. Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It’s truly the best of both worlds for our customers—bringing together two critical platforms that every customer needs to understand their world,” said Marc Benioff, chairman and co-CEO, Salesforce, in a statement.
Tableau makes Tableau Desktop, which is a PCMag Editors’ Choice pick in our self-service business intelligence (BI) tools review roundup; we like it for being one of the most mature offerings on the market and easily one of the best tools in the self-service BI space. Salesforce’s Sales Cloud Lightning Professionalsolution is an Editors’ Choice selection for CRM software; it ranks at the top our CRM software review roundup for its smooth workflow and wide range of advanced feature that suit the needs of organizations of any size. The combination should have some marked benefits for both companies’ customers.
However, the merger and subsequent integration of Tableau into Salesforce will have some challenges. Salesforce has built powerful cloud-based, Software-as-a-Service (SaaS) solutions that have moved millions of customers off legacy systems and into the cloud. This differs from Tableau’s software approach. While the company does have an online version, its main focus is still to run its solutions locally, via its flagship Tableau Desktop £70.00 at Tableau Software product.
According to Statista, big data and business analytics is expected to generate 189.1 billion U.S. dollars worldwide in 2019. These are high-growth areas in business technology, so companies that don’t provide these services are expected to ramp up their offerings or acquire the necessary products and expertise through mergers. That’s given rise to what many are viewing as a Big Data consolidation trend.
Salesforce snapping up Tableau comes hot on the heels of other significant mergers and acquisitions in the BI space. Google announced that it has entered into an agreement to buy BI and analytics firm Looker for $2.6 billion, ostensibly to add embedded data analytics and visualization to its Google Cloud platform. Logi Analytics, a leading embedded analytics provider, acquired Zoomdata, which offers realtime visualization of big data.
These recent acquistions mark a trend in big data as smaller BI players have matured and become more commoditized. This is likely a reaction to larger players like Microsoft and Oracle discounting their BI services in larger enterprise deals.
Salesforce is the leading player in the CRM market, but it is facing rising competition from the likes of Microsoft, Adobe, SAP, and other large players. By absorbing Tableau, Salesforce is better prepared to compete in the long term. According to Jen Underwood, founder of and Principal Analyst at Impact Analytix, LLC, the consolidation trend is nothing new. “We are seeing history repeat itself,” Underwood said.
“From 2006 to 2008, Microsoft acquired ProClarity, Oracle bought Hyperion, SAP picked up Business Objects, and IBM purchased Cognos,” she said. “Big-company culture, politics, execution, and poor customer experience fueled the last decade of analytics market disruption led by TIBCO Spotfire, Tableau, and Qlik. The continued analytics market consolidation delivers the gift of more opportunity for smaller, more agile companies to innovate, outperform, and thrive.”
In the case of Salesforce, which is mostly a SaaS solution, how it integrates Tableau into its roster of offerings remains to be seen. “Most of Tableau’s 86,000 customers use on-premises offerings. The Tableau architecture was recently significantly updated for Hyper data engine, with a relatively painless upgrade experience,” Underwood said. “Salesforce also acquired BeyondCore [an augmented analytics vendor] in 2016 and Datorama, another visual analytics vendor, last year. I see amazing potential combining what they already purchased.”
Stephen Swoyer, Research Analyst at the Eckerson Group, believes that Salesforce acquired Tableau simply because both companies already serve many of the same customers and consolidation is a natural next step forward. “Both companies have massive corporate overlap; many of the same customers use both Salesforce and Tableau,” Swoyer said. “Most people doing any kind of analysis in Salesforce use Tableau, albeit perhaps in combination with Microsoft Excel, Alteryx, and a few other tools. Salesforce is just making it official.”
According to Swoyer, the economic impact of all of these acquisitions is “probably going to be, on the whole, a net negative for a fair proportion of employees with these companies.” He predicts many people, particularly professionals in non-engineering positions, are going to lose their jobs. “In any merger scenario, the jobs that tend to take some time to absorb and get squeezed out as duplicates are the bureaucratic professional jobs,” Swoyer noted. He added that, for the newly merged companies, the finance, human resources (HR), information technology (IT), marketing, and security jobs are usually the first ones gutted.
“This acquisition allows Salesforce to ultimately provide an integrated and bundled solution that customers can leverage to drive growth,” said Ray Johnson, Chief Data Scientist at SPR (which stands for Systems and Programming Resources). “Existing Tableau users could benefit from easier Salesforce integration, and Salesforce users could get a well-established data visualization platform.”
For Tableau users, the reality that their favored product is now just part of a stable of offerings at Salesforce might be met with some resistance. “Self-service BI and Tableau, in particular, addressed the business person’s unmet demand for agency—for self-determination and autonomy,” Swoyer said. “Business people wanted to take some control back from an IT colossus that had become obsessed with controlling access to IT resources. Tableau, more than any other tool, helped them do that. It was at once tool and weapon. The people who use and love it are, in my experience, even more loyal than the most ardent of Apple acolytes.”
“In current big tech market conditions, customers lose negotiation power and voice.” Underwood noted. One of the downsides of acquistions of any kind is that larger, merged companies might be more standoffish towards customers. “Small and medium size vendors are much easier to work with than the big tech giants,” she added.
“Analytics market consolidation has been a long time coming. I’ve written about it now for five years,” Underwood said in an email. “The analytics market was flooded with similar, browser-based, mobile-friendly, analytics for everyone—no need for IT—solutions. To the untrained eye, all of these solutions seemed exactly the same. Same look, same marketing story, and minimally different development experience. When Microsoft woke up and finally delivered a comparable solution at a fraction of the price of existing solutions [which I wrote about here], most of the niche analytics vendors struggled to retain market share. Tableau and a few others were exceptions to the new norm.”
Salesforce said it would combine Tableau’s capabilities with Salesforce Einstein, its artificial intelligence-powered platform, which would help provide services at every touchpoint of sales, marketing, service and commerce for customers.
“The extreme market valuations we’ve seen this past week help other strong niche artificial intelligence (AI) and machine learning (ML) companies. In the digital era, AI is the next key battle to win,” Underwood explained. “No industry is immune. C-level executives are looking to gain a competitive advantage with data and analytics. “Unlike prior data initiatives, AI is top of mind for C-level executives. The ability to exploit analytics is a game-changing competency.”