Salesforce's $15.7 billion Tableau acquisition: Everything you need to know
Salesforce's $15.7 billion purchase of Tableau is arguably the most strategic move the company has made, as it fleshes out its master plan to offer a 360-degree view of the customer and become a de facto data stack for the enterprise.
The deal also has a few interesting sidebars to ponder as Salesforce gets an enthusiastic data community as well as an enterprise standard visualization tool. Tableau can meld with Salesforce's platform and technologies such as Einstein. Salesforce CEO Marc Benioff heard so much about Tableau with customers he had to buy it.
Here's a look at everything you need to know about Salesforce's Tableau acquisition and the rationale behind it.
Salesforce bulks up its revenue base
Salesforce is issuing 1.103 shares for each Tableau share in a move that will add about $350 million to $400 million in fiscal 2020 revenue assuming the deal closes Oct. 1. Salesforce revenue for fiscal 2020 is now expected to be $16.45 billion to $16.65 billion.
Non-GAAP earnings for fiscal 2020 will take a hit of about 37 cents a share to 39 cents a share to land between $2.51 a share to $2.53.
So, yes, Salesforce bulked up a good bit. Tableau brings nearly $1.4 billion to the table in annual revenue. Remember that Salesforce's goal is to create a $30 billion enterprise software powerhouse.
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Salesforce can grow more with Tableau and cross selling
With the purchase, Salesforce lands the No. 1 analytics platform and now has some portion of your data stack. Most enterprises have Salesforce and/or Tableau in the fold. Benioff said:
I've been especially impressed that more than 86,000 organizations around the world such as, Schwab, Verizon, Schneider Electric, and Southwest Airlines rely on Tableau to help them see and understand their data. And, by the way, those are all our great Salesforce customers, too. You probably know that. Well that really got my attention.
In the end, enterprise software companies (cloud or otherwise) like to sell customers a menu of stuff. For Tableau shops that don't use Salesforce, there's a cross selling opportunity. For joint customers, there are integrations such as Einstein with Tableau that can be sold. Rest assured Salesforce's Marketing Cloud and Tableau will be a force.
Yes, Salesforce gets a critical analytics platform, but also prevents Microsoft, SAP or Oracle from buying it.
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Tableau can now leverage Salesforce's sales team in the field
Salesforce co-president Bret Taylor said the company can reach more people with Tableau. Taylor said:
With Tableau, we're really expanding it to enable analytics and intelligence and data literacy for every department and every user and every company. We think that's a really strategic place to enter into these customer conversations.
Not all customers are going to be happy that Salesforce bought Tableau
I've already heard a few anecdotal hackles from Tableau customers. Tableau was multi-platform and connected to multiple datasets. Salesforce, which did buy Mulesoft to connect to other data sources, is likely to maintain Tableau's mission and approach, but it'll have to prove it to some folks. BMO Capital analyst Keith Bachman noted that Tableau buyers are different than the folks Salesforce sells to.
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Benioff said:
In regards to a buyer, well, I guess that you could make the case that there is a data analyst or a visualization expert or business intelligence expert and that those buyers in companies we speak to a regular basis are discrete. While we plan to continue fully and enhance and invest in Tableau's existing go-to-market capabilities, a lot of customers that buy Salesforce are wider business relationships of people who want to acquire this type of technology. It is just a natural fit between Salesforce and Tableau.
One response on the Tableau community forum likely sums up the concerns by some customers:
Will we wake up on this date next year and see 'Tableau Powered by Salesforce,' and then the next year Tableau becomes nothing more than a checkbox on the Salesforce contract? I have staked by career on this wonderful tool the past few years and truly love it. I just don't want to see it ruined or fade off into the sunset.
Salesforce needed Tableau for a bit of public cloud defense
Google Cloud's move to buy Looker is one example of where the public cloud providers are headed. Looker is a Tableau rival on many levels. In one swoop, Google Cloud closed some data platform gaps with Microsoft Azure and Amazon Web Services with its Looker purchase.
Meanwhile, Cloudera noted that it is seeing more competition from public cloud providers.
The risk to Salesforce is obvious. If the data and analytics platform becomes the center of the enterprise universe perhaps all of those other parts of the stack are less strategic. Salesforce wants to be the digital transformation engine of the enterprise. Funny how public cloud providers want to be that too.
Google Cloud CEO Thomas Kurian has a pitch that sounds almost Oracle-, SAP- and now Salesforce-ish.
Wedbush analyst Steve Koenig said that Salesforce's Tableau purchase is about defense as much as offense. Koenig said in a research note:
Salesforce is positioning itself for the future of analytics, which is cloud, selfservice, and machine-assisted. The weight of data volume and velocity is starting to shift from premise to cloud, and Salesforce will no doubt work to accelerate
Tableau's cloud roadmap, both in conjunction with cloud platforms (e.g. Tableau Server on AWS) and its own SaaS offering. The major public cloud vendors (Amazon, Microsoft, and Google) are also working feverishly to innovate and consolidate in next-generation and advanced analytics (witness Google's $2.6B acquisition of Looker last week). Salesforce-Tableau is particularly a shot across Microsoft's bow, extending the CRM rivalry into the heart of the analytics market. The deal adds all the more urgency for public cloud vendors to lead the analytics market into a new era.
Forrester analyst Allen Bonde said that the Tableau deal for Salesforce is "in a way an answer to SAP's purchase of Qualtrics." He added that Salesforce has been weaker an customer analytics so Tableau will help its standing.
Tableau gives Salesforce a more realistic play as a data stack
Clearly, the game is to be an enterprise's default data stack. There will never be one data to rule them all, but enterprises can't resist consolidating vendors.
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There's no doubt that Microsoft has a strategic product line and Benioff wants Salesforce to get there in a hurry. Benioff said:
When I talked to some of our largest customers, we're talking about Salesforce, we're talking about all the different products. They're using Sales Cloud and Service Cloud and Marketing Cloud, and they're using all of our various capabilities, and then they'll start talking about how they're using Tableau.
And just in my mind and I'm like 'Wow, this was more deeply integrated as one motion. We could be satisfied of much bigger customer need.' And that's ultimately we want. We want to build come into the customer and have a completely strategic product line.
In a two charts, here's how Salesforce sees its data platform chances with Tableau in the fold:
Salesforce looks a lot more like Microsoft now with more on-premise as well as cloud options
The combination of Salesforce and Tableau is all about data and it's the same direction Microsoft is going with Azure, Dynamics, LinkedIn, and Power BI, a Tableau rival. Microsoft, Salesforce, SAP, and Oracle all want to offer that holistic view of the customer and operations. All those vendors have their own spin, but Tableau makes Salesforce less cloud and more enterprise software vendor.
In the end, though, you could argue that Salesforce's purchase of Tableau is about Microsoft as much as anything else.
Microsoft's Power BI has revamped its user experience and added more artificial intelligence. The ties between Power BI and Azure are only going to get stronger.
Salesforce's answer to that move will be to infuse Tableau with Einstein. Tableau CEO Adam Selipsky explained:
What if customers can get a 360-day degree view of their business, their customers, their suppliers by combining all their data in the cloud and on from premises? What if you get empowered developers leveraging Salesforce's platform to embed Tableau's powerful analytics and their solutions across multiple industries in use cases? We're was excited to explore ways to augment Tableau's analytics platform with Salesforce's Einstein capabilities and AI deploy and auto analysis, which will accelerate our ability to help all customers deliver predictive and prescriptive analytics for their data-driven businesses.
Salesforce becomes a standard in university data science, analytics, business, and information systems departments
Don't underestimate the power of Tableau, its community and ability to bring new customers to the Salesforce platform. For starters, Tableau is a standard at universities and has a program that puts the software in students' hands free. I use it in my class at Temple University. Chances are everyone from business majors to engineers are going to know Tableau before they know Salesforce. Now Tableau can be a gateway to a new generation of Salesforce users.
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Salesforce can leverage Tableau's community
As a sidebar to the education reach, Salesforce also gets a community that extends Benioff's efforts for global good. Salesforce CFO Mark Hawkins alluded to the Tableau community as well as its impact. Hawkins said:
If you look at public.tableau.com, you see these incredible applications, visualizations, and community. I honestly think it's some of the most innovative work I've even seen, not just in data or visualization in the industry.
I spent a lot of time actually on that site [public.tableau.com] -- even before we considered the acquiring the company, because I've been so inspired. I've been finding things that motivate my philanthropy. You'll see stuff on oceans, you'll see stuff, of course, on business intelligence, on Salesforce, all kinds of things. And that's where I'm like 'Wow, if we could really bring this into what Salesforce is doing, it would really take our community do a new level.'
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