Incorporating Slack And Other Apps Into The Salesforce Platform Can Actually Put Buyers Off
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Salesforce said about 80 Fortune 100 companies use Slack. The move to combine an ever-widening range of IT software and services into a single platform could backfire.
Salesforce acquired Slack
Salesforce, which confirmed plans to acquire Slack in December 2020, was a pioneer in selling cloud-based customer relationship management software on a subscription basis.
Salesforce.com Inc has agreed to buy Slack Technologies Inc., a $27.7 billion messaging company, shows how the biggest players in cloud computing are racing to get stronger in the face of the remote work boom during the pandemic. It was the biggest move ever made by Salesforce CEO Marc Benioff, a pioneer in selling software subscriptions that run on remote servers, to transform the company he founded 21 years ago into a broadly established powerhouse in enterprise technology tools. The deal is almost twice the size of Salesforce's largest acquisition to date. It was intended to turn the combined company into a more threatening competitor to Microsoft Corp.
The acquisition was aimed at taking over the fast-growing market for communication and collaboration software during the Covid-19 pandemic as employers sent employees home and switched to remote systems.
Currently, companies in the market for customer relationship management software - Salesforce's flagship product - do not seem to be thrilled with the addition of messaging and collaboration.
Slack can still be purchased as a standalone app, outside of Salesforce CRM tools.
Dark side
Since the acquisition, Slack's revenue growth has steadily declined. Salesforce reported approximately $402 million in revenue from Slack subscriptions and support in the fiscal third quarter ending Oct. 31. That's an increase of 6.9% quarter-over-quarter, but reflects a slowdown from 9.3% growth in the second quarter and 11.7% growth in the first quarter, based on revenue data from the company's earnings reports.
Meanwhile, on Wednesday, Salesforce said it would lay off 10% of its workforce as customers take a more cautious approach to spending.
What's more, CIOs also take care of uncertain markets by reducing cloud spending and removing unused applications. Wong said that incorporating Slack and other apps into the CRM platform could actually put buyers off.
The CIO and other corporate tech leaders will take a closer look at spending. As the number of functions increases, companies are increasingly forced to hire more technical staff to manage an ever-wider range of tools, which can be prohibitively expensive during economic downturns.
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Salesforce and Slack vs. Microsoft
Salesforce and Slack, both based in San Francisco, have long been competing with Microsoft. In 2016, Salesforce, after losing to a larger rival in the purchase of LinkedIn Corp., urged regulators to investigate the proposed deal for antitrust laws. The transaction eventually passed regulatory scrutiny. This summer, Slack filed a complaint with the European Union over Microsoft's alleged antitrust behavior, which was using its market dominance to pressure Teams.
Salesforce share price
As with most tech companies, Salesforce's shares also had a downward trend last year. The lowest share price appeared last month. Salesforce ended 2022 with a price of 132.59. The beginning of the new year brings positive signals. Share prices have increased and are now at 140.51
Source: wsj.com, finance.yahoo.com
