Salesforce is a cloud CRM powerhouse with strong customer and employee commitment. They have no legacy baggage like other big CRM competitors like Microsoft and Oracle. Just last week some massive mergers took place in the BI community with Looker being bought by Google and of course Tableau and Salesforce just following. The merger of Looker and Google makes big sense but the merger between Salesforce and Tableau has me asking a lot of questions. Tableau and Salesforce are both great organizations but sometimes 1 + 1 does not always equal 3 or 2! It will be interesting to see how this merger works out in the next 5 years. Here are my thoughts:

Let’s start with the facts of the merger:

Salesforce buys Tableau in an all stock deal of 15.3 billion dollars. Each organization will maintain its leadership for now. The plan is to achieve 26 to 28 billion in revenue by 2023. Each share of Tableau stock will be exchanged for 1.103 shares of Salesforce stock. At the close of the day shares of Salesforce were down 4.4%.

Salesforce is no Google:

Google is a monster when it comes to advanced computing. Of course you have heard of them and their search engine and probably use it everyday. Many of you might know them for their free cloud apps that come along with your gmail account. You can write documents, build presentations, and construct spreadsheets. If you are a start up, most likely you are using a suite of products from Google. Google’s purchase of Looker makes a ton of sense. Looker was purchased by Google for roughly 2.9 billion USD. I like this merger! Why? Google, like Salesforce, does not have a lot of legacy baggage. They also have a suite of products you may not have heard of for the enterprise. One of those apps is Google BigQuery and Looker will fit in nicely with this offering. Google is diversified, search engine, productivity apps, email, file sharing, and of course BigQuery and other enterprise apps. Salesforce is not diversified. They are a CRM tool. Google is a household word where Salesforce is a niche player. If you are in the customer contact business or a sales team you may have heard of them. Salesforce is no Google.

A ton of very good competitors:

Tableau is known primarily for its big thick client application and is a company in cloud transition. It entered the market like a lion and everyone in business intelligence knows who Tableau is. There are a ton of players in the BI space. Players like SAS, SAP, IBM, Oracle, and Microsoft. Oracle, IBM, and Microsoft also compete with Salesforce in CRM and now in BI. Microsoft is the one to watch with its flagship product PowerBI. This near free offering is chipping away at Tableau customers and other big players in the BI market. Microsoft is a major player in the cloud and is gaining traction against cloud monsters like AWS. Oracle has the OBIEE offering which spawned from its Hyperion purchase years ago. SAP is a fierce competitor and owns Business Objects. There are a lot of smaller competitors like Microstrategy and organizations like Looker that are finding it hard to compete. The top 10 competitors dominate with nearly 70% of the BI market share. Also, don’t count out AWS QuickSight. Pardon the expression AWS QuickSight sort of sucks but give it time and it will be a major player.

Did Salesforce pay too much for Tableau?

I think so considering that Tableau 2018 total revenues were 1.1 billion USD. That means that Salesforce paid nearly 15x for Tableau. Tableau’s growth was beginning to stall as smaller more aggressive startups like ThoughtSpot begin to chip away at their marketshare. Tableau is growing at about 19% while ThoughtSpot is enjoying triple digit growth numbers and has a much more interesting offering than Tableau. I think Salesforce could have purchased a smaller BI provider for much less and still gained the same financial upside and without the baggage of Tableau! There are a ton of smaller BI providers in the market too, much like my former employer Arcadia Data. Financially, the merger between Salesforce and Tableau was a mistake!

Tableau has baggage that Salesforce doesn’t need:

Tableau has cloud offerings but most people use them because of the desktop Tableau toolset. This is massive baggage that Salesforce will not understand as they are 100% in the cloud. Salesforce is not used to dealing with operating systems and other trappings that come with desktop software. Tableau also has a different licensing model, sales staff, and different technical field talent needs. Other baggage or factors include:

Tableau is a horizontal partner with many of Salesforce competitors like Oracle and Microsoft. Microsoft and Oracle don’t like to lose and have the deep pockets to chip away at Salesforce BI but also its crown jewel CRM business.

Tableau also is just a BI tool and has little to zero footprint in what the market wants to do: Advanced Analytics!! Advanced analytics is the hot topic of the day and Tableau has no play here.

Conclusion:

Fact: Salesforce spent too much money for Tableau and should have bought a smaller BI provider that was good enough. This would have made more sense and would have had better upside for both organizations. Tableau users are not and never will be Salesforce users. Maybe Salesforce exposes its API for free to Tableau users and charges everyone else. Tableau has no deep learning, graph, machine learning, or other advanced analytical capabilities that the market wants. Time will tell how this merger works out but I think it is a flop!