Salesforce announced today it plans to acquire Tableau Software in a deal valued at $15.7 billion to extend the reach of its expanding enterprise software empire in the realm of data visualization and analytics.
Once the deal is completed sometime in the third quarter of this year, Tableau Software will continue to operate as an independent business unit of Salesforce.
During a call with Wall Street analysts, Salesforce CEO Marc Benioff positioned the deal as one that plugs a gap in the company’s existing portfolio of customer relationship management (CRM), marketing and service applications by adding an analytics capability that goes well beyond generating reports based on CRM data. Tableau Software is currently employed by more than 86,000 organizations around the world, including Charles Schwab, Verizon, Schneider Electric, Southwest and Netflix.
Benioff says Salesforce also expects Tableau to play a major role in accelerating digital business transformation initiatives based on the Salesforce application portfolio.
“That’s where the magic happens,” says Benioff.
In the first year alone, Benioff says Salesforce expects Tableau to add $350 to $400 million in incremental revenue for Salesforce. Tableau itself has been financially challenged as of late after posting a GAAP operating loss for the first quarter of 2019 of $93.2 million. The deal to acquire Tableau comes a few days after Google agreed to acquire Looker, a startup provider of a rival analytics cloud service, for $2.6 billion.
The biggest issue Salesforce may have to address, however, is embracing Tableau alongside the software-as-a-service (SaaS) application model on which Salesforce is built. Tableau today can be deployed on-premises, in a public cloud or accessed via a managed service offering. Tableau, however, has yet to make a true SaaS application instance of its software available. Benioff says as part of this acquisition Salesforce now has a greater appreciation for the value of on-premises IT environments. In fact, Benioff notes that increased appreciation started with the acquisition of MuleSoft, a provider of an application integration platform, last year.
Tableau CEO and president Adam Selipsky says roughly a third of the company’s customers have deployed Tableau on a public cloud and there are more than 10,000 customers employing the managed service edition of Tableau. Going forward, both CEOs made it clear they expect Tableau to benefit from ongoing Salesforce investments in areas such the Einstein artificial intelligence platform
While there’s no doubt Tableau is major force when it comes to data visualization and analytics, competition across this sector has heated up considerably with vendors ranging from Qlik Software and MicroStrategy to Microsoft and SAP mounting more aggressively challenges. Salesforce should provide Tableau with the financial wherewithal required to combat rivals in a way that preserves its independence. In fact, Selipsky notes the cultures of Salesforce and Tableau are already well aligned.
“The cultural similarities are amazing,” says Selipsky.
Nevertheless, many customers will be anxiously watching as this merger and acquisition proceeds because the number of deals of this size that have succeeded in the past are few and far between indeed.
