POV: Microsoft to Buy Salesforce?
Mindshare Point of View
The Internet has been ablaze with rumors that Microsoft is potentially interested in buying cloud-based marketing software giant Salesforce. CEO Marc Benioff and his Salesforce shareholders saw their equity fluctuate as pundits weighed in on the pros and cons of Microsoft making such a hefty purchase of a company with a market capitalization of nearly $50b.
Details and implications
Salesforce has arguably been the one of the most successful of the cloud marketing solution providers, a category that has become increasingly crowded and competitive as the Internet itself has grown in size, speed, and importance to marketers and businesses. Salesforce has achieved its success in two key ways. First, the company has taken a very aggressive acquisition strategy that has ranged from buying social monitoring technologies (Radian 6 for $340m), email and direct marketing solutions (ExactTarget for $2.5b) to social media management systems (Buddy Media for $689m). Second, CEO Mark Benioff has developed a vision and culture for the company that has transformed it from a traditional sales automation SaaS (software as a service) provider to a leader in the cloud marketing solutions space. Benioff and his team have worked hard to re-configure all of these disparate acquisitions and technology into a fully integrated and pervasive CRM solution, one that redefines CRM by enabling clients to manage customer interaction across multiple touch-points based on real-time business data, including sales. It’s a big vision, and one that is not fully realized yet. While Salesforce has made good progress, it will take time for the company to assemble all the pieces of the puzzle it has purchased – but at least it has the pieces.
Why would Microsoft be interested in Salesforce? New Microsoft CEO Satya Nadella has made it crystal clear since starting his role that Microsoft’s future is in helping businesses, particularly enterprise clients, manage, navigate, and win in the cloud. Not surprising given that prior to taking on the CEO role Nadella was in charge of Microsoft’s Cloud and Enterprise group. While Nadella has made some important moves to open up Microsoft and shift its thinking to an open cloud-based approach, he has yet to make a significant big bet that fundamentally changes the game. Faced with a growing list of “frenemies” (everyone from SAP to Amazon to IBM to Adobe), his hand may be forced sooner rather than later. A Salesforce acquisition would send shockwaves through the industry, and solidify Microsoft’s position as the preeminent player in the enterprise cloud solutions and software business, helping companies with everything from Office365 application to ERP to marketing….with data and workflow all connected and integrated.
For marketers, a Microsoft acquisition would solidify the Salesforce suite of products as the go-to choice for many top organizations. Salesforce already has a strong position with leading marketers like Unilever, Nestle, and Coca-Cola, who use parts or all of its solution set. Further integration into Microsoft’s ecosystem would also help bridge the growing gap between the IT and marketing worlds. According to Accenture’s CMO-CIO Disconnect study, only one in ten of marketing and IT executives believe collaboration between CMOs and CIOs is at the right level in their organizations. Perhaps Microsoft can be the 3rd party that marries the two worlds together.
While a Salesforce acquisition by Microsoft remains purely speculation at this point, it does raise the tantalizing possibility that Microsoft could rapidly boost its street cred and capabilities with arguably the industry’s most successful cloud marketing company. Microsoft is one of the few players with the war chest to actually make such a purchase. However, beyond the technology and software itself, a key question is whether Microsoft could successfully embrace Benioff and the Salesforce culture, or smother it as so often happens with other acquisitions. If the former it could be the cultural jolt that many in the industry believe is necessary to lift Microsoft above its competition.