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Salesforce: There's no more Slack left to cut

SaaS CRM slinger blamed the pandemic for 10% workforce cull, but scattergun M&A strategy hasn't helped

Opinion The philosophy behind tech industry leaders during the pandemic appeared to be, "never waste a good crisis." While the likes of ServiceNow scrambled to show the advantages of producing a new workflow on the fly, Salesforce reached for its checkbook.

But 18 months after the CRM giant paid $27.7 billion for chat platform Slack, there is suddenly a lot to discuss.

Salesforce is set to shed around 10 percent of its workforce — around 7,000 jobs — as it adjusts to life after what we hope is the peak of the pandemic.

"As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we're now facing, and I take responsibility for that," Salesforce CEO Marc Benioff said.

Billed as a "once-in-a-generation opportunity to rethink and reshape everything about how and where we work," the Slack acquisition has seemingly yet to light a fire under the Salesforce customer base.

Liz Herbert, a vice president and principal analyst at information-technology research firm Forrester Research told the Wall Street Journal there was little pent-up demand for Slack among those using Salesforce. "It really hasn't become something compelling," she said.

The publication also quotes a Salesforce CRM user who seems unimpressed by Slack and content to carry on with Microsoft Teams as the chat platform of choice.

The observation is in line with Slack's revenue growth, which slid to 6.9 percent quarter-on-quarter in the third quarter, down from 9.3 percent in the second quarter and 11.7 percent in the first quarter (Slack subscription and support revenues are detailed as Platform and Other).

Slack is used by all kinds of employees, from engineers to accountants to, erm, journalists. Only salespeople use Salesforce. If Slack isn't bringing anything to Salesforce, what is Salesforce bringing to Slack? Are customers really likely to base their office chat decision on their existing CRM system?

Salesfolk, their customers, and the utility of the tools

Yet Slack is not the only Salesforce acquisition raising questions. Tableau, the data visualization and analytics system bought for $15.7 billion in 2019, was hit proportionally harder by job cuts than other Salesforce divisions, according to reports last week. Salesforce already let CEO Mark Nelson go from the data analytics division in December while other managers were axed last Wednesday.

Weirdly enough, another Salesforce acquisition — the API-farmer MuleSoft — underscores weaknesses in its M&A strategy. While the $6.5 billion buyout would allow Salesforce to create a "Salesforce Integration Cloud" to allow enterprises to surface any data, regardless of where it resides, to "drive deep" into "customer experiences," that is something of a two-way street.

If you can use API-based integration to pull business application data into your CRM system, why not do the same to pull data from Salesforce to the visualization tool of your choice: Google's Looker or Qlik, for example? Does it make any more sense for visualization to be close to CRM than sitting it next to a data warehouse or analytics system for that matter?

For workplace chat, businesses are likely to reach for Microsoft's Teams, not because it is better than Slack, but because Microsoft has the irresistible user gravity of Windows and Office, and the Redmond giant has been cutting tempting corporate meal deals since Benioff was still working at Oracle.

Salesforce has strived to innovate in its home CRM markets. Last year it launched Genie, a lakehouse-style architecture borrowing a concept from Databricks to combine the idea of the data lake with the SQL queries of the data warehouse, to bring real-time analysis to customer data. But the analyst reaction suggested the organizations that would gain the most from Genie are those already using multiple Salesforce products, especially industry cloud clients.

The only tool left in the tech-biz box is then the axe, wielded mercilessly by Benioff last week despite all the talk at the company of "Ohana." While attempting to exploit the opportunity presented by the pandemic, he is finding out that one crisis can lead to another, sadly all too true for those losing their jobs. ®

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