At the beginning of 2020, who (besides maybe a few virologists) could have predicted that a virus — only visible under a microscope — would bring “business-as-usual” to a screeching halt, creating an economic downturn never before seen in terms of scale and pace. With such abrupt changes impacting businesses around the world, merger and acquisition (M&A) activities have naturally come to a near full stop — until recently. Following Twilio’s acquisition of Segment in October, this week marked several significant acquisitions in the CX space.

In this series, we’ll delve into the multiple recent acquisitions that have rearranged the CX space, beginning with a change in the way many organizations communicate internally.

Salesforce Acquires Slack

First in this week’s M&A activity list is the cloud CRM provider Salesforce buying business communications software provider Slack. Upon this news, many in the industry have noted — incorrectly, that is — that this acquisition brings social collaboration and communication capabilities within the Salesforce portfolio. Salesforce launched its own social collaboration tool — Chatter — a decade ago in 2010. Since then, the adoption rate of Chatter didn’t reach desired levels, as it’s restricted to only Salesforce users. While the company grew its user base between 2010 and 2020, there are still organizations that are not yet using Salesforce, and hence can’t utilize Chatter.

Enter Slack.

What Does This Mean for Salesforce (and Their Competition)?

With Slack in its portfolio, Salesforce now has a collaboration tool available to users across the broader enterprise. Slack is a popular internal communication and collaboration tool amongst the developer (software engineer) community. As such, it represents a wider (in some cases new) user group than traditional front-office workers in sales, marketing, service, and commerce departments. Taken in consideration with Salesforce’s Mulesoft acquisition 2018 and Tableau acquisition in 2019, we can see that the firm is rapidly expanding its portfolio userbase beyond customer-facing functions by adding more IT users within its ecosystem.

Growth through acquisitions is no doubt a key factor driving this acquisition. But, there’s more to it.

Many of my industry analyst and financial analyst peers note that this acquisition is directly aimed at Microsoft. The consensus is that as Microsoft aims to grow its market share in the cloud CRM market through Dynamics CRM, and increasingly using Microsoft Teams (its own business communications tool) to support this effort.

Until now Salesforce didn’t have a widely adopted business communications tool of its own — meaning this acquisition leveled their capabilities. While I agree that competition with Microsoft is likely an important factor, I believe the Slack acquisition is more than a short-term competitive play against Microsoft. It’s a long-term play acknowledging the future of work being one that’s increasingly remote, digital, and much more collaborative.

Communication Between Employees; Anywhere & Everywhere

Aberdeen’s research in the CX space shows that firms have increased their adoption of remote work capabilities (messaging, phone, video, workspaces, collaboration) by 364% between mid-2019 and mid-2020. Planned adoption rates signal that the remote work / work from anywhere is not just a short-term trend or a buzzword. Of all the firms participating in Aberdeen’s related 2020 survey, 81% note that they will maintain or increase the percentage of their workforce working remotely in 2021 and beyond. It’s important to note that it’s not realistic to expect that all employees across all industries will continue working remotely well after the COVID-19 pandemic. We’ll likely see a greater percentage of knowledge workers in a hybrid model where they work in an office or other worksite one or two days a week and work remotely the rest of the time.

While Zoom meetings have been popular leading to new terms such as ‘Zoom fatigue’, employees in customer-facing departments spend less than 20% of their time in video meetings — for those in the back-office and operational roles, it’s even less than 10%. Clearly, video is not the primary way remote workers get their work done — rather, it’s the broader use of communication and collaboration platforms.

From the lens of Slack, the acquisition also provides an opportunity to continue growth while competing more directly with Microsoft Teams. While its competitor Microsoft had the luxury of adding millions of users by simply adding Teams within its suite of productivity tools, Slack needs to fuel its growth through new customer acquisition.

What’s Next?

Salesforce buying Slack should be considered not as a short-term move to compete with Microsoft in the CRM market, but instead as a long-term move to position the company as a customer engagement platform enabling employees to remain productive working from anywhere. Joining the Salesforce portfolio will now provide access to a wide number of businesses in the ecosystem that can now become new users of Slack — making it easier for Slack to continue as a direct competitor of Teams.

As the title of this blog suggests, Salesforce buying Slack isn’t the only acquisition from last week that’s making waves in the CX space. Stay tuned for more in this series over the next week to keep up to date with the many CX technology providers that are merging.