Why Is a Cloud Computing Titan Venturing Into Workforce Management?
By: Vrunda Nagpal
Tags: Case Study, Startup, Entrepreneurship, Workforce Development, Innovation

Why Is a Cloud Computing Titan Venturing Into Workforce Management?

Image from Salesforce.com

What is the deal?

Salesforce, the #1 CRM platform announced its biggest acquisition ever: the $27.7 purchase of Slack, an innovative, fast-growing collaboration platform. Forbes reports that this is the 8th largest M&A deal in tech history.

The combination will create the operating system for the new way to work, uniquely enabling companies to grow and succeed in the all-digital world.

Marc Benioff, Chair and CEO, Salesforce stated, “Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world”.

This year, there has been an acceleration in the adoption of digital innovations. Organizations rushing to embrace an all-digital world where work happens wherever people are. For example — this combination of Salesforce and Slack will provide companies with a unified platform for connecting employees, customers, and partners with each other and the apps they use every day, all within their existing workflows.

Why is WEM gaining importance ­?

The deal is one of the largest among a recent spate of acquisitions made by tech companies to capitalize on the shift to remote work. Adobe for example recently announced its plans to acquire the workforce management software company Workfront for $1.5 billion.

But why are all these tech companies trying to secure a foothold in workforce management?

Photo by William Iven on Unsplash

The concept of Workforce management is over 3 decades old, initially, it was all about operational efficiency — making sure that service centers were run smoothly by forecasting the workload and the staff requirements.

Then with the emergence of AI, automation became a key factor in building and maintain a productive workforce. This included real-time data gathering, performance & training management, and service optimization

“Automation has had a direct impact on the agent’s quality of life — in a positive way.” -Melissa Matross, senior vice-president product management, salesforce

Eventually, a new, broader term, workforce engagement management (WEM) came about. As per Gartner’s characterization, WEM also included functions like — recruiting and onboarding, time management, metrics and recognition, and Voice of the employee.

With the recent shift in consumer behavior toward digital channels and the growing virtual workforce, companies have had to adapt their WEM systems yet again. Keeping a distributed workforce engaged means providing better support within the organization. Even companies that did not use workforce management software have felt the need to deploy one now to ensure their teams are fully equipped to deal with evolving new demands.

As the new interface for Salesforce Customer 360, Slack will allow companies to transform how their people communicate and collaborate.

Adobe also acknowledges the need to deliver content across increasingly dispersed teams and their Workfront deal shows they are rising to meet the increasing expectations of their customers.

How does it tie in with customer service?

Photo by NordWood Themes on Unsplash

Service agents today are required to engage with their customers on multiple platforms -email, text, a plethora of social media- and still deliver quality service. They need to keep a track of their multiple interactions and have ready access to data from all these sources.

Companies have realized the value and need to have empowered teams, where employees learn & grow. Employees that have the necessary resources and support to do their jobs successfully will automatically deliver great service.

Tying workforce management with cloud bases CRM system seems to be an ideal solution. Service teams can easily collaborate with internal clients and stay connected with eternal clients no matter where they are.

Peter Tsai, who is the Senior Technology Analyst at Spiceworks Ziff Davis says: “In our Workplace Communications Trends in 2020 report, we found only 41% of business chat app adopters use tools such as Slack and Teams frequently for external communications, compared to 79% for internal communications. This represents an opportunity for Salesforce, which has clear intentions to use Slack to help facilitate better communications between businesses and their customers and partners using ‘Slack Connect.’ With an established foothold in the CRM market, this acquisition could further strengthen Salesforce’s position and help grow Slack’s user base.”

Adobe caters to a very wide audience from marketers to creatives and analysts. Now they can operations managers to this list. Their aim is to overcome the old “siloed work management” and bring collaboration and productivity with the combination of Adobe Experience Cloud and Workfront.

Let’s look at Slack

Slack CEO Stewart Butterfield, Image from Forbes

In 2009, the company was called “Tiny Speck” and they focused on the development of a multi-player game. While they had to shut it down due to a lack of interest, they still had a great IM system. CEO Stewart Butterfield pivoted the company and it emerged as Slack: the successor to email. It raised $1.4 billion, went from zero to a $7 billion valuation to IPO, checking off every box on the start-up founder’s wish list.

Soon it was making news for its rivalry with Microsoft Teams.

Slack garnered a lot of support as the David of Silicon Valley standing up to the Goliath Microsoft. It has a lot of great features and has been called a messaging app on steroids. It allows teams to pick to choose their own tools as it can be used across multiple devices and platforms, and is equipped with robust features that allow people to chat one-on-one as well as in groups.

What Slack didn’t have is distribution. Slack’s users have increased from 4 million to 12 million in the past 4 years, Microsoft on the other hand went from 0 to 115 million. It was clear this start-up fairy tale wasn’t going to end well.

Stewart Butterfield had some strong words regarding Microsoft, saying the software giant saw his company as an existential threat.

“When you’re a scrappy start-up going against an 800-pound gorilla that’s one of the most well-capitalized companies in existence, it’s tough to compete,” Mr. Purk said of Slack. “This is more or less saying: ‘We can’t compete with Microsoft Teams anymore. We need more firepower.’”

Enter Salesforce.

Slack will now get the support of one of the world’s largest software companies which is a huge advantage for them. They can now reach customers on a global scale and compete with Microsoft or more even footing.

What do we know about Salesforce?

Salesforce Park, San Francisco, Photo by Jason Barone on Unsplash

Salesforce describes themselves as global CRM leaders, empowers companies of every size and industry to digitally transform and create a 360° view of their customers. In 2006 it began acquiring companies to boost its business operations and has completed 60 acquisitions to date, including Tableau, Mulesoft, and Demandware.

In August 2020, Marc Benioff the Salesforce CEO and chairman told investors “We’re not in a good M&A environment, this isn’t part of our plan right now. We don’t see that. We really see focusing on our business.”

So it was an abrupt turn around when it was announced they are definitively acquiring Slack. Salesforce president and COO Bret Taylor said the pandemic had fundamentally shifted consumer behavior and the way people work. Buying Slack would help Salesforce’s customers make the digital transformation, he said. According to Benioff “This is a match made in heaven”. He has also likened the beginning of Slack to that of Salesforce.

With this deal, Salesforce is set to make clear in-road into the workforce management market which is projected to reach $9,391 million by 2027.