Tuesday, May 28, 2024

With mandate to improve acquisitions integration, Salesforce CIO went to work

One of the most challenging aspects of purchasing a successful company, especially when you pay billions, is finding ways to integrate it successfully with your own. Melding products and operations without crushing what made the acquired company successful in the first place requires finesse, and it’s not an easy balancing act.

Over the last several years, Salesforce has made several mega-purchases. In fairly quick succession the company paid $6.5 billion for Mulesoft in 2018, dished out $15.7 billion for Tableau in 2019 and then $27.7 billion for Slack in 2021. In fact, the pace at which Salesforce bought other companies was something that activist investors complained about earlier this year, leading to the dissolution of its M&A committee in March.

Sure, these companies helped Salesforce grow revenue, but critics suggested that the CRM giant wasn’t integrating the acquisitions into its broader organization. While there was some crossover with the core Salesforce platform, the blending of the acquired companies into Salesforce more broadly has felt surprisingly slow.

One of CIO Juan Perez’s early mandates was to improve the mingling of these acquired companies, he said. “From the day that I started, one of the number one objectives that was given to me as the new CIO was that the organization wanted to improve our overall M&A integration process, from both a business process standpoint, but also from a technology-integration standpoint.”

It’s normal for mature companies like Mulesoft, Tableau and Slack to want to continue operating the way they have always done, doing what made them successful, said Perez, who was hired last year after more than 30 years at UPS.

“These organizations have their own culture, they have their own approach to doing things, they have their own infrastructure to support their business. And there’s this natural tendency of wanting to stay in their lane and not integrating with the [parent] company,” he said.

That’s expected to an extent. Speaking at Dreamforce in 2016, then company president, vice chairman and COO Keith Block talked about the challenges a company like Salesforce faces when purchasing a company, and that was long before Salesforce started looking at much higher-priced targets.

“If you drive growth and experimentation, you might not get leverage into the installed base. If you push too hard on integration, you get cost savings, but you might hurt innovation,” Block said at the time. That’s as true today as it was back then.

With mandate to improve acquisitions integration, Salesforce CIO went to work by Ron Miller originally published on TechCrunch

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