In the world of Business Intelligence, big news travel fast and the acquisition of Tableau by Salesforce and Looker by Google was BIG news! For some these types of transactions generate apprehension and fear, for others, it raises hopes and excitement. Apprehension and fear because sometimes these acquisitions are made simply to acquire technology or customers and throws away the rest. Hope and excitement because, if executed correctly, it could bring more features and integrations with the acquirer.
History, however, has proved that these types of acquisitions do have repercussions, mostly on the acquired company and their customers. In 2007, Oracle acquired Hyperion, IBM acquired Cognos, and SAP acquired Business Objects. Reporting on the financials of the specific products is nearly impossible since they are all part of a “bundle” when it comes to pricing, but looking at the success of Tableau in displacing Cognos and BO installs it is reasonable to assume that the acquisitions were merely a play to acquire more customers.
So let’s take a look at both acquisitions and identify the reasons why the acquisitions were made and draw parallels with similar acquisitions and forecast the future of the vendors.
Google Acquires Looker
The Looker acquisition by Google makes a lot of sense technically. Looker integrates with many types of databases and platforms while Google’s own products only integrated with other Google products. This could be an opportunity for Google to enter the BI market as a true cloud player. By Looker connecting to Amazon, Microsoft, Oracle, and Salesforce products and databases, it can now start bringing customers into Google BigQuery and the Looker application.
Looker’s outcome is less clear than Tableau’s mostly because Google’s acquisitions do not follow any patterns like Salesforce. They acquired Alooma, a data integration platform but other than that, no other purchases focused on B2B and Data Analytics were made. Google’s acquisitions have always been based on technical interests such as acquiring Motorola’s patents and then reselling the company at a loss of over 10B US$ or related to their core business Ad Management.
Looker boasts some technology around Machine Learning so perhaps this is their key interest in addition to having a better understanding of how to enter the BI B2B market.
The risks for Looker and its customers, therefore, hinges on what is Google’s interest in this purchase. If this is a pure technology acquisition and integration into their core products then Looker will most likely go the way of many of the other purchases and eventually be reduced to another closed experiment.
However, if Google’s interests are entering the BI market then this can be very of tremendous benefit for their customers. More so if Looker continues on its path of connecting multiple databases and applications to their application.
The final concern is around data storage. With this acquisition, Looker now has “free” use of Google’s infrastructure and will no doubt use Google BigQuery as its storage facility for customers’ data. Although Google BigQuery is a performant and scalable database it only exists in one cloud – Google’s. It can not be replicated on-premise or accessed directly other than via Google’s API which customers pay to access on volume and number of requests.
In essence, although Looker can interface data from any system, the end location must and always will be Google and that may have an impact for some customers, especially those that require more direct access to the data, or that require data to be stored at a specific geography for which Google does not have a data center for it. Compared to Amazon’s and Microsoft Azure’s 18 locations, Google covers only 11 countries.
Overall, this acquisition is a positive sign for Looker’s customers, where the scale of Google will have a positive impact if the purchase was done for the right reason – that of boosting Looker’s capacity to deliver a BI platform. However if done only for the technology then Looker’s days are counted and eventually, it will fade away into the Google suite of applications as a potential add-on to Google Sheets or Google Analytics.
Salesforce Acquires Tableau
Because Tableau is a Data Visualization tool, not a Business Intelligence platform, (for the key differences between BI, Data Visualization and other terms take a look here) it was a logical step for Salesforce to acquire the world’s leading data visualization software. In the last 3 years, Salesforce is growing the same way that Oracle attempted growth, by buying companies, often competing in the same sector and Benioff, an ex-Oracle employee, is going down the same path.
Salesforce acquired over 60 companies including Datorama, BlueTail, and PredictionIO in the last 3 years alone, all of them are data mining and analytics companies. Additionally, they launched Wave Analytics, later renamed Einstein analytics, which continues to exist.
Similar to Oracle, Salesforce is already creating confusion among its own sales staff and customers, unsure of what or how to sell and what to buy. Microsoft and Oracle learned the hard way what it is like to have multiple internal teams pushing for different products and Salesforce will undoubtedly learn it as well. In the end, and just like Oracle, it will be the customers and not Salesforce that will pay the acquisition bill.
With respect to Tableau, it is, for the most part, an on-premise solution. The complete dashboard editor is a Windows application only that must be installed in local PCs, and Tableau server is a Windows Server only installation which although can be hosted in Amazon or Azure, by itself does not make it cloud. It is just a server running in a data center.
It is mostly for this reason that Salesforce is very interested in this acquisition. “This is a Salesforce play to get at Tableau’s on-premises customers, and to get at Tableau customers who run Tableau analytics on top of Oracle or SAP,” says Boris Evelson, VP and Principal Analyst at Forrester.
In the long term, there will be some consolidation and integration between the two companies and that is going to be a very difficult task not only due to the differences in purpose, culture and growth of each company but because there is so much overlap with existing acquisitions and technology.
What does this mean for existing Tableau customers? Unfortunately, looking at the history of Salesforce’s acquisition of any size (although Tableau was the largest acquisition, Salesforce acquired over 6 companies in the multi-billion dollar range), the customer will end up being pressured into cross-selling situations similar to those that happened and failed with Business Objects and SAP or Oracle Solutions and Oracle BI (Siebel). In fact, looking at SAP and Oracle, Tableau is the leading Data Visualization tool used for both those vendors despite the fact that they have a more integrated solution available from the same vendor.
Similarly, it is highly unlikely that Tableau will remain a multi-database, multi-vendor software as Salesforce will not invest in keeping it working with direct competitors.
On the short term, the impact may be less critical but looking purely at financials, the Tableau acquisition will cost Salesforce the equivalent of its profit for almost 2 years, while Tableau was operating at a negative profit of nearly $100M US. Salesforce investors will certainly demand profitability and that can only be achieved by reduction of services or staff. It is expected, therefore some reduction and immediate merging of common internal services. Again, most of the impact will be felt by current customers of Tableau as Salesforce organization will most likely remain the same.
Is the future bleak for Tableau? History is predicting a very negative outcome for Tableau due to this acquisition, but it is not all bad news, especially if Salesforce stays out of Tableau’s trajectory and instead injects the needed cash for Tableau to refactor their applications as true cloud platforms. Common Salesforce and Tableau customers will most likely profit from this even if it will be a player only in the Salesforce cloud.
Salesforce may now tap into Tableau’s resources. Tableau being a Seattle based company in close proximity to Microsoft and Amazon, where talent is rich and not as expensive as San Francisco. However, Salesforce’s technology and cloud presence are small compared to Microsoft and Amazon and less sexy despite its acquisition of Heroku which is yet to make a dent in the Amazon, Microsoft, IBM, and Google cloud market.
In both cases, these acquisitions were in fact needed by all companies involved based on 3 things:
- Both Looker and Tableau needed to become a true BI platform (with storage and data management) and move to the Cloud and Google and Salesforce have databases and solid cloud infrastructure.
- Both Looker and Tableau needed money to compete in the market and Google and Salesforce have lots.
- Both Google and Salesforce needed more customers targeting competing platforms (Amazon Microsoft, SAP, Oracle) and non-Cloud customers and Looker and Tableau have them.