When Salesforce.com announced its intention several days ago to acquire API vendor Mulesoft for $6.5 billion, the wailing and gnashing of teeth began instantly as the short-sighted nickel-counters fixated on and howled about the price, and agreed to pay.
But those armies of the indignant are overlooking some key realities that I believe will ultimately prove that Benioff’s decision was not only appropriate but brilliant:
- While Salesforce is as pure-play a cloud company as you will ever find, probably 99% of its customers are blending Salesforce’s SaaS with legacy apps and systems.
- If Salesforce and its customers are not able to elegantly interconnect those worlds of cloud and on-premises applications and data, they will eventually put themselves at huge disadvantages.
- In its 19-year history, Salesforce has always made growth and market share top priorities over racking up big profits; and with a market cap of more than $85 billion-plus future cloud-revenue commitments of many billions of dollars, the Mulesoft deal fits perfectly into the company’s profile, strategy, and needs.
- And, every major cloud vendor is doing everything within its power to extend into as many of the three layers of the cloud—IaaS, PaaS and SaaS—as possible because that’s what big corporate customers want and need those cloud vendors to do. In buying Mulesoft, Salesforce takes a huge step in complementing its world-leading SaaS business with additional and highly strategic platform capabilities.
On that last point, there’s a growing trend among the major cloud providers to emphasize their capabilities in the hybrid cloud because even as businesses are without question embracing cloud computing aggressively and with fewer and fewer reservations, the cloud today and throughout 2018 will comprise only a fraction of the total global enterprise-IT landscape.
Yes, the cloud is growing rapidly, but on-premises technology is still by far the predominant IT model—so it’s incumbent on those top cloud vendors to make their products as compatible as possible with those massive estates of on-premises technology.
SaaS players that don’t branch out into Platform as a Service will find themselves increasingly isolated from the hybrid capabilities that customers are demanding as those customers seek to find the ideal blend of cloud and on-premises that delivers maximum business value and flexibility to meet the demands of today’s consumer-driven and increasingly digital world.
And that is precisely why it makes so much sense for Salesforce to buy a company that does what Mulesoft does: allow disparate applications to interconnect via APIs (application programming interfaces) and thereby give business customers the ability to find, manage, analyze and act upon all of their data, regardless of its IT classification or pedigree or location.
In an interview earlier this week with the Wall Street Journal’s always-interesting CIO Journal, Salesforce.com president and COO Keith Block offered these thoughts about the Mulesoft deal to reporter Angus Loten—and the entire article is well worth reading:
- “As we were listening to CEOs, the whole notion of integration and data kept coming up over and over again. They are so frustrated that they can’t unlock data from their legacy systems. That is the strategic nature of why we are acquiring MuleSoft.”
- “Being able to coordinate and unlock and integrate all this data is so important. Over time all of these organizations’ legacy systems will be moving to the cloud. But it has taken years to build up these systems and I don’t think we can underestimate how much legacy is still out there.”
- On the ways in which exciting new technologies such as AI fit into today’s business environment: “These technologies really create opportunities for companies to do things they’ve never been able to do.”
On that last point, as companies in every industry and around the world begin to “do things they’ve never been able to do,” one thing’s certain: those new initiatives will be spinning off mountains of data, which is the primary source of nutrition for digital business.
And those companies will need to be able to connect all of that data from all of those new apps and devices and engagements, and turn that data into real-time business insights and opportunities.
That’s why Salesforce made a great deal in acquiring Mulesoft—regardless of all the screeching coming from the penny-pinchers so rigidly focused on the short term that they can’t begin to imagine where the world is headed
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RECOMMENDED READING FROM CLOUD WARS:
The World’s Top 5 Cloud-Computing Suppliers: #1 Microsoft, #2 Amazon, #3 Salesforce, #4 SAP, #5 IBM
Amazon Versus Oracle: The Battle for Cloud Database Leadership
As Amazon Battles with Retailers, Microsoft Leads Them into the Cloud
Why Microsoft Is #1 in the Cloud: 10 Key Insights
SAP’s Stunning Transformation: Qualtrics Already “Crown Jewel of Company”
Watch Out, Microsoft and Amazon: Google Cloud CEO Thomas Kurian Plans To Be #1
The Coming Hybrid Wave: Where Do Microsoft, IBM and Amazon Stand? (Part 1 of 2)
Oracle, SAP and Workday Driving Red-Hot Cloud ERP Growth Into 2019
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