On August 7, 2019, Salesforce and ClickSoftware announced they had signed a definitive agreement for Salesforce to acquire ClickSoftware for approximately $1.35 billion in a combination of cash and stock. The deal is net of ClickSoftware shares Salesforce currently holds and expected to close by the end of October.
Rumors that the two companies were discussing potential acquisition at a price tag of $1.5 billion emerged in January, as reported by Reuters in Tel Aviv. The two companies have also partnered on field service since Salesforce released Field Service Lightening in 2016. So in a sense, this isn’t new news, but confirmation and conclusion of a deal that was already in the works.
Constellation’s Take:
Salesforce has the understanding of what its customers need and the vision to make it happen. It’s clear from Salesforce’s track record of acquisitions, as well as its internal development investments, that the company understands what its customers want and why. While field service doesn’t apply in every industry, it has a huge impact on customer experience in those where it does. Given Salesforce’s emphasis on helping its customers to build great customer experiences, it makes sense for the company to deepen its capabilities in this area.
Field service is a specialist area that requires deep expertise to get right. In both technology and process or workflow terms, field service is a complex, specialist area. Coordinating customers, technicians, parts, vehicles, warranty information, and service practices requires a deep knowledge of the processes required to make field service happen effectively. Technologies like AI play an increasingly important role in managing the complexity of dispatching service, but like all forms of AI, they are most effective when applied to specific elements of the problem. That’s tough to do well without specialist knowledge.
The technology challenges increase with use of IoT as well. The ability to pull information directly from devices that need repair is significantly changing the nature of field service, with tremendous potential to improve customer experience. Indeed, field service is the point at which customer data intersects directly with device or product data—and there’s still a whole lot of work to do to make this work as well as it potentially can. That’s not a game for generalists.
This acquisition builds capabilities and blocks competitors. Although Salesforce and ClickSoftware have had a close relationship for several years, it was by no means exclusive. ClickSoftware executives even joined SAP on stage at 2018’s Mobile World Congress to demo predictive field service capabilities. We believe that Salesforce’s acquisition of ClickSoftware, like its acquisition of Tableau, was as much about blocking other competitors from acquiring them as it was about securing desired capabilities.
Overall, it’s probably good news for customers. Although details on how the acquisition will be managed and who from ClickSoftware will remain, at this point, it seems likely that the ClickSoftware organization will remain largely intact. Given the specialist nature of this type of capability, we anticipate that Salesforce will be eager to keep ClickSoftware’s expertise. There’s already a good bit of overlap between the customer bases of both companies, so focus will likely be on extending that even further. If you’re in manufacturing or service, running Salesforce, and not using ClickSoftware, you’ll likely hear from your account manager by the end of the year. Likewise, if you're a manufacturer or in field service using ClickSoftware but not already use Salesforce, they may get to you even sooner.