Analytics Market Just Became More Mainstream and Confusing

When Salesforce announced that its USD 15.7 billion all-stock buy of Tableau, the market let out a huge sigh.

Many industry observers saw the news coming. “The move is not a big surprise, as rumors of massive acquisitions have been swirling and Salesforce has clearly stated its vision to be a more integrated, insights-driven solution portfolio," said Liz Herbert, vice president and principal analyst, Forrester.

There is also overlap in customers. "Numerous Salesforce customers already use Tableau due to its simplicity and strong appeal with the line of business, which are two traits it shares with Salesforce,” she added.

The move continues the realignment of the broader analytics market. Earlier, Google bought Looker for USD 2.6 billion in cash. SAP completed its acquisition of Qualtrics for USD 8 billion at the beginning of this year. Meanwhile, analytics incumbents like TIBCO Software are making analytics more mainstream

Customer experience has a lot to do with the recent moves. Forrester saw the purchase countering SAP’s Qualtrics customer experience play. “While a leader in many waves, Salesforce has been weaker when it comes to customer analytics versus its peers,” said Allen Bonde, vice president and research director, Forrester.

BI Deja Vu

The shift toward making analytics mainstream is not new either. It happened before, back when we called this market business intelligence (BI).

“This is similar to the consolidation that happened in 2007/2008 in the traditional BI market when mega vendors Oracle, SAP and IBM bought traditional BI market leaders Hyperion, BusinessObjects and Cognos, respectively, to complement their respective applications and technology stacks,” said Rita Sallam, vice president and distinguished analyst, Gartner.

Sallam noted that the earlier consolidation spurred the market to innovate. The result was the rise of companies like “Tableau and Qlik.” “The current consolidation will continue to drive a new round of innovation around Augmented Analytics with new startups emerging daily,” he said.

Boris Evelson, vice president and principal analyst, Forrester noted that the same BI market is also adding cost pressures on smaller analytics players. Choosing to integrate with a larger company seems to be an economic inevitability.

“Business Intelligence (BI) is a very mature market with most of the features and capabilities getting increasingly commoditized. With discommoded features and price pressures (in large enterprise deals Microsoft charges under USD 4 per user per month) it's increasingly difficult for independent BI vendors to remain profitable,” he said.

Unclear Customer Rationale

The problem with the Salesforce-Tableau acquisition lies in the customer rationale. Analysts pointed out that Salesforce has its work cut out in convincing customers.

First, there is the issue of Salesforce being a public cloud player. “A lot of Tableau customers are on-premises, so they will need to rationalize the cloud strategy for the combined company.” Forrester’s Bonde.

“Longer term, this has great potential for Salesforce to create more cross-cloud data visualization aligned to its Customer360 strategy. In the shorter term, however, the status quo is likely to remain as Tableau customers are still only partially in the cloud and as such this introduces another platform into the mix,” Forrester’s Herbert added. 

Gartner’s Sallam noted that the synergies are unclear compared to other acquisitions. “The Google acquisition of Looker fills a gap in the Google analytics stack and is complementary with a well-articulated rationale and set of synergies. The rationale and strategic synergies of Salesforce acquisition of Tableau are less clear at this time.”

The biggest concern for customers will be the overlap between Salesforce Einstein Analytics, which is based mainly on the BeyondCore acquisition, and the Tableau product stack.

“Salesforce said it will announce specific product integration plans after the deal closes, but there is duplication in the Salesforce Einstein Analytics and Tableau product stack. This can cause customer confusion if the two platforms remain separate and potentially painful product rationalization if combined,” Sallam added.

Success Hinges on Focus

Forrester sees integration inevitable in the long term. “Visualizations, OLAP, NLP and many other features of these two products are overlapping, so it'll be interesting to see how Salesforce reconciles and integrates them or keeps them separate,” said Forrester’s Evelson.

Evelson does not believe both companies will support two different sets of code. "So, in my humble opinion, integration is inevitable. And hence, the risk - Tableau as an independent company had the luxury of focusing on nothing but BI and analytics. Now Tableau faces the challenge of integrating third-party code, getting its developers pulled into other Salesforce projects, etc. Keeping Tableau laser-focused on its core product will be the key to the successful merger.”