He brings more operational discipline to the IT side of the CRM giant
One of the The most challenging part of buying a successful business, especially when paying billions, is finding ways to successfully integrate it with your own business. Fusing products and operations together without crushing what made the acquired company successful in the first place takes finesse, and it’s not an easy balancing act.
In recent years, Salesforce has made several mega purchases. In rapid succession, the company paid $6.5 billion for Mulesoft in 2018, $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 this earlier this year, leading to the dissolution of its M&A committee in March.
Sure, these companies have helped Salesforce generate revenue, but critics suggested the CRM giant failed to integrate the acquisitions into its wider organization. While there was some crossover with the core Salesforce platform, the integration of the acquired companies into Salesforce more broadly was surprisingly slow.
One of CIO Juan Perez’s first mandates was to improve the blending of these acquired companies, he said. “From the day I started, one of the key objectives given to me as the new CIO was for the organization to improve our overall M&A integration process, both from a business process perspective and also from a technology integration perspective . point of view.”
It’s natural that mature companies like Mulesoft, Tableau and Slack want to continue working the way they always have, 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 is a natural tendency to want to stay in their jobs and not integrate with the (parent) company,” he said.
That is expected to some extent. Speaking at Dreamforce in 2016, then company president, vice chairman and COO Keith Block spoke about the challenges a company like Salesforce faces when purchasing a business, and that was long before Salesforce moved toward much more expensive goals to watch.
“If you encourage growth and experimentation, you may not gain influence over the installed base. If you put too much emphasis on integration, you get cost savings, but could hurt innovation,” Block said at the time. That is as true today as it was then.