Four Questions to Ask if Microsoft Buys Salesforce (or During Any Mega-Acquisition)

Spend Matters welcomes another guest post by Jeff Muscarella, Partner, IT and Telecommunications, from NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.

Will Microsoft buy It’s a $50 billion dollar question stemming from Bloomberg’s recent report that Salesforce has been approached with a solid acquisition offer. The prospective buyer remains a mystery, but names like Oracle and Microsoft have been floating around.

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Out of these 2, Microsoft appears to have the most to gain. The company has been very vocal about its cloud and mobility ambitions as of late, and there are few IT vendors out there that complement these ambitions better than Salesforce. Of course, a buyout may never come to pass, which is fine for many Salesforce fans who would like to see the platform remain unencumbered by Microsoft, Oracle or any other “legacy” vendor.

However, the enterprise IT industry may be due for a mega-acquisition. As old guard vendors like Microsoft try to re-architect their businesses for a cloud- and mobility-first approach, acquiring the technology and customer base of a pioneer in those areas looks like a smart idea.

Whether it’s a Microsoft/Salesforce merger, or another “power couple” in the industry, one thing is certain – it will have an impact on the thousands of customers that use both vendor solutions. In those cases, companies need to be prepared to ask their vendors the following questions:

  1. How will this impact pricing at both granular and strategic levels? In the Microsoft/Salesforce hypothetical, there are 2 distinct pricing cultures. Microsoft is known for its complex pricing and licensing options, while Salesforce pricing is more straightforward. The bleeding over of pricing strategy in either direction could precipitate significant pricing changes.
  2. How will this impact service quality? Support is a cash cow for some vendors, and less significant for others. How will the 2 support “cultures” be blended? Will you still have the same support team/rep in place?
  3. How will this impact the vendors’ innovation paths? The upgrade and innovation path of your largest, most entrenched vendors is important to your business. In some cases, an acquisition can mean more resources to develop better versions of a product/service. In other cases, it can mean some innovations may be sidelined. It’s important to know how upgrade paths and R&D will be impacted and the ripple effects on your internal IT strategy.
  4. How will this impact contractual complexity and flexibility? Depending on the vendors involved, an acquisition could mean more streamlined contracting and negotiation. But, it could also mean less flexibility, fewer concessions and more standardized terms. Understanding the disparities between each vendor’s contracting and negotiation behavior is key. It’s also important to review each contract and confirm the full transfer of obligation between vendors.

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Voices (2)

  1. sbobet:

    I like many of Microsoft’s products. And also performing well

  2. Bill Kohne:

    All really good questions but when something really big happens typically this is more like a rhetorical exercise.

    My guess is that we will see more cloud SaaS solutions being swallowed by bigger enterprise providers. Just within the last couple of weeks “partnerships” have been announced such as IBM and Coupa; Netsuite and Microsoft.

    Of course SAP and Concur being a long done deal as well.

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