While Salesforce’s Q3 earnings call yesterday was filled with talk about new co-CEO Bret Taylor and the company’s imminent entry into the Fortune 100 and concerns over modest Q4 guidance, what stood out most to me was Salesforce’s subtle but unmistakable positioning of superstar Slack as the ServiceNow slayer.
Throughout the call, Taylor and co-CEO Marc Benioff positively gushed about the position, performance, and potential of Slack, for which Salesforce paid $27.7 billion to greatly enhance the value proposition Salesforce can offer customers surging into the digital economy.
Slack generated revenue of $280 million in Salesforce’s fiscal Q3 ended Oct. 31, its first full quarter as part of Salesforce. Benioff and Taylor rhapsodized about the impact Slack is having not only on customers but also within Salesforce itself. And several of these excerpts from the earnings call indicate how and why Salesforce is positioning Slack to go directly after that massive growth that ServiceNow has experienced since CEO Bill McDermott arrived 2 years ago and turned ServiceNow into the ultimate platform for what he dubbed “digital workflows.”
- Benioff: “I heard a great story yesterday from a friend who was at a check-in counter for an airline that was using Slack entirely to make the reservation and book the tickets—just an incredible story with this company.”
- Taylor: “Customer 360 and Slack are powering this transformation for companies in every industry and in every region of the world, and you can really see that in our results.”
- Taylor: “Slack outperformed our expectations in its first full quarter as part of the Salesforce family as the number of customers who spent over $100,000 on Slack was up 44% year over year.”
- Taylor: “The adoption of Slack Connect was up an astonishing 176% year over year. So Slack is not just a product—Slack is a network. And it’s incredible to see that growth.”
- Taylor: “Slack and Customer 360 have never been more relevant and are playing a pivotal role in supporting our customers’ next phases of growth.”
- CFO Amy Weaver: “Already, four of our top 10 deals this quarter included a new Slack win.”
- Taylor: “Slack has already transformed how we work at Salesforce. Since we’ve deployed Slack, we send 46% fewer emails—and in just the last 30 days, Salesforce employees have sent about 60 million Slack messages and conducted 500,000 Slack Huddles.”
- Taylor: “We run Salesforce on Slack.”
So what does all of this have to do with ServiceNow?
Well, the first hint of Salesforce going after ServiceNow and its digital-workflow franchise came in June when Salesforce cofounder Parker Harris, speaking at an investors conference, said Slack would deliver “human workflows” (for more on that, please see our analysis, Salesforce Targets ServiceNow: Slack Delivers “Human Workflow”).
And in yesterday’s earnings call, Taylor hit even closer to home for ServiceNow when, while describing how Slack “continues to innovate at an unbelievable pace,” he referred to the recent announcement by Slack of its next-gen platform.
“It’s going to truly transform the way companies think about workflows and automation,” Taylor said.
Steered by McDermott, ServiceNow has been out in front of everyone over the past couple of years with its focus on “workflows” and in particular “digital workflows.” So I don’t think it’s in any way a coincidence that first Harris and now Taylor are jumping on the workflow train, and there are multiple reasons for that, including both internal and external varieties.
- Salesforce has set enormously ambitious growth targets for itself so it’s gotta feed the beast. As big and vibrant as the traditional CRM space is, Salesforce needs some additional booster rockets to hit those lofty goals. With the profound changes in how we work over the past 21 months, workflows looks like a very attractive proposition.
- Salesforce paid $27.7 billion for Slack, and I suspect over time that will come to be viewed as an exceptionally good price for Salesforce. But any way you slice it, $27.7 billion is a lotta scratch, and Benioff and Taylor have to find dynamic and deep market segments for Slack to pursue to justify that investment. Again, workflows—whether “human workflows” as Harris called them or the digital kind that ServiceNow has championed—fit the bill very nicely.
- As I noted in my June article cited above—Salesforce Targets ServiceNow: Slack Delivers “Human Workflow”—ServiceNow has not yet encountered any head-to-head competition from a major cloud player. So surely Benioff sees that as a big opportunity, particularly since McDermott has begun talking about his aspirations for ServiceNow to reach $15 billion in revenue within a handful of years (it’s now at just over $5 billion).
And with the nature of how we work and where we work having changed so profoundly over the past 21 months, this workflow opportunity appears to be just getting started—a fact that Salesforce clearly grasps.
“Offices aren’t going away,” Taylor said on the call. “But your digital headquarters are going to be more important because it’s truly the infrastructure that connects all of it, especially in this new normal.
“And Slack and Customer 360 together are really powering this transformation.”
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