Salesforce, one of today’s leading cloud software players, is paying $300 million to acquire Salesforce.org.
What is Salesforce.org?
Salesforce.org, Salesforce’s external philanthropic branch that helps nonprofits and educational institutions achieve their purpose-driven missions faster, makes technology and community resources more accessible to social enterprises around the world. It creates and distributes industry-specific solutions (Nonprofit Cloud, Education Cloud, Philanthropy Cloud) using the Salesforce platform, and through the Power of Us Program, provides 10 donated subscriptions and discounts on Salesforce products and services to qualifying organizations. Additionally, they have distributed tens of millions of dollars in grants, primarily to organizations engaged in youth education and workforce development.
Why is Salesforce merging Salesforce.org into their business?
One easy answer is that the company estimates it will capture approximately $200 million in additional revenue annually. But there is more. Even with its rapid growth rate over the past years, Salesforce.org needed to scale faster to compete and have the greatest impact for its customers. Merging is the best way Salesforce.org could surround their customers with the full weight and power of the platform. By creating a new vertical business unit from Salesforce.org, they will be able to:
- Offer more products to their education and nonprofit customers. There will no longer be two separate product catalogs, nor the associated contracting friction. Additionally, look for the industry-specific product development engine to accelerate further.
- Open new markets. Salesforce.org products were previously unavailable in Asia-Pacific or to for-profit educational institutions.
- Accelerate acquisitions: The merger will enable Salesforce.org to acquire up-and-coming startups and game-changing technologies faster, further rounding out their product portfolio.
- Achieve operational efficiency at a greater scale.
- Strengthen their competitive edge: They will gain a stronger competitive footprint against rivals such as Microsoft, Blackbaud, and Adobe in the sector.
What does the Salesforce.org deal mean for customers?
- More products = more solutions. With Salesforce products such as Heroku, Einstein, Salesforce CPQ, and Commerce Cloud now available, the 40,000 customers of Salesforce.org now have more ways to tackle some of their most difficult technology challenges. And Partners will begin to develop new industry-specific solutions built around these products in the months ahead.
- More choice of Salesforce partners in the long-run: Salesforce partners who may have been reluctant to sell to Nonprofit and Education institutions may now enter the vertical. Customers will have more choice of partners to help them on their Salesforce journey.
- The right combination of Industry expertise and Product expertise will be even more critical to success. With the proliferation of solutions now available to them, customers will ask how best to create value from them to advance their mission. Most customers will not be able to find expertise across the entire range of available Salesforce Clouds and will need help. Partners will need to understand Salesforce technology, and also need real subject matter expertise and deep knowledge of the Nonprofit and Education industries to successfully serve the market.
Of course there are still some important questions that remain to be answered now that these two units are combining. We know Salesforce is committed to business as a force for changing the world in which we live and work, but stakeholders will want answers to these questions:
- Will Nonprofit and Education customers continue to enjoy deeply discounted products, or will the presence of shareholder demands make that more difficult?
- Will other nonprofit organizations, such as Professional Associations, now also be able to access these products and/or enjoy discounted pricing?
- Will the pace and amount of grantmaking change?
Salesforce is making a bold strategic play to strengthen its position serving the most impactful of its customers, be more efficient, and grow at a faster pace. Fasten your seat belts and get ready for an exciting ride into the future.
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