After 3-plus years of licensing, Salesforce intends to acquire ClickSoftware to augment Field Service Lightning
One week after Salesforce completed its acquisition of Tableau, the vendor announced its intent to acquire ClickSoftware, a field service management solutions provider, for $1.35 billion. ClickSoftware is a practical acquisition target for Salesforce; the vendors have been partners since 2016 and Salesforce licensed ClickSoftware’s field service scheduling and optimization technology to build Salesforce Field Service Lighting. Once the acquisition closes, Salesforce would integrate the remaining capabilities from ClickSoftware’s flagship product, Click Field Service Edge, such as demand forecasting and contractor management, into Field Service Lightning. These additional capabilities would better enable Salesforce to fulfill customers’ field service needs, particularly those of enterprises to manage the scheduling and dispatching of large field service employee bases.
Field Service Lightning is part of Salesforce’s Service Cloud, which exceeded $1 billion in revenue for the first time in 1Q19. TBR expects Service Cloud will surpass Sales Cloud as Salesforce’s largest revenue driver this year. Based on the inflated value of technology companies, ClickSoftware’s revenue contribution to Service Cloud would likely be marginal. Rather than acting as a catalyst for Service Cloud’s revenue growth, ClickSoftware would fill capability gaps in Salesforce’s soon-to-be flagship offering. Why would Salesforce make this acquisition after a four-year-long successful partnership in licensing ClickSoftware’s technology? Well, that licensed technology would become part of the foundation for Field Service Lightning. If a competitor was looking to purchase ClickSoftware’s technology, it could leave an unexpected gap in Salesforce’s portfolio following a fast breakup between the two vendors. So, why not get hitched and make sure no one else takes ClickSoftware off the market?
Salesforce’s front-office portfolio will help the vendor fend off competitors in the field service space
Augmenting Field Service Lightning with the remainder of ClickSoftware’s technology will better enable Salesforce to compete with vendors such as Microsoft, SAP and most notably Oracle. In 2016, when Salesforce first launched Field Service Lightning and partnered with ClickSoftware, Microsoft, SAP and Oracle were acquiring around field service. Since then, each vendor has developed a field services value proposition. For Microsoft, field service is a module within its Dynamics 365, where the vendor also offers AR apps and HoloLens devices that can be utilized by field service workers. Oracle and SAP are leaders in the ERP market but are complementing their field service applications with growing front-office and service-related SaaS offerings. However, a broader and more deeply integrated front-office portfolio would help Salesforce fend off competition, particularly if it integrates a field service leader into its arsenal.