With mandate to improve acquisitions integration, Salesforce CIO went to work

He’s bringing more operational discipline to the IT side of CRM giant

One of the most challenging aspects of purchasing a successful company, especially when you pay billions, is finding ways to integrate it successfully with your own. Melding products and operations without crushing what made the acquired company successful in the first place requires finesse, and it’s not an easy balancing act.

Over the last several years, Salesforce has made several mega-purchases. In fairly quick succession the company paid $6.5 billion for Mulesoft in 2018, dished out $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 earlier this year, leading to the dissolution of its M&A committee in March.

Sure, these companies helped Salesforce grow revenue, but critics suggested that the CRM giant wasn’t integrating the acquisitions into its broader organization. While there was some crossover with the core Salesforce platform, the blending of the acquired companies into Salesforce more broadly has felt surprisingly slow.

One of CIO Juan Perez’s early mandates was to improve the mingling of these acquired companies, he said. “From the day that I started, one of the number one objectives that was given to me as the new CIO was that the organization wanted to improve our overall M&A integration process, from both a business process standpoint, but also from a technology-integration standpoint.”

It’s normal for mature companies like Mulesoft, Tableau and Slack to want to continue operating the way they have always done, 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’s this natural tendency of wanting to stay in their lane and not integrating with the [parent] company,” he said.

That’s expected to an extent. Speaking at Dreamforce in 2016, then company president, vice chairman and COO Keith Block talked about the challenges a company like Salesforce faces when purchasing a company, and that was long before Salesforce started looking at much higher-priced targets.

“If you drive growth and experimentation, you might not get leverage into the installed base. If you push too hard on integration, you get cost savings, but you might hurt innovation,” Block said at the time. That’s as true today as it was back then.

But with rising market pressure to reduce costs and improve efficiencies, Perez says that the C-suite began pushing harder to integrate these companies into the Salesforce core. “All these M&A integrations have to start with leadership wanting to support and drive the integration from the top. So I’m seeing that taking place,” he said.

The effort also involves doing a much better job managing integration “programs,” a term Perez uses deliberately because it goes to the heart of how to make these integrations happen. “I call them programs because every single one of these integrations needs to be viewed as a program with a discipline of managing the program just like any project would be managed.”

Thoughtful integration also involves getting closer to the business units to understand their needs and how they fit into the broader Salesforce mission, he said. “I use the term ‘business intimacy’ all the time. It is about getting much closer to the business, therefore understanding the needs of the business better, creating better plans to support the business, and from a budgeting standpoint, helping us be significantly better at allocating budget and sticking with the budget to support the integration,” he said.

Building efficiencies across the company

It doesn’t actually start or end with integrating these companies. It’s really about creating an efficiency mindset, something he brought from his years running technology at UPS.

“I came from an organization that was constantly focused on efficiency and productivity. And I always make the point that when growth is not there, when a business has issues and pressure that’s really impacting growth in the organization, your safety net to keep the business profitable and viable is productivity and efficiency,” Perez said.

That’s why he thinks it is imperative to always maintain a productivity and efficiency mindset in every business; software businesses are not exempt.

In more practical terms, it takes a dedicated organization within IT to push that kind of mindset. That’s why he established an Office of Transformation after he started at Salesforce. “It is working with all of the functions to identify efficiencies across each and every one of the groups so that we can continue to take cost out, improve our processes and manage the business better,” Perez said.

When it comes to acquisitions, there can be a lot of system-level duplication between the acquired and parent companies. Perez said he’s working hard to eliminate that unless there is a good reason to keep something, in which case it still has to come under his department’s purview for a number of reasons.

“We have an active effort right now to look at all decentralized IT across the organization. We are assessing for all of those types of applications that are managed outside of IT, whether they should be brought into IT for building synergies, better cost controls, better security controls and so forth,” he said.

If the applications should remain outside of IT’s direct management, where the business continues to manage those apps, his department will find a way to add a level of visibility for the broader Salesforce IT organization to understand what’s going on with those applications.

Adding startups to the mix can help

Perez said he looks at startups as a way to help creatively drive efficiencies across the multiple organizations that make up Salesforce. “My view always has been that we’re going to spend our budget on the things that drive the company forward, and that are strategic in nature,” and he says if that involves a startup he will budget for it. He looks for really good solutions that can provide value to a CIO, and he’ll implement it regardless of whether it’s a startup.

As an example, he uses Zylo, a company that Salesforce invested in to help find duplicate software licenses, which should come in handy for a company looking for ways to cut costs. “Zylo is one example, which assesses the license usage and talk about efficiency. It looks at how licenses are being used, and if there are opportunities to recondition or reprovision licenses in the organization,” Perez said.

But he says that it’s important to keep in mind that startups do require some maintenance. “When it comes to these engagements, you have to support the startups. You have to make investments in supporting them. What does that mean? You have to invest time in giving them guidance and supporting them in building their solution,” he said.

It’s certainly been more challenging for an organization like Salesforce to look closely at efficiency when up until recently it has been much more focused on growth. But Perez said he thinks that growth and efficiency can coexist in the same organization.

“There’s no reason why we cannot have a mindset of constant growth, and do it more efficiently,” he said. If that helps bring costs down, while integrating the large acquisitions, all the better.