In one of the biggest tech deals of recent years, business software giant Salesforce has bought workplace messaging platform Slack for $27.7bn (£20.6bn).
The deal is the largest in Salesforce’s 21-year history and appears to send a clear message to the market: homeworking is here to stay, and Salesforce is prepared to bet billions on it.
Salesforce said the tie-up will enable companies undergoing digital transformation to “grow and succeed in the all-digital world”.
The company added: “The events of this year have greatly accelerated the move by companies and governments to an all-digital world, where work happens wherever people are – whether they’re in the office, at home or somewhere in between.”
The transaction could mark a dealmaking milestone in the working-from-home phenomenon. What does the development of tech tools designed to help businesses operate remotely mean for the future of the office?
Tacos and tech
Legal & General office sector lead Andrew Mercer believes that the role of the office will change post-pandemic and that demand for space will shrink. But disappear entirely? Don’t bet on it.
“The majority of professional tasks do need office time – you can’t do it all from home,” Mercer says. “The other issue is that if you have people coming into the office three or four days a week, how do you make sure all the right people are in the office at the right time to collaborate? Those sorts of issues will drive people to the office more than perhaps they have been at the moment.”
Mercer argues that the novelty of homework has worn off for the majority of staff. “The longer this drags on, the greater the desire is to get back to the office for the majority of the time,” he adds.
WiredScore president and managing director William Newton thinks the Slack deal says less about the role of offices and more about the use of technology.
“I would stake a contention that this is not a massive bet on the role of working from home post-pandemic,” he says. “I would look at it as a massive bet on the importance of culture and the recognition of the benefits that technology can bring to culture for modern companies.”
WiredScore uses Slack, along with a number of other tools, in the day-to-day running of the company as staff continue to work remotely. But these tools are more necessary for cultivating a sense of community among staff, Newton says, and not necessarily for the essential running of operations.
The company uses the app Hey Taco to commend good work (managers can give employees a virtual taco as praise for work) and also uses a tool whereby employees can ask the leadership team anonymous questions which are answered on fortnightly company-wide calls.
“All of those things are important, whether you are in an office or at home,” Newton says. “To me, [the Slack takeover] is just a bet on technology’s role in company culture, rather than on the idea that we are all going to be working from home.”
Winners and losers
Either way, $27.7bn is an eye-watering amount of money to pump into a workplace messaging platform. And this market in general is experiencing exponential growth, with engagement booming over the course of the pandemic – Zoom’s sales between August and October soared by 367% year-on-year.
With huge amounts of cash being invested in (and generated by) such businesses, Dan Bayley, head of London tenant representation at BNP Paribas Real estate, says office landlords must step up and invest in tech to ensure that the office does not become a less attractive option than working from home.
“Because of greater adoption, there will be greater investment in virtual meeting places and so on, so they are likely to only get better,” Bayley says. “The office itself has to get better, because it will be less compulsory.”
Those that don’t step up may suffer, says KPMG’s head of UK real estate Andy Pyle. “What I expect to see in the office market is a bigger spread of outcomes, in terms of success measured by investment returns, rents, that sort of thing,” Pyle adds. “By that I mean the best offices that really do a great job of helping companies around creativity, culture, collaboration, are going to do really well. They will be full, they will be able to achieve a good level of rent.”
Those that are less conducive to fostering this type of environment could lose out, Pyle says.
“You are going to see a much bigger spread of returns in the office market as a result. And we are going to certainly see significant amounts of space handed back from tenants to landlords when we get to lease breaks. Because if you’re a big organisation, you can control a little bit more when your employees are in the office, and when they’re not. Then I think you do have the opportunity to reduce the amount of space you have got.”
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