What Does Salesforce Buying Salesforce.org Mean for Higher Education?

Enterprises

What Does Salesforce Buying Salesforce.org Mean for Higher Education?

By Tony Wan     Apr 24, 2019

What Does Salesforce Buying Salesforce.org Mean for Higher Education?

It’s not every day that a company acquires a nonprofit that it started that shares its name. But then again, Salesforce isn’t a typical company.

Last week, Salesforce announced it will pay $300 million in cash for Salesforce.org, which sells discounted licenses of Salesforce’s customer-relationship management (CRM) tools to nonprofits and educational institutions. That money will go to Salesforce Foundation, the company’s philanthropic and grant-giving arm. After the deal is closed, the education and nonprofit business formerly under Salesforce.org will continue as a new division under the Salesforce corporate umbrella. Rob Acker, CEO of Salesforce.org, will lead this new vertical.

The company declined to comment on the record, citing regulatory approval for the pending transaction. In describing the complex deal, its announcement only offered that the move will “create strategic synergies and operational simplicity” for its nonprofit and education customers.

Reading between the lines, Paul Freedman, CEO of Entangled Group, believes it’s a deal that the higher-education industry should watch closely. He sees it as a signal that the education market is no longer an afterthought for Salesforce, the biggest brand in the CRM business that has the funding and resources to compete with almost any player focused on the education market, should it so choose.

Salesforce entered the higher-education market through Salesforce.org, a separate entity that acted mainly as a resale operation, with limited development resources to customize the product. (Aside from an advising tool, the educational offerings are largely similar to the main CRM product.) By rolling this work into the main corporate entity, “it indicates that the company has reversed course and now considers education to be a core market for them,” Freedman says. “That means the education strategy will be connected to its overall product strategy and other core initiatives.”

Education industry analysts expect Salesforce to devote additional support to expanding its education product and footprint, which could be a cause for concern for its many competitors, such as Campus Management, Ellucian, Jenzabar and Oracle.

Salesforce.org was created in 2008, and was converted to a public benefit corporation in 2015. During that span, Salesforce.org has sold discounted licenses—at upwards of 75 percent off the regular price—to more than 40,000 institutions. Today it serves more than 4,000 higher-ed customers, according to a spokesperson. In 2018, Salesforce.org generated $250 million in revenue.

According to Kim Taylor, CEO of Cluster and a former higher-education industry executive, colleges and universities are increasingly turning to CRMs to track the life cycle of their engagement with students—from initial marketing outreach to financial aid, applications, enrollment, course registration, retention, alumni and donor relationships.

In the past, institutions have turned to a motley of vendors to provide those services, usually on a piecemeal basis. But getting the different tools and systems to share data with one another—and provide school officials with a full picture of its interactions with students—can pose a challenge, according to Taylor. What CRM tools like Salesforce and its competitors promise is an integrated platform that connects the dots.

Still, she notes, a CRM is hardly a simple, cure-all solution. “CRMs are generally only as good as your ability to customize them. It’s not just ‘You buy Salesforce and it works.’ The people who get the most out of it will have the most sophisticated development team.”

Higher-ed institutions seem willing to invest in this effort. According to a 2018 survey (paywalled) of higher-ed chief information officers by market research firm Gartner, CRMs ranked as the third most important technology to help higher-ed institutions succeed (behind analytics and enterprise resource planning software). Fifty-six percent of the 178 respondents said they had already deployed a CRM, and another 36 percent said they are planning to do so.

“The CRM market is becoming increasingly important in higher education, and it’s driven by the fact that higher-ed institutions have to behave differently to adapt to the demographic changes of the student population,” says Phil Hill, a writer at e-Literate, an education technology blog and consulting firm. As working adults return to colleges, institutions are increasingly taking a customer-centric approach to serving them, one that requires a “holistic approach in organizing communication, support and touch points for each individual,” he adds.

If Salesforce becomes more aggressive in building additional features for its educational offering, that could also create an awkward relationship with education companies that have developed tools based on its CRM.

A keyword search for “education” in Salesforce’s app store returned 141 results for such tools. Among them is TargetX, which offers a student recruitment tool—for which it charges upwards of $10,000 per year—that runs on Salesforce. Another higher-ed software company, Motivis, also relies on Salesforce to support its student information and learning management systems.

Public market analysts have already expressed concerns for what Salesforce’s additional investment in its educational offerings could mean for education companies. In a note to investors last week, Needham & Company, an investment banking and research firm, wrote: “We think the higher spending by [Salesforce] will create additional challenges for Blackbaud, particularly as it sunsets its legacy products.” Blackbaud, a publicly-traded company, sells CRMs and related tools to the K-12 and higher education markets.

Salesforce has also already developed its own learning management platform, Trailhead, to train other organizations in using its tools. Freedman says that it’s possible that the company could decide to adapt some part of this technology for its educational offerings.

Salesforce has so far committed to continuing the discounts for nonprofit and educational institutions that it offered through Salesforce.org. But Freedman and Taylor both bet that any additional features for its education customers will be accompanied by a higher price tag.

“The good news for higher-ed customers from this deal is more product customization,” says Freedman. “The bad news may be that the discounts may not be as high as they were in the past.”

It’s not every day that a company acquires a nonprofit that it started that shares its name. But then again, Salesforce isn’t a typical company.

Last week, Salesforce announced it will pay $300 million in cash for Salesforce.org, which sells discounted licenses of Salesforce’s customer-relationship management (CRM) tools to nonprofits and educational institutions. That money will go to Salesforce Foundation, the company’s philanthropic and grant-giving arm. After the deal is closed, the education and nonprofit business formerly under Salesforce.org will continue as a new division under the Salesforce corporate umbrella. Rob Acker, CEO of Salesforce.org, will lead this new vertical.

The company declined to comment on the record, citing regulatory approval for the pending transaction. In describing the complex deal, its announcement only offered that the move will “create strategic synergies and operational simplicity” for its nonprofit and education customers.

Reading between the lines, Paul Freedman, CEO of Entangled Group, believes it’s a deal that the higher-education industry should watch closely. He sees it as a signal that the education market is no longer an afterthought for Salesforce, the biggest brand in the CRM business that has the funding and resources to compete with almost any player focused on the education market, should it so choose.

Salesforce entered the higher-education market through Salesforce.org, a separate entity that acted mainly as a resale operation, with limited development resources to customize the product. (Aside from an advising tool, the educational offerings are largely similar to the main CRM product.) By rolling this work into the main corporate entity, “it indicates that the company has reversed course and now considers education to be a core market for them,” Freedman says. “That means the education strategy will be connected to its overall product strategy and other core initiatives.”

Education industry analysts expect Salesforce to devote additional support to expanding its education product and footprint, which could be a cause for concern for its many competitors, such as Campus Management, Ellucian, Jenzabar and Oracle.

Salesforce.org was created in 2008, and was converted to a public benefit corporation in 2015. During that span, Salesforce.org has sold discounted licenses—at upwards of 75 percent off the regular price—to more than 40,000 institutions. Today it serves more than 4,000 higher-ed customers, according to a spokesperson. In 2018, Salesforce.org generated $250 million in revenue.

According to Kim Taylor, CEO of Cluster and a former higher-education industry executive, colleges and universities are increasingly turning to CRMs to track the life cycle of their engagement with students—from initial marketing outreach to financial aid, applications, enrollment, course registration, retention, alumni and donor relationships.

In the past, institutions have turned to a motley of vendors to provide those services, usually on a piecemeal basis. But getting the different tools and systems to share data with one another—and provide school officials with a full picture of its interactions with students—can pose a challenge, according to Taylor. What CRM tools like Salesforce and its competitors promise is an integrated platform that connects the dots.

Still, she notes, a CRM is hardly a simple, cure-all solution. “CRMs are generally only as good as your ability to customize them. It’s not just ‘You buy Salesforce and it works.’ The people who get the most out of it will have the most sophisticated development team.”

Higher-ed institutions seem willing to invest in this effort. According to a 2018 survey (paywalled) of higher-ed chief information officers by market research firm Gartner, CRMs ranked as the third most important technology to help higher-ed institutions succeed (behind analytics and enterprise resource planning software). Fifty-six percent of the 178 respondents said they had already deployed a CRM, and another 36 percent said they are planning to do so.

“The CRM market is becoming increasingly important in higher education, and it’s driven by the fact that higher-ed institutions have to behave differently to adapt to the demographic changes of the student population,” says Phil Hill, a writer at e-Literate, an education technology blog and consulting firm. As working adults return to colleges, institutions are increasingly taking a customer-centric approach to serving them, one that requires a “holistic approach in organizing communication, support and touch points for each individual,” he adds.

If Salesforce becomes more aggressive in building additional features for its educational offering, that could also create an awkward relationship with education companies that have developed tools based on its CRM.

A keyword search for “education” in Salesforce’s app store returned 141 results for such tools. Among them is TargetX, which offers a student recruitment tool—for which it charges upwards of $10,000 per year—that runs on Salesforce. Another higher-ed software company, Motivis, also relies on Salesforce to support its student information and learning management systems.

Public market analysts have already expressed concerns for what Salesforce’s additional investment in its educational offerings could mean for education companies. In a note to investors last week, Needham & Company, an investment banking and research firm, wrote: “We think the higher spending by [Salesforce] will create additional challenges for Blackbaud, particularly as it sunsets its legacy products.” Blackbaud, a publicly-traded company, sells CRMs and related tools to the K-12 and higher education markets.

Salesforce has also already developed its own learning management platform, Trailhead, to train other organizations in using its tools. Freedman says that it’s possible that the company could decide to adapt some part of this technology for its educational offerings.

Salesforce has so far committed to continuing the discounts for nonprofit and educational institutions that it offered through Salesforce.org. But Freedman and Taylor both bet that any additional features for its education customers will be accompanied by a higher price tag.

“The good news for higher-ed customers from this deal is more product customization,” says Freedman. “The bad news may be that the discounts may not be as high as they were in the past.”

 

Trending

Get our email newsletterSign me up
Keep up to date with our email newsletterSign me up