How Salesforce’s Quip deal will change the face of an industry

Salesforce announced its acquisition of office productivity app Quip earlier this week for $582 million ($750 million if you include cash incentives). That may seem like a staggering sum to pay for a 4-year-old 40-person startup, but not when you consider what’s at stake: ownership of the CRM and collaboration market.

The deal is not only a shot across the bow at Microsoft (and Google) but has deep implications for the future of the entire collaboration and CRM market. Specifically:

1. This deal signals the convergence of CRM, collaboration, and document management.

Even though documents and content have always been a critical part of how companies engage with customers and prospects, CRM and collaboration solutions have remained separate platforms with varying levels of integration. That era is now over. By folding Quip into its CRM platform, Salesforce.com is demonstrating that integration alone will no longer cut it. It wants to fully own users’ collaboration and document workflows. Why? The entire customer lifecycle from sales to account management to support is highly content intensive. Sales reps use various documents and pieces of collateral to communicate value and move prospects through the funnel. Account teams communicate and grow customers through various forms of content. Support and customer services teams use documentation to field and resolve requests. Owning the content stack will make Salesforce.com more sticky and, more importantly, provide Salesforce.com with invaluable data and insight around which content is most effective at driving deals.

Salesforce’s competitors in the CRM market like Oracle, IBM, Infor, and Microsoft will have to respond to remain competitive. Lightweight integrations with collaboration and document management players will no longer cut it. Instead, Salesforce competitors will have to partner with or acquire collaboration or document management technologies. The key will be choosing partners or acquisition targets that provide both robust functionality and a platform from which data can be aggregated and used.

2. Machine learning and AI will underpin key productivity applications

Over the past year, every major software vendor — including Salesforce — has talked about its AI strategy and applications. The challenge for these companies is that to create any meaningful AI or machine learning advances you need both breadth and depth of data from across the entire organization. Sales and CRM data is certainly valuable but does not provide sufficient patterns and trends on its own. Enter collaboration, content, and document management. By marrying sales data with content, and using the machine learning technology it has acquired over the last year, Salesforce can build a predictive content engine that identifies the most suitable content for each sales opportunity. We’ve seen many technologies predict the deals most likely to close, but Salesforce’s acquisition of Quip could actually increase the likelihood of deals closing by promoting the right content.

This marriage of data and relationships from traditionally disparate systems will underpin Salesforce’s roadmap and become a key part of other content and CRM applications that want to stay relevant.

3. Document management, CMS, and document creation vendors will have to become relevant to sales

Document management, CMS, and document creation vendors have long faced the threat of commoditization and irrelevance. This threat applies to Office 365, Google Docs, SharePoint, Box, Dropbox, Documentum, OpenText, and many others. Commoditization will only accelerate if these players can’t figure out a way to move up market and make their offerings more relevant to the front of the building — ie sales and the customer lifecycle. These solutions must figure out how to provide insight into internal content usage and, more importantly, external content usage among customers and prospects. With the Salesforce acquisition of Quip, this functionality has become essential. Without it, vendors will be relegated to legacy pieces of infrastructure.

Alex Gorbansky is CEO of Docurated.