Earlier this week, Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google and leading customer relationship management company salesforce.com (NYSE:CRM) announced a collaboration that will deeply integrate Google's cloud and analytics with Salesforce's industry-leading CRM solutions. The combination of the two companies' cloud services not only helps create stronger solutions for customers, but it should also help accelerate growth for both Google Cloud and Salesforce.
Here's an overview of what the partnership entails, and why investors should care.
Google Cloud and Salesforce are integrating their businesses in a range of ways, but here are the most important highlights from the new partnership:
Salesforce integrates into G Suite: Salesforce Lightning will be integrated into Gmail, enabling users to sift through CRM data within Gmail. Lightning will also integrate with Google Sheets, allowing G Suite users to easily push data from Salesforce to a Google Sheet. Within Google Drive and Google Calendar, users will be able to interact with Salesforce's Quip Live Apps. Finally, Salesforce data will surface in Google Hangouts Meet, enabling users to see and act on customer data and insights.
Salesforce and Google Analytics 360 data connect: By combining insights from Salesforce sales and marketing solutions and Google Analytics 360 insights, marketers have more information to "drive smarter engagement -- from awareness all the way through to conversion and retention," Salesforce said in a press release about the partnership.
Google Cloud gets a big customer: As part of the collaboration between the two companies, Salesforce has designated Google Cloud as its preferred public cloud provider to support its growth. Specifically, Salesforce will "use Google Cloud Platform for its core services as part of the company's international infrastructure expansion," Salesforce said in a blog post.
Salesforce gets leads: Google said Salesforce will remain its preferred CRM provider for its cloud customers.
A free year of G Suite: Salesforce customers new to G Suite will get access to the productivity suite at no cost for one year.
By bringing the best of Google's G Suite and analytics together with some of Salesforce's CRM solutions, both companies are ultimately reaching new customers without giving up any of their respective markets. While both of the companies' businesses are in the cloud, Salesforce is primarily concerned with expanding its leads in CRM, and Google Cloud is focused on selling cloud infrastructure and productivity services. But despite their different goals, both companies' end customers consist of businesses looking to streamline their operations in the cloud. It's a perfect cross-selling opportunity.
Making the agreement between the two companies even more notable, both Google Cloud and Salesforce are growing very rapidly. In Alphabet's third quarter, Google "other" revenue, which is primarily made up of cloud, Google Play, and hardware, saw its sales increase 40% year over year; and management said cloud was the largest contributor to the segment. Meanwhile, Salesforce revenue recently surpassed a $10 billion annual run rate after posting 26% year-over-year revenue growth in its third quarter.
Of course, the deal is likely more material for Salesforce investors than Alphabet investors, since Google Cloud is only a small portion of Alphabet's total business, yet all of Salesforce's 150,000 CRM solutions customers could benefit from the deal. Even more, while Google Cloud is getting Salesforce as a customer and G Suite and Analytics 360 offerings are being marketed to Salesforce's 150,000 customers, Salesforce just got a major endorsement to the 3.5 million businesses globally that are already using G Suite.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool recommends Salesforce.com. The Motley Fool has a disclosure policy.
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