Author(s): Angela Ashenden
Last week, I attended Slack's Frontiers 2018 customer conference in London, the last stop in a tour that kicked off in its home town of San Francisco in September. The conference was a great opportunity for a deep dive into Slack's current positioning and strategy, and its road map into 2019. Here I summarize the most significant messages. The full report is available to CCS Insight clients (see Enterprise Insight: Slack Builds Momentum to Take on Microsoft Teams).
Reasserting Slack's Position in Team Collaboration
The overriding themes of the conference were team collaboration and coordination as well as the future of work, with a strong focus on company culture and the importance of an engaged, motivated workforce to create a successful and competitive business.
It's an interesting time for Slack. After several years of largely unchallenged growth, Microsoft's explosion into the space with Teams has forced Slack to take a more careful look at its strategy and how it will continue to differentiate itself against a rival with much deeper pockets and a ready-made audience for its product (see Microsoft Launches Free Version of Teams).
The User Experience Is Slack's Secret Ingredient
Perhaps the most impressive thing about Slack's customers is how much they love its product. Slack's simple user experience makes it easy for new business users to get started, particularly those with an IT or engineering background. Slack is enjoying viral adoption within its customers' organizations, and it's getting better at fuelling this through an effective customer success and adoption strategy.
Championing the Best-of-Breed Strategy
Slack sees a best-of-breed, multi-supplier technology strategy as the best approach for businesses, with partnerships and integrations playing a critical role in its tactics. Slack itself is a hub for getting work done, and for capturing all the conversations, actions and decisions that support business processes. This strategy has accumulated an impressive number of integrations, with more than 1,500 apps available in Slack's store. It's also resulting in encouraging adoption of these apps among customers: according to Slack, 94 percent of its clients use apps to integrate other systems and processes into their Slack channels, with 60 percent developing custom integrations.
A Focus on Adoption, Culture and Enabling Change
One of the strongest messages from the event was Slack's emphasis on the importance of collaboration, and of collaborating effectively. Although technology is at the heart of its business, Slack's understanding of the challenge of enabling a more collaborative culture, and its focus on helping customers maximize the value they get from the technology through a careful and strategic adoption programme are together an important differentiator over rivals such as Microsoft and Facebook.
Slack's Priorities for 2019
Better Support for Non-Technical Users
Although customers often highlight Slack's ease of use, in practice the app tends to be adopted first by teams such as engineering, IT or product development, which are comfortable with its command line-style interface and simple mark-up language for formatting messages, and are able to use their coding skills to develop custom app integrations. But as Slack expands to the wider organization, these capabilities start to limit adoption. Its acquisition of no-code workflow designer Missions in July 2018 aims to allow any user to create custom apps to support their processes.
Collaboration and User Experience Enhancements: Embracing Artificial Intelligence
Slack has significantly enhanced its search capability in 2018 and promises to build on this in 2019 by exploiting information about the way users work and communicate within the platform, or the "work graph". These machine learning-driven enhancements will enable more-personalized searching and more effective people and skills search.
Additionally, in September 2018, it acquired Astro, developer of the artificial intelligence-based Astrobot plug-in that allows users to manage their e-mails from within Slack. Slack's interest here is about better integrating its app with e-mail to break down the boundaries between those who use Slack and those who don't. The outputs of this effort are scheduled for 2019.
Enterprise Features: Security, Admin and Workspace Flexibility
Its newest development for large or highly regulated organizations is Enterprise Key Management, which will give customers control over the encryption keys for their Slack data and will allow admins to revoke access at a workspace or channel level for a specific time period. Slated for release in early 2019, the tool will help companies to address some major security concerns and accelerate adoption of Slack at a strategic level.
In the next few months, Slack will also add functionality to enable admin users to better manage the use of apps within their organization, providing a centralized way to approve, restrict and automatically install apps.
Standing Up to the Microsoft Challenge
It's clear that Slack is taking full advantage of its recent injection of cash through its latest funding round, which valued the company at over $7 billion. It's no mean feat to maintain its position in this space, and Microsoft will be quick to replicate any successful Slack features in its own product. In contrast, Slack is still playing catch-up with Microsoft in terms of its support for enterprises.
Slack has made great progress in just four and a half years: it now has more than 8 million daily active users, with 500,000 businesses using Slack including 70,000 paid teams. But it remains a small player in a field where the tech giants are determined to use their weight to their advantage. In our latest survey of IT decision-makers, 7 percent of organizations have adopted Slack, compared with 13 percent that have chosen Workplace by Facebook and 24 percent that have opted for Microsoft Teams.
Slack needs to look beyond easily replicable features and enterprise scalability, and this is why the user experience and "stickiness" of the Slack platform are so critical. Integration is central to this, particularly in terms of how easy it is for companies to build their own business processes into the Slack environment. Its acquisition of Missions will be crucial here.
The ability to manage work also becomes increasingly important; currently Slack relies on its integration with partners to enable users to coordinate their tasks. However, there's an opportunity for Slack to take on more of this through its own platform, helping to feed the work graph and increase Slack's stickiness. My bet is that it will buy its close partner Asana, with which it shares many customers (see CCS Insight Predictions for 2019 and Beyond).
It's not easy being an independent player in a growing software market, and the pressure is on Slack to convert its early advantage into long-term success as an enterprise software-as-a-service player. The early signs are good, but there's a long race ahead. In the short term at least, Slack is well-positioned to maintain its niche, even against the threat of Microsoft.