Why Salesforce Is Buying This Little-Known Startup

July 22, 2016, 2:47 PM UTC
Key Speakers At 2015 The Dreamforce Conference
Photograph by David Paul Morris—Bloomberg via Getty Images

Salesforce, a leader in cloud-based enterprise software, plans to buy Coolan, a startup specializing in monitoring fleets of gear running data centers. The plan was announced in a Coolan blog post, but terms were not disclosed.

This is a different type of deal than many previous Salesforce (CRM) acquisitions such as ExactTarget, Demandware, Buddy Media, or Radian6. All of those purchases were designed to expand the types of e-commerce, social media, and marketing software services that Salesforce could offer its customers. Coolan, on the other hand, is all about the nitty-gritty of running massive pools of hardware efficiently by analyzing tons of performance data.

“If you’re a company buying, say 100 Dell servers this year, and another 100 in six months and another 100 next year, you really don’t know what the components in all those servers are,” said a source close to Coolan, who requested anonymity because he is not authorized to speak on the deal. “Some may have Western Digital hard drives, others may have Seagate, some server lots will have memory from this supplier, others from someone else. Coolan goes in and tells you what all those components are, how they all perform over time and what their failure rates are.”

For more read: Salesforce Inks Major Deal with AWS

Big IT buyers can use that information to go back to suppliers to demand replacements and better terms, he noted.

He likened Coolan to New Relic (NEWR), which measures software application performance metrics except that Coolan does the same for hardware components from network interface cards to disk drives to memory. And, it doesn’t really care if that hardware is running in a company’s own data center or in the Amazon (AMZN) Web Services cloud.

“Coolan is not popular with the hardware vendors,” he quipped, adding that Workday (WDAY), another big enterprise software company, is a Coolan customer.

For Salesforce, this is indeed an interesting proposition because it has to ensure all those aforementioned software services are up and running and available to remote customers. The best software in the world won’t work if the hardware crashes.

Given that Salesforce software is running in its own data centers and also going forward in Amazon Web Services (AWS) data centers, Coolan looks like a smart pickup.

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Coolan, was founded by Amir Michael, formerly a hardware engineer at Google (GOOG) and Facebook (FB), two companies that know quite a bit about deploying massive amounts of computing hardware. Coolan, which has ten employees, has scored an unknown amount of venture funding from North Bridge Venture Capital and Social Capital.

Michael’s work at Facebook contributed to the launch of the Open Compute Project, an effort to make the design specifications for efficient and powerful data center hardware available to anyone.

OCP member companies include AT&T (T) Facebook, Google, IBM (IBM), Rackspace (RAX), Fidelity, Goldman Sachs (GS), Microsoft (MSFT), and many other tech companies. But the consortium doesn’t include Salesforce—at least not yet.

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Holger Mueller, analyst with Constellation Research speculated that the Coolan deal might indicate that Salesforce is still evaluating its deployment options. Maybe Salesforce will start to build its own hardware using this Open Compute expertise and assets from Coolan, Mueller said via email.

Maintaining two architectures as a software-as-a-service vendor has its downside, Mueller added referring to Salesforce’s own infrastructure as well as deployment on AWS, adding, “Double the road map, plans, partners, even acquisitions definitively is not cheap.”

Fortune reached out to Salesforce for comment on that and will update this story as needed.

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