News Analysis
The Gist
- Strategic enhancement of data capabilities. Salesforce's potential acquisition of Informatica is aimed at significantly bolstering its data capabilities, particularly in areas such as data integration, quality assurance and customer insights. This move is part of a broader trend of consolidation in the software industry, aiming to enhance Salesforce's competitive edge in data analytics and management.
- Broadening Salesforce's data ecosystem. The integration of Informatica will enhance Salesforce's existing generative AI systems and Mulesoft infrastructure, providing more comprehensive data cataloging and advanced data management tools like master data management and data governance.
- Implications for CMOs and CX professionals. The acquisition signals a shift toward more accelerated innovation in customer experience management. By integrating robust data capabilities, Salesforce aims to empower CMOs and CX professionals to make faster, more informed decisions, enhancing customer experiences and potentially leading to higher revenue growth and better competitive positioning.
Salesforce's potential acquisition of Informatica signals a significant move to bolster its data capabilities, reflecting an ongoing consolidation trend in the software industry. The Wall Street Journal first reported the news of the potential Salesforce-Informatica acquisition Friday, April 12. Informatica's market cap was more than $11 billion as of Saturday, April 13. Salesforce is valued at about $285 billion.
This development comes amidst speculation that Thoma Bravo is considering a public offering for Qlik, Talend, and possibly Alation, highlighting a broader aggregation of similar functionalities within the tech landscape. The reported price, below Informatica's current share value of $38.48, underscores the strategic maneuvering underway.
Informatica, which offers AI-powered cloud data management, boasts a clientele of 5,000 customers and recent advancements in artificial intelligence tools. That presents an enticing opportunity for Salesforce. If the deal materializes, it will mark one of Salesforce's largest acquisitions since its $28 billion purchase of Slack Technologies in 2021, amplifying its competitive edge in data and analytics domain. As the industry continues to evolve, such strategic moves are poised to reshape the landscape, setting the stage for heightened innovation and market consolidation.
Related Article: Will Alphabet Acquire HubSpot?
Informatica Experience: Data Portfolio Strength
In full transparency, this author joined Informatica in 2014 during a period of steady 9% annual growth, surrounded by a cadre of exceptionally talented individuals. Our industry-leading data portfolio positioned us well, but like many legacy software vendors; our Achilles' heel was our lack of an integrated cloud portfolio.
Admittedly, the industry-wide shift toward cloud computing posed a significant challenge for many organizations, especially considering the changing purchasing models. The transition to private equity, albeit resulting in some personnel changes including me, ultimately facilitated Informatica’s transformation to a Software-as-a-Service (SaaS) delivery model, aligning Informatica with modern industry standards.
Salesforce will then become a data company... No longer a CRM company, it will become a data management company if they acquire Informatica.
— Jesús Hoyos #cx2advisory #martech #crm (@jesus_hoyos) April 13, 2024
Data needs governance, data needs to be clean, data needs to be accurate, data needs to be available, and today's data is everywhere.… https://t.co/afTuDAwj0x
What Would Salesforce Get With Informatica?
In acquiring Informatica, Salesforce would gain a strategic pathway to enrich its generative AI systems, fueling Einstein with robust APIs and advanced data integration capabilities. This portion of the integration will merge existing Mulesoft infrastructure, bridging the gap between business and data integration realms. Salesforce acquired Mulesoft in 2018 for $6.5 billion.
However, to be fair, Mulesoft has been more about system integration, Electronic Data Interchange (EDI) replacement and less about data integration.
Predrag (PJ) Jakovljevic, principal industry analyst for Technology Evaluation Centers, told CMSWire on Saturday, "MuleSoft is good for APIs and data transfers. Informatica is much more about ETL and data quality for data warehouses and data lakes. Tableau on top for visualizations. But even more, the critical piece for Salesforce’s AI strategy is Data Cloud and metadata framework. Informatica would play the role as an ETL for Databricks, Snowflake, etc. That Data Cloud normalizes data so that marketers, CX agents, sales, etc. all look at the same data but relevant for them."
The acquisition also promises a more comprehensive data catalog than what's currently native to Tableau (another Salesforce acquisition), empowering users with enhanced data discovery, quality assurance and observability tools. Moreover, Informatica brings to the table vital components like master data management, 360-degree customer insights, data governance, privacy features and the potential for a data marketplace, fortifying Salesforce's data-centric offerings.
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The consolidation of Mulesoft and Informatica within Salesforce's ecosystem will be a focal point, particularly considering Mulesoft's recent personnel losses. Additionally, the synergy between Einstein Copilot for Tableau and Salesforce's CRM platform holds promise for streamlined data analysis and management, potentially resolving data quality issues and facilitating native integrations.
Related Article: The Salesforce Data Fiasco: Some Public Sites Exposing Sensitive Information
Salesforce's Move to Master Data Integration
Ultimately, Salesforce's strategic move positions it to offer comprehensive, end-to-end data solutions, addressing the critical need for consistent customer data and empowering organizations to make faster, more informed decisions.
Howard Dresner, the founder and chief research officer for Dresner Advisory Services, said, “while I understand the business rationale for this move including bringing accretive revenue to the bottom line, these kinds of moves are highly disruptive for customers and employees. Without question, Informatica is a prize to be acquired because they are the best at what they do with one of the strongest portfolios in the business."
Dresner said he anticipates further mergers and acquisitions in the upcoming year, largely driven by economic conditions rather than Salesforce's actions. To fully capitalize on this, Salesforce and Tableau must integrate their capabilities effectively, thereby improving customer insights and analysis.
What Does This Mean for CMOs and CX Professionals?
For CMOs and CX professionals, the acquisition of Informatica by Salesforce signals a potential acceleration in innovation crucial for enhancing customer experiences. By integrating robust data capabilities, leaders gain the agility for self-service analysis, empowering them to make data-driven decisions swiftly.
However, as highlighted by the authors of Future Ready, achieving industrialized data and optimizing customer experience are paramount, correlating with significantly higher revenue growth and net margins. Neglecting data industrialization risks escalating costs and exacerbating fragmentation, ultimately compromising service quality.
Therefore, smart marketing and CX leaders prioritize industrialization efforts to mitigate these risks and maintain competitiveness against rivals like Adobe. By harnessing Salesforce's consolidated offerings effectively, organizations can maximize business value and elevate customer satisfaction, underscoring the significance of this development for CMOs and CX leaders alike. Put simply, the competitive advantage for CMOs and marketing leaders is to industrialize and eliminate the tech debt that has limited exceptional customer experience. Getting this right will therefore offer significant business value.
Parting Thoughts on Potential Salesforce-Informatica Deal
The pending acquisition of Informatica by Salesforce marks a strategic move to bolster data capabilities and streamline data integration within the tech landscape. This consolidation not only promises to accelerate innovation for CMOs and CX professionals, enabling swift decision-making and enhanced customer experiences, but also underscores the critical need for industrialized data.
As highlighted by industry experts, organizations that prioritize data industrialization alongside customer experience optimization stand to achieve substantially higher revenue growth and net margins. By leveraging Salesforce's comprehensive offerings effectively, companies can mitigate risks, reduce costs and ultimately drive business value, positioning themselves competitively in the ever-evolving market for customer experience solutions.
