The Deal That Never Was: Salesforce and Informatica

In one of the biggest technology news stories of the year, it was reported in April that Salesforce was on the verge of acquiring cloud data management provider Informatica. Salesforce Informatica Almost. Both Bloomberg and The Wall Street Journal confirmed the story, with Bloomberg predicting that the deal could be finalized within days.

Salesforce appeared poised to leverage Informatica’s data integration and management platform to enhance its Data Cloud and Einstein 1 solutions. However, by the following week, reports surfaced that the deal had fallen through due to an inability to agree on terms, with an unnamed Bloomberg source citing a disagreement over price.

Neither company has disclosed specific reasons for the failed negotiations, but market reactions were notable, with both companies experiencing share price drops after the news broke. Salesforce has since somewhat recovered from its initial 7% decrease, but Informatica’s stock has continued to decline, now at its lowest point since mid-February.

Criticism also emerged within the technology sector. Gaurav Dhillon, Co-Founder of Informatica and current CEO of SnapLogic, was particularly vocal, describing the proposed acquisition as a “real step backward” for Salesforce and expressing concerns about the merger’s impact on Informatica’s users. Dhillon predicted a “rocky road ahead” due to significant overlaps in integration products, specifically highlighting the challenge of merging Informatica’s technology with MuleSoft, an integration platform Salesforce acquired for $6.5 billion in 2018.

Dhillon warned that integrating these disparate platforms would be a complex, time-consuming project likely to take more than five years to complete.

Industry Analysts Weigh In

The topic was recently revisited by leading CX analysts during a CX Today Big CX News discussion. Despite the initial market and industry criticism, many analysts agreed that the acquisition made strategic sense for Salesforce.

Martin Schneider, Head of Research at Annuitas Research, emphasized that data quality is a longstanding issue in the CRM sector and described Informatica’s data capabilities as the missing “puzzle piece” for Salesforce’s end-to-end, AI-driven strategy. He stated, “One thing that Informatica does incredibly well is data quality. Having a CDP is one thing, but unless you actually have the data set right, you can’t create a free-flowing customer data value chain.”

Michael Fauscette, Founder, CEO & Chief Analyst at Arion Research, echoed this sentiment, highlighting the enhancements Informatica could have brought to the backend of Data Cloud as a missed opportunity. “If you think about what Salesforce has done over the last couple of years with Data Cloud, it really completes that story from the backend,” he said. “The part of how do I get the data prep and make sure the quality is there.”

While acknowledging that the price may have been a sticking point, particularly given the overlap with Salesforce’s existing solutions, Zeus Kerravala, Principal Analyst at ZK Research, expressed surprise that Salesforce walked away from the deal. He asserted, “If an acquisition is a good acquisition, you can never pay too much for it.”

Kerravala further explained that data quality issues are a significant hindrance to Salesforce’s AI capabilities. “Salesforce customers are notorious for putting bad data into Salesforce, and bad data leads to bad output. If there’s one thing they needed, it was a company like Informatica to help with that.”

Conclusion

Despite the week-long will-they-won’t-they drama, the potential acquisition of Informatica by Salesforce remains a ‘what if.’ While initial market reactions and industry criticisms suggested that the failed deal might have been for the best, many CX analysts believe it represented a missed opportunity for Salesforce to enhance its data management and AI capabilities. As the dust settles, the implications of this near-acquisition will continue to be a topic of discussion in the CX community.

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