Analyzing the Salesforce-Informatica Acquisition that Never Was

In one of the biggest CX news stories of the year so far, back in April, it was reported that Salesforce was on the cusp of acquiring cloud data management provider Informatica.

Both Blomberg and The Wall Street Journal confirmed the story at the time, with the former publication actually predicting that it could be completed within days.

Salesforce may well have been looking to leverage Informatica’s data integration and management platform, which could have been utilized to enhance the CRM provider’s Data Cloud and Einstein 1 solutions.

However, by the following week, it had been reported that the deal was off due to the two tech firms’ inability to agree on terms, with an unnamed Bloomberg source attributing the impasse to a disagreement over price.

While neither company has discussed why the proposed deal fell through, it may have been in response to the reaction of the market, with both companies experiencing share price drops after the news broke.

While Salesforce has recovered somewhat since its initial 7% decrease, the potential takeover marked the start of a gradual decline for Informatica, with its price having fallen by almost nine dollars and currently at its lowest point since mid-February.

Away from the stock market, the deal also garnered criticism from those within the CX sector, with Gaurav Dhillon – Co-Founder of Informatica and current CEO of SnapLogic – one of the more vocal naysayers.

Dhillon described the proposed acquisition as a “real step backward” for Salesforce, as well as expressing concerns about the merger’s impact on Informatica’s users – predicting a “rocky road ahead” due to significant overlaps in integration products.

The Co-Founder’s primary worry was how Informatica’s technology would coexist with MuleSoft, the integration platform Salesforce acquired for $6.5 billion in 2018 – claiming the issue could take years to resolve:

With two disparate platforms, Salesforce now has to navigate merging MuleSoft’s technology with Informatica’s technology – a complex, time-consuming project that will likely take more than five years to complete.

The topic was recently re-examined by some of the most prominent CX analysts in the sector during a CX Today Big CX News discussion.

So, what did the experts have to say about the ‘almost acquisition’ of the year?

The Deal that Never Was

Despite playing their parts in a week-long will-they-won’t-they that could have rivalled Ross and Rachel in their prime, the potential acquisition looks set to remain a ‘what if’.

And while the stock market and the likes of Dhillon suggest that this was for the best, interestingly, our CX analysts were fairly united in their view that the deal made a lot of sense for Salesforce in particular.

For Martin Schneider, Head of Research at Annuitas Research, data quality is a long-standing issue within the CRM sector and has been something of an Achilles heel for Salesforce – describing Informatica’s data capabilities as the missing “puzzle piece” needed to complete Salesforce’s end-to-end, AI-driven, nextgen go-to-market story.

“One thing that Informatica does incredibly well is data quality…. what it has been doing exceptionally well for a very long time is it kind of cleaning it up,” he said.

Because just having a CDP is one thing but unless you actually have the data set right, there’s a lot more to actually making a free-flowing customer data value chain that’s adding value – and Informatica could really help there.

Michael Fauscette, Founder, CEO & Chief Analyst at Arion Research, also believes that it would have been a “great acquisition” for Salesforce – outlining the enhancements that Informatica could have made to the backend of Data Cloud as a missed opportunity:

“I mean if you think about what they’ve [Salesforce] done over the last couple years too, with Data Cloud, it really does complete that story from the backend, right? The part of how do I get the data prep and make sure the quality is there.”

While both Schneider and Fauscette acknowledge that the price may have been too high, particularly when Informatica’s assets include many solutions and innovations that Salesforce already has, Zeus Kerravala – Principal Analyst at ZK Research – was surprised that Salesforce walked away from the deal, stating that:

If an acquisition is a good acquisition, you can never pay too much for it.

Kerravala expounded on his point, describing Salesforce’s data management as a “mess” and discussing the wider industry issue with data quality among enterprise customers:

“The one thing holding them [Salesforce] back from more AI is data quality … Salesforce customers are notorious for putting bad data into Salesforce, and bad data leads to bad output, right?

“So, if there’s one thing they needed, it was a company like Informatica to actually help them with that. So I was pretty optimistic they would do this because I thought it would really help them.”

You can watch the analysts’ full discussion about the Salesforce-Informatica acquisition that never was, and a range of other topics here.