Since Salesforce announced they were acquiring Slack for $27.7B at the tail end of 2020, the cloud software giant has paused their acquisition strategy.
Acquisitions have always been a huge part of Salesforce’s history, but rising interest rates, declining revenues, and a focus on profitability have had to set this aside. Just this weekend, however, The Wall Street Journal and many other news publications have leaked that Salesforce is in advanced talks to buy Informatica in a deal worth more than $11B.
Salesforce to Acquire Informatica?
Informatica is a data heavyweight in the enterprise world. With revenues of over $1.51B, and over 5,000 employees, they provide an AI-powered cloud data management platform. Informatica specializes in helping companies process and manage large amounts of data, combining data from different sources to gain insights.
If this type of tool sounds familiar, the verbiage to describe Informatica is very similar to how Salesforce has positioned its product suite over the past decade; combining data from multiple sources, bringing it into one system, and allowing you to gain insights about your business performance.
As artificial intelligence is still poised to change everything (when that will happen is anyone’s guess), Salesforce is centering its product suite around being able to ingest and process huge amounts of data. This data will then be used to provide context to prompts and LLMs to ensure better generative and predictive outputs from using AI.
Salesforce acquired MuleSoft back in 2018 for $6.5B, and the acquisition has largely been a success. It’s an easy way to create APIs to connect different systems together which eliminates a huge pain point of digital transformations. However, MuleSoft is primarily focused on APIs, which are fantastic for connecting disparate systems but are better focused on real-time integrations with less data.
Informatica on the other hand, focuses on ETL (Extract-Transform-Load), data quality, and moving data to and from data lakes e.g. Snowflake and Databricks.
A Mega-Data Deal
Data has been an important topic for as long as computers have been around, but generative AI and LLMs facilitate the ability to dig through an ever-increasing mound of data to get helpful insights.
At Dreamforce last year, Salesforce renamed their platform “Einstein 1”, with a focus on bringing the Einstein AI and Data Cloud products closer together. This was also re-emphasized with their new slogan “AI + Data + CRM”.
Data Cloud is now the true flagship product for Salesforce (move over Sales Cloud!), growing at 90% YoY and approaching $400M in ARR, 2024 is the year of the CDP.
Salesforce has already partnered with the likes of Snowflake, Databricks, AWS, and Google to ensure that data being stored in these systems can be accessed by Data Cloud customers. Now, they want a slice of the ETL pie that enables companies to safely transport large amounts of data into these systems, ensuring the data is cleaned and ready to be used.
Informatica also deals in Master Data Management, that is, trying to move towards the holy grail of creating a single master record for your customers within the business. With so much data being created about customers than ever before, across multiple disparate systems, creating one unique record using an MDM strategy will be the dream for many enterprises.
Final Thoughts
Although the deal is yet to be finalized, it’s always exciting to speculate on the enhancements to the Salesforce product ecosystem that could take place with a fresh acquisition.
Salesforce is placing all its chips in one basket with the “AI + CRM + Data” tagline. Although the AI excitement is dying down (naturally) and we enter another phase of the hype cycle, it seems that Salesforce is laying the groundwork for its exact vision of the future.
The post Salesforce in Talks to Acquire Informatica: The Mega-Data Deal Explained appeared first on Salesforce Ben.