Salesforce is on the cusp of acquiring global data integration platform provider Informatica, according to reports in The Wall Street Journal and Bloomberg.
Bloomberg – citing “people familiar with the matter” – has even intimated that the two companies might finalize an agreement by the end of the week.
While talk of the potential merger has generated a lot of buzz in the CX tech space, not all of it has been positive.
After the news broke, Gaurav Dhillon – the Co-Founder of Informatica and current Chief Executive of Software Company SnapLogic – blasted the reported acquisition, describing it as a “real step backward” for Salesforce.
Dhillon was also critical of how the merger would impact Informatica’s users, claiming that it would be a “rocky road ahead for Informatica customers due to the significant overlap in integration products.”
Dhillon’s major concern with the proposed acquisition appears to be how Informatica’s technology will co-exist alongside MuleSoft, the integration platform that Salesforce purchased for $6.5b in 2018.
Indeed, the Co-Founder outlined how he believed the complications affiliated with integrating Informatica 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.
For Dhillon, the proposed acquisition is a “massive validation and an ‘I-told-you-so’ moment for SnapLogic, a company that was founded on the premise that one unified platform is needed for application and data integration.”
While one could argue that Dhillon’s criticism of the potential merger may contain a degree of bias, especially considering he is using it to champion his current company, he is not the only industry voice who is skeptical about the deal.
Guggenheim Securities Analyst John DiFucci also highlighted the issue of Salesforce having to navigate multiple tech platforms, stating that “Informatica competes directly with MuleSoft.”
In addition, the tech advisor cast doubts over Salesforce’s ability to oversee a successful merger, describing the company as having a “mixed M&A integration track record.”
Lastly, DiFucci pointed out that the merger could alienate some of Informatica’s existing customers as it would result in the company losing its ‘Switzerland’ status.
How Has the Stock Market Reacted?
Perhaps more worrying for Salesforce and Informatic than the opinions of two industry professionals is the fact that the market appears to agree with them.
Following the reports, both companies have seen drops in share prices.
At the time of writing, Salesforce is currently 7.9 percent down in the past week, and Informatica has seen an 8.5 percent decrease, with its share price dropping by almost four dollars a share.
This news is particularly problematic for Informatica, who will undoubtedly want to go through with the acquisition when its share price is at its healthiest.
With the wider industry clearly skeptical, what benefits could Salesforce reap from the acquisition?
Informatica’s Selling Points
As the race to integrate and maximize AI solutions continues to hot up, the ability of Informatica’s data integration and management platform to support AI deployments will clearly be a major selling point.
With the power to facilitate the organization, refinement, and utilization of customer data for businesses, Informatica’s platform holds the potential to enhance Salesforce’s Data Cloud, which powers the AI models of its Einstein 1 Platform.
Moreover, Informatica could improve the metadata layer within the Einstein 1 platform, ensuring seamless data integration across various Salesforce applications and enabling platform updates without disruption.
If the deal proceeds, Salesforce is expected to prioritize enhancing Data Cloud and metadata capabilities. This aligns with its strategy of combining AI, data, and CRM to shape the future of customer experience.
Salesforce is Keeping Busy
Away from the potential acquisition of Informatica, it has still been a busy month for Salesforce.
Last week, the cloud-based software company announced the launch of its Public Sector Einstein 1 for Service solution, with the aim to enhance governmental customer service.
The solution equips government employees with CRM functionalities, AI capabilities, and improved data tools, enabling the automation of administrative tasks and improving the overall constituent experience.
In addition, the company recently debuted the widespread availability of its Unified Conversations service on WhatsApp.
The integration empowers businesses to utilize WhatsApp for improved marketing promotions or service requests, fostering dynamic two-way communication.
