Why Salesforce Acquired Informatica

Informatica are one of the grand old names of data management. Founded in 1993, they were selling integration software to large enterprises when AI was still in the realm of science fiction. Instead, they made their name selling the tools needed to manage data warehouses. Much later, Informatica were able to expand their business on the back of the cloud computing boom, building a range of technologies to extract, transform and load databases. They even own the Strikeiron email validation service.

Executive Priorities

All this means that Informatica are well placed to benefit from the AI trend. Accurate AI output requires high quality data inputs, otherwise, you end up with garbage in, garbage out. As a result, data integrity and data accessibility have become a critical concern at board level. CEOs have issued AI mandates that aren't being followed because individual AI pilots are unable to produce the desired results. Data quality is rightfully seen as a major barrier to AI deployment.

Now, data challenges are nothing new. Marketers have been complaining about data for as long as anyone can remember. Furthermore, data improvement has been a key priority for CMOs for many years. That's never been enough to fix the problem though - one department can't fix all corporate databases on their own. However, if you develop an overarching information governance strategy then perhaps each team can take the necessary steps to maintain data quality while sharing the relevant sources with any tools and services that need it - GDPR and security permitting. With the right data foundations, AI can benefit the business and improve employee productivity.

This ongoing process of opening up internal databases to AI provides Informatica with a real opportunity to cement their position as an enterprise data management vendor. Consequently, there was only modest surprise when Salesforce looked at buying the company last year. Last week, they closed the deal. Salesforce will be acquiring Informatica for $8m - their largest deal since purchasing Slack in 2020.

The IT Challenge

Naturally, there was a lot of talk about AI when the deal was announced. It's bigger than that though. Buying Informatica does benefit Agentforce. However, data is the lifeblood of modern business. It allows marketing teams to personalise the customer experience, and sales teams to identify the right tactics for each opportunity. Salesforce have spent a lot of time trying to make Data Cloud central to their ecosystem. They've not really succeeded though. Data Cloud is still a platform you use because you have to, rather than because you want to. Buying Informatica is intended to change that perception.

Salesforce have promoted Data Cloud heavily. However, it's struggled to gain either mind share or market share. Largely, because Salesforce were very late entering the CDP market. Data cloud has evolved beyond merely being a CDP for marketing, but it is still widely perceived as a marketing platform for unifying across the various Salesforce apps. It's not seen as a tool for managing data across the entire enterprise tech stack, regardless of whether it touches Sales Cloud or not.

In order to boost their AI ambitions, Salesforce need a data ecosystem that has IT pedigree. Companies are struggling to manage ever increasing volumes of information. As a result, enterprise data management is a rapidly evolving market that has been revolutionised multiple times in recent years. New technologies such as Databricks and Snowflake have introduced new ways of manipulating data and managing data warehouses. That has enabled IT departments to deploy a single tech stack for integrating, transforming and securing data across the enterprise regardless of source or eventual use. CIOs want a data management framework which works for all departments, rather than relying on vendor specific point solutions.

Improving Data Cloud

Salesforce may be a leading CRM vendor, but in the data management market, it is indeed seen as one of those point solutions. Informatica does have the IT pedigree needed, as one of the oldest and biggest vendors of enterprise data management platforms. That doesn't mean that Informatica will replace Data Cloud, but it allows Salesforce to control the entire enterprise data foundation. That's critical for a company pitching itself as a general purpose AI automation vendor. They can control the data structures and data pipelines which allow agents to transform business processes.

Of course, there is still overlap between Informatica and Salesforce's existing data cloud portfolio. In 2018, Salesforce acquired Mulesoft, another data integration vendor. That formed the basis of the Salesforce Integration Cloud, and the initial attempts to expand Salesforce Data Cloud beyond marketing. Mulesoft is a much simpler product without the complexity of a traditional enterprise integration vendor. Too simple for enterprise use cases, and for a data market where the boundaries between data storage location and data usage locations are blurring. Mulesoft can import your data into Salesforce, while Informatica adds enterprise grade data governance and data cleansing tools to make sure the information is properly tagged and categorised.

Salesforce have made a big bet on Data Cloud. It's central to Agentforce, and to Salesforce's overall AI ambitions. That means it needs to scale to enterprise wide use cases. Furthermore, it needs to become a critical part of the enterprise IT stack. That hasn't happened both because of product limitations and because of poor market perception. Buying Informatica solves both of these challenges. It's a critical milestone on the road to making Agentforce a major AI platform. Better data management alone is not enough though. The real difference maker is in how you use that data.