Breaking news this morning that Salesforce is acquiring integration vendor Mulesoft for some $6.5 billion. Readers will remember that Mulesoft had its stock market debut last year, and has fared well since becoming public. Readers will also remember that Salesforce Ventures, the investment arm of the cloud innovator, invested in Mulesoft early in its life. This deal values Mulesoft at a healthy premium (around 36%) on current trading values.
What some people may be less aware of, is the complex situation revolving around all this. Mulesoft is essentially an integration player, helping organizations integrate different software solutions together. They started off with a singular focus on application integration, but have since broadened to being all about integration generally – hence they’re now a broad API management player.
All that is interesting, but it’s also worth noting that there are other players in the Salesforce ecosystem that do the same job – Jitterbit and SnapLogic being two examples. hence we have a situation where Salesforce has done two things:
- Decided that application and general integration is now a core part of the proposition and hence needs to be offered as a first-party Salesforce service
- Picked a winner and decided that Mulesoft is the horse to back
Is integration core?
On the first point, one could debate as to whether Salesforce really needs to own this part of the puzzle. Sure integration is important, but as Salesforce moves to build out its core offerings via acquisition, integration becomes less of a problem. Or does it? Bear in mind that at least some of the acquisitions that Salesforce has made have been on a separate code base and hence somewhat problematic in terms of integration – a good example of Heroku which has taken years (and the process is ongoing) to integrate deeply into Salesforce. Maybe Mulesoft can be a valuable internal tool for Salesforce to reconcile its various component pieces.
What will the ecosystem think?
More pressing, arguably, is how this looks to the ecosystem. readers may recall last time Salesforce made a choice like this – a couple of years ago when they acquired Steelbrick. there where other companies (and, again, Salesforce was an investor in some of these companies) that did ostensibly the same thing, and it’s fair to say that the acquisition of Steelbrick caused some massive pain, particularly for Apttus.
After the Steelbrick acquisition, many people suggested that building a business off the back of Salesforce’s footprint, while a logical-enough strategy, is also one fraught with risk. It’s great if Salesforce deices to leave the space alone and lets third-parties deliver the functionality, but it’s worrisome if Salesforce decides that it wants to own that part of the market – someone is going to be left feeling jilted in that instance.
MyPOV
Mulesoft already ostensibly did what Salesforce needs it to do and, hence, there was no massive technology reason for Salesforce to acquire them. Rather, I see two things going on here, firstly, and as I detailed previously, Salesforce wants to make heavy use of Mulseoft internally for its own purposes and, secondly, Salesforce, as it moves towards its $20 billion revenue target, realizes that more and more of its prospects need application integration. That’s a lucrative product proposition and it was just too tempting for Salesforce to scoop up Mulesoft to enjoy that revenue flow.
