Salesforce this week announced it will plunk down $6.5 billion to acquire MuleSoft, a provider of application integration software currently used by more than 1,200 organizations. Once the deal is complete, MuleSoft will continue to operate as a unit of Salesforce with current MuleSoft Greg Schott continuing as CEO.
However, there will be two integration platforms once the merger is completed: MuleSoft will continue to offer its Anypoint platform that can be deployed on-premises or accessed as a service, while Salesforce plans to unfurl a separate Salesforce Integration Cloud based on the Anypoint platform.
Schott said the merger will accelerate digital transformation projects that in many cases are hampered by developers writing custom point-to-point code at a cost of more than $400 billion a year. By relying on an integration platform, he said, organizations will be able to take advantage of an application network to unlock the value of data locked in legacy systems faster using a standard set of application programming interfaces (APIs) than they would if the two companies had simply decided to form a technology alliance.
The reason for two separate integration platforms comes down to how different customers engage with MuleSoft and Salesforce, he said. The two companies have a roughly 60 percent customer overlap. That means a significant portion of the MuleSoft base is not integrating applications involving software-as-a-service (SaaS) applications from Salesforce. The Salesforce Integration Cloud will be targeted specifically at customers that are, for example, making use of Salesforce Lightning low-code application development tools to create applications that extend the core capabilities of the Salesforce application portfolio.
In addition, MuleSoft provides a complementary capability to the Heroku platform-as-a-service (PaaS) environment that Salesforce already owns.
Salesforce estimates moving into the application integration space will increase the size of its available market by more than $20 billion through 2022. But the company acknowledged that MuleSoft has as of late been operating at a minimal loss—its sales grew 58 percent last year to $297 million, but that’s a fraction of the total available market. Salesforce is betting that its sales staff combined with an ecosystem of partners will be able to drive the revenue MuleSoft currently generates higher by several orders of magnitude.
However, competition across the application integration category is fierce. Not only is there no shortage of options, but many developers often prefer to write custom code than incur the cost of employing an integration platform. As digital business transformation projects accelerate, Salesforce is essentially arguing that the pace of integration required will make it impractical for developers to continue writing custom code. The rise of microservices also creates a requirement for integration at a level of scale that is difficult to keep pace with when employing custom code.
The degree to which digital transformation coupled with microservices will transform application integration remains to be seen. But it is apparent that the need to integrate disparate sets of code using a structured set of DevOps processes has never been greater.