Informatica – IPaaS offering & growth drivers

iPaaS expected to thrive

However, industry demand drivers are shifting and Informatica is going through a “major transition”, moving from its on-prem PowerCenter to a fully cloud-native integration platform as a service (iPaaS) offering. Third Bridge Forum spoke to a former executive at the company to discuss its operating environment and growth drivers and challenges. 

“From a trend perspective, we know that there are certain industry trends that are affecting almost every software business, which is moving from on-prem to cloud, which is moving from fixed licensing models to more subscription-based payment models and more and more consumption-based payment models,” the specialist said, adding that these trends are “definitely” impacting Informatica. 

Although Informatica is currently the leader in terms of market share, this could change. New entrants include Dell Boomi and MuleSoft, which was acquired by Salesforce and is doing “really, really well”. Another area of concern is that it must continuously balance investing for growth with near-term profitability. “I do see that, over the next few years, market share will slowly move… to other players, but in aggregate, Informatica is still growing, and in absolute terms, it’s still growing and is still a perfectly healthy business.” 

Industry consolidation was also on the Interview agenda. “At one point, I had an opinion that all these integration providers and iPaaS providers… would be acquired by one of the major cloud providers,” the expert said. “Since then, I have revised my opinion there, and the reason… is if you look at integration PaaS, it facilitates integration between multiple clouds.” Therefore, iPaaS companies are expected to “continue to exist and thrive as an independent set of companies”. One of the gaps across the board is API management — a potential M&A opportunity for Informatica. 

The expert also expressed concern that Informatica is focusing too much on enterprises and missing opportunities with SMBs. “The danger is the small players are coming from the bottom of the stack, making significant inroads into SMBs, and they might just eat Informatica’s lunch over time if Informatica doesn’t address SMB and smaller companies more proactively.” The company would benefit from simplifying its pricing structure, including lower entry points, as well as faster negotiation and sales cycles, we heard.

To access all the human insights in Third Bridge Forum’s Informatica – IPaaS offering & growth drivers Interview, click here to access the full transcript.