The ability to properly analyze data has become a core element of how organizations are evolving their operations. As such, we’ve seen two multibillion-dollar analytics software deals in a week – Google’s $2.6bn acquisition of Looker and Salesforce’s $15.1bn purchase of Tableau. Not only did those transactions bring back a key feature of 2018’s M&A market – big-name companies printing big-ticket deals at scorching valuations, as we noted yesterday – they also reflect the central role that data and analytics are expected to play in a modern enterprise.
Our surveys of IT professionals and managers show that improved analytics is a key reason for businesses to undergo digital transformation. According to451 Research’s Voice of the Enterprise: Digital Pulse, 43% of respondents that are executing or planning a digital transformation said ‘data-driven business intelligence and analytics’ is a primary purpose for that larger initiative. That central role of analytics helps explain why Google and Salesforce are looking to data visualization and analysis to build deeper relationships (and larger contracts) with customers.
For a similar surge in analytics software M&A, look back to 2007, the year IBM, Oracle and SAP each picked off the top three BI software vendors (Cognos, Hyperion and Business Objects, respectively). Yet Tableau’s acquisition, which stands as the largest-ever purchase of a business application provider, according to 451 Research’s M&A KnowledgeBase, dwarfs all those previous deals, the largest of which (Business Objects) was $6.8bn. And on valuation, Tableau commanded 12.2x (subscribers to the M&A KnowledgeBase can access our estimates of Looker’sforward and trailing multiples), while those earlier transactions fell shy of 5x.
We’ll be hosting an in-depth discussion of the importance of data to the future of business and its impact on valuations at our Cycle of Innovation Summit on Thursday morning in London. Those wishing to attend can request an invitationhere.