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Posts Tagged ‘SAS Institute’

Can Informatica earn a place at the head table?

February 22, 2010 Leave a comment

Informatica might be thought of as the last independent data management company standing. In fact, that used to be Informatica’s main positioning in the market. That has begun to change over the last few years as Informatica can continued to make strategic acquisitions. Over the past two years Informatica has purchased five companies  — the most recent was Siperian, a significant player in Master Data Management solutions. These acquisitions have paid off. Today Informatica has past the $500 million revenue mark with about 4,000 customers. It has deepened its strategic partnerships with HP, Ascenture, Salesforce.com, and MicroStrategies,  In a nutshell, Informatica has made the transition from a focus on ETL (Extract, Transform, Load) tools to support data warehouses to a company focused broadly on managing information. Merv Adrian did a great job of providing context for Informatica’s strategy and acquisitions. To transition itself in the market, Informatica has set its sights on data service management — a culmination of data integration, master data management and data transformation, predictive analytics in a holistic manner across departments, divisions, and business partners.

In essence, Informatica is trying to position itself as a leading manager of data across its customers’ ecosystem. This requires a way to have consistent data definitions across silos (Master Data Management), ways to trust the integrity of that data (data cleansing), event processing, predictive analytics, integration tools to move and transform data, and the ability to prove that governance can be verified (data governance). Through its acquisitions, Informatica is working to put these pieces together. However, as a relatively small player living in a tough neighborhood (Oracle, IBM, SAS Institute,etc. it will be a difficult journey. This is one of the reasons that Informatica is putting so much emphasis on its new partner marketplace. A partner network can really help a smaller player appear and act bigger.

This Marketplace will include all of Informatica’s products. It will enable developers to develop within Informatica’s development cloud and deploy either in the cloud or on premise. Like its new partner marketplace, the cloud is offering another important opportunity for Informatica to compete. Informatica was an early partner with Salesforce.com. It has been offerings complementary information management products that can be used as options with Salesforce.com.  This has provided Informatica access to customers who might not have ever thought about Informatica in the past. In addition, it taught Informatica about the value of cloud computing as a platform for the future. Therefore, I expect that with Informatica’s strong cloud-based offerings will help the company maintain its industry position. In addition, I expect that the company’s newly strengthened partnership with HP will be very important in the company’s growth.

What is Informatica’s roadmap? It intends to continue to deliver new releases every six months including new data services and new data integration services. It will including develop these services with a self-service interfaces. In the end, its goal is to be a great data steward to its customers. This is an admirable goal. Informatica has made very good acquisitions that support its strategic goals. It is making the right bets on cloud and on a partner ecosystem. The question that remains is whether Informatica can truly scale to the size where it can sustain the competitive threats.  Companies like IBM, Oracle, Microsoft, SAP, and SAS Institute are not standing still.  Each of these companies have built and will continue to expand their information management strategies and portfolios of offerings. If Informatica can break the mold on ease of implementation on complex data service management it will have earned a place at the head table.

Why is SAP buying Business Objects?

October 10, 2007 2 comments

The first time I made contact with Business Objects was in 1992 when I was hired by a venture capitalist to conduct due diligence on Business Objects. At that time the company was still emerging. At that time Business Objects was a tiny Paris-based that offered a windows based reporting product designed for use with the Oracle database. My advice to Atlas Ventures was that it would be a wise idea to invest in the company. I recommended that they improve their user interface, add more databases than Oracle, and learn how to partner. And as they say, the rest is history. So, more than 15 years later is to become part of the SAP empire.

So, what do I think? I have a mixed reaction. Here are my first takes:

1. Business Objects has a diverse and interesting base of technologies. For example, it has its traditional reporting platform that is a huge source of revenue (especially maintenance). Over the years it has added lots of products to its bag of tricks including the low end Crystal Reports to text analytics (acquisition of inxight Software ) and Cartesis for financial reporting. It appeared that the company was on a path to positioning itself as a full service information management player.

2 . Today, Business Objects is about $1.5 billion in revenue. While it is growing at about 20% a year in many areas, new license revenue is only about 9% of revenue. Many companies in the information management space are finding that it is hard to grow into a major player organically — or even with solid acquisitions.

3. SAP is paying a lot of money; making this a big gamble. Unlike Oracle, SAP has not made a lot of big acquisitions. Perhaps the company felt that Oracle was simply getting a bigger piece of the information management pie than was comfortable. SAP will have its work cut out for it as it tries to learn to sell at the low end of the market. Yes, it has introduced its mid-market platform but it still has a steep learning curve. It will also have to rationalize its existing offerings with those from Business Objects. For example, now SAP will have two financial reporting systems — Business Object’s Cartesis and Outlook Soft, a company with a similar product that SAP purchased.

4. I think that integration is very tough to full off. The plan mentioned in the announcement is to integrate the Business Object suite with SAP’s NetWeaver middleware. While this might be a good long term strategy, it might not be a high priority for customers who just want to get their reports done.

I plan to keep an open mind. My old friend, Josh Greenbaum, who is one of the most knowledgeable SAP watchers around is pretty bullish on the plan. So, it is definitely worth a second look as the acquisition moves forward.

I’ll make an obvious prediction right now — business intelligence vendors will continue to be targeted for acquisition by the big players. As this happens, the strong vendors that do remain independent will be attractive to customers who want to work with an independent player and to vendors who are looking for good ecosystem partners. Who is on my list as attractive independents: Information Builders and SAS Institute. Ironically, both companies are around Business Objects size and neither are public. Now there is some food for thought…