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Informatica finally plugs MDM gap

Madan Sheina

Informatica finally plugs MDM gap

Informatica continues to round out its data integration portfolio after acquiring master data management (MDM) specialist Siperian. The move preceded a strong set of financials for Informatica - a 25% increase in software licence revenues in 4Q09 helped to push 2009 revenues up 10% and past the $500 million mark. A broadening portfolio together with a laser focus on data integration positions Informatica strongly to gain market share against larger rivals. But how long can Informatica remain an independent company for?

An MDM acquisition was inevitable

It wasn't really a matter of 'if', but 'when'. Informatica has already assembled a market-leading suite of data quality, identity resolution and online address verification tools - acquired from Similarity Systems, Identity Systems and AddressDoctor - to complement its core PowerCenter data integration platform. MDM had been conspicuous by its absence even though it is a promising market and a logical extension to data quality offerings.

Siperian is a good choice, providing infrastructure-based and application-agnostic MDM that complements Informatica's own platform. Furthermore, Siperian has identity resolution and AddressDoctor from Informatica embedded in its platform. There's also integration between Siperian and Informatica PowerCenter and Informatica Data Quality. Another common theme between the two companies is their pure-play software focus; both rely on partners for deployment services and verticalisation.

Informatica's acquisition spree is by no means over

We estimate that the $130 million that Informatica spent (its largest acquisition to date) runs at around three to four times Siperian's revenues. Historically Siperian has delivered a strong operationally focused, multi-domain MDM hub that's strong in life sciences, with customers such as Pfizer and Johnson & Johnson. But it recently started to target other master data domains. One area that Siperian doesn't address is analytic MDM, which provides master views of reference data in analytic environments. Other MDM products, such as Oracle Hyperion DRM and Microsoft Stratature, are designed to do just that. Informatica might therefore look to buy another MDM vendor, such as Kalido or Orchestra Networks, as cover.

We're still not sure why Informatica held off for so long - Informatica points to a disciplined, long-term roadmap that evolves the company from data- to integration-centric technologies - and whether it got its hands on the best technology.

We don't believe that Informatica's acquisition streak will end with MDM, particularly as it continues to redefine its boundaries. The company has already expressed a desire to branch out into other areas such as unstructured data management (Itemfield), complex event processing (Agent Logic) and ILM (Application). We would anticipate additional acquisitions in business process management and data warehousing appliances.

MDM will increase Informatica's sphere of 'coopetition'

MDM now creates another competitive front for Informatica against rivals and complicates some partial relationships - notably Oracle, which includes Informatica's identity resolution software as part of its Siebel Universal Customer Master (UCM) MDM engine, as well as some parts of its data quality software. Informatica also has OEM relationships with IBM and DataFlux for address cleansing that might need revisiting.

Informatica's move is likely to accelerate the pace of consolidation in technologies related to data integration. Don't expect Oracle to take this move lightly; we expect it to sharpen its data integration development, sales and marketing, and continue to reduce its reliance on Informatica (and other vendors such as Trillium) for data quality. Oracle could supplement its Silver Creek Systems purchase for product quality with another acquisition - Datanomic, DataLever, Datactics or even Trillium (if Harte-Hanks was to let it go) - as it responds to Informatica and IBM's own MDM moves in order to take charge of its own data quality destiny.

More consolidation means more choices for MDM customers

This acquisition will be good news for smaller, independent MDM specialists - validating the importance of their technology in data integration. We believe there is plenty of potential for further acquisitions from the likes of HP, EMC, Microsoft, Oracle, SAP and Tibco. As expected, IBM followed up Informatica's move by making a bid for Initiate Systems.

What does all this consolidation mean for the customer looking for MDM solutions? Two things: best-of-breed transactional/analytic-based MDM solutions will increasingly be provided through the end-to-end stacks of large data integration platform providers; and customers now have the option of an application- or database-agnostic MDM solution.

Informatica is small enough to be truly focused on data management but also large enough to have a global presence, strong sales and marketing support, and close-knit relationships with many major global SI influencers. That unique position makes it an attractive competitive target with Oracle, SAP and HP (if it ever decides whether it wants to get into the BI market).

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