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A Business Intelligence Stunner: Informatica Makes Its Move

With the acquisition last week of data quality specialist Similarity Systems, Informatica bucked the expectations of several industry watchers.

• By Stephen Swoyer
• February 1, 2006

Several industry watchers predicted that Informatica Corp. would make a data quality play of some kind this year, most likely picking up Firstlogic. Instead, conventional logic went out the window, as Similarity Systems got the nod. And as one BI analyst notes, there’s more rationale to Informatica’s move than first meets the analytical eye.

Informatica and Firstlogic struck many as a no-brainer pairing for several reasons. The two companies were longtime partners. Informatica has tapped Firstlogic as its go-to data quality solution for several years now, with the result that many customers are using Firstlogic in tandem with Informatica’s bread-and-butter ETL technology.

Despite a history with Firstlogic, Informatica’s acquisition of Similarity Systems is not inexplicable. “Sometimes being late to market is an advantage for a vendor,” said Philip Russom, TDWI’s senior manager of research and services. “Data quality vendors of recent vintage focus on recently defined requirements, like single tool for multiple uses, ease-of-use for business end-users, heavy doses of process management, and deep data profiling, monitoring, and reporting.” Newer, smaller vendors—like Dataflux, Innovative Systems, and Similarity Systems—tend to fit this description better than older, more technical ones like Firstlogic, Group 1, IBM (Ascential), and Trillium.

“These recently defined requirements are getting more urgent,” continued Russom. Recent TDWI research shows that 39 percent of organizations are already applying data quality on an enterprise scale, with another 26 percent soon to follow. From a different viewpoint, 49 percent perform data-quality tasks in the context of enterprise-scope programs for data stewardship or data governance. Organizations embracing this kind of “enterprise data quality” face a quandary: they need scalability (which older tools are known for), yet they must also accommodate a growing number of non-technical business users who demand process management and data monitoring (as established by newer tools).

“Informatica’s acquisition of Similarity Systems makes a statement,” said Russom. “They’re saying that the new set of requirements is indicative of what their users need. I would amend this statement to say that there are two opposing sets of requirements—one old and one new—a situation that leads many companies to deploy two or more data quality tools.”

For example, Informatica and Similarity already have approximately 25 customers in common. Russom says he suspects that some of these also use products or customer-data masters acquired via Informatica’s reseller agreements with Firstlogic and Trillium. Informatica representatives explained that they will no longer resell Firstlogic and Trillium, but will continue to support their technologies, due to customers in common.

Robert Lerner, a senior analyst for data management with consultancy Current Analysis, agrees. “This is an interesting acquisition on many levels,” he comments, noting that Similarity gives Informatica a strong data quality product set, including data profiling, data quality, and data monitoring, that should help broaden its data management play. “Data quality is crucial to the success of data integration, and Informatica, unlike its most important direct competitors [IBM and SAS], lacked its own comprehensive data quality technology.”

There’s an additional upside to the purchase, too. “Similarity Systems brings something on the order of 150 customers, most of which it can leverage for cross-selling opportunities,” Lerner indicates.