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Analysis

Microsoft Masters Data Management with its Acquisition of Stratature

Even the mighty Microsoft now plays in the MDM space.

• By Mike Schiff
• July 5, 2007

Although relatively late to the game with technology of its own, Microsoft’s acquisition of master data management (MDM) software vendor Stratature fills a gap in Microsoft’s technology portfolio. Furthermore, it should enhance the overall competitiveness of the MDM market while encouraging additional organizations, especially small-to-medium sized companies, to consider MDM solutions.

Strengths:

• As Stratature products utilize Microsoft SQL Server as their underlying database engine, there will be no need to port them from another database. Prior to the acquisition, Stratature was a Microsoft Gold Certified partner.
  
  
• This acquisition fills a gap in Microsoft’s technology portfolio that other database vendors including IBM, Oracle, and Teradata already offered.
  
  
• Microsoft will integrate Stratature’s MDM technology into other offerings including Microsoft Office and PerformancePoint Server.
  
  
• It should further popularize master data management technology and facilitate its adoptions. Stratature’s +EDM product is not limited to a single MDM subject area such as customer data integration; it also provides an infrastructure for other subjects including product information.
  
  
• The acquisition of privately held Stratature is already completed and does not need to await stockholder or governmental approval. Stratature is now a wholly owned subsidiary of Microsoft.

Weaknesses:

• Microsoft has stated that it plans to withdraw the current Stratature products from the market and this will almost certainly cause current Stratature prospects to seek alternative solutions.
  
  
• Although Microsoft has stated that it will continue to work with customers and partners to fulfill existing agreements, it does not appear that they will necessarily be renewed, at least in their current form, when they expire.
  
  
• Microsoft’s statement that Stratature “employees will continue to be employed as either a full-time Microsoft or a transitional employee for a defined period of time” implies that some will not survive the acquisition. While this may be an honest statement by Microsoft to forewarn Stratature employees about a possible layoff, it may have the effect of causing employees it wishes to retain to jump ship prematurely. Given that Stratature had only 16 full-time employees at the time of acquisition announcement, Microsoft’s statement seems to be overly dramatic.

Opportunities:

• In general, Microsoft’s entry into any market tends to add credibility to that market and tends to cause it to expand. Companies, especially small-to-medium-sized organizations, that previously considered master data management solutions as beyond their reach, may now revisit their need.
  
  
• Microsoft has the opportunity to target Stratature’s installed base and partners to embrace additional Microsoft technology.
  
  
• As future product details were sketchy at best, Microsoft needs to quickly provide a roadmap and timetable as to how and when Stratature’s technology will be integrated with the Microsoft product portfolio. It has the opportunity to formulate a compelling story, although it should have had this ready when the acquisition was announced.
  
  
• Microsoft’s acquisition of Stratature provides yet another example of the on-going industry consolidation and the willingness and ability of major vendors to acquire desired technology rather than developing it on their own; it may encourage other vendors and their investors towards similar exit strategies. It might also raise concerns among prospects about acquiring technology from small companies with solid technology and cause some to limit their supplier short-list to major software vendors.

Threats:

• Oracle, in conjunction with its enterprise applications, is one of Stratature’s Technical Alliance partners. As Oracle already has two sets of master data management products (its own and the MDM technology it acquired with Hyperion as a result of Hyperion’s prior acquisition of Razza), it is doubtful that its relationship with Stratature will survive.
  
  
• Other master data management vendors will likely target Stratature’s installed base in an attempt to migrate them to their own products. As Microsoft plans to withdraw Stratature’s products from the market, these competitors will find a receptive audience.
  
  
• Other master data management vendors will point out that while Microsoft’s acquisition of Stratature further validates the MDM market, Microsofit is new to the MDM game while their own products are well established. The longer it takes Microsoft to release a timetable and roadmap, the more convincing these competitive messages will become.