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Master Data Management at a Crossroads
Is the master data management (MDM) market at a crossroads?
It sure looks like it. So far this year, three MDM independents have been acquired. First, on January 4, Oracle Corp. acquired product data specialist Silver Creek Systems. In late January, Informatica Corp. nabbed MDM best-of-breed Siperian. Finally, in early February, IBM Corp. picked up MDM best-of-breed Initiate. Three important MDM players -- including two of the largest MDM independents -- have been gobbled up by bigger, non-MDM players, but the economics and perhaps even the scope of the MDM market are clearly changing. What does it all mean?
For one thing, experts say, MDM is no longer a niche play. At this point, the big computing giants -- players such as Hewlett-Packard Co. (HP), IBM Corp., Microsoft Corp. Oracle Corp., and SAP AG -- have articulated MDM strategies. What’s more, the big data warehousing (DW) and data integration (DI) players (e.g., Informatica Corp., Kalido, SAS Institute Inc., and Teradata Corp.) likewise have a clear MDM strategy.
Even free and/or open source software (F/OSS) vendors are involved. In January, for example, Talend unveiled its own MDM effort. Meanwhile, other smaller ERP, BI, or DW players -- companies such as enterprise application specialist QAD (which purchased the former FullTilt nearly two years ago) and analytic database specialist Kognitio (which sources say generates a fair part of its revenues from MDM-related consulting) -- also promote their MDM expertise.
Similarly, MDM is no longer exclusively (or even largely) the province of best-of-breed vendors. There’s no shortage of MDM pure-play or specialty vendors: the list of independent or best-of-breed MDM vendors includes D&B Purisma and VisionWare Inc., to name just two. There’s also no denying that MDM’s place in the information technology hierarchy is at issue. Moreover, the recent acquisition moves -- by application middleware giant IBM and data integration powerhouse Informatica -- suggest that MDM is being swallowed up by larger, more generalized market forces.
Where does that leave MDM? Is it its own practice? Is it a subset of data integration? Is it a core component of data management (DM)? Recent history in a related segment -- information data quality (DQ) -- suggests some answers to these questions.
To some extent, what’s happening in the MDM market now smacks of what took place in the data quality (DQ) segment just four years ago. Back in early 2006, a pair of bigger, non-DQ vendors -- Informatica and the former Business Objects SA -- purchased best-of-breed DQ independents (Similarity Systems and Firstlogic, respectively). Those acquisitions followed on the heels of IBM’s 2005 purchase of the former Ascential Software -- which, in addition to the ETL technology for which it was perhaps best known, fielded DQ and data profiling offerings, too. In 2004, DQ stalwart Group 1 software was acquired by Pitney-Bowes. In 2001, SAS began the trend when it snapped up prominent DQ pure-play DataFlux.
As a result, by early 2006, almost all of the best-of-breed independents that helped propel the DQ market to prominence had themselves been acquired.
What’s more, they were typically acquired by companies (IBM, Informatica, Business Objects) that planned to leverage them in the service of a bigger, more generalized strategy: IBM, as part of a database-centric, application- and information-centric middleware push; Informatica, as part of an application- and platform-neutral DI strategy; and Business Objects, as part of its broader BI and enterprise information management (EIM) plan.
The same is the case in all three recent MDM-related acquisitions. Each parent company (Oracle, IBM, and Informatica) has ulterior motives.
“Informatica bought Siperian to color in its MDM functional offerings, just as Oracle has a much more robust story around product master data in its acquisition of Silver Creek,” notes Jill Dyché, a principal with BI and DW consultancy Baseline and an avid champion of MDM. “But IBM is different. IBM bought Initiate Systems for its customer base. Initiate has more customers than rival Siperian, and these customers are smack dab in the middle of IBM’s strategic goals of driving health-care reform -- Initiate cut its teeth on patient data -- and bolster its information on-demand strategy.”
Dyche stresses that both the Siperian and Initiate acquisitions were inescapably strategic buys.
“[B]oth Informatica and IBM were laser-focused about what they wanted from their respective acquisitions,” she notes. “Watching these two purpose-built vendors as they’re absorbed into their new corporate parents will be entertaining, as will the heightened buzz around the remaining niche players in the MDM space.”
The fate of these MDM survivors is less clear. Market consolidation doesn’t always cap or constrain the dynamism of a segment. Take the DI market, where vendors such as Acta, Ascential, DataMirror, and Sunopsis (along with replication stalwart Golden Gate Software) were all purchased by bigger players. This action hasn’t stifled the DI market. Informatica, for example, emerged as a bona-fide DI force only after IBM acquired Ascential. What’s more, a host of DI players -- such as Information Builders Inc. (IBI) with its iWay subsidiary, F/OSS vendor Talend, and newcomer Expressor Software -- have emerged in the DI segment.
On the other hand, consolidation can cap or constrain dynamism in some markets. Consider what happened in the best-of-breed BI suite segment, for example. When the big BI pure-play vendors -- Business Objects, Cognos Inc., and Hyperion Solutions Corp. -- fell back in 2007, Wayne Eckerson, director of TDWI Research, remarked that the fates of all three vendors were foreordained once Oracle acquired Hyperion in February of that year. Both Business Objects and Cognos then fell like so many dominoes, Eckerson noted. They almost had to.
It’s less clear what’s going to happen in the MDM segment. There’s no big independent company. Experts concede that there’s a roiling debate over the soul of MDM. Dyché and others champion an inclusive or complementary model in which MDM is positioned as an important but in no way discrete DM service. Other industry watchers are less charitable. In some cases, it's a question of orientation: DI experts see MDM as a subset of data integration.
“MDM products … have improved in features, but most of the market still rolls their own solutions,” observes author, consultant, and data warehouse architect Mark Madsen, a principal with consultancy Third Nature Inc.
“The thing is, DQ is really an element of ETL, and separate isn't all that sensible [in this respect].” That’s one reason, Madsen suggests, why DQ has largely been subsumed by DI. This isn’t so simple when it comes to MDM.
“MDM is a level up in abstraction, but it's still core to managing data and quality. It takes a lot of DI to do MDM, so you end up forking over money for the MDM ‘solution’ only to discover that three-quarters of your project is data integration and you need to fork over more for a data integration product.”
MDM has a “dirty little secret,” too, according to Dyché. To the extent that the recent acquisitions will help reconcile and promote how MDM and DI complement each other, that’s a great thing, she stresses, but most DI or information-integration players tend to have ulterior motives when it comes to MDM. That’s something you almost certainly won’t hear them talking about.
“[These] acquisition[s] … start to reveal the dirty little secret that vendors don’t want you to know about MDM: Once you invest in an MDM technology and on-board a system or two, you’re pretty much on the hook. It becomes foundational, not only from an IT perspective -- as it continues to link data from heterogeneous systems -- but from a business-enablement perspective,” she concludes.
“MDM is the new ERP. It’s really, really hard to de-commission. Way harder than replacing a BI tool or re-platforming a data warehouse. The vendor that owns MDM can become the de-facto owner of its customers’ enterprise data.”