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Examining the Aftershocks of IBM's Ascential Acquisition

Because of the range of BI partners impacted, IBM's Ascential buyout could prove to be the most disruptive BI acquisition to date.

• By Stephen Swoyer
• April 13, 2005

Before it was acquired by IBM Corp. several weeks ago, Ascential Software Corp. enjoyed a unique position among ETL pure-players. For starters, it was a market-leading ETL vendor and boasted a diverse assortment of (mostly complementary) BI technologies in its product portfolio.

Furthermore, Ascential—unlike pure-play rival Informatica Corp.—never strayed from its calling as an ETL vendor. ETL and data integration were its steadfast core competencies. Informatica, with its digression into pre-packaged analytics and analytic reporting (with PowerAnalyzer), alienated several one-time BI partners, some of which jumped ship to Ascential.

Ascential’s acquisition by IBM alters this calculus considerably. Even after several weeks, the aftershocks of Big Blue’s move are still being felt.

Consider Ascential’s existing partnerships, which include a veritable who’s who of BI players—Business Objects SA, PeopleSoft (formerly independent itself), NCR Corp. subsidiary Teradata, and others. At first glance, IBM’s stewardship of Ascential shouldn’t alter any of these relationships. But in the weeks since Big Blue first announced its blockbuster move, several Ascential partners have signaled caution about their future relationship with IBM’s newest acquisition.

Take Teradata, for example. In spite of its high-end data-warehousing prowess, the NCR subsidiary doesn’t currently offer an enterprise ETL tool of its own. This is by design, says Teradata CTO Stephen Brobst. “Our strategy is really a best-of-breed strategy, so we do not have an ETL tool built into Teradata. We do joint engineering with the industry leaders like Ab Initio, and Informatica, and even Ascential,” he explains.

Brobst adds an important caveat on the subject of Ascential, conceding, “We kind of have to work out what the IBM thing means for the future of that [relationship].”

Teradata, as it turns out, has good reason to be wary of an IBM-controlled Ascential: Big Blue is its most significant competitor in the large-volume data warehousing space, Brobst says. “We have lots of customers who use Ascential, and they’re very happy with it, but we just have to sort out what changes” IBM has in mind for Ascential’s product and technology stack. “We kind of have this co-opetition relationship with IBM, so we just have to make sure that all of our Ts are crossed and our Is are dotted.”

Brobst thinks it’s possible IBM could tighten up integration between Ascential’s ETL and data integration tools and its own DB2 database. “On the DB2 side, they’re a competitor, and we have to just make sure that the Ascential people are firewalled from the DB2 people, like it is with WebSphere,” he notes. Several Ascential competitors—most notably, Informatica—have claimed such a coupling is a near-certainty, but IBM has insisted it will continue to offer a full-featured, standalone version of Ascential’s DataStage ETL tool.

At the same time, Brobst points to IBM’s strategic shift in favor of WebSphere—which it has subtly positioned as the nucleus of its data integration strategy—as a promising sign. “I think a lot of that [Ascential technology] will end up [in WebSphere].”

Other Ascential partners have confessed themselves concerned, too. Business Objects, for example, recently signed a deal to license Big Blue’s DB2 Information Integrator Classic Federation, a mainframe data-access tool. The agreement is a textbook example of why data integration vendors should stick to data integration: Business Objects had previously licensed mainframe-access technology from the former Striva Corp., which Informatica acquired in late 2003. Given Informatica’s presence in several of the markets in which it also competes— pre-packaged analytics and analytic reporting—it was a no-brainer that Business Objects would look elsewhere for a mainframe data access tool.

On top of all of that, Business Objects markets an ETL tool, Data Integrator, which is based on technology it acquired from former SAP data access specialist Acta.

What will Business Objects do now that mainframe data access partner IBM has bought a market-leading ETL tool? In the days immediately following Big Blue’s acquisition of Ascential, Darren Cunningham, product marketing manager for Data Integrator, admitted that his company had been tossing around the same question. “So there’s some internal discussion going on, and a lot of it will depend on what IBM’s direction is with Ascential, but we’ve certainly been happy integrating with their mainframe connectivity, so that one is sort of a to-be-determined,” he acknowledged. “In general, there’s opportunity for [competitive] data integration platforms that better access mainframe data.”

Not everyone is sweating the IBM/Ascential juggernaut. SAS Institute Inc. is a long-time IBM partner. But SAS also pushes a market-leading ETL tool of its own—Enterprise ETL-- that both Forrester Research and META Group have rounding out the ETL top three (along with Informatica and Ascential). But Bill Prentice, a technology strategist with SAS, argues that IBM is a responsible company that (more importantly) generates considerably more revenue from its IBM Global Services unit than its Software Group. This will keep Big Blue honest, Prentice speculated just after the announcement of the acquisition.

“They [IBM Global Services] resell our products. They resell Ascential’s [products]. They obviously don’t just push [IBM’s own products] or they wouldn’t have the kind of success they’ve had,” he pointed out.

What does IBM’s move mean for Business Objects, SAS, Data Junction, Cognos (which markets an ETL product called Decision Stream) and other vendors (such as Ab Initio) that either don’t concentrate on ETL as a core competency or which lack the penetration and profile of an Ascential or Informatica? After all, not only has one of the last ETL pure-plays been taken off the market, but another trend—that of RDBMS vendors doing ETL—has fast been gathering momentum.

Oracle continues to push Warehouse Builder wherever its flagship database is in use, Microsoft’s Data Transformation Services has enjoyed great success, and now IBM has come into possession of a full-fledged enterprise ETL tool, some part of which will almost certainly find its way into DB2. What’s the upshot for everyone else?

“ETL does seem more [of] a back-end IT issue—perhaps best [left] in the hands of the DBMS vendors, whereas BI is sold to businesses, a front-end issue,” says long-time industry watcher Cindi Howson, a principal with Analytic Solutions Know-How (ASK). Most analysts, not surprisingly, have tended to take a mixed view of the acquisition, although almost all have seen a lot more upside for IBM than downside. What’s clear, says Mike Schiff, a senior analyst with consultancy Current Analysis, is that the full effect of IBM’s move won’t be known for some time. In this respect, the Ascential acquisition could prove even more disruptive than other past BI mega-acquisitions, such as Business Objects purchase of the former Crystal Decisions Inc. for more than $800 million in 2003.