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Informatica, Salesforce.com Plight Their Troth

It’s a big win for Informatica and an important milestone in the SaaS-ification of its data integration stack.

• By Stephen Swoyer
• July 26, 2006

Just two months ago, Informatica Corp. announced its first substantive foray into software-as-a-service (SaaS) ETL, touting a partnership with salesforce.com and connectivity into salesforce.com’s software stack as the first steps in the SaaS-ification of its own data integration offerings.

Last week, Informatica went back to the SaaS well—so to speak—notching a deal with salesforce.com whereby the latter company agreed to tap Informatica’s (em>on-premises ETL (PowerCenter, PowerCenter Connect, PowerExchange), data profiling, and data cleansing tools for use by its professional services teams in key customer engagements. On top of the “strategic” partnership the two companies announced in May, this deal brings them even closer together. More importantly, it’s a great cross-sell opportunity for Informatica, as it will give that company access to some of salesforce.com’s most prominent customers.

The new Informatica/salesforce.com accord primarily involves INFA’s on-premises data integration technology, but Informatica itself is fast working to blur the distinctions between the two product categories.

The ETL specialist’s come-to-SaaS moment in May was capped by the announcement—the third deliverable in a projected three-phase roadmap—of a canned SaaS data integration platform, due out early next year. Informatica officials say the company’s SaaS entry will seamlessly interoperate with its on-premises solutions (such as PowerCenter) and will provide multi-tenant, hosted data integration services for a variety of different SaaS and business process outsourcing (BPO) vendors. The idea, said vice-president of business development Ivan Chong, is that users can tap Informatica’s SaaS offering to integrate data across multiple outsourcing service providers and on-premises applications.

Much of Informatica’s SaaS activity to date has directly involved salesforce.com (e.g., it developed PowerConnect specifically for salesforce.com’s hosted stack), but Chong and other officials have said the company’s SaaS data integration entry will support a wide variety of BI, CRM and BPO providers.

“The overall strategy that we’re going to employ is to put more and more of our Informatica data services and data integration capabilities on demand, to be available as services,” said Brian Gentile, Informatica’s chief marketing officer, in a May interview. “In the last six to eight years, we’ve seen a huge rise in data outside the corporation, payroll [BPO players] like ADP, HR like Hewitt, CRM systems like Salesforce.com—lots of data now exists that is owned by the enterprise but exists outside the enterprise.”

Under the terms of the new agreement, salesforce.com’s professional services teams will use Informatica’s data integration and data quality software to help integrate (replicate) customers’ on-premises systems with salesforce.com’s hosted systems. But the accord also calls for Salesforce.com customers to keep using Informatica’s premises-based software (to support ongoing synchronization and replication) even after the professional services engagement is finished.

That’s a big win for Informatica, says James Kobielus, a principal analyst for data management with consultancy Current Analysis. “[It] was a necessity for the vendor to show continued progress in its aggressive on-demand strategy and in its efforts to target the SMB customers that have flocked to Salesforce.com and other SaaS business application environment[s],” he writes. “The latest announcement extends [the Informatica/Salesforce.com] partnership into the realm of professional services and leverages a new tool—PowerCenter Connect—that was also announced in May. And the fact that Salesforce.com has established an internal Informatica center of excellence indicates that the companies are making progress on their commitment … to make all Informatica PowerCenter functionality generally available on Salesforce.com AppExchange.”

The accord helps Informatica protect its existing installed base while laying down another milestone in its nascent on-demand services play, Kobielus says. And there’s the revenue hook, too. “Informatica will gain revenues both from Salesforce.com professional services engagements in which its premises-based tools are used, and also from ongoing usage of any tools that Salesforce.com opt to continue using on an ongoing basis,” he points out.

What’s more, Kobielus notes, Informatica made sure it had all its bases covered: it structured the agreement so as to ensure a minimum guaranteed revenue stream, plus significant growth potential. (Salesforce.com has committed to purchase a minimum number of Informatica service licenses and has provided a minimum annual royalty guarantee to Informatica on subscription licenses.) Salesforce.com will set prices for the subscription licenses on Informatica’s premises-based tools, but Informatica will take 60 percent (and Salesforce.com 40 percent) of the subscription software license revenues.