It’s Good to Be Informatica
Industry watchers once scribbled epitaphs for pure-play competitor Informatica. A funny thing happened, however: Informatica has thrived.
- By Stephen Swoyer
- January 3, 2007
Sometimes the biggest seeming setback is actually a prelude to greater success.
Consider IBM Corp.’s acquisition of Ascential Software Corp., which Big Blue sprang on an unsuspecting (or only slightly suspecting) industry nearly two years ago. At the time, industry watchers were scribbling epitaphs for ETL pure play competitor Informatica Corp. With good reason, apparently.
Since then, a funny thing happened: Informatica has thrived.
"The deal will significantly broaden IBM's integration offerings, giving WebSphere Information Integrator needed … ETL and data quality functionality and further complementing WebSphere's process integration offerings," Gartner analyst Ted Friedman wrote at the time. "These capabilities will give IBM all the components of a very broad integration platform, adding ETL to the list of software infrastructure areas in which it has a strong presence and placing increasing pressure on smaller, more narrowly focused integration vendors."
Of course, some industry watchers saw opportunity for Informatica. "From Informatica's perspective, they can create [fear, uncertainty, and doubt] about the Ascential product line being optimized for IBM products while they remain neutral to all," noted Mike Schiff, then a senior analyst with consultancy Current Analysis and now a principal with data warehousing consultancy MAS Strategies.
Informatica officials would be the first to disclaim any charge of FUD-mongering, but the inescapable fact of the matter is that the data integration pure play has benefited from IBM’s move—mostly by picking up disaffected or concerned Ascential customers. In this case, perhaps it was a question of self-generated FUD which—conveniently enough—mongered itself. In any event, as of the end of 2005, Informatica was sitting pretty in the data warehousing (DW) tools segment: According to market watcher International Data Corp.’s (IDC), for example, the data integration specialist last year grew its DW tools revenues at a double-digit clip, with a 25.8 percent spurt in revenue. That more than doubled Informatica’s growth rate from the previous year (9.1 percent) and outpaced everyone else in the DW tools segment—including Microsoft Corp.
How has Informatica done it? For one thing, Schiff says, it was in just the right place and had just the right story at just the right time. He isn’t kidding, either: Just six months before IBM’s Ascential coup, Informatica had a come-back-to-data-integration experience, quitting the business analytics market altogether and deemphasizing its reporting aspirations (with PowerAnalyzer) in favor of a return to its roots: ETL and the broader (and suddenly booming) data integration space. The timing was perfect, Schiff says: a little bit later—after, say, IBM had snapped up Ascential—and Informatica would almost certainly have been seen as capitalizing on a suddenly salient market trend: data integration neutrality.
As it was, Informatica was able to rededicate itself to data integration and, with a new CEO and an emphasis on its bread-and-butter PowerCenter ETL tool, position itself as the Switzerland of data integration vendors well before IBM made its move. Since then, Schiff says, further acquisitions in the data integration segment have bolstered Informatica’s case even more.
"With Sunopsis being picked up, Informatica can benefit the same way—maybe picking up Oracle Warehouse Builder customers who are worried [about the future of OWB} just as Sunopsis customers will be worried about [the future of] Sunopsis," Schiff suggests. "There are other pure play vendors, Kalido and Ab Initio to name a few, but they don’t really talk much about what they do. Informatica is probably the best known pure play vendor. And it’s totally independent. Business Objects [with Data Integrator] is a strong player, SAS is a strong player, but they’re both part of other companies."
Informatica officials, for their part, decline to come right out and pronounce the Ascential acquisition a Good Thing. At the same time, says Informatica’s Ivan Chong, the acquisition did serve to emphasize the importance of data integration neutrality, which—from Informatica’s perspective—is an Unalloyed Good Thing.
"The need for neutrality that it’s emphasized in our customer base is stark and important. Ascential as a standalone was compared against Informatica, and for the casual observer I think the choice was a little bit muddy. Whereas with IBM, the choice is very clear: do you want a big stack or do you want to move toward an SOA architecture where you have a dedicated [data integration] layer?" Chong argues. "Just the fact that the choice is very simple now, it’s either us or IBM, that I think has really made things easier."