As I’m sure everyone has heard by now, EMC acquired data warehouse appliance vendor, Greenplum. I don’t cover the data warehousing and analytics space, I leave that to my colleague Jim Kobielus who discussed this acquisition on his blog. While many data warehousing and analytics thought leaders will debate the likelihood that this acquisition will spark a wave of consolidation in the DW/analytics space, I’d like to focus on what’s going through the mind of the acquirer: EMC. I was intrigued by this acquisition because EMC has been on my very short list of potential new entrants into the data management software space, especially concerning master data management (MDM) and data integration.
So to cut to the chase, in this blog post I’m going to recommend to EMC that they acquire both Informatica and TIBCO and challenge IBM for world domination of the information management market. Here’s my thought process:
EMC hinting at data management interest for a while now
EMC, a $14+billion information management powerhouse, has a product portfolio very focused on the unstructured content side of the information landscape. According to its latest 10K filed earlier this year, most of its business comes from its hardware and software Information Storage solutions ($10.7 billion), but significant business also contributed by its VMWare Virtual Infrastructure ($2+ billion), Enterprise Content Management and Archiving ($740 million) as well as its RSA Information Security solutions ($606 million).
But EMC’s hardware and software business is just the tip of the iceberg. Approximately 37% of EMC’s total revenue comes from its consulting and IT services business. And this is where EMC has caught my attention over the past year or two with its focus on strategic consulting to support both MDM as well as information governance efforts that spans both data and content initiatives. In addition, EMC acquired a BI consulting company, Conchango, back in 2008. When I first heard EMC was investing in building a practice to support MDM – a very structured data-centric competency at this stage – I wondered if this was a way for them to test the waters to see if its large client base would be interested in having them as a partner to focus on both content and data. (A note for those who believe MDM is bigger than just structured data today: Beyond PIM applications that bridge product data and images and other product-related content within the context of that application, a legitimate focus on true master “information” management remains many years away in my view. I certainly agree it will be an important evolution, but we’re not there yet).
The next move EMC made was in May 2010, when EMC and Informatica announced a partnership agreementwhereby ECM will resell Informatica’s Information Lifecycle Management (ILM) and MDM solutions as part of its EMC Select partnering program. Informatica’s ILM solution (which came via its acquisition of Applimation in 2009) supports archiving of both structured and unstructured information, and EMC pointed to application and data warehouse archiving – a structured data focus – as one of its key drivers for that partnership. And of course Informatica’s MDM solution (based on its acquisition of Siperian in January 2010) makes Informatica one of the top MDM vendors in the market.
The Greenplum acquisition clearly had a number of existing synergies (as Jim outlined in his blog), but now that EMC has made the move into data warehousing, the next logical step is to build out their software stack to better support data warehousing efforts. From a data architecture perspective, this would most likely include data integration such as ETL, change data capture (CDC) and data federation to complement EMC’s existing data replication capabilities, as well as data quality and master data management technology to manage that pesky “getting trusted data in” dependency.
It seems clear that EMC is interested in expanding its data management stack, but will they consider a best of breed approach of acquiring smaller, niche vendors to expand this data management stack – as they did with Greenplum. There are still a few targets in the data integration and data quality space, although many of the more mature enterprise-class vendors have already been acquired – especially on the ETL side. Similarly, acquisition targets for highly functional, enterprise-class MDM solutions are scarce at best. While MDM vendors such as Data Foundations and Kalido are doing interesting things in the MDM space, they don’t today offer as comprehensive a solution as those offered by IBM, Oracle and now Informatica/Siperian.
EMC should target Informatica – but may have some competition
In my view, the most logical acquisition for EMC to instantly ensure its credibility – and market presence – in the data management space is to acquire Informatica. There is minimal overlap between EMC’s and Informatica’s product portfolio. Informatica brings its mature and well integrated stack which begins with its PowerCenter data integration platform at the core. But Informatica over the past 4+ years or so has been extremely active in building out its data management portfolio to compete more effectively with IBM’s InfoSphere solutions and has since acquired data quality (Similarity, AddressDoctor), MDM (Siperian), identity resolution (Identity Systems), unstructured data management (Itemfield), complex event processing (Agent Logic), ILM (Applimation) and messaging (29West).
Informatica is a public company with annual revenues exceeding $500 million with a market cap over $2.25 billion (as of today), so they won’t come cheap. But EMC is one of the few large information management vendors with both the means (over $6.5 billion in cash) and the potential motivation to make such an acquisition.
Other potential suitors for Informatica include:
- SAP. SAP certainly has the means, and rumors have been around for years that SAP would acquire Informatica – but honestly I think SAP waited too long and there’s just too much overlap in its portfolio to rationalize such an expensive acquisition, especially with the EIM portfolio it acquired with Business Objects.
- Oracle. This is not that likely since there’s a ton of overlap between Oracle and Informatica’s MDM and data integration portfolio. That said, Informatica’s PowerCenter is much more robust than Oracle Data Integrator and much of Oracle’s BI portfolio still OEM’s Informatica. Also Oracle’s Universal Customer Master MDM solution still OEM’s Identity Systems which Informatica acquired in 2008. Oracle could certainly benefit from Informatica’s data quality and identity resolution portfolio, but honestly the main reason Oracle would consider an Informatica acquisition would be to (1) acquire Informatica’s customers, (2) block its competitors from getting Informatica, and (3) well, just because they can afford it they could do it and that’s often enough reason for Oracle. I don’t necessarily expect Oracle to make a first move for Informatica, but wouldn’t count them out if a bidding war ensues.
- Microsoft. Microsoft also certainly has the means, but it just doesn’t seem interested in doubling down on heterogeneous environments – instead focusing their data management investments in optimizing SQL Server shops.
- HP. There’s been talk for years that HP, also an information management powerhouse – would move beyond just their niche Neoview solution and acquire/develop more data management software, but HP’s strategy for years has remained very focused on the services side of their business (acquisitions of Knightsbridge, EDS, etc) and I’d be surprised if they finally made an aggressive move on the data management software side of the market. If HP did in fact make a move for Informatica, I would expect them to also make major acquisitions in data warehousing, analytics, and business intelligence as well.
Well, the crystal ball is already on the table so…
Now that we’re all agreed it’s time for EMC to acquire Informatica 🙂 let’s go one step further and suggest that EMC should also acquire TIBCO to round out its integration and BPM portfolio. TIBCO specializes in its popular application integration and business process management capabilities, but also offers business intelligence and data visualization software (via Spotfire), advanced analytics (with Spofire’s Insightful acquisition), MDM (acquired Product Information Management vendor Velosel back in 2005), and most recently advanced matching capabilities with its recent acquisition of Netrics.
TIBCO is of similar size to Informatica (~ $675 million in revenue with a market cap at about $2 billion) and both Informatica and TIBCO can claim dominance in their individual markets – TIBCO on the transactional, real time messaging, application and process integration side and Informatica on the data integration side. But both have been slowly trying to expand their relevance to the other’s market. Informatica purchased 29West, a messaging vendor specializing in the financial services sector to improve their real time credibility and TIBCO has been playing with the MDM market since it acquired Velosel moving its CIM product to support multi-domain use cases beyond just PIM, but hasn’t been able to get a strong foothold against the MDM market leaders. I’ve always thought a merger of equals of Informatica and TIBCO would be a very intriguing and complementary partnership from a technology portfolio perspective, but don’t see that as practical. But having EMC as the guiding force to bring these two cultures together would be extremely interesting and would instantly create significant credibility for a combined EMC/Informatica/TIBCO to compete against the likes of IBM, Oracle and SAP in the broader information management marketplace.
So what do you think? Is EMC moving in this direction? Was Greenplum just a tactical acquisition that’s not foreshadowing a major product strategy shift? Do I need to shelve my crystal ball and get back to work!?
I’d love to hear your thoughts.