Software AG buys Data Foundations: Business Acumen Meets Data Competency
Co-authored with Forrester's Rob Karel.
On September 18, 2010, Software AG (SAG) — best known for its business process management, B2B, and SOA-based integration solutions — announced its acquisition of Data Foundations, a master data management (MDM) vendor based in Hackensack, New Jersey. Data Foundations is smaller and less well known than the more mature and comprehensive MDM solutions from Initiate Systems and Siperian, both of which were acquired earlier this year by IBM and Informatica, respectively. Once Initiate and Siperian were taken off the market, no tier one MDM vendors remained for potential suitors to consider — especially those that could support both analytical and operational use cases. Having missed out on the opportunity to snag one of those leaders, we believe Software AG made the right technology choice in selecting Data Foundations.
Who is Data Foundations?
Data Foundations was founded in 1998 as a data management services consultancy, but it moved into MDM software in 2002 with the first release of its OneData platform. Most of Data Foundations’ experience to date has been in the analytical MDM (or as we like to call it, “governance-driven MDM”) market that focuses primarily on delivering version-controlled views of master data across various data domains used often in data warehousing, BI, or analytic environments and included strong workflow, stewardship, and security controls. Data Foundations’ competition primarily included Kalido, Orchestra Networks, and Oracle DRM. More recently, Data Foundations says that the newest version of OneData can now compete in the operational MDM market supporting CDI and multidomain MDM use cases dominated today by IBM, Informatica/Siperian, and Oracle. Since that version is new to the market, it’s too early to tell how it stacks up against the rest.
Why is Software AG entering the MDM market?
It’s no longer too scandalous or surprising to admit that technology- or IT-centric MDM strategies just don’t work. Building a single version of truth of master data in a central hub somewhere doesn’t directly solve any business problems. The only way master data can reduce risks, improve operational efficiencies, reduce costs, increase revenue, or strategically differentiate an organization is by figuring out how to connect and synchronize that master data into the business processes and decisions most important to an organization’s success.
With this acquisition, Software AG acknowledges that the customers of its integration and business-process-centric solutions have a strong dependency on high-quality data. This move reflects a trend that we have identified and coined as “process data management,” which recognizes the clear need for business process management (BPM) and MDM strategies to be much more closely aligned for both to succeed. The synergies between BPM and MDM are incredibly strong, and SAG is gambling that its differentiated “Process-Driven Master Data Management” message will both intrigue its existing BPM clients as well as differentiate it from the other MDM vendors. Software AG, especially with its 2009 acquisition of IDS Scheer, is now closely aligned with the business leaders that own these mission-critical processes, which is a relationship that evades many other MDM vendors who are still selling primarily to IT.
In our first report on process data management, we highlighted the inherent risks faced by both MDM and BPM teams when process improvement and data quality are disconnected. Our research uncovered that BPM teams face a vicious cycle of “process data failure” if they don’t invest time to uncover how processes leverage master data from the outset. And on the flip side, MDM teams must continuously prove their value to the organization when data quality is not connected to business context. With Data Foundations, Software AG plans to bridge this gap by connecting process discovery and execution with data governance and data quality.
This doesn’t mean that Software AG is immediately relevant in the MDM market. It has a lot of work to do to integrate the less-known and less- experienced Data Foundations technology platform into its broader portfolio, and it will have to continue to consider what functional gaps may still remain to truly compete with much more mature solutions on the market. Software AG would do well to focus on its process-driven MDM message and hope to get some early wins from its existing BPM-centric install base to prove it can play ball with the more experienced MDM providers. Unlike its acquisition of itCampus, Software AG will need to provide a clear road map to customers on how the Data Foundations acquisition will directly benefit stakeholders and accelerate time-to-value across BPM and MDM initiatives.
Will this trigger more movement in the BPM and MDM markets?
MDM and BPM cannot live independently, and vendors providing solutions into either or both of these competencies need to address this relationship sooner rather than later. Even MDM leaders like IBM and Oracle that also offer business process management software within their product portfolios are doing very little to actually integrate and align these capabilities. TIBCO is probably the most comparable competitor to Software AG from a product portfolio and alignment standpoint, but TIBCO’s MDM solution has not made a significant dent in the MDM market, most likely due to its continued focus on IT and technology issues as opposed to evangelizing MDM to a business audience. This is Software AG’s opportunity to differentiate, while the other BPM and MDM vendors scramble to catch up.
Data Foundations had an existing OEM partnership with Netrics for data matching, but with TIBCO’s acquisition of Netrics earlier this year, SAG will instead focus more on its relationship with Harte-Hanks Trillium Software ongoing to provide data quality and matching capabilities to support MDM. Of course, on the same day that SAG announced its acquisition of Data Foundations, TIBCO announced its agreement to launch a joint MDM and data quality platform with Trillium Software, which dilutes the differentiation that SAG could have had with Trillium as a partner. We expect to see other MDM vendors, most notably Oracle, continue to partner with Trillium as well to deliver best-of-breed data quality capabilities. We’ve blogged this recommendation often to Oracle and will provide the same advice to Software AG and TIBCO: Bring data quality and matching capabilities in-house to support your MDM strategies. It’s too important a component of MDM to rely solely on a third-party partner.
Additionally, we expect Software AG’s move will spur other BPM suite players to move beyond “data services” as the catch-all solution for addressing master data issues encountered on BPM initiatives. While leading vendors, such as Appian and Pega, understand the challenges of connecting master data to process improvement, very few support business-oriented data modeling as a key component of process modeling. Our recently published “Forrester Wave ™: Business Process Management Suites, Q3 2010” report highlighted IBM as the only BPM suite vendor to offer a full-featured business glossary as part of their BPM suite — but even then, the business glossary was not connected with IBM’s InfoSphere Business Glossary targeting data stewards and data management professionals. By connecting ARIS’s business-oriented process and data modeling features to the Data Foundations environment, Software AG would become one of the first BPM suite vendors to provide a seamless environment for modeling and managing data across different roles and perspectives that contribute to both MDM and BPM.
Further convergence of business process management and data management solutions may see some of the following changes over the coming years:
- Bridging of business glossaries created within BPM suites and business glossaries/data dictionaries created by data management and metadata management platforms.
- Combining data modeling and process modeling best practices and technologies with the deliverable of a true enterprise process data model as a result.
- Increased focus to align data governance and process governance initiatives across organizations.