Andy on Enterprise Software

Kalido changes hands

October 17, 2013

Yesterday Kalido, the data warehouse and MDM company, changed owners. Rather than an acquisition by a software company, the buyer was an investment company called Silverback, a Texas company backed by a VC called Austin Ventures. The company specialises in purchasing software companies in related groups, building the businesses into something greater than the original parts. It has recently done this with a series of project management-related acquisitions in the form of Upland Software. In this context, presumably Kalido will be combined with Noetix, an analytics company in their portfolio, perhaps with something else to follow. At first glance, the synergy here looks limited, but we shall see. It would make sense if acquisitions in the areas of data quality and perhaps data integration followed, allowing a broader platform-based message around master data.

As someone with a personal interest in the company (I founded it, but left in 2006 when it moved its management to the USA) it is a little sad to see Kalido not achieve greater things than it has in the market, at least up until now. It was perhaps a bit ahead of its time, and had technology features back in 1996 that are only now appearing in (some) current competitors: time variance and the management of federations of hub instances being key examples. The marketing messaging and sales execution never matched the technology, though the company has nevertheless built up an impressive portfolio of global customers, which remain a considerable asset. Hopefully the new backers will invigorate the company, though to do this a key indicator will be whether they manage to lock in and motivate key technical staff. If this happens, and genuinely synergistic acquisitions follow, then perhaps the company’s technology will gain the wider audience that it deserves.

Informatica’s MDM strategy

March 12, 2013

I recently spent a couple of days with the management of Informatica at the Rosewood Hotel in Palo Alto. The company sees a lot of potential in the notionally rather mature area of data integration, with hand-coding still the norm in many companies, especially in less developed markets such as China, Russia and Mexico. From an MDM viewpoint, In 2012 one third of the revenue was part of a broader deal, with the company claiming a doubling of customer logos. Informatica’s MDM offering is based on two acquisitions, Siperian and now Helier. Siperian was also noted for its good scalability for customer data, and a recent customer win at HP illustrates that, the application dealing with 1.5 billion customer records, and handling 37,000 users.

The Heiler acquisition is still technically not complete (German securities rules in such things moves slowly) but it was evident that the Heiler staff were already working in concert with Informatica. Heiler itself grew 29% in 2012, showing a growth spurt in Q4 after the acquisition was announced. Informatica had for some time claimed that their MDM offering was multi-domain, but in reality most customer examples were based on customer data, and heavily skewed towards North America. The purchase of European PIM vendor Heiler gives more balance to this picture, and in time one would expect to see the separate MDM hubs sharing metadata etc. Informatica actually has a quite good story around managing multiple MDM hubs, but this is one that it has been quiet about, perhaps not perceiving much demand, yet its capabilities e.g. in data masking, are useful in such contexts and should enable it to do a better job than many in a federated environment. For mufti-national companies managing a federation of MDM hubs will be the reality, but the MDM market has been in denial about this. To me there is an opportunity here for any vendor that can clearly articulate a federated vision.

Informatica has clearly embraced MDM as a core technology, and indeed this make sense given the higher growth rates in the MDM market than in its traditional integration market.

Informatica goes shopping

October 9, 2012

Informatica has made an offer to buy Germany PIM vendor Heiler – the deal has not gone through yet and the German securities laws are complex, but it appears to be a “friendly” takeover. There are a few interesting aspects to this. Firstly, it sets a useful valuation benchmark. Heiler did 17.4 million Euros in revenue in their last financial year, and the offer is 80.8 million, so this is a price to sales ratio of 4.6, a healthy though not extreme valuation (Heiler also has 15.8 million euros of cash and is modestly profitable, with profits in the last financial year of 1.4 million Euros). It had been around in the MDM market for 12 years, and so is quite a mature product/company, shown in the split of its revenue, with nearly half its revenue in services, and a fifth in maintenance revenue, with several hundred customers.

The deal makes sense to Heiler, as Informatica has a far more powerful sales channel. From Informatica’s perspective they gain a solid piece of technology with a proven footprint in the product data domain, whereas Informatica, for all its multi-domain marketing, has been primarily used to managed customer data. They also gain a slice of the European MDM market, reducing their heavy US revenue preponderance. Moreover, assuming the deal goes ahead, Informatica now has several hundred new customers to up-sell its other software to e.g. its integration and data quality offerings.

The deal also shows that the M&A market is still active for MDM software, which is positive news for the shareholders of other independent MDM vendors out there.

SOA and how to run a conference

October 15, 2008

I am currently at the SAP Teched conference in Berlin. I will write in a separate publication about the forthcoming version 7.1 of SAP MDM, but have a couple of quite separate observations to mention here. The first is a confirmation of what i have long believed:that going towards an SOA world is going to be very hard work. One customer here, Volkswagen Financial Services, described an ambitious project where they have taken a part of their business, which deals with fleet car hire, and moved wholesale to an SOA-based infrastructure. This project has been live a few months and is already showing some genuine benefits compared to the rather manually intensive system they had before, in terms of faster processing time for certain common business processes (which used to involve agents dealing with multiple applications) and in terms of improved data quality. However it is interesting that no formal cost/benefit analysis appears to have been done. Moreover this project, which involved 100 IT staff and 50 business people, took over five years to complete. I do not think this is much to do with the technology, but rather the sheer complexity of taking a cross functional view, involving different business lines agreeing on common terminology and data definitions, agreeing on the way in which the many new web services behave. There has also been a lot of change management needed to effectively get the front-line business users to accept the new system, which automates many tasks that they used to have direct control of.

I suspect that few companies have been quite so aggressive in their move to SOA as VW. A more typical conversation was with a gentleman at a German utility and resources company, who have been looking actively into SOA since 2006. They are only just putting their toe in the water now, putting in a very limited project with just a handful of web services, across a single process, in just one small subsidiary of their organisation. Even this limited pilot has not been entirely without its issues. One problem which has reared its head is how much more difficult it is to do debugging across a web services application which touches a whole series of different applications in its wake. If something goes wrong, then they have found it is a lot more fiddly to trace where exactly the fault lies, given the cross-application nature of the project. Again, this is a project driven by the IT department as an exercise in proving technology, rather than one with a quantified business case. I do not pretend that a few random conversations at a conference is a remotely scientific sample, but it seems clear that SOA is far from mainstream in many companies thus far, and that there are new issues to address compared to traditional applications. Not least of these is the need to sort out common master data definitions across the multiple applications affected.

On a separate note, those who read my blog regularly will know that a bugbear of mine is conferences that do not run on time or are disorganised – yes ETRE, that means you. By contrast, this conference is a testament to stereotypical Teutonic efficiency. Sessions start on time to the minute, and finish on time, to the minute. There are plenty of staff around to guide people around the large congress centre, and the pre-conference administration was exemplary. When I arrived I was handed not just a conference schedule, but a suggested set of lectures and meetings that were likely to be of interest specifically to me based on my MDM interests. If only all conferences could be run by Germans.

A speedy investment

August 30, 2008

In recent years venture capital firm have generally shunned enterprise software companies, so it was interesting to see start-up expressor (no, this is not a typo) doing a USD 10 million round this week. The company has genuinely interesting data integration technology, and in a future release plans to add significant data quality functionality. Its use of parallelism enables it, in principle, to compete at the high end of ETL.

It is good to see venture firms dipping their toes back in the water of innovative enterprise software companies. A couple of years ago I came across what I thought was an interesting data quality company called Zoomix. I introduced them to a prestigious venture firm, who were entirely uninterested, at the time chasing after ever more trendy social networking websites (the company was in fact bought by Microsoft a few months ago, which would have netted a pretty decent return for the investors). Although the enterprise software sector is not exactly booming, there is still room for astute investments in differentiated technologies.

The Bulldog gets a housemate

July 21, 2008

Microsoft generally likes to acquire software companies when they are quite small, with a dozen or two employees. In this way they can assimilate the development staff into Redmond and into the Microsoft way of doing things. An example of this was last week, when they decided to acquire a data quality technology. There are literally dozens of data quality vendors out there, most fairly small, and so there was plenty of choice. They opted for Zoomix, a small Israeli company which I first encountered in 2006, though they were founded in 1999. Zoomix had some quite clever marketing, claiming “self learning” technology as a way of making data profiling in particular more productive. In this way it could be compared to Exeros, although the technology underpinnings are quite different.

In this case the R&D team will move into the Microsoft technology centre already in Israel. This is a logical move by Microsoft, who acquired Stratature in order to give them an MDM capability. This product is currently being retooled under the code-name Bulldog, and a data quality offering to complement this is a natural fit. The timing around Bulldog’s release are unclear at this point, as it is folded into the SQL Server release timeframe.

Initiate not going for Initial

June 27, 2008

In what could not be described as surprise move, Initiate Systems just pulled its previously planned Initial Public Offering. The turmoil in the capital markets means that it is difficult time to raise money right now, and so it seems sensible to wait until a better time for going public. This does raise the possibility of whether Initiate will consider raising money another way (update – it just did a USD 26 million private round), or indeed whether a potential predator might consider this a good time to pounce.

Generally this has little impact, but a lack of exit opportunities is a poor thing for the enterprise software sector in general, as venture capital firms are less likely to invest in earlier stage firms with one of the two exit routes (the other being a trade sale) closed. Initiate had made excellent market progress with its MDM technology, and it would have been nice to see a pure-play MDM vendor going public.

The dust clears (a bit)

June 5, 2008

I have wondered for some time about Informatica’s intentions in the MDM space. There had been some market rumours about them possibly buying Siperian, but it seems as if their not so secret meetings with Siperian were actually to form a partnership, which was just announced.

This is an eminently sensible partnership in my view. In most MDM projects there is going to be much gather of data from multiple places, and so MDM vendors typically need to rely on integration, or at least data movement technologies that enterprises have already deployed. Assuming that this relationship will be exclusive (unclear from the press release), Siperian has locked in a relationship with the last remaining independent ETL and integration player of note (Ab Initio is also still out there, but is so secretive that it is part vendor, part cult). Informatica gains a foothold into the fast growing and important MDM market, so it is a win-win as far as I can see.
Perhaps one day this relationship will lead to something more binding, but for now these two vendors appear to be dating rather than tying the knot.

The Information Difference

May 13, 2008

Today sees the launch of the Information Difference, a boutique market research and analyst firm specialising in the master data management market. This reflects the increasing interest in this fast-growing area. The company has developed detailed profiles of all the vendors in the MDM space, as well as of some of the major and most interesting players in the related data quality space. The company will shortly announce its first piece of primary research (into MDM adoption) and will produce white-papers on key issues in the MDM market.

Its principals are Dave Waddington (ex Chief Architect at Unilever Foods) and myself, with some part-time assistance from a number of other talented individuals. It is nice to see some positive reactions from some serious industry luminaries (see press release).

We hope to bring a more in-depth perspective to this emerging market than is common today, and have some exciting research in preparation.

For more information see the company website.

Tilting at Windmills

April 22, 2008

I wrote recently about likely further consolidation in the MDM market. A further example, albeit on a small scale, happened today as FullTilt, a PIM provider, was bought by QAD. QAD is a public company selling ERP software, with around 1,500 employees which has been listed since 1997 though its history goes back to 1987. FullTilt was known by industry insiders to be “in play” for many months, and has been openly for sale for some time. It is a relatively small company that has struggled to get scale, and so a deeper pocketed parent makes some sense for it.

This is another example of companies in more mature markets seeking to get exposure to the fast growing MDM market. It will not be the last such move.