Matching specialist Netrics was this week acquired by Tibco. Netrics offered a genuinely different technical approach to matching (with its bipartite graph technique) and, unusually, was designed to be embedded within other applications. Several MDM vendors did just this, and the feedback I have had is that the technology was easy to OEM and worked well in practice.
This is a good exit for Netrics shareholders but rather a shame that a different approach to matching has been taken off the market. Hopefully Tibco will continue to encourage other vendors to embed the technology, though inevitably vendors will be more nervous of doing this now.
It has been a busy week on the MDM M&A front, as in addition to Informatica’s purchase of Siperian, IBM also opened its cheque book to buy Initiate, which was the largest independent MDM vendor. This is a further validation of the attractiveness of the MDM space. The financial terms were not disclosed, but Initiate was over twice as large as Siperian in revenue terms, so the deal size will have been significant. Initiate’s investors have been looking at an exit since they were forced to pull their planned IPO in adverse market conditions, so it is not entirely surprising that Initiate has been swallowed up.
What was somewhat more surprising is who did the swallowing. I had a feeling that SAP were a likely candidate to buy Initiate, given their current product-centric MDM product (based originally on content management vendor A2i). After all, IBM already has two MDM product lines, a customer hub (based originally on DWL) and a product hub (based originally on Trigo) that they are ever-so-slowly merging under the MDM Server banner. This is in addition to the MDM hierarchy management tool they obtained when they bought Cognos. Hence IBM was not exactly light on MDM products.
What is intriguing is the almost entirely vertical slant that IBM are putting on the Initiate purchase; their press release describes Initiate as a healthcare solution, with MDM not even mentioned. Initiate grew up in the healthcare sector, and has plenty of healthcare customers, but it was a marketed as a general purpose MDM customer hub. Customers outside healthcare include Microsoft, Barnes & Noble, Capital One and even Brent County Council.
It is intriguing to consider whether the Initiate technology will be incorporated in any way within the IBM MDM Server roadmap, or whether it will be treated as a stand-alone healthcare product. The style of the press release suggests the latter.
This significant move further enhances the value of the remaining independent MDM software vendors, since there are still plenty of large players out there who may wish to get into the fast-moving MDM space.
I have been speculating for years now about when Informatica would finally enter the MDM marketplace. It is a leader in the integration space, and has good data quality offerings via its acquisitions of Similarity Systems, and more recently Identity Systems and Address Doctor. I am not sure why Informatica held off so long from gaining exposure to the fast growing MDM market, but its purchase of an MDM platform hub has seemed almost inevitable.
I most recently speculated about the eventual target being Siperian. Today the two finally tied the knot, with Infomatica buying Siperian for around $130 million in cash. I estimate that this is a revenue multiple of perhaps four times. This is a very logical purchase for both companies. Siperian has solid technology based on a flexible business model, and will be very complementary to Informatica’s data quality and integration offerings.
This acquisition further confirms the attractiveness of the MDM market, and is good news for the other MDM platform vendors. Market rumours are swirling as we speak about the purchase of Initiate (perhaps by IBM) and if this happens then it could be a gold rush to pick off the better quality independent companies. Despite many purchases already in this space, there are still plenty of potential further acquirers out there.
I would like to wish you all a happy New Year. Some people have inquired about why my here postings have become less regular than they were in the past. Well, it is not that I have run out of opinions (you wish), but I now have some other outlets for the material that used to appear entirely in this blog. Some of the longer-style posts now appear in the form of a monthly column in CIO magazine:
http://www.cio.co.uk/author/andy-hayler/ (which has a link to the articles)
The more news-related items, which typically talk about an event in the software industry such as an acquisition or a significant new software release, appear as articles on the web sites IT Analysis and IT Director. For example:
http://www.it-director.com/about/author/14100/andy_hayler.php (with link to articles)
http://www.it-analysis.com/about/author/14100/andy_hayler.php (this has a link also).
I will use this blog to cover miscellaneous items that don’t fit logically into the above forums.
I am looking forward to 2010, which I hope will see at least a partial recovery for the economy and hence better times for the enterprise software industry. Have a great year!
New MDM Landscape is available
My company has now completed its latest assessment of the MDM market, which we represent via our “Landscape” diagram. The research is quite time-consuming, and involves surveying vendors for factual information (then sifting out their more blatantly optimistic assertions; I am a suspicious soul), looking at product demonstrations and asking pesky questions about features of the products, and carrying out a survey of reference customers. The results are amalgamated into a high level view of each vendor in the market in the dimensions of “market strength”, “technology “and “customer base”. Much more detail of the breakdown of the various elements that contribute to these scores are held in our vendor profiles.
You can see the diagram and some accompanying text on the front page of our web site.
As part of our ongoing research program, we are conducting a major survey into the state of data quality today. If you have a few minutes it would great if you could participate in this (all participants get a free summary of the survey results).
The survey can be found here:
In addition your e-mail address will be entered for a prize draw offering you the chance to win one of ten free annual subscriptions to The Information Difference website (worth USD $ 550).
Thanks in advance.