With the Jan 28th announcement of Informatica’s acquisition of MDM pure play vendor Siperian for $130m in cash the red hot master data management (MDM) market is poised for more interesting things to come. Siperian has been one of the last standing independent MDM vendors with a strong footprint in the Pharmaceutical and Life Sciences market. Strategically the acquisition seems to make sense to me – integrating MDM functionality into the data movement between operational systems and integrated operational or analytical data stores makes architectural sense and will enhance the functionality Informatica can provide to its customers. It will also put pressure on the last independent CDI MDM provider – Initiate Systems – to either forge strong partnerships with data integration players or being acquired itself. Data quality and match providers such as Trillium, Data Flux, and Pitney Bowes will face a harder time in the market as customers are becoming more unlikely to try to implement CDI solutions themselves using their toolset.
What are the implications for ERP vendors with CDI solutions?
I think the impact for the big ERP players such as Oracle and SAP will be fairly limited. Their approach to integrate MDM functionality into the front-end operational systems is different than Siperian’s and Initiate’s architecture. Both Siperian and Initiate are basically stand alone data hubs that can be accessed from operational systems but are most often used to integrate data after it was created by the transactional systems. A company that relies on a big ERP vendor to implement their core operational systems will most likely stick with the ERP vendor’s approach to MDM and only implement additional master data systems if they have a heterogeneous operational environment and the need to integrate data from more than one ERP system.
What are the implications for Initiate Systems?
Initiate Systems has long been a premier provider of a lightweight, registry style CDI solution. Their core market lies in the healthcare space but over the last view years they have established strong footprints across industries including retail and high tech. Architecturally Initiate is a black box service that stores its data in a proprietary format that facilitates high speed matching, merging and business rules driven creation of a ‘Best Customer View’. This approach has always necessitated the native services to be called either from an interactive application or a data integration tool. Informatica now has the ability to natively integrate Siperian’s services into their ETL tools which should make design time integration much more transparent and easier to use. Initiate will need to forge strong relationships with data integration providers to allow for similar ease of use. This may be difficult as integration providers are moving towards building and acquiring this functionality as part of their toolset as Informatica has done now or Tibco had done before with their Collaborative Information Manager and the integration of Netrics’ matching software into their product. Initiate will keep being a strong player in the CDI MDM space but may in the foreseeable future be acquired by either IBM or one of the ERP players. IBM would be an interesting play because one may argue that IBM already has CDI capabilities through their DWL based products. I believe that Initiate would be complimentary to IBM’s existing portfolio because it implements a different style of CDI and would better integrate with IBM’s Ascential based products such as InfoSphere Data Stage.
What are the Implications for data quality players?
The further consolidation of the MDM market is poised to relegate pure data quality players such as match providers, data cleansing engines, address verification, etc. more to a OEM partner role than selling directly. The majority of Diamond’s Fortune 500 customers have in the last few years abandoned efforts to create their own CDI hub by integrating niche products themselves. The value proposition of doing so is just no longer there with tools such as Initiate and Siperian providing a vast array of functionality and services that can not easily be implemented and maintained using parts. My bet in the long run is that CDI providers will acquire the niche players they currently embed thus sending others into a mad dash to replace their OEM partner to avoid paying royalties to their main competitors.
What does it mean to our Customers?
I see this announcement as a further validation of the MDM software space and see overall positives for my clients. Tighter integration of products by a vendor will allow for faster implementation cycles and less hassle. Using a complete MDM vendor rather than stitching together a solution seems more and more the industry standard and may allow replacement of aging existing solutions and lessen political resistance to doing so. For current users of Siperian it obviously means a potential new partner in Informatica that surely will want to sell their whole suite of integration products. If one is in the middle of making a decision to purchase a MDM solution existing relationships with Informatica may certainly weigh in more heavily than before. On the other hand Initiate is in my opinion certainly still a strong contender and I am pretty sure will soon be part of a vendor that most if not all large organizations already do business with. I would not put any CDI effort on hold but rather carefully weigh the implications for my organization and move forward accordingly. In spite of consolidation and tighter integration, companies will still need to be mindful of the process and organization challenges that must be addressed to be successful with MDM.