My MDM Acquisition Verdict: Why Informatica – Siperian beats IBM – Initiate Systems, especially if you are an MDM buyer today

First of all, congrats to Initiate Systems management and their employees, an excellent result for you and I wish you all the best. Also for those ex-DWL employees who ended up at Initiate, nice going! Nothing like getting two buyout checks from IBM 🙂 in a 5 year span.

Ok let’s get down to brass tacks. Even though rumors had been swirling around IBM’s purchase of Initiate Systems for over a week, today’s announcement is still a bit of a surprise for those of us focused on Initiate as an MDM vendor. IBM had been offering their MDM solution via a combination of their Trigo and DWL acquisitions more than 5 years ago. Together with IBM’s other data management offerings via their acquisitions of Ascential’s DataStage and Quality Stage you would think that they had more than enough pieces to be successful.

Not so it would seem. Over the years IBM’s MDM customer base through their DWL acquisition has been under attack and new customers haven’t been rushing to their door. For example Siperian (disclosure, my former company) displaced IBM/DWL in a head-to-head evaluation at BofA/Merrill Lynch a few years back. Additionally the IBM offering which was supposedly optimized for a financial services and insurance data model, continued to lose deals to the likes of Siperian, Initiate Systems and others. While the adage “nobody ever gets fired for buying IBM” still has some play in IBM won MDM deals, more and more customers were realizing that that Siperian and Initiate had the better solution.

Credit Ray Wang (now with Altimeter), and Rob Karel of Forrester who put out an objective CDI/MDM assessment in the form of the Forrester Wave. That wave fundamentally positioned Siperian and Initiate at the top of the pile for those evaluating MDM. It allowed customers to truly focus on what mattered to them technically and architecturally.

In another sign that may have indicated to IBM that it was time to reconsider their MDM capabilities, IBM Business Consulting Services (operating as an independent entity) routinely partnered with and recommended both Siperian and Initiate over their paternal offerings. System integrators are no dummies, they want project success and they will align and partner with the products that will allow them to deliver for their customers.

So is IBM practicing a “if you can’t beat them, buy them” strategy? Maybe, but the Initiate acquisition could be justified as a 2 for 1 purchase. The reality is while Initiate was high profile in MDM, their bread and butter growth has been focused on health care and the EMPI (Employee Master Patient Index) space. As such, IBM has purchased solid technology with proven penetration in a potentially hyper growth industry, especially given the Obama administration’s focus on health care. Meanwhile, I’m sure the IBM MDM team and Initiate are looking at how the two technologies can be further integrated to bolster IBM’s MDM solutions. Given that IBM already had 2 different types of offerings for MDM, if a 3^rd suddenly appears that would not be a good thing. That would also definitely be counter to the concept of “Master” and “multi-domain/entity” persisting within a single platform. P.S. I also wouldn’t want to be an IBM sales rep selling MDM right now, talk about having to explain why another IBM group now owns an MDM product that was on a customers eval short list. Talk about competing internally!

So this brings me to my preliminary verdict based on the two announcements:

1) If you are evaluating IBM’s MDM platform pre-Initiate purchase, you have to ask yourself what is IBM doing buying Initiate? Is it an admission that their current offering is lacking? Or are they buying another product because their current offering can’t fulfill a “master data” capability in a specific vertical. Either way, it’s not a strong endorsement.

2) Informatica’s acquisition of Siperian however changes nothing about Siperian’s offering. The best MDM platform is still intact, and the benefits to you as an MDM buyer is that Informatica are now behind the technology and they will also bring to the table a suite of complementary data management tools and technologies to further ensure your success.

So my early verdict: Informatica – Siperian wins in my opinion over IBM – Initiate, over the long haul who knows. I guess if you are not ready to deploy MDM till 2015 you can wait until IBM integrates Initiate, or you can get going now and call your friendly Informatica/Siperian rep.

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