Informatica Snags Siperian for $130 Million

Informatica, a company perhaps best known for its data integration capabilities, has had an explosive start to 2010. In addition to an earnings announcement last week that fourth-quarter revenue was $150 million and full-year annual revenue was more than $500 million for the first time ever, Informatica revealed its acquisition of master data management (MDM) vendor Siperian -- a cash purchase of $130 million. Referring to 2009 as a "pivotal year" for the company, Chris Boorman, Informatica's chief marketing officer, says Siperian will "round out [Informatica's] MDM strategy beautifully."

Industry analysts have mentioned Siperian as a potential acquisition target for the past year. "That Informatica had a financial stake in Siperian was no secret," says Jill Dyché, partner and cofounder of Baseline Consulting. "The real surprise is what took so long."

Forrester analyst Rob Karel hinted at the possibility of Informatica purchasing Siperian in a blogpost back in April 2008, shortly after Informatica acquired Identity Systems, aprovider of identity-resolution software. Identity Systems' data-matching technology (now part of Informatica's portfolio) is a critical component of MDM, Karel noted in the post. Not only is identity resolution a component of MDM, but it's a technology that Siperian's product is built on. In fact, the majority of Siperian's approximately 60 customers also happen to be customers of Informatica, including Pfizer, Shire, Bank of America, State Street, and LexisNexis. 

Boorman calls the Siperian acquisition a natural evolution of the Informatica technology. The overlaps of Siperian product are evident in three areas, he notes: 

1. Informatica owns the identity-resolution environment on which Siperian is based. 
2. The vast majority of Siperian customers also use Informatica's address-cleansing technology (a solution Informatica gained with its July 2009 acquisition of AddressDoctor).
3. The majority of Siperian customers use data quality and data integration technology from Informatica to move and clean data. 

"This is a very, very unified technology," Boorman stresses, adding that now is an ideal time for Informatica to expand its MDM vision, as customers are moving from recessionary survival modes to revival strategies. "We have seen a growing interest in an adjacent market to us in MDM," Boorman says. "MDM helps [companies] get better value and understanding out of their data." 

Dyché says the deal truly lets Informatica round out its MDM journey. "Up until now, Informatica has been straddling the fence on the ‘build-versus-buy' story," she says. "Through other acquisitions…Informatica could fill in components of the MDM stack, and could make a valid argument for putting all the pieces together to deliver MDM." Now, she says, there's no argument that Informatica now has a bona fide MDM offering.

In addition to what Boorman calls Siperian's seamless extension to the Informatica platform, the acquisition was also deemed attractive thanks to Siperian's multidomain MDM approach. Some of its competitors focus on either customer or product data, but Siperian takes a more-holistic approach. As destinationCRM reported late last week, Siperian had been diving into verticals with its Extended Customer View, a solution the company recently introduced for the financial services sector. "This strengthens our approach into verticals and we are very pleased," Boorman says, adding that Informatica will be able to provide Siperian with a broader sales organization that can help MDM better penetrate organizations in those sectors. 

If you were to visit Siperian's Web site shortly after the acquisition, you'd see the Informatica brand name, underscored by "Formerly Siperian." According to Boorman, Informatica plans to transition the Siperian brand over time to Informatica and within six to nine months move forward with only the Informatica brand name. Ivan Chong, general manager of Informatica's data quality business unit will now head oversee MDM strategy and the Siperian tools. Interestingly, Boorman says that Siperian's chief executive officer, Peter Caswell, will aid in the transition, but will soon be looking for new opportunities outside of Informatica. 

Karel, in his blogpost about the acquisition, addresses the implications of the deal on Oracle, a close Informatica partner, but also a provider of MDM solutions itself with its CDH and UCM products.

Boorman says he imagines Informatica will continue to do business with Oracle, in part because the software giant is an application MDM provider, according to Boorman, whereas Informatica provides MDM at the infrastructure level. He says Informatica's technology is neither vendor- nor application-specific, so he doesn't see why a customer couldn't use tools from both vendors.

"No matter how often Oracle says how happy [it is] to maintain a friendly state of co-opetition with strategic partners, I don't anticipate [it] will want to run the risk of a competitor pulling the rug out from under its aggressive MDM strategy," Karel writes. He goes on to say, however, that Oracle might very well seek a different provider of identity resolution and might be prone to acquire an address-cleansing solution rather than using Informatica's AddressDoctor.

In other speculation, Karel writes that the long-gestating rumor about IBM acquiring Siperian's MDM competitor, Initiate Systems, is now reaching a fever pitch. "By acquiring Initiate as a defensive move, IBM will eliminate the risk of another vendor (EMC, HP, Microsoft, SAP) from strengthening or entering the MDM market as a tough competitor," Karel writes. 

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine.

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