IBM looks to expand its reach into the data integration space, with plans to fatten its BI and data management functionality.
Posted Mar 14, 2005
IBM's interest in data integration has just gotten bigger. On Monday the company unveiled plans to purchase the equity of enterprise data-integration software provider Ascential Software in an all-cash transaction of approximately $1.1 billion or $18.50 per share. The acquisition, which must meet Ascential shareholder and regulatory approvals, along with additional customary closing conditions, is expected to close in second-quarter 2005.
IBM will establish Ascential's operations as a business unit within the former's Information Management software division on the acquisition's completion, and incorporate Ascential's technology and solution set into IBM's Information Management and Software Group offerings.
The purchase would extend an existing relationship, including more than 550 joint customers worldwide, as the acquisition is certainly not the companies' first partnership with each other. Previously, IBM acquired the assets of Informix software, Informix's database business in 2001, and the name was changed to Ascential Software. Since then, Ascential spun off and became an independent organization, which integrates with IBM WebSphere Business Integration software as part of a service-oriented architecture.
The deal is about four times that of Ascential's 2004 total revenue of $271.9 million, which according to Wayne Eckerson, director of research at The Data Warehousing Institute, signifies a strong endorsement of the data integration space. "IBM is obviously responding to that demand for greater information, greater knowledge, [and] greater analytics built into applications and processes," he says. "It's going to be good news for all of the data integration players, any vendor who's trying to use that as their strategy."
IBM has been busy bolstering its data management and BI capabilities, including an OEM agreement with Cognos and its January 2005 acquisition of SRD, an identity resolution software provider, to enhance its information management software.
The acquisition adds to the trend toward consolidation, as more vendors look to become customers' sole solution providers. "Customers want to deal with fewer providers in terms of trying to juggle lots and lots of companies. It is getting very hard for customers," says Judith Hurwitz, president of consultancy Hurwitz & Associates.
Monday's announcement was unveiled in the midst of a battle between Oracle and SAP for retail software provider Retek. Ascential's customer base includes large retailers that implement the software to garner, standardize, and structure sales information obtained from multiple channels, but Hurwitz contends that the move is more of a pure progression and not a response to the Retek issue. "Data management isn't something that has been the core of what SAP is focused on right now," she says. But she does expect to see Oracle make some acquisitions in the data management/data integration space. "IBM has been partnering with Ascential...so it's really more of a natural synergy," she says.
The pressure instead falls on enterprise data integration provider and Ascential competitor, Informatica, according to Eckerson: "It seems to be less aggressive in establishing deep partnerships. For IBM's part, they've been acquiring a lot of companies in the BI and data warehousing space and I think that's a sign that the business landscape as a whole is still finding business intelligence and data warehousing very important fields of endeavor, but even though it puts more pressure on Informatica, it validates the space."
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