AddressDoctor A Smart DQ Acquisition For Informatica, Still Moving Closer To MDM

Robert-Karel by Rob Karel

Informatica today announced its planned acquisition of AddressDoctor GmbH, a premier global postal address data quality software vendor. AddressDoctor provides postal address cleansing and verification for over 240 countries through batch processing or real-time Web services, supporting 40 different character sets and can transliterate non-Latin characters including Greek, Cyrillic, Hebrew, Japanese, Chinese and Korean.

While AddressDoctor may not be a household name for many data management professions, data quality (DQ) platform and master data management (MDM) vendors certainly know it. Vendors such as Capscan, DataFlux, Datanomic, IBM, Initiate Systems and Siperian either OEM or resell AddressDoctor technology to provide address cleansing capabilities within their broader DQ and/or MDM solutions. Even perceived competitors in the niche postal address verification market like Experian’s QAS and Melissa Data have relied on AddressDoctor to expand their global reach for postal address data.

Informatica also had a prior OEM relationship with AddressDoctor, so the ability to provide global address verification is nothing new. Instead, Informatica says the acquisition will support their “Pervasive DQ” strategy and will allow them to more easily embed address validation within their Profiling, DQ Scorecarding and Monitoring solutions, in addition to its Informatica On-demand “cloud” services.

But I also see this acquisition playing additional strategic roles for Informatica. First, by acquiring what amounts to a market-hub of global address verification technology, Informatica has the full attention of many of its DQ and data integration competitors like DataFlux and IBM. While Informatica has of course announced that they intend to support these prior partnerships, the reality is DataFlux and IBM should be shopping around for another channel to provide these capabilities – too risky to rely on the good graces of a tough competitor.

But for me, the most interesting outcome of this acquisition is that Informatica further entangles themselves with already strong partnerships with the two leading pure play MDM vendors, Initiate Systems and Siperian. Last year, Iblogged on Informatica’s acquisition of identity resolution (IR) vendor Identity Systems, and it seemed obvious to me then that Informatica was looking to do more than just to enter the IR market and enhance its DQ offering. I suggested at that time, and I believe even more strongly today, that these acquisitions are just the appetizers for Informatica as they determine how they can most successfully enter the ever-growing MDM market - not just as yet another new entrant in a market full of “me too’s”, but as a legitimate contender to derail MDM market share leaders IBM, Oracle, and SAP.

Here’s how:

Identity Systems, now branded as Informatica Identity Resolution, is certainly a great addition for Informatica’s data quality platform with its strong matching technology, but Identity Systems also remains the core match engine for Siperian’s MDM solution (among other MDM partnerships including D&B’s Purisma and Oracle). And now with the acquisition of AddressDoctor, Informatica also owns one of Siperian’s core data quality components. Add to that the fact that over 50% of Siperian’s customers use Informatica’s PowerCenter data integration platform to load data into the Siperian MDM Hub, it seems that Informatica is already directly influencing some pretty core parts of Siperian’s MDM success.

Informatica also has a solid partnership with Initiate Systems. In fact, Informatica even invested in Initiate, having participating in its last rounding of funding back in June 2008. It’s certainly feasible that Informatica could choose to acquire Initiate’s solid MDM platform instead, but the existing synergies between Informatica and Siperian still have me leaning towards that as the acquisition that can legitimately unseat IBM, Oracle, and SAP.

Of course all of this could be moot if Oracle decides to acquire Informatica to 1) resolve it’s noticeably absent data quality portfolio (beyond partnerships and OEMs), 2) give up trying to rationalize its Oracle-product-centric data integration portfolio (Oracle Data Integrator and Oracle Warehouse Builder) in exchange for a market-leading heterogeneous platform, and 3) eliminate the risk of Informatica entering the MDM market as a competitor. These rumors have been floating around for a while now, and I’m not convinced - but big pockets like Oracle have been known to do the most interesting things…

Comments

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Informatica, like many other tools vendors in the software market, continues to think adding features through acquisition is an effective way to help customers manage their data. Kalido views these components as a subset of a more complex data governance challenge. Simply adding narrow data quality functionality to a data integration platform falls far short of the requirements for effective data governance. Successful data governance requires a combination of processes, validation rules, audit and control capabilities and supporting technology. That means an open, top-down, business model-driven environment; a workflow-driven engine to enforce governance processes and ensure clean, accurate and timely information; and a mechanism to control and audit all activities.

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Rob raises some interesting scenarios. The chronic speculation of an ORCL acquisition of INFA doesn’t seem as plausible as it once did. For starters, with a P/E approaching 30, INFA is expensive. The point that INFA would fill the data quality void at ORCL is sound, but there are other less expensive means to achieving that goal, including acquisition of data quality pure-plays such as Trillium. Owner Harte-Hanks, whose revenue and stock price has been declining for years, might welcome the cash infusion.

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Thanks for your thoughts Bill. While I completely agree with you that ANY data management software is only a small part of the broader data governance challenge which is more about organization, people, and process change, I don't believe it's a fair or accurate assessment of Informatica's data management strategy to say Informatica is only looking at technology to solve the business problem of data management.All data management software vendors that have any desire to remain in business in todays environment (including Informatica and Kalido) have been heavily investing in data governance and stewardship methodologies, best practices, and of course enabling technological capabilities. And there are many different approaches to this problem - and in my opinion no one approach has been proven to the be the "right" one yet. The jury is out and I encourage all data management software vendors to send a clear message to the market about what their perspective might be on how to mitigate the data governance inhibitors that are often the barriers to realizing the promised value from the technology solutions they are offering.Data integration platforms, data quality software, MDM infrastructure, modeling environments, workflow management tools, etc - these are all critical technology components and competencies required to enable a "Trusted Data" ecosystem. But the tools alone are only as good as the people, processes, rules and policies put in place to ensure value can be delivered.Thanks again for sharing your thoughts!

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

That's a fair statement- what I really would like to emphasize is that companies take a "tops down" vs "data up" approach to data governance, just as they have for financial governance, risk, etc- it's the only effective way that we've seen that ties the goals and objectives to the business directly to data governance policy.

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Great point. I often advise our clients who are trying to define their data governanace vision that they must consider the enterprise enterprise (top down) and that data governance must be viewed as a "fiduciary" responsibility by senior management and not a grassroots effort led by IT. But organizations should not take that as a call to boil the proverbial ocean. Instead, they must develop a multi-phase strategy that identifies the most critical business processes and decisions - and to tackle those first (bottom up).Of course 'bottom up' is very different than 'data up' and I can't agree more that a data-centric approach to this problem (translated: an IT-driven data management project with an 'if we build it they will come' mentality) is never going to succeed.Thanks again for your insights!

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Great analysis, Rob. Do you get any sense whether those who compete with Informatica may look switch alliances when it comes to international address quality? Pitney Bowes, for example, has been a big player in this space for some time.

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Ed - I do think that competitors - IBM and DataFlux, as key examples - will have to give serious thought to identifying altenative partner/suppliers of postal address data verification capabilities.Pitney Bowes (PB) could in theory be a possible beneficiary, although PB's data quality platform (formerly Group 1 Software) is also likely seen by these vendors as a competitor in their DQ space so if PB were interested in reaching out they would need to figure out a story on how that "co-opetition" might work. It'll be very interesting to see how the market reacts over time.Thanks for the question!

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Rob -I read your blog with great interest.Anchor Software is a provider of direct mail, data quality and document design software, and we are the exclusive provider of Uniserv products in the USA.Through Uniserv, we have focused on international data quality in the SAP world in addition to our traditional US addressing and printing products.The acquistion of AddressDoctor will definitly effect the current competitive marketplace and will undoubtedly lead to the need for their partners to look for other relationships, which I believe may open the door for the Anchor/Uniserv model.If you can provide appropriate contact information with Dataflux, IBM or others, it would be much appreciated.Thank you,Gary Siegel, President, Anchor Software

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Thank You.

re: AddressDoctor A Smart DQ Acquisition For Informatica, Still

Rob,Thanks for such a wonderful piece. When feeding data to Siperian, Informatica hardly use any of its features for which its known. So if tomorrow it enters in MDM market not seems a bad idea. An end to end solution for enterprise's all data related needs... sounds quite interesting :-)