Software AG Buys Data Foundations: Business Acumen Meets Data Competency

Co-authored with Forrester's Clay Richardson.

On September 18, 2010, Software AG (SAG) — best known for its business process management, B2B, and SOA-based integration solutions — announced its acquisition of Data Foundations, a master data management (MDM) vendor based in Hackensack, New Jersey. Data Foundations is smaller and less well known than the more mature and comprehensive MDM solutions from Initiate Systems and Siperian, both of which were acquired earlier this year by IBM and Informatica, respectively. Once Initiate and Siperian were taken off the market, no tier one MDM vendors remained for potential suitors to consider — especially those that could support both analytical and operational use cases. Having missed out on the opportunity to snag one of those leaders, we believe Software AG made the right technology choice in selecting Data Foundations. 

Who is Data Foundations?

Data Foundations was founded in 1998 as a data management services consultancy, but it moved into MDM software in 2002 with the first release of its OneData platform. Most of Data Foundations’ experience to date has been in the analytical MDM (or as we like to call it, “governance-driven MDM”) market that focuses primarily on delivering version-controlled views of master data across various data domains used often in data warehousing, BI, or analytic environments and included strong workflow, stewardship, and security controls. Data Foundations’ competition primarily included Kalido, Orchestra Networks, and Oracle DRM. More recently, Data Foundations says that the newest version of OneData can now compete in the operational MDM market supporting CDI and multidomain MDM use cases dominated today by IBM, Informatica/Siperian, and Oracle. Since that version is new to the market, it’s too early to tell how it stacks up against the rest.

 Why is Software AG entering the MDM market?

It’s no longer too scandalous or surprising to admit that technology- or IT-centric MDM strategies just don’t work. Building a single version of truth of master data in a central hub somewhere doesn’t directly solve any business problems. The only way master data can reduce risks, improve operational efficiencies, reduce costs, increase revenue, or strategically differentiate an organization is by figuring out how to connect and synchronize that master data into the business processes and decisions most important to an organization’s success. 

With this acquisition, Software AG acknowledges that the customers of its integration and business-process-centric solutions have a strong dependency on high-quality data. This move reflects a trend that we have identified and coined as “process data management,” which recognizes the clear need for business process management (BPM) and MDM strategies to be much more closely aligned for both to succeed. The synergies between BPM and MDM are incredibly strong, and SAG is gambling that its differentiated “Process-Driven Master Data Management” message will both intrigue its existing BPM clients as well as differentiate it from the other MDM vendors. Software AG, especially with its 2009 acquisition of IDS Scheer, is now closely aligned with the business leaders that own these mission-critical processes, which is a relationship that evades many other MDM vendors who are still selling primarily to IT.

In our first report on process data management, we highlighted the inherent risks faced by both MDM and BPM teams when process improvement and data quality are disconnected. Our research uncovered that BPM teams face a vicious cycle of “process data failure” if they don’t invest time to uncover how processes leverage master data from the outset. And on the flip side, MDM teams must continuously prove their value to the organization when data quality is not connected to business context. With Data Foundations, Software AG plans to bridge this gap by connecting process discovery and execution with data governance and data quality.

This doesn’t mean that Software AG is immediately relevant in the MDM market. It has a lot of work to do to integrate the less-known and less- experienced Data Foundations technology platform into its broader portfolio, and it will have to continue to consider what functional gaps may still remain to truly compete with much more mature solutions on the market. Software AG would do well to focus on its process-driven MDM message and hope to get some early wins from its existing BPM-centric install base to prove it can play ball with the more experienced MDM providers. Unlike its acquisition of itCampus, Software AG will need to provide a clear road map to customers on how the Data Foundations acquisition will directly benefit stakeholders and accelerate time-to-value across BPM and MDM initiatives.

Will this trigger more movement in the BPM and MDM markets?

MDM and BPM cannot live independently, and vendors providing solutions into either or both of these competencies need to address this relationship sooner rather than later. Even MDM leaders like IBM and Oracle that also offer business process management software within their product portfolios are doing very little to actually integrate and align these capabilities. TIBCO is probably the most comparable competitor to Software AG from a product portfolio and alignment standpoint, but TIBCO’s MDM solution has not made a significant dent in the MDM market, most likely due to its continued focus on IT and technology issues as opposed to evangelizing MDM to a business audience. This is Software AG’s opportunity to differentiate, while the other BPM and MDM vendors scramble to catch up. 

Data Foundations had an existing OEM partnership with Netrics for data matching, but with TIBCO’s acquisition of Netrics earlier this year, SAG will instead focus more on its relationship with Harte-Hanks Trillium Software ongoing to provide data quality and matching capabilities to support MDM. Of course, on the same day that SAG announced its acquisition of Data Foundations, TIBCO announced its agreement to launch a joint MDM and data quality platform with Trillium Software, which dilutes the differentiation that SAG could have had with Trillium as a partner. We expect to see other MDM vendors, most notably Oracle, continue to partner with Trillium as well to deliver best-of-breed data quality capabilities. We’ve blogged this recommendation often to Oracle and will provide the same advice to Software AG and TIBCO: Bring data quality and matching capabilities in-house to support your MDM strategies. It’s too important a component of MDM to rely solely on a third-party partner.

Additionally, we expect Software AG’s move will spur other BPM suite players to move beyond “data services” as the catch-all solution for addressing master data issues encountered on BPM initiatives. While leading vendors, such as Appian and Pega, understand the challenges of connecting master data to process improvement, very few support business-oriented data modeling as a key component of process modeling. Our recently published “Forrester Wave ™: Business Process Management Suites, Q3 2010” report highlighted IBM as the only BPM suite vendor to offer a full-featured business glossary as part of their BPM suite — but even then, the business glossary was not connected with IBM’s InfoSphere Business Glossary targeting data stewards and data management professionals. By connecting ARIS’s business-oriented process and data modeling features to the Data Foundations environment, Software AG would become one of the first BPM suite vendors to provide a seamless environment for modeling and managing data across different roles and perspectives that contribute to both MDM and BPM.


Further convergence of business process management and data management solutions may see some of the following changes over the coming years:

  • Bridging of business glossaries created within BPM suites and business glossaries/data dictionaries created by data management and metadata management platforms.
  • Combining data modeling and process modeling best practices and technologies with the deliverable of a true enterprise process data model as a result.
  • Increased focus to align data governance and process governance initiatives across organizations.



Very informative article Rob, thank you.

I think that one of the biggest problems facing the data quality industry is the disconnect between business rules and data (quality) rules.

There seems to be an obvious gap in the market, and therfore an opportunity, for a company to link these two worlds together. Until we do this we're always going to have an inconsistency between the rules we manage in the data quality apps and the actual business functions implemented either loosely via apps or part of some controlled workflow.

For me this is the holy grail and will have dramatic improvements in areas such as operational and transactional data quality.

Your viewpoints give me confidence that we might be heading in the right direction at last.

Business Rules and DQ Rules - YES!

Couldn't agree more Dylan, there is a definite disconnect between the very real business rule engines that are fit for purpose to solve data quality problems and the business rule platforms used for more transactional scenarios. While the use cases often differ, there is a clear and valuable intersection that should be considered.
Thanks for the great comment!

Well done

I agree almost completely with this and Dylan's comments, but from the start-up perspective I must say (again) that philosophy and solutions have actually been around a long time-- the glacial pace is due to the method by which both vendor and customer approach the problem.

As long as customers insist on supporting the status-quo, instead of disruptive innovation, the result will be glacial, markets will be dysfunctional, and few jobs will be created in the broader economy.

I just received the following from an old personal friend who is a senior strategist for one of the world's leading ESW companies -- he's been quite accurate in his calls over the years, but often has been the case the org didn't listen, or act.

"Without a long term view as a company – most are fighting on a quarterly basis - and an understanding of oneself –(doesn't come) easily within a company tread mill – no idea will find a fruitful soil and in most cases those organizations won’t be able to come up with truly innovative ideas – or even recognize them."

I think he's speaking here of not just his own industry, but customers. While there certainly isn't anything new in the statement for a guy who has operated an early stage incubator and VC for 15 years, it's still interesting to see the discussion and confirmation. The answer, of course -- is not just relationships, but cultures in vendor and customer that are very similar, even if unaware.

What about SAP?

I'm missing a reference to the pretty complete, pre-integrated MDM+DQ+BPM stack SAP is offering. It helps people approach the issue from different perspectives:

1) Master data projects requiring strong process governance (e.g. in consumer products companies)
2) Data quality projects looking for collection and distribution processes
3) Process management projects requiring clean master data

Products involved are SAP NetWeaver MDM, BPM and SAP BusinessObjects DQ, DS.

Where's SAP?

Good question, and I should have clarified my position on SAP in the post.
While I agree completely that SAP does in fact have all components within their portfolio, they have not in my opinion done much to date to pre-integrate its MDM and BPM stack. There is nothing in SAPs MDM message or solution that considers process beyond governance workflow (which is not differentiated from all other MDM vendors) and integration with SAP apps.
In addition, SAP has misfired on its SAP MDM solution for a while now - I get more client inquiries with issues and frustration with SAP MDM than all other MDM solutions combined. While more recent versions of SAP MDM has worked hard to both address some of these client concerns, in addition to providing improved integration with its BusinessObjects Data Services (DQ + ETL) solution, they have some credibilty that needs to be rebuilt in the MDM market.
I'd love to see SAP embrace BPM/MDM convergence as Software AG has - it could be the ticket to regaining market momentum - but to date I haven't heard it.

Thanks for your comment.


Excellent Analysis as Usual

Rob, terrific viewpoint as usual. BPM and MDM are definitely critical bed fellows. When Lombardi was acquired by IBM, it definitely made several MDM vendors wince due to their OEM/Resell relationships (Siperian at the time being one of them). Do you expect that Informatica will need to themselves acquire BPM technology at some point? Or are you still waiting for EMC to pick up both INFA and TIBCO at some point :-) as you had predicted

Yes, I think INFA will move into BPM

Thanks for the comment Ramon.
I do think Informatica will be in the market for a BPM play at some point. The question will be whether it'll be purely focused on provided more advanced workflow capabilties for its MDM and data governance solutions, or whether it will see an opportunity to differentiate in the BPM market itself as well.

Speaking of predictions, I did suggest that Informatica might make this move into BPM in my blog in January when I discussed its acquisition of Siperian. Here's a link to check out some of my other predictions for INFA:

Thanks again!