John Rizzuto

I paraphrase:

We are transforming Informatica from a category leader to an Industry leader – Sohaib Abbasi, CEO, Informatica

And so the theme was set for Informatica’s annual industry analyst summit held on February 26th to 27th. Informatica’s 2012 performance was a year to forget. Informatica, which had been on a solid multi-year double-digit revenue growth rate, faltered (missing its own forecast) and posted only modest revenue growth while seeing a meaningful decline in license revenue. However, if you hear the subtext of the conference, in 2012 Informatica hit an important inflection point. Over the last year, many executive decision makers joined Informatica, including its EVP of Worldwide Field Operations, SVP of WW Sales Specialists, VP of Latin America, Country Manager in China, SVP of WW Alliances, VP of WW Channels, and its CMO. Informatica is setting out to redefine itself and to put in motion an updated long-term plan.

Redefine can sometimes be a scary word. Informatica is evolving. Over the last several years it has made acquisitions and delivered new products to enter into new markets. What I like about these markets is the synergy potential from each other and from Informatica’s core data integration and data quality roots. Informatica calls itself “The Data Integration Company” but down the road it might be more apt to think of the Informatica as a broader data management company.

Informatica, from a revenue and product perspective, is a leader and enjoys the top spots in Gartner’s MQ Data Integration Tools and MQ Data Quality Tools. These markets remain attractive and healthy. There has been continual angst regarding the competitive landscape in DI & DQ tools – particularly among financial analysts – but there are several things that could be better understood about these segments. My colleagues Merv Adrian and Ted Friedman wrote an excellent piece that addresses some of the concerns, “Hadoop Is Not a Data Integration Solution”. The reality is that ETL has changed and the requirements for solutions are accelerating. As such, there are likely four important things to realize about these markets

1. As complexity increases, IT organizations are under more pressure to move from hand coding to packaged solutions,
2. The functional gap between the high-end of the market and the low-end of the market has expanded,
3. Point-to-point integration, or application DBMS to data warehouse DBMS, is being replaced by the much more complicated, any data source to any data repository requirement, and
4. The need to get “real-time” information.

All these bode well for Informatica and although the competitive landscape is intensifying, Informatica is poised to strengthen its position.

Thus far, Informatica has built itself on the DI & DQ opportunity, but the future it envisions relies on an expanded footprint. Informatica believes it is competing in markets that, in aggregate, are nearly $10 billion in size. It is not an unreasonable expectation. However, beyond its PowerCenter DI & DQ products,Informatica gnerates less that 15% of its revenue. One area, master data management, MDM, is expected to be a very large opportunity and Informatica is a leader in one of Gartner’s MDM MQs. Informatica is plotting a different strategy to address this market. While, most MDM solutions are domain-specific, like product or customer data, Informatica is building a multi-domain solution. Depending how the market evolves, this can be an opportunity for the company – or a risk. Another area to highlight is Informatica’s cloud strategy. Informatica has a well-established data integration cloud product line and it is among the revenue leaders in the PaaS segment. In addition to MDM and cloud, Informatica has products in complex event processing (CEP), archiving, masking, and replication. All these markets are in their rapid growth phase. The next step is to bring them together.

Informatica has yet to realize and has not discussed synergies across these businesses, which is fair as most solutions are typically bought and evaluated versus their segment-centric brethren. For Informatica to become greater than the sum of its parts, it needs to establish cross-market synergies. At first glance, it is likely that Informatica’s technologies are complementary and as markets mature, solutions will likely arise which rely on and create value by combining their specific capabilities. This will also invite fierce competition.

In any case, Informatica is excited about its prospects and I am too. The road is long and there are the inevitable potholes along the way but the journey has begun. It’s now that we can stop waiting for Informatica to become the company it wants to be and start watching for Informatica to be the company it wants to become.

My colleague, Andrew White, has a very good blog that talks more of the event.

In addition to Merv Adrian and Ted Friedman, I highly recommend inquiries with Mark Beyer and Roxane Edjlali to talk more about big data, data warehousing and data and information management.

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