In-Depth

Ascential: The New Data Integration Pure Play

Company's most recent acquisition underscores the somewhat divergent path that the company has taken from its competitors

• By Stephen Swoyer
• 08/13/2003

Much of the consolidation in the business intelligence (BI) space has been driven by leading vendors anxious to address specific weaknesses in their product stacks. Business Objects SA and Hyperion Solutions Corp., for example, bought best-of-breed production reporting capabilities from Crystal Decisions Inc. and Brio Software Inc., respectively.

Ascential Software’s acquisition last week of enterprise application integration (EAI) specialist Mercator Software Inc. was no different. After all, Mercator—with its raft of adapters for a variety of different enterprise applications and data sources—should help to shore up Ascential’s data and application integration portfolio. Moreover, company representatives say, the new Ascential—with combined revenues of $250 million annually—is better equipped to pursue larger, global accounts.

“Our vision is to build the leading enterprise data integration company, and Mercator brings new functionality that augments what we already have,” explains Mike Cassettari, Ascential vice president and chief marketing officer. “Mercator gives us the ability to deal with any source, any target of information … There were capabilities that Mercator had that we felt extended our product line: They have a very high scale data transformation engine and very rich routing capabilities.”

A Different Path

At the same time, however, Ascential’s most recent acquisition underscores the somewhat divergent path that the company has taken from one of its biggest competitors—extraction, transformation and loading (ETL) powerhouse Informatica Corp.—along with other big players in the BI space.

As other BI vendors have diversified their interests and sought to expand their competencies, Ascential has remained first and foremost a data integration specialist. The company announced version 7.0 of its Enterprise Integration Suite (EIS) in June. EIS 7.0 boasted integrated data quality, data transformation, parallel processing and meta data capabilities, along with an add-on component—called Real Time Integration Services—that facilitates real-time integration between applications. (For more information, see http://info.101com.com/default.asp?id=1892.)

Contrast Ascential’s approach with that of Informatica, which recently chose to deemphasize its analytic software stack, trumpeting a return to the company’s roots—i.e., as a data integration specialist. Nevertheless, Informatica formally committed itself as a BI player when it introduced its new PowerAnalyzer 4.0 product several months ago, catapulting itself into competition against many of the same vendors—Business Objects, Cognos Inc., and MicroStrategy—with which it had partnered in the past. (PowerAnalyzer story at http://info.101com.com/default.asp?id=746.)

Similarly, Business Objects, Cognos and SAS Institute Inc. (among others) have sought to reinvent themselves as end-to-end BI players, attempting to become, in a sense, all things to all BI constituencies.

Challenges Ahead

On the surface, analysts say, Mercator presents a very neat acquisition opportunity for Ascential: There’s little to no overlap between the two companies’ products—short of similar adapters into specific applications or data sources—and thanks to Mercator’s integration technologies, Ascential will now be able to offer both data and application integration solutions.

There are other benefits as well, says Shawn Willett, a principal analyst with consultancy Current Analysis Inc. “The cross selling and upselling of the combined 3,000-strong customer base is likely to spur some sales,” he writes. “Mercator, for its part, will contribute an established and efficient transformation and routing engine. One of its strengths is its vertical B2B solutions, particularly in the financial and healthcare fields.”

Willett notes that the EAI space has been hammered recently, as most of its dominant players—WebMethods Inc., Tibco Software Inc., and Vitria Technology Inc.—all posted net losses during their most recent quarters, with revenues down from their year-ago levels, to boot. Mercator also posted significant losses in its most recent quarter, with revenue dipping from $27 million to $22 million, and license revenue plummeting from $10.9 million to $6.1 million.

For his part, Ascential’s Cassettari argues that Mercator is in good hands with Ascential, which he says has about half a billion dollars in the bank. In fact, Cassettari claims, Ascential’s bid has already been cheered by Mercator customers apprehensive about the company’s future. “We’re hearing loud and clear, especially now that he acquisition has been announced, that their customers are pretty happy,” he claims. “We’re doing great in the market, we’re gaining market share, we’re adding customers, our performance continues to grow, so we fundamentally believe that we’ve taken off the table, or that we will take off the table, the issue of corporate viability.”

In the long term, Ascential faces other challenges. “Ascential … must form better links between application server platforms and Mercator, using its vertical expertise as a leverage point in co-selling arrangements,” Willett notes. On the latter point, Mercator last year notched a deal with BEA Systems Inc. to tie its Integration Broker and vertical integration applications to BEA’s WebLogic application server.

Although Ascential hasn’t yet disclosed a roadmap for integrating Mercator’s technologies with its own, Willet believes that a few integration points are obvious. “Mercator has a weak BPM story and Ascential should complete the work of fully merging [its] BPM tool with the core Mercator integration engine,” he concludes. “The company should improve links between its data integration and Mercator’s transaction integration products and should continue to expand the company’s vertical suites, an area where Mercator can continue to preserve higher margins.”