Q&A: Informatica CEO on Data Integration Trends
Informatica CEO Sohaib Abbasi charts a pragmatic course when talking about his company’s vendor partners—but pulls no punches on the subject of ETL competitors
After 20 years with database giant Oracle Corp., Sohaib Abbasi took the helm as CEO at Informatica Corp. last July. Abbasi inherits a company that has struggled to complete the transition from ETL powerhouse to data-integration specialist. What’s more, even though Informatica leads the ETL space in most market research surveys, the company has sometimes been out-marketed by its foremost data-integration competitor, according to one prominent analyst.
With Abbasi at the helm, that looks to be changing. Abbasi talks about charting a very pragmatic course in Informatica’s dealings with application, business intelligence, and other vendors, but pulls no punches when discussing ETL competitors. Informatica posted record revenue but disappointing (and negative) income in its most recent quarter, but Abbasi cites several trends—including RFID, the primacy of data integration, and the data integration problems created by outsourcing—as potential revenue- and income-generating drivers.
I understand that you come most recently from Oracle, which, I suspect, has a somewhat different culture from Informatica. One reason I ask this is because it’s been my perception, shared by some of my colleagues, that Informatica has long lacked a killer instinct, so to speak, in its marketing. Oracle, on the other hand, virtually defines this term. I wonder, has it been part of your strategy to encourage a similar philosophy at Informatica since you came on board?
It would not be an identical philosophy for the simple reason that Oracle’s ambitions are very different from our ambitions. The similarities are that we would like to be the dominant leader in our market segment. In that sense, Oracle and Informatica have a similar ambition. The difference in the culture is that because of the nature of data integration, partnerships are critical for our success. We work with all of the database vendors, we work with all of the application companies, we work with all of the other integration companies, including application server companies, enterprise-application integration companies—we work with all of the system integrators, like IBM Global Services and EDS. The culture has to be distinctly different from that of Oracle and Microsoft.
That’s very true, but you also compete against other vendors in the ETL—excuse me, data integration—space. Do you think Informatica could benefit from being more aggressive in how it markets itself against some of its competitors?
When it comes to competing against other data integration vendors, I think we have a great opportunity this year to win market share away from our primary competitor, and the reason for it is very simple. Ascential has announced their plans to rationalize all of the products that they have acquired over the years. And as I’m sure you know well, they have not built this software themselves. They acquired a lot of other companies that built software independent of the other companies.
What I’ve heard is that they have announced their intentions to rationalize their products. The only way I know that somebody can rationalize products built by several other organizations is to essentially re-write them. The question I have for prospects that might choose both us and Ascential is, what is the product that you think you’re going to get from Ascential?
Because we built all of our products, we have a unified architecture. They were all designed to work together. We run on all of the latest hardware that’s available today, and 64-bit is clearly the price/performance leader. We ran joint benchmarks with HP that showed very impressive gains as a result of the new platform, and our competitor still does not have a 64-bit platform.
You announced Universal Data Services last year, in May. Now you’ve said that UDS is very partner-centric, with the idea that you’re going to provide the data-integration hub for these other best-of-breed partners. You have a partnership with FirstLogic for data quality, for example. At the same time, one of your competitors has its own data-quality offering and its own data-profiling offering. With the increased emphasis many companies are placing on BI standardization, getting all or most of their tools from the same vendors, is this something that might hurt you? If so why not just acquire data-quality technology of your own?
When it comes to data quality, the value proposition that we offer is that we offer the best of both worlds. We partner with FirstLogic, and we also partner with Trillium, and the two are recognized by all for having the best data quality. … Overall, the value proposition that we have is much more compelling, because there’s no question that FirstLogic and Trillium offer much better data quality than other sources. So by having an open architecture and having all of the integration points defined, we truly deliver the best of both worlds.
I’ve heard you talk in the past about Integration Competency Centers, which you’ve described as an emerging trend. … What exactly is an integration competency center and what does it entail?
The single biggest IT expense in most Fortune 2000 companies is integration. Forty percent of all projects that are being undertaken today require data integration. In the past, when people were doing data warehousing, they would do data marts, so the sales department would be interested in knowing how they enhance productivity, so they would build data marts, and almost all of these projects were undertaken at the departmental level.
There have been two trends. One is a recognition that data integration is, if not the most resource-intensive project being undertaken, it’s one of the top [projects]. There is a desire by enterprises to better manage that. The second trend is in order for organizations to gain a competitive advantage, they have to have a holistic view of their business.
Given those two trends, one is a recognition that it is a big chunk of the IT budget and it needs to be better managed, and just the nature of the kinds of questions companies need answered, requires a cross-departmental approach. A number of organizations have realized that the only way they can achieve that is to have integration competency centers. By centralizing it, you actually benefit it because you actually have economies of scale rather than having each org come up with [its] own methodology and come up with [its] own technology ideas, some of which don’t work as well. So economies of scale and best practices are the two drivers behind these.
I wanted to talk about ETL, which for a long time has been Informatica’s bread-and-butter market, even though obviously you’re more than just an ETL vendor. We’ve seen an increasing commoditization of ETL over the last few years, Microsoft and Oracle building it into their databases, for starters, but also BI players like Business Objects, SAS, and even Cognos continuing to support and extend their own ETL offerings. What’s your view on the commoditization of ETL? Is this something that will hurt you by stealing some of your bread-and-butter share away, or do you think it helps to highlight the paradigm shift to full-on data integration?
I believe it’s neither a threat nor a strong endorsement [of the data integration paradigm] because the best way of looking at it is from a customer’s perspective. Historically what customers have sought is some technology to allow them to better analyze the data in order to determine what the trends were, hence the term data warehousing. It was a historical way of looking at your data to draw from it some trends that would allow you to do a better job.
That attracted a lot of attention from the database vendors. Their vision is very simple: They want to manage all of the data, and if the data is going to be used for analytic purposes, for data warehousing, for them, going into the market for ETL tools was a way for them to seed their data. Their ambition was not to become the dominant provider of data integration techs.
BI vendors—their ambitions are very similar as well. They want the data to be in some place where it will be accessible from their ad hoc query and analysis tools, or perhaps from their OLAP servers. That’s only part of what customers are looking for. If you look at the top five IT initiatives, I would be surprised if you did not find, in addition to business intelligence and data warehousing, migration as being one of the key initiatives. Or consolidation—having a single view of the data across these systems. Or synchronization of data [between these systems].
So from a customer perspective, what they’re looking for is a way to gain more strategic value, and data warehousing is only one way to do that. Another way is by consolidating all of your data sources. By having a single view, whether it’s business partners or supply chains. By moving off of legacy platforms. If you look at what’s required for it, you need a full platform.
Some analysts talk up RFID as the Next Big Thing for the ETL and data integration markets, in that it’s expected to generate huge volumes of data from a number of different sources, all of which organizations will want to analyze. Do you have a perspective on this? Do you see signs that, if this is the case, it’s already starting to happen?
Any trend is a huge opportunity for us. RFID will lead to greater data fragmentation as companies realize that in order to have this ability across the entire supply chain, they have to capture the data in different stages of the supply chain, and each of those stages has [its] own requirements in terms of data storage. But equally big, and in my view perhaps even bigger, is outsourcing.
And by outsourcing, I’m not necessarily referring to offshoring. You’ve got organizations like IBM and EDS that propose to their customers that they can take over their operations and go even further. You’ve got business-process outsourcers like ADP, who say, "You don’t need payroll because we can do it all for you." You’ve got HR outsourcers like Hewitt, who say, "You don’t need this because we can do it all for you." …
So data that previously was being collected in-house … is no longer being collected. If you look at Cisco, they’re a salesforce.com customer and an Oracle e-business suite customer, and if they ever want to know how effective their marketing campaign was, they need to integrate that [salesforce.com] data with the receivables [system] that is in house. …
So my own view is that the role of transactional business applications will be diminished as more functions get outsourced, whether to business process service vendors or on demand or [integrators]. Customers of the outsourcing services providers will want to have greater visibility into that data, and that creates an enormous opportunity for us.