With Ascential Acquisition, IBM Becomes Data Integration Powerhouse

IBM has, or will soon have, the data integration goods, but can it convince customers it isn’t just a DB2- or WebSphere-centric play?

There’s a hungry new contender in the data integration business—call it The Great Blue Hope. It’s a super-heavyweight with an array of formidable data integration weapons, including EII, EAI, event management, content management, and ETL capabilities.

Can this data integration up-and-comer—IBM Corp.—convince customers it isn’t just a DB2- or WebSphere-centric play?

That’s the $1.1 billion question for the company, which ponied up about that much last week for Ascential Software Corp. With the Ascential acquisition, IBM hopes to position itself as a veritable one-stop shop for almost any conceivable organization. But who—outside of Big Blue’s existing database customers, that is—will take the bait?

Enormous Upside

In the two years since Big Blue first started shipping its DB2 Information Integrator tool, that product has emerged as one of the most popular EII and content-aggregation offerings on the market. Similarly, IBM’s WebSphere Business Integration (WBI) offering is an EAI force to be reckoned with, boasting hooks into a number of enterprise application architectures and data sources. Furthermore, on its own and by means of acquisitions, Big Blue has developed content management, mainframe data access (via CrossAccess), event publishing, and other, industry-specific integration offerings, too.

The Ascential deal gives IBM even more integration expertise, much of which will undoubtedly find its way into Information Integrator (which Big Blue recently rechristened with a “WebSphere” branding), DB2, and WebSphere, along with IBM’s other middleware offerings. After all, Ascential is currently one of the top three ETL vendors, and also fields data quality, data profiling, metadata management, and real-time data integration offerings, too.

“The deal will significantly broaden IBM's integration offerings, giving WebSphere Information Integrator needed … ETL and data quality functionality and further complementing WebSphere's process integration offerings,” writes Gartner analyst Ted Friedman. “These capabilities will give IBM all the components of a very broad integration platform, adding ETL to the list of software infrastructure areas in which it has a strong presence and placing increasing pressure on smaller, more narrowly focused integration vendors.”

It’s the Database, Stupid

Then there’s the database angle. Unlike competitors Microsoft Corp. and Oracle Corp., for example, IBM’s DB2 database was bereft of anything more than a basic (vanilla SQL) extraction, transformation, and loading (ETL) component. The Ascential acquisition addresses this shortcoming in a big way.

But can a vendor with so significant a database technology pedigree cultivate customers who aren’t currently using its database offerings—particularly in view of the richly varied state of most enterprise data-integration efforts?

Consider Microsoft Corp. and Oracle Corp. both of which have shipped ETL capabilities with their flagship database offerings for some time now. Microsoft’s Data Transformation Services (DTS) and Oracle’s Warehouse Builder are very popular inside each respective company's existing customer bases, to be sure, but typically see little use as enterprise ETL tools for accessing heterogeneous data sources. Why should IBM be any different?

Neither comparison is completely apposite, however. For starters, Ascential’s ETL and data-integration technologies are not (in this case) DB2-only plays. Far from it. As a top-tier ETL vendor, Ascential supports about as many different data sources and formats as arch-competitor Informatica Corp—including every major relational database offering on the market. In terms of its ETL market share alone—which (depending on who’s counting) is second only to Informatica and SAS Institute Inc.—Ascential gives IBM considerably more breadth of coverage than products from Microsoft or Oracle.

As far as Jeff Jones, director of strategy for IBM’s data management portfolio, is concerned, the Ascential ETL technologies simultaneously redress Big Blue’s own shortcomings in the relational database arena and help to position IBM as a data integration vendor without peer.

“If you couple Ascential’s broad reach [in ETL and data integration] with all of the things we bring to the table, you’ve got this astounding conclusion,” says Jones. “If you inject WebSphere Information Integrator into coexistence into Ascential, you’ve got a completely universal data-warehouse integration capability. And from the DB2 Information Integrator side of the house, you can apply the Ascential ETL capabilities virtually anywhere.”

But isn’t there a danger that IBM’s new ETL competitors could pigeonhole IBM and its Ascential offerings by dint of association with the more RDBMS-dependent ETL offerings from Microsoft and Oracle? To some extent, after all, Informatica, Business Objects SA, and others have started to do just that.

“It’s an easy and invalid conclusion to make. That’s what [other ETL vendors] would like to see happen. If you ask IBM’s Systems and Technology Group how many IBM servers get sold with Oracle databases on them, you’d get a number that would surprise you. And Oracle is our friend from that vantage point—that’s not my vantage point; it’s a company vantage point,” says Jones.

Gartner’s Friedman agrees. “Some customers may be concerned that IBM will make Ascential's technology highly DB2-centric and compromise its DBMS-neutral nature. These concerns should, however, be mitigated by IBM's progress with Information Integrator in diverse environments,” he writes.

Potential Downside, Too

Of course, the combined IBM/Ascential will be vulnerable on several fronts. The move could endanger the comity Big Blue currently enjoys with most vendors in the BI space. To this point, IBM has stuck to a middleware-centric strategy—while, admittedly, begging belief by positioning DB2 as “middleware”—that has allowed it to partner with a range of BI vendors, including Ascential and (Ascential arch-competitor) Informatica, Business Objects SA, Cognos Inc., MicroStrategy Inc., and SAS Institute Inc., among others. While the Ascential technology stack is more or less consistent with IBM’s middleware-centric focus, there’s a chance that Big Blue’s gambit could unnerve some long-time partners.

Take Business Objects, which notched a deal several months ago to license Big Blue’s DB2 Information Integrator Classic Federation, a mainframe data-access tool. Business Objects came to Classic Federation by way of mainframe-access technology from the former Striva Corp., which Informatica acquired in late 2003. At the time, Informatica had recently exited the prepackaged analytics market and was still aggressively marketing its PowerAnalyzer reporting tool. Because of this, Business Objects not unreasonably viewed Informatica as a competitive threat.

There’s really no sense in which the Ascential acquisition should change the terms of IBM’s relationship with Business Objects. But Business Objects representatives last week were somewhat reticent about their long-term plans with respect to Classic Federation.

“So there’s some internal discussion going on, and a lot of it will depend on what IBM’s direction is with Ascential, but we’ve certainly been happy integrating with their mainframe connectivity, so that one is sort of a to-be-determined,” says Darren Cunningham, product marketing manager for Business Objects’ Data Integrator ETL tool. “In general, there’s opportunity for [competitive] data integration platforms that better access mainframe data,” Cunningham concludes, citing technology from Attunity Inc.

There are other concerns for IBM. Ascential has a long-standing reseller relationship with ERP giant SAP AG. Once again, there’s nothing on paper that suggests SAP need be wary of IBM’s move—although Gartner’s Friedman suggests that the acquisition could alarm SAP, Oracle, and other traditional providers of application-oriented data-integration technologies. With this in mind, some competitors think Big Blue might be vulnerable. “SAP has a reseller agreement with Ascential, and who knows how [SAP] is going to view this,” says Karen Steele, director of corporate communications with Informatica. “We again believe that given all of the things that we do that will help SAP’s business, we’re a logical independent partner for them.”

Likewise, Steele cites the former PeopleSoft, which terminated a long-time reseller agreement with her company just last year, opting for a similar partnership with Ascential. In this respect, she raises doubts about PeopleSoft steward Oracle’s willingness to enrich IBM’s bottom line: “We are still certified to do all of the [Enterprise Performance Management] work with PeopleSoft. We do have a relationship with Oracle that is very positive—and we have never considered ourselves a head-to-head competitor.”

But how does the acquisition affect Informatica’s increasingly cozy relationship with Big Blue? According to Steele, it’s business as usual.

“When you look at the IBM world, the largest part of their revenue comes from [Business Consulting Services], [and] they are in fact the largest consulting group in the world,” she says. “BCS has hundreds of consultants trained on Informatica, and these guys routinely sell and service software and hardware that directly competes with IBM. So we don’t believe this will have any impact.”

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