Pitney Bowes Nabs Another Data Quality Player: Firstlogic
Acquisition of Firstlogic takes one of the few remaining independent data quality players off the market
Direct mail and campaign-marketing powerhouse Pitney Bowes Inc. probably isn’t the first name that comes to mind when you think about data quality.
With the acquisition last week of data quality market leader Firstlogic, all that should change. Pitney Bowes’ Firstlogic coup follows on the heels of another data quality acquisition, that of the former Group 1 Software Inc. last April. With two respected purveyors of data quality software in hand, Pitney Bowes (with its global presence and $5.3 billion in annual revenues) is a de facto force to be reckoned with in the data quality market.
And yet Pitney Bowes remains an enigmatic player in a rapidly coalescing data quality segment. Not only does its acquisition of Firstlogic take one of the few remaining independent data quality players off the market, but it also impacts several key BI players who resell Firstlogic’s technology (including data integration giant Informatica Corp.). Moreover, it raises questions about Pitney Bowes’ aspirations—or strategy—in the data quality space. What prompted that company to acquire not one but two best-of-breed data quality vendors?
Pitney Bowes officials position the Firstlogic acquisition as a customer-driven move. “We entered the growing $4 billion customer communication management market with the acquisition of Group 1 software last year. The acquisition of Firstlogic extends our platform by giving our customers a more comprehensive portfolio of software, services and solutions,” said Pitney Bowes Chairman and CEO Michael Critelli in a statement. “Firstlogic’s extensive relationships with top-tier system integrators and enterprise software vendors enhance our distribution network and accelerate our global expansion. Like Group 1 before it, this acquisition supports key areas of our growth strategy—mailstream expansion, global penetration and cross-selling.”
It stands to reason that Pitney Bowes is not in the business of acquiring data quality vendors simply to shore up its own position in the data quality market. Instead, as Critelli himself explained last year, the Group 1 acquisition (and that of Firstlogic, by extrapolation) reflects the critical importance of data quality technology. Critelli previously outlined plans to grow Pitney Bowes’ document management expertise by integrating mail and documents enterprise-wide across multiple customer touch points and business processes, a practice that he christened “customer communications management” (CCM). “We feel Group 1’s suite of solutions helps lay the foundation for profitable expansion in the $4 billion, and growing, CCM market,” he said last year.
In this respect, says long-time industry watcher Aaron Zornes, who now heads up the Customer Data Integration (CDI) Institute, the Firstlogic deal effectively finishes what Pitney Bowes started last year. “We believe that Pitney Bowes is acquiring Firstlogic to round out the address cleansing technologies that it acquired via its 2004 purchase of Group1,” he writes. But by acquiring two best-of-breed data quality vendors, isn’t there some risk of overlap or redundancy for Pitney Bowes, particularly with respect to address cleansing technologies? It’s distinctly possible, Zornes says. “An additional irony is that, of all the Group1 technologies, their address cleansing was always the most competitive technology (and duplicative of Firstlogic’s). But Pitney Bowes apparently either likes Firstlogic’s address technologies better or (just as compelling) saw a chance to take out a competitor to its own address technologies.”
There’s another wrinkle here, too. Group 1 and Firstlogic were both stable companies with established revenue streams. In other words, neither company was hurting for customers. What can they expect?
Head honcho Critelli and other Pitney Bowes officials have said little about what users of Firstlogic’s data quality solutions can expect in the post-acquisition timeframe. The company was similarly mum in the aftermath of its Group 1 acquisition last year. And there’s a reason for that: Pitney Bowes is not, strictly speaking, a data quality vendor.
That doesn’t mean it’s willing to forsake a potentially lucrative revenue segment, however. It continues to resell a branded Group 1 data quality offering, for example—and could do the same with Firstlogic.
“[T]he acquisition of Group 1 may enable Pitney Bowes to make a strong statement in the data quality market. Pitney Bowes does have some data quality tools [its Data Quality and Postal Presorting solutions], but these are essentially address tools and lack the breadth of functionality that Group 1 and others can offer,” said Robert Lerner, a principal analyst for application infrastructure with Current Analysis, last year. “Despite the fact that Pitney Bowes highlights its CCM capabilities with respect to the announcement, it does look upon the data quality market as another growth opportunity, and with an established player such as Group 1, it has a nice entry to this market.”
Outside of address cleansing, CDI’s Zornes says Pitney Bowes isn’t interested in Firstlogic’s matching (or redundant) technologies. “[W]e believe Pitney Bowes will sell off Firstlogic’s matching technologies … to a vendor such as IBM, Informatica or Oracle as this capability is vital to ‘pure play’ CDI vendors (and undervalued as a standalone data quality capability).”
Of course, IBM already has its own data quality and data profiling technologies (the former Ascential QualityStage and ProfileStage products)—although that doesn’t mean Big Blue wouldn’t buy the Firstlogic technology to keep competitors (such as Informatica, Oracle, or even Microsoft) from getting it first. Informatica, for its part, has been content to stress a partner-centric approach to data quality: the company has OEM relationships with Firstlogic and rival Trillium Software. Indeed, Informatica’s new OEM relationship with Trillium—which was notched just last month—was widely seen as a blow to Firstlogic. (http://www.esj.com/business_intelligence/article.aspx?EditorialsID=7643&t=y )
But if Pitney Bowes does indeed put much of the viscera of Firstlogic’s data quality technology on the market, it could be an irresistible opportunity for Informatica. (Note: Owing to the Labor Day holiday, BI This Week went to press earlier than is customary; Informatica representatives did not immediately respond to requests for comment.) CDI’s Zornes, on the other hand, says that Informatica itself could become acquisition bait—in this case, for Trillium parent company Harte Hanks Inc. “This [merger-and-acquisition] move likely has the biggest impact on Informatica, who is starting to look pretty lonely (and possibly a good acquisition target by Harte-Hanks or others).”
Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.