Are Data Integration Vendors Responding to Pricing Concerns?

Vendors appear to be making an effort to address concerns about how they price their data integration tools. Will their efforts result in meaningful savings?

According to Gartner Inc.'s latest Magic Quadrant assessment of the data integration (DI) tools market, users tend to like their DI tools for very different reasons.

This isn't surprising. Users of IBM Corp.'s InfoSphere DI stack, for example, like its ability to support large and complex DI implementations; users of Informatica Corp.'s DI stack like its improving self-service capabilities; and users of Oracle Corp.'s combined DI stack like the one-stop resources of Oracle itself. What is surprising is that IBM, Informatica, and Oracle customers all dislike the same thing about their DI tools: their high cost.

Customer dissatisfaction with DI tool pricing is nothing new. It's one reason hand coding is still so prominent, accounting for almost one-third of all DI according to a 2011 survey. Gartner's latest "Magic Quadrant for Data Integration Tools" assessment suggests that IBM, Informatica, and Oracle -- three of the vendors most stung by criticisms about the high prices of their DI tools -- are at least making an effort to respond to these concerns.

Whether their responses result in meaningful savings for most users in common implementation scenarios is another matter.

Gartner reports that Oracle customers, for example, cite "pricing challenges" as one of their biggest concerns. "For most, it is the per-source/target CPU-core pricing model of ODI and GoldenGate that contribute to the high cost of licensing the technology, especially in large and diverse environments," write analysts Eric Thoo, Ted Friedman, and Mark Beyer.

In response to these concerns, the analysts note, Oracle seems to have shaken things up. "For example, ODI can now be licensed based on the number of CPU cores on which transformation logic will execute, and GoldenGate can be procured using a term-based licensing model," they explain. "These options will help some customers find a more attractive cost model, but it remains to be seen if they will address the majority of customers' concerns."

Informatica faces a different problem. Although its prices are high -- albeit "similar to other leading vendors," according to Gartner -- its pricing scheme is less straightforward than are those of competitive offerings. In part, this is because Informatica does a poor job of communicating how its prices compare with those of its competitors.

"Informatica customers who responded to our survey reported that its solution is expensive compared with similar solutions from 'stack' vendors. Similarly, they indicated that its pricing is confusing," write Thoo, Friedman, and Beyer.

This confusion is a result of what the Gartner trio dubs "value layering," an effect that "occurs as organizations request greater functionality from their data integration platform as a whole, and the overall value remains aligned with functionality." Informatica still has its work cut out for it in convincing customers that the value it is delivering is commensurate with its pricing. "The various 'editions' help customers understand the price, but they also make it difficult to compare the price paid to the 'layered value' being delivered. An alternative cost model is cloud-based delivery with on-demand and term-based pricing," they point out.

Gartner likewise describes pricing as a "major concern" for users of Big Blue's InfoSphere DI stack. For starters, the Gartner analysts say, IBM uses CPU speed as its main pricing parameter. This results in increased complexity for customers, who have to audit and/or modify their InfoSphere implementations on an ongoing basis. That's only part of the problem.

"[T]he relatively high cost of a typical implementation [compared with competitive offerings] lead[s] some prospective customers to consider alternative providers or to limit their investment to a small number of components," the analysts explain, noting that IBM's InfoSphere DataStage ETL tool is a popular option in such cases." IBM specifically developed limited-scale or purpose-bundled packages such as its InfoSphere Information Server Workgroup Edition and its DB2 Data Warehouse Edition to help address these concerns, Thoo, Friedman, and Beyer note. Big Blue's also introduced term-based licensing in response to concerns about its InfoSphere pricing scheme. How well these are received by customers -- and how well they address the needs of customers -- remain to be seen, however.

IBM, Informatica, and Oracle aren't the only vendors facing pricing pressure. Two other DI market leaders -- SAP AG and SAS Institute Inc. -- are likewise coming under fire for the high perceived cost of their DI products.

In SAP's case, it, too, claims to have addressed pricing concerns. "Reference customers cited pricing and licensing complexity as potentially complicating the growth of SAP's footprint in existing accounts," according to the analysts, who note that SAP "recently reduced the number of pricing options to improve understanding and simplify licensing selection."

Whether SAP's moves will achieve this outcome -- or will (instead) serve as a pro forma gesture to rebut pricing criticisms -- is still unknown.

It's less clear what SAS can do to rebut criticisms about the expense of its DataFlux Data Management platform. Compared to their counterparts, SAS/DataFlux customers are "less satisfied with [their] pricing model and value relative to cost," the report indicates. Nor is that all: "In a recent survey of users of data integration tools that had conducted a competitive evaluation of multiple vendors, the issue of cost of ownership was the most common reason for SAS/DataFlux losing out to competitors."

SAS isn't sitting idly by, according to Gartner. It's expanding its training options, beefing up its professional services support, and developing alternative pricing or delivery models -- including on-demand and subscription-based schemes.