IBM has ulterior motives with Initiate: Informatica

Data integration vendor Informatica Corp. shot verbal arrows at IBM Corp., saying its acquisition of master data management (MDM) vendor Initiate Systems Inc. will only leave customers out alone in the cold. 


IBM owes it to its customers to explain if, when and how it plans to rationalize and integrate the overlapping MDM and data quality technology, said Ivan Chong, executive vice-president of the Redwood City, Calif.-based company’s data quality product division.


“If I were them, I would have the impression that IBM is repurposing the technology for something completely different,” said Chong.


IBM is not interested in selling Initiate’s technology as MDM offerings; instead, they will refer to it as data integrity and offer it within its health-care technology suite, said Chong.


IBM made the announcement Wednesday that it will buy, for an undisclosed sum, privately-held, Chicago-based Initiate. The purchase is IBM’s 30th in the data and analytics space. Other recent activity in the MDM space include Oracle Corp. buying SilverCreek Systems Inc. and Informatica buying Siperian Corp.


Chong points out that the press release announcing IBM’s acquisition did not refer to Initiate as an MDM company, but a data integrity company. “I found their announcement was rather surprising, that they’ve purchased an MDM technology and chose not to refer to it as such,” he said.


Chong went on to say that Initiate customers should fear the degree of fragmentation in IBM’s approach to the MDM market, which has resulted from gaps not covered by existing products and difficulty integrating and rationalizing others. Customers need flexibility and consistency to adapt to changing business conditions, he added. “Having fragmented and un-integrated products means they will have a very difficult time leveraging their existing investments,” said Chong.


In response to Chong’s comments, Ray Wang, a partner with analyst firm Altimeter’s enterprise strategy group, said that although IBM has historically had difficulty pulling together its portfolio of applications, that has not been the case in recent years. “The past two years has been about rebuilding around, and with, IBM’s information assets,” said Wang.


As for Chong’s warning to customers that Initiate’s MDM offerings will be repurposed as data quality, Wang said he expects Initiate’s technology to be verticalized around people/patient/customer and that a key driver behind the acquisition is a realization that MDM will eventually go vertical or industry-based. But, Wang said, “it’s still MDM and data quality, though a subset.”


Wang said the term MDM is not typically used in IBM parlance, compared to other labels like master information hub, “so using MDM or not, I’m not sure whether this would make a difference.”


Chong denied that Informatica is merely nitpicking on semantics when it points out the lack of use of the term MDM by IBM. “Customers have a very specific need. They understand the market definition for the technologies they invest in,” said Chong. “IBM should know better than to change the terminologies and confuse their customers.”


Chong also sent a message to system integrators, warning them they won’t find a neutral partner in IBM if they’re looking for someone with which to jointly sell MDM technology.


To that, Wang said Chong does have a point. “It’ll be harder for software vendors to see IBM as a neutral party in total,” said Wang.


Initiate’s health-care clients include payers and providers as well as retailers selling prescription drugs, among which are the Alberta Ministry of Health and Wellness, Calgary Health Region, CVS/Caremark, Humana, the State of North Dakota’s Department of Health and Human Services and the University of Pittsburgh Medical Center.

Follow Kathleen Lau on Twitter: @KathleenLau 

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