Search Vendor Partner Tie Ups Reconsidered
November 13, 2009
I read a post by Rajan Chandras called “Informatica Scores Big with New Release Yet…”. The article triggered my memory about an October 26, 2009, article called “Endeca, Informatica Partner to View Enterprise Data”. Both of these source documents have wild and crazy urls, so the links may be dead if you are reading this after November 13, 2009.
I am delighted that Endeca, a vendor of high end search solutions, and Informatica, a data integration vendor, have hooked up. Search requires content transformation, which as many licensees of enterprise search systems discover, can be a expensive proposition. I have referenced data that suggests that as much as one third of an information technology department’s budget can be consumed with transformation costs. I won’t go into the importance of having filters, connectors, and transformers that work without stuffing the exception folder full of files that may require manual inspection. I will leave that to the simplicity seeking 20 somethings who often don’t know what they don’t know about enterprise search systems.
I did notice one comment in Mr. Chandras’ article that was particularly interesting to me:
Even with this stellar performance from Informatica, I expect more. Added data quality to data integration? Should have been done a long time ago. B2B data exchange? One (or even a few) verticals does not even dent the business requirement for data exchanges -– how far will Informatica keep trudging down this path into other verticals? Application lifecycle management? Need to know more about how Informatica will exploit the shared boundaries between ALM and ETL. CEP? Same thing. Cloud computing? See my previous post about cloud competitor SnapLogic. Informatica’s steadfast progress is great news, really, but quite frankly I am looking for more leadership from Informatica.
If Mr. Chandras is correct, Informatica may be under considerable competitive pressure. In this context, is the tie up with a search vendor a move that will address these competitive pressures. In my opinion, the tie up could benefit both firms. However, if the competition triggers a price and feature war with a pivot point ease of use, fast deployment, and acceptable performance, the deal might not address Mr. Chandras’ concerns.
Enterprise search and content processing is a volatile sector. The forces against which search and content companies compete range from database administrators who want something familiar based on IBM, Microsoft, or Oracle technology—whether the system works all that well or not. Other companies are on the rebound after having been burned by the hot fires of engineering and support costs. More organizations are taking a hard look at open source systems such as Lemur Consulting’s FLAX or the Lucene system. I prepared a list of almost two dozen European vendors with some really attractive systems on offer; for example, Exalead, an outfit that knocks me out with their implementations and a dinner at a good French restaurant.
I am not sure that tie ups will deliver the benefits the partners want. Tie ups are popular for these reasons in my opinion:
- A deal creates a news hook so the pundits have a field day. I am an addled goose, but I am writing about this tie up, so the PR angle is valid.
- The deal creates hope for investors or stakeholders who want to see that top line revenue grow in a lousy economic climate. After firing people, the companies have to get back to producing solid, organic revenue growth. Chugging along with little or no growth is not going to get me excited.
- The customers of the partners’ technologies have an opportunity to participate in an upsell. In fact, the upsell angle is among the more significant opportunities a tie up occasions.
- The management of the two companies can rework plans, hold seminars, and tap into the adrenaline rush the deal lets loose.
- There may be some cost payoffs to be had. A partner might angle for a discount on the other partner’s technology. That’s a good thing for one of the partners. The other partner? Maybe.
Looking forward to 2010, I see more tie ups. The “no cash” mergers I mentioned in earlier posts about Attensity and Lexalytics may become more popular as well. There are too many me-too search systems in the market in my opinion. Maybe tie ups are one quick path to differentiation?
Stephen Arnold, September 13, 2009
I did receive one tiny check in the mail this month, but, alas, not from Endeca or Informatica. Vite, vite, report this fact to the Court of International Trade. Ooops. These are mostly US companies. Try the Department of Veterans Affairs.
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