Teradata finished 2010 with an acquisition by snapping up privately owned Aprimo, a provider of marketing management software, for $525 million in cash. The acquisition demonstrates Teradata’s desire to broaden its analytic application capabilities, whilst also being able to complement and enhance its market leading (and mature) enterprise data warehousing (EDW) platform.
Teradata snags a leading pure-play marketing automation vendor
Aprimo offers a suite of integrated marketing automation applications for both B2B and B2C organisations for developing, implementing and managing cross-channel marketing initiatives. The suite supports activities including campaign management, brand management, marketing resource management, and social marketing. The software is also available via a number of deployment options. Aprimo Marketing Studio is a single tenant solution that can be installed or hosted whereas Aprimo Marketing Studio on-Demand is a multi tenant SaaS-based solution. The company asserts it has over 150,000 marketers from 40 countries using its software including 36% of the Fortune 100. In 2009 the company reported revenue totalling $69 million—that’s growth of 15% compared with 2008.
Acquisition provides opportunities to expand addressable customer base
This announcement marks a step up in acquisition activity from the data warehousing giant, which also picked up the small analytic appliance vendor Kickfire in the middle of last year. The difference here for Teradata is that by acquiring one of the leading pure-play marketing automation specialists it not only gets it hands on the company’s software assets but a growing customer base as well. This base may prove fruitful for cross-sell opportunities with its data warehousing and analytics business. For example, by pairing an integrated view of the business—delivered as an EDW—with a marketing automation solution can arguably improve the ability to deliver a more consistent, holistic and integrated marketing effort. Especially since a solid data foundation is critical to understanding, targeting and interacting with customers and partners.
Equally the Aprimo acquisition will also complement Teradata’s existing analytic application business that includes demand and supply chain management, profitability analytics, finance and performance management. This is not to say that there are no areas of overlap between both companies. Teradata, for example, is already an established provider of marketing applications via its marketing resource management and relationship management applications. We expect that the longer term aim for Teradata will be to integrate these into the Aprimo Marketing Studio offering rather than keeping them as separate product lines.
Interestingly Aprimo will also give Teradata a welcome boost in the area of software-as-a-service and Cloud Computing. Until now the company has tentatively embraced the cloud. In 2009 it launched its Cloud Computing initiative Teradata Enterprise Analytics Cloud that offers a private cloud within its own data centre allowing customers to engage with data warehousing and analytics on demand. This is complemented by a public cloud capability that offers a free developer version of the Teradata database on Amazon Web Services’ Elastic Compute Cloud (EC2).
Leveraging cloud computing and software-as-service applications is proving to be an appealing way to counteract the traditional high upfront costs of software and services, as customers can engage with analytic applications and data warehousing without having to invest and install software and IT infrastructure. Similarly Teradata’s introduction of appliance-based data warehouses is enabling the company to make the Teradata platform more affordable and easy to deploy for a broader range of customers who don’t necessarily want to engage (straight away) with large scale EDW deployments. We believe both the Aprimo acquisition and its capability for SaaS deployment together with its appliance strategy mark a concerted effort by Teradata to expand its addressable customer base while countering competitive pricing pressures from its nearest rivals.
A consolidating marketplace
These rivals come in all shapes and sizes, a number of which compete directly in both the data warehousing and marketing automation space. IBM, for example, moved into marketing management when it picked up Unica back in August 2010 for $480 million as well as acquiring Netezza (the data warehousing appliance vendor) for $1.7 billion in September. Equally, Teradata partner SAS is a leading provider of marketing analytics solutions and only last year announced that it had optimised its marketing automation solutions for the Teradata platform. At the same time arch rival Oracle continues to offer marketing software based on its Market2Lead and Siebel acquisitions. Other vendors in this space include Tibco who recently acquired Loyalty Labs, Alterian, SAP and Portrait Software (acquired by PBBI).
All in all we believe the Teradata acquisition, together with other recent market activity, provides evidence of the growing focus and attention vendors are paying to the role of the CMO. This is not altogether surprising considering the pivotal role that CMOs play in driving competitive differentiation, marketplace leadership and being the ‘voice’ of an increasingly diverse and global customer base.