Informatica Morphs into Enterprise Decision Support Vendor

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Vendor Genesis

Based in Palo Alto, California, Informatica was founded in late 1993 by Gaurav Dhillon, the current Chief Executive Officer, and Diaz Nesamoney, the current President. Originally they were strictly an ETL (Extract/Transform/Load) vendor who competed with Platinum Technology, Prism Solutions, Carleton, and Evolutionary Technologies (ETI). With his background at Unisys and Sterling Software, Dhillon understood that applications were being moved from mainframes to the then-new client/server technologies. Many companies were struggling to move the required data between the two environments. Informatica was formed to solve this problem. The first product to be introduced to market was Open Bridge in early 1994. Open Bridge was a set of tools that allowed the movement of data from mainframes into the client/server environment using a graphical front-end.

After receiving $2.5 million in venture funding, PowerMart was released in May of 1996 as the next generation of Open Bridge, with the addition of features designed to allow customers to design the data movements without assistance from the vendor's consultants. PowerMart has components to allow the designing, building, populating, and managing of scalable data marts, and the server can be run on Windows NT or UNIX. One interesting feature of PowerMart is what Informatica refers to as "Scalable Pipeline Processing", which combines disk staging with in-memory server-side caching to fully leverage system resources. It also has an FTP integration feature which helps set up FTP parameters for flat file transfers (flat files need to be on the same machine as the ETL server as parsing files across an NFS mount is inefficient). In addition, the product contains an open metadata repository, a pipelined, multi-threaded server engine, and a scheduling mechanism.

PowerMart was followed by PowerCenter in 1998. PowerCenter is an enterprise data integration hub that integrates and unifies diverse data sources, including ERP systems. In addition to PowerMart for data movement, the product contains a Global Repository which, via Informatica's MX2 API, allows business intelligence products to share metadata with PowerCenter. (See TEC News Analysis article: "Informatica Conforms to Metadata Standard" November 10th, 1999). The product also contains pre-built integration with Trillium's data cleansing product and is capable of extracting from SAP and targeting BW (SAP's Business Information Warehouse), and can also extract from PeopleSoft and populate their EPM warehouse.

PowerConnect and Business Components were released in 1999. PowerConnect is a family of packaged software products that allow customers to extract both data and metadata from ERP and legacy applications. The information is then delivered to PowerCenter. PowerConnect modules currently exist for SAP, PeopleSoft, and DB2. Business Components are pre-defined templates that shield application developers from the complex process of consolidating data. They provide business-level views of complex systems such as SAP R/3 to simplify the creation of analytic systems.

PowerPlugs were also released in 1999. They allow the Entity Relationship Diagrams (ERD's) for schemas to be imported into Informatica's metadata repository, which allows model changes to be synchronized with the ETL tool. PowerPlugs currently exist for Oracle Designer/2000, Platinum/CA Erwin, and Sybase PowerDesigner.

The next product to be released will be PowerCenter.e 1.6 in the first quarter of 2000. Informatica states that the product "extends business focus to provide the first cross-channel data integration platform for eBusiness."

On January 5, 2000 Informatica released PowerPlug 3.0. Based on their MX2 metadata initiative, and jointly developed with the Yaletown Technology Group, the product is capable of bi-directional metadata exchange, metadata updating and synchronization from upstream data modeling tools, and metadata comparison, among other features.

The development of these products has allowed Informatica to provide a complete solution for the population of data marts and also data warehouses. (There is a common misconception about data marts being smaller than data warehouses, but this is untrue, it is the fact that they are subject-focused that makes them data marts.) Before purchasing the Informatica product, the United States Postal Service proved that PowerMart could scale to three terabytes.

Informatica was originally a privately held concern, but completed a public offering in late April 1999, issuing 2.75 million common shares at $16 and raising $44 million .

Vendor Strategy and Trajectory

Informatica's strategy has always been to assume that data warehouse projects are too large, expensive, and prone to failure to be an effective answer to management's need for business knowledge. As expressed by Gaurav Dhillon, "We looked at the existing model and realized that the idea of building a centralized warehouse that everyone can use is not a very good one. It takes too long and the tools are complicated. The result is that it never happens." Dhillon and Nesamoney decided that the data mart would be faster and cheaper. (Data marts can either be subsets of a data warehouse or standalone, and typically represent information for one group or function). PowerMart was originally developed to allow the extraction and transformation of data into data marts. PowerCenter is an extension of the same principle, and now provides for a global metadata repository, multiple engines, and centralized monitoring of processes. With the acquisition of Influence Software for business analytics and the release of PowerCenter.e, they are moving strongly into the eBusiness market, including enterprise resource planning and extended supply chain access. With the addition of support for MQSeries and XML in the PowerCenter.e version, much of the work can be done in real time. We believe that Informatica is moving in the correct direction. Informatica has also become profitable in recent quarters in spite of its high investment in research & development (25% of total revenues for fiscal 1998).

Vendor Strengths

Informatica has a lead over most vendors in core database extraction technology. In addition, their MX2 metadata initiative gives them a wide-ranging competency with metadata exchange among other vendors. They currently have interfaces to products from tool vendors such as Business Objects, Cognos, and Seagate Software (See TEC News Analysis article: "Informatica Conforms to Metadata Standard" November 10th, 1999 .) In addition, the acquisition of Platinum Technology by Computer Associates has thrown the DecisionBase product off of its release schedule (by a minimum of six months), which should allow Informatica to gain further ground against this competitor. (For further information on the DecisionBase product see "Computer Associates Splashes Into the Data Warehousing Market with Platinum Technology Acquisition" September 23rd, 1999 .) With both of its major competitors in a state of flux, Informatica has an opportunity to gain ground. Moving into the hot field of eBusiness should provide many sales opportunities.

Vendor Challenges

Having only been public since April of 1999, Informatica needs to keep increasing their market share and visibility. Their current competitors are well-funded (Platinum Technology is now part of Computer Associates, the third largest software vendor, Ardent Software is being acquired by Informix, another large, well-established software firm.) Informatica must act fast in both the research & development and sales & marketing areas to capitalize on the current state of flux in their market. In addition, competing vendors are adding other capabilities to their products, such as improved mainframe data access, business intelligence capabilities, and data cleansing. Informatica will have to work to keep up with these trends. (For more information on these developments, see "More Data is Going to the Cleaners" December 1st, 1999). Informatica's push into business analytics through their acquisition of Influence Software should give them a chance to compete with other product "suites". Informatica has ambitious plans for eBusiness, and will have to work hard to realize them in a completely cohesive product.

Vendor Predictions

We predict that Informatica will improve their market share to at least 20 percent in the next year (60% probability). Informatica's stability compared to the other two major ETL vendors should give them a strong opportunity to excel in increased market share, customer awareness, and product functionality. We believe that there is a 30% probability that Informatica will merge with another, larger software vendor to extend their reach. We also predict that Informatica will attempt to increase their services revenues from consulting (60% probability).

Vendor Recommendations

Informatica should keep an eye on Ardent Software, since they are merging with Informix. Informix's world-wide sales and support facilities will provide Ardent with a greatly expanded sales and services channel. (See TEC News Analysis article: "Informix to Acquire Ardent Software-Another Vendor's Attempt at End-to-End Data Warehousing" December 14th, 1999) Ardent has kept their eye on Informatica and considers it its strongest competition. Informix and Ardent are also working on eBusiness and will continue to be its strongest competition. Informatica may have a lead in core database extraction capabilities, but needs to think about the next level of competition, especially in the area of unstructured data (data which is not stored in relational tables). Informatica's MX2 metadata initiative, as well as its contract with the U.S. Postal Service, gives it a powerful chance to keep up with Ardent.

User Recommendations

Informatica should be included on any short list of Extract/Transform/Load tools and eBusiness solutions with Ardent Software's DataStage (Ardent is currently being acquired by Informix), Sagent Technology's Data Mart Solution, BMC's ChangeDataMove, ETI's Extract, the SAS Institute's Warehouse Administrator, as well as others depending on whether ETL is the only goal. It should be noted that there are few pure-play ETL vendors left, most have entered into the Business Intelligence space and eBusiness markets, and/or are attempting to provide End-To-End Data Warehousing solutions. This fact will make it more difficult to compare vendors against each other due to differing product mixes.


FTP: (File Transfer Protocol) A protocol used to transfer files over a TCP/IP network (Internet, UNIX, mainframe, etc.). It includes functions to log onto the network, list directories and copy files. It can also convert between the ASCII and EBCDIC character sets and supports both character and binary transfer modes.

NFS: (Network File System) The file sharing protocol in a UNIX network. This de facto UNIX standard, which is widely known as a "distributed file system," was developed by Sun. It can be used to make files appear to be on the local machine when they are in fact somewhere else on the network.

Metadata: Data that describes other data. Table and column names are examples of metadata. Metadata for a relational database system is stored in a Data Dictionary.

Schema: The definition of an entire database. It defines the structure and the type of contents that each data element within the structure can contain. Schemas are often developed with modeling tools such as Platinum/CA Erwin and then the SQL Data Definition Language (DDL) is generated from the tool and applied to the database to instantiate the schema (create the physical database from the logical model).

ERD: (Entity Relationship Diagram) A database model that describes the attributes of entities and the relationships among them. The typical entities in an ERD are tables and columns.

MQSeries: Messaging middleware from IBM that allows programs to communicate with each other across all IBM platforms, Windows, VMS and a variety of UNIX platforms. Introduced in 1994, it provides a common interface (API) that programs are written to.

XML: Extensible Markup Language) A document format for the Web that is more flexible than HTML. Its use is becoming common is eBusiness.


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