IBM To Acquire Initiate Systems

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IBM on Wednesday announced a definitive agreement to acquire Initiate Systems, a small, Chicago-based purveyor of master data management (MDM) software. The deal comes less than a week after Informatica's purchase of Siperian and brings yet more consolidation to the MDM market.

The terms of the Initiate acquisition were not disclosed.

MDM software helps organizations ensure data consistency across dimensions such as customers, products, locations and employees. Curiously, IBM eschewed MDM terminology in its press release on the deal and focused instead on Initiate's presence in the health care and government markets.

"In the U.S. alone, there's $36 billion in government stimulus funds [available] to facilitate the adoption of electronic health records and health information networks, both being places where Initiate's solutions play strongly," noted IBM's Arvind Krishna, general manager, Information Management, during a conference call on the deal. Krishna highlighted Initiate customers including CVS Caremark, University of Pittsburgh Medical Center and the U.S. Department of Veterans Affairs.

IBM already offers the IBM InfoSphere MDM Server and a related product information management product. But Krishna said Initiate's products do not overlap with these transactional MDM technologies and, therefore, will be retained and extended. Initiate's registry style of MDM brings summary index information together in a common hub while leaving source content in underlying repositories, an approach Krishna said avoids replication of sensitive content such as health records.

"We'll stop the debate on trying to force fit one [MDM] answer and instead will provide the correct answer for our clients," he said. "Many large customers may actually end up requiring both styles of MDM, depending upon the problem. So we will increase investment in both technology sets."

The lion's share of the MDM market is now controlled by IBM, Oracle and SAP, and the Siperian and Initiate deals leave few prominent independents other than Informatica. One such vendor, Kalido, dismissed IBM's purchase as a niche, industry-specific play that won't advance the tougher organizational problem of data governance. "This acquisition will be delivered like so many others; with dozens of IBM global services consultants to 'knit' the patchwork of tools together," stated Bill Hewitt, Kalido's president and CEO.

IBM said it would retain Initiate Systems' 347 employees and most of its offices. Siperian, which has strong presences in the health care and life sciences markets, was acquired for $130 million in cash and had approximately 150 employees.