Q&A With Informatica CEO Sohaib Abbasi

The head of the data integration tool provider talks about competition, software industry consolidation, and Informatica as an acquisition target.

Mary Hayes Weier, Contributor

February 4, 2008

6 Min Read

A number of tech vendors in recent months have talked about the various ways they're helping business customers manage fast-growing mountains of digital data.

Informatica, as the leading independent provider of data integration tools, is among a handful that excels at this claim. Informatica just finished one of its best fiscal years ever, growing revenue by 21% in 2007 to $391.3 million, even as it faces increasing competition from IBM's ambitious Information On Demand strategy.

InformationWeek editor-at-large Mary Hayes Weier caught up with Informatica CEO Sohaib Abbasi on Feb. 1, to learn his views on the competition, software industry consolidation, and the occasional chatter about Informatica as an acquisition target.

InformationWeek: How well is data integration understood among large companies?

Abbasi: It is early days in the data integration market. The majority of the deals [we get] in any given quarter remain uncontested by any commercial vendor. Our success comes primarily by convincing customers to buy our software instead of building it in house. That's no different from any other category; where business apps were 30 years ago or relational databases 25 years ago. The value, of course, is reduction in costs. It's not as labor intensive [to buy a commercial solution].

InformationWeek: IBM has gotten more aggressive about this space, particularly since acquiring Ascential Software for $1.1 billion in 2005. Is IBM your top competitor?

Abbasi: We see IBM more frequently [in competition for deals] than any other commercial vendor. Fifteen percent to 20% of any deals in any quarter we will compete with IBM. We win 70 to 80% of deals we go against them. The reason is two-fold. First, our neutrality: we partner with all the leaders in business intelligence, databases, and applications. We have no hidden agenda of promoting one database over another or one app over another. The other reason we continue to win the vast majority of deals against IBM is our relentless pace of innovation. Informatica has delivered new product capability every quarter for the last 12 quarters. In order for companies to gain an advantage they need to leverage all of their data; not just relational data but near universal access. The volume of data increases 50% each year, but IT budgets don't increase 50% each year. We support the latest in grid technology and commodity hardware to enable cost-efficient scalability.

InformationWeek: Informatica often comes up as a potential acquisition target. Do you see an acquisition or merger in your future?

Abbasi: We have been singularly focused on our execution. Our management team is very much focused on ensuring we deliver the best value to our customers, employees, and shareholders. We would not have achieved record results had we not been singularly focused. We are well aware that segments of our industry are consolidating at a higher pace than younger segments. I expect there will be a lot more consolidation in mature segments where the only growth strategy is acquisition. We are in an early stage market. We have a near perfect innovation record, having delivered new functionality in 12 quarters. Having said all that, our board has a fiduciary responsibility to consider all the strategic opportunities available to Informatica. InformationWeek: What impact is the consolidating software industry having on IT organizations?

Abbasi: There is a lot of uncertainty in the minds of our customers. Particularly the CIOs, in terms of what the implications are. Will IBM/Cognos support Oracle as well as it supports IBM's database? Will Business Objects support Oracle as well as it will support SAP? [CIOs] are becoming more aware that the single most valuable asset is the data. Data matters more, and they want to make sure they're not locked out of any of their data. Our neutrality is the better way to deal with the uncertainly of industry consolidation.

InformationWeek: But what about the many CIOs who say industry consolidation has brought the benefit of not having to deal with so many vendors?

Abbasi: That's an over-simplification. Here's an example: there's a telecom leader in Europe who standardized on Oracle. They acquired a company that had made a similar decision to go with SAP. All of a sudden they realized they're not supporting a single standard. By saying customers want fewer checks to sign is missing the point. The reality of an IT organization is very different because no one is in a position to scrap everything they've invested in [and replace it] with new software from one of those vendors. We see customers not wanting to deal with thousands of vendors, but they don't want to be limited to software by a single vendor. My best proof point is we continue to grow and win the vast majority of deals.

InformationWeek: IBM, Microsoft, Oracle, and SAP now have (more or less) comparable software tools to offer and are far more entrenched in corporations. Why should a business look to Informatica?

Abbasi: The reason is quite simple. Our ambitions are very different from the ambitions of the companies you mentioned. What the customer requires is a neutral data-integration platform that will allow them to leverage all they have within their IT organization and very gracefully evolve any platform they have, including open source. Microsoft wants to be the sole provider of the OS and productivity apps. Oracle's ambitions are to be the predominant provider of databases and business apps. Those ambitions conflict with what the customer wants -- to make the most of what they have, which is technology from all of those vendors. They enjoy the freedom they have of choosing across from those giants. Our vision aligns well with what the customer needs, which is they want to be able to leverage all of their data.

InformationWeek: Just like Salesforce.com's Marc Benioff and Netsuite's Zach Nelson, you're a CEO who came out of Oracle. Based on your knowledge of Oracle's culture, what do you think will be its next acquisition move?

Abbasi: Oracle has done a remarkable job in changing its culture. I joined in 1982 and I left 20 years later, in 2003. In that time revenues increased from $4 million to $10 billion. That was all obtained through organic means. Since 2003, it has a completely different strategy that has emphasized acquisitions. So the culture I knew best is not the current culture.

InformationWeek: You recently did a deal with Fast Search & Transfer (in the process of being acquired by Microsoft for $1.2 billion) that calls for Fast to embed your data integration software within the Fast Adaptive Information Warehouse, with the goal to simplify access to structured enterprise data. Tell me about that deal.

Abbasi: This is a very exciting deal for us. Enterprise search is one of the fastest growing categories in the software industry. The relevance of that agreement is Informatica provides the enabling technology to gain access to data sources. The search capability, in a lot of ways, is limited by the types of data it can have access to. What we have been able to do is expand the reach of Fast's enterprise search capability to encompass data in any relational database underlying any business app; in fact, even mainframe systems. It's broadening the reach of enterprise search by providing access to all data.

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights