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July 11, 2002

Fish Eat Fish — Another ETL Vendor is Swallowed

Business Objects' acquisition of Acta Technology indicates a recurring market pattern that suggests ETL vendors are approaching extinction

by Philip Russom

On July 9, 2002, Business Objects SA announced its intention to acquire Acta Technology Inc. for approximately $65 million in cash. There are many interesting facets of this acquisition in terms of what Business Objects' product offering stands to gain. But I'd like to derail the focus on Business Objects and follow a track that focuses on the market for extract, transform, load (ETL) tools.

This acquisition shows the later stage of a lifecycle played out repeatedly by several ETL vendors over the last 10 years or so. In many cases, an ETL vendor is founded with a focus on a particular ETL problem, succeeds as a small-to-midsize company, and then is acquired by a larger vendor with a broader offering. "Market consolidation" is nothing new to the world of business intelligence (BI) and data warehousing, but the list of acquired ETL vendors is hard to ignore. In fact, someone recently tried to convince me that acquisitions of ETL vendors would accelerate, such that all pure-play ETL vendors will disappear by 2003. That's overstating the issue, of course. Or is it?

List of Acquisitions

The litany of ETL vendors acquired in recent years includes Carlton (by Oracle), Constellar (by DataMirror Corp.), Leonard's Logic (by Hummingbird Ltd.), Prism Solutions (by Ardent, now Ascential Software Corp.), and Relational Matters (by Cognos Inc.). We've seen one fish swallowing another, as with Red Brick, which was swallowed by Informix, which was swallowed by IBM. And then there's the unsinkable Ardent, swallowing Dovetail and Prism Solutions (as well as some small database vendors), only to be swallowed by Informix, and then emerge transformed (forgive the pun!) into Ascential, when IBM caught and gutted Informix.

Most ETL products from these defunct one-product vendors live on, swimming in the larger ponds of new caretakers. Users of these ETL tools get a little nervous occasionally, fearing that the new caretaker may discontinue their beloved tool. But many users tell of new benefits, like dealing with a larger, financially stable vendor and receiving improved product support.

Big Is Not Bad

There's nothing wrong with procuring an ETL tool from a large supplier. I'm not sure how the data-warehousing community got into the habit of turning to smallish and new software vendors for ETL tools. I guess it's because these have been a source of innovation that satisfies new, emerging requirements. However, quality ETL tools (and related tools for data integration and database management) are also available from established, substantive vendors like BMC Software Inc., Computer Associates, Information Builders Inc., and SAS Institute Inc.. Furthermore, ETL tools from major database vendors — namely Microsoft's Data Transformation Services (DTS) and Oracle's Warehouse Builder — are just hitting their stride and show promise of accruing a respectable user base.

Natural Lifecycle

So, will all pure-play ETL vendors disappear, leaving us with just large suppliers? No doubt the ongoing consolidation in the software industry in general, as well as in BI and data warehousing in particular, will continue. This trend is partly a function of the slow economy and partly due to the maturation of the BI market. So it's inevitable that the BI community will lose a few more ETL vendors as they complete their natural lifecycles.

Admittedly a few pure-play ETL vendors are struggling at the moment, such as D2K Inc. and Evolutionary Technologies International (ETI) Inc. But others — especially Informatica Corp., Data Junction Corp., and DataMirror Corp. — are weathering the economic storm rather well. Ascential Software is on track to move into the black in Q4 2002. And Acta has seen consistent quarter-to-quarter growth, even in 2001, one of the toughest years ever for software vendors.

ETL Vendors Not Extinct

But the main reason I think there's ample hope for ETL vendors is because new ones appear regularly, addressing new user requirements as they emerge. For instance, in 2000, new ETL vendors like Ab Initio Software Corp., Sunopsis S.A., and Striva Corp. came on the scene and are today firmly established as players in their target niches. Heck, we're only half way through 2002, and we've already seen promising new ETL tools from i-flex Solutions Ltd. (FLEXCUBE ETL) and Embarcadero Technologies Inc. (DT/Studio).

And you should expect more new ETL products to appear, addressing emerging requirements for ever-more extreme levels of data scalability, new Web standards (especially Web services), and ETL functionality for specific business functions (like supply chain and procurement issues). On a different front, a middle market is emerging that demands new cost-effective and easy-to-use ETL tools rather than the older complex and high-priced ones that have traditionally reigned.

Hence, pure-play ETL vendors are over-fished, but not yet endangered by extinction. As some become fodder for larger fish, new ones are hatched to carry the species forward. The natural cycle repeats, so that — for the time being, at least — there are plenty more fish in the sea.

Philip Russom, Ph.D. [www.PhilipRussom.com] is a Research Director at Giga Information Group where he provides advice to user organizations about data warehousing, business intelligence, and database management.

Resources

Related articles on IntelligentEnterprise.com

"Informatica PowerCenterRT FAQ," (June 11, 2002): PowerCenterRT — a new special edition of PowerCenter from Informatica — brings ETL into real-time to enable real-time alerts in metrics-driven analytic applications.

"Data Quality Week," (March 19, 2002): Ascential Software's announcement to acquire data-quality tool vendor Vality Technology momentarily puts data quality in the limelight.

"Orchestrating a Torrent," (Jan. 8, 2002): Its recent acquisition of Torrent Systems will take Ascential Software into the high-end market for ultra-scalable data integration.