Among all of the dismal numbers in Teradata’s Q3 earnings report yesterday was news that it would be selling off its marketing applications unit. The reasoning, as reported by the company, is that it wants to focus its investments and attention on its “core data and analytics business.”
The data warehousing giant also needs to cut its losses where investments aren’t paying off as well as might have been expected.
Teradata got into the marketing applications business when it acquired cloud-based integrated marketing software provider Aprimo in late 2011. It has since purchased eCircle, a provider of cloud-based digital marketing solutions through social, mobile, Web and e-mail; creative agency Ozone Online; the technology assets of social media management startup Argyle Social; and mobile marketing automation provider Appoxee.
Is a Shopping Problem to Blame?
These are sobering times for Teradata, but it might be worth asking if other enterprise software providers will soon pay the price for their buying binges as well. After all, some of the world’s leading applications firms have been gobbling up small to mid-sized marketing software vendors as if they were items on an all-you-can-eat buffet where the food tastes good, creates no bloat and doesn’t have any calories.
Consider not only Teradata's marketing acquisitions of late, but also those of Adobe, IBM, Oracle, Salesforce and SAP — among others.
All of these companies have made an extraordinary number of marketing and marketing-related acquisitions over the last 10 years (many of them in the last four). The most carnivorous among them:
- Adobe acquired: Neolane, Omniture, Efficient Frontier, Demdex, Auditude, Satellite TMS, Day Software, Tumri, Behance
- IBM acquired: Unica, Silverpop, Tealeaf, SPSS Statistics, Xtify, Cognos, Coremetrics, Demandtec, Worklight
- Oracle acquired: Eloqua, Siebel Systems, FatWire Software, ATG, Datalogix, Vitrue, BlueKai, Collective Intellect, Involver, Responsys, Compendium
The question now isn’t only whether these vendors can support the weight of these new family members from a financial perspective, but also if they can nurture, feed and make them all work together to create big wins for their customers (and shareholders).
Sum of the Parts vs. The Whole
After all, the analysts like Teradata’s marketing applications offerings: it was named a Leader in Gartner’s MQ for Multichannel Campaign Management earlier this year, a Strong Performer in Forrester’s Wave for Cross-Channel Campaign Management, a “Niche Player” in Gartner’s inaugural MQ for Digital Marketing Hubs …. Individually these are good products.
So the fact that Teradata has put up a very public “For Sale” sign on its bundle, as opposed to quietly courting buyers hoping they’ll offer a premium, signals something — namely that the business isn’t working as well as hoped and that it needs it off of its books.
Is There Such a Thing as a Frankencloud?
George Corugedo, CTO of RedPoint Global, a Teradata Marketing Applications competitor, told CMSWire that he wasn’t the least bit surprised when he heard the news of the sale. Only he wasn’t sure that it would be the first casualty. “It’s one of many still to come,” he said, implying that marketing clouds from Adobe, IBM, Oracle and others might suffer the same fate.
“You can’t buy a bunch of companies (marketing tech providers), staple them together and expect them to work as if they were built as one,” he explained, arguing that the applications in this generation of marketing clouds don’t share the same code base, the same database, the same identities across different domains.
“People have multiple identities, there are bits of data scattered all over the place. Data is siloed. It’s a mess,” said Corugedo.
“These aren’t marketing clouds, they’re Frankenclouds,” he added. “They can never deliver what data-driven marketers have really needed — an integrated platform."
Needless to say, RedPoint Global claims to have built that platform and that it, by its very nature, avoids all of these problems.
More Than Hot Air?
Even taking Corugedo's words with a big grain of salt, he could have a point, especially if you’ve read comments from Gartner analysts like Kimberly Collins and Adam Sarner.
In their Magic Quadrant report for Integrated Marketing Management they warned that just because capabilities come from the same vendors, they may not be integrated.
“Acquisitions have resulted in different modules and functionality on different architectures and codebases. Some vendors had different codebases prior to acquisitions.”
It’s hard to know how much money, time and effort marketing cloud vendors are putting into integrating their acquisitions versus marketing and selling their products and services.
As Gartner wrote, “Integration between acquired products continues to be a work in progress for many vendors,” adding that because even more consolidation could occur “this will continue to be an issue with the larger providers making numerous acquisitions.”
There could be a lesson to learn in Teradata’s decision to sell off its marketing applications business — both it, and marketing cloud providers might benefit from focusing on investing in what they own and serving their customers well by making sure their products work well together.