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IBM's Bid 'Ascential' For Dominating Integration

IBM's move to acquire Ascential Software for $1.1 billion gives the company a big advantage over rivals like Microsoft and Oracle in the data integration field and could lead to a litany of similar buys, analysts said.

Should the deal succeed, IBM will plug a major hole in its portfolio by adding Ascential's broad suite of extraction, transforming and loading (ETL) software, said Forrester Research Analyst Philip Russom.

ETL software extracts data from one database and places it in another, which is an important job at a time when businesses frequently need to migrate data.

It's also an area where IBM has been traditionally weak. Its Warehouse Manager never made much of a mark, and the Armonk, N.Y., company did very little to advance it, Russom said.

Bringing in Ascential would not only make IBM a top ETL provider, but it would become the data integration and application integration leader on the strength of its WebSphere line.

Russom explained IBM's motivation.

"Since integration technologies and practices have taken off so well this decade despite the fact that other areas have declined in terms of spending, IBM is trying to supply demand from customers for more integration technology, but also to pull multiple integration technologies together into a single platform," Russom said.

"No other vendor is trying to do this," he continued. "IBM's goal is to not supply them as isolated point products, which is really what you get from Oracle and Microsoft."

While the deal seems to make so much sense, Gartner analyst Ted Friedman cautioned against the optimism, noting that IBM has a long road of integration to travel with Ascential, a company with which it has enjoyed a reseller agreement for several years.

"It's positive, but it's not going to be without its challenges, because there is some product overlap," Friedman said. The technology Ascential acquired in its purchase of Mercator, he said, "feels to me like it's overlapping with WebSphere Business Integrator and they have to work that out."

He also said both organizations were going down parallel paths with stronger metadata capabilities, so they will have to rationalize that.

"IBM will have to be very careful to let the Ascential product roadmap run its course," Friedman said. "It would be a bad deal if IBM takes their eye off the ball."

A Competitive Landscape Shifts

Meeting customer demand might be the primary focus, but the chance to stick it to Oracle and Microsoft cold be just as tantalizing to a company who has completed seven acquisitions in the integration software space since 2001.

IBM purchased SRD in January; Venetica in August; Alphablox in July; Trigo in March 2004; Green Pastures Software in December 2003; CrossAccess in October 2003; Tarian in November 2002, and a database software division of Informix in April 2001. Informix changed its name to Ascential Software after IBM acquired its database assets.

With Ascential seemingly in IBM's clutches, the spotlight now shines on Informatica, a large, standalone integration player that competes with Ascential in the ETL space. IBM and Informatica are also in a reseller agreement, fanning the speculation fire.

"What happens to Informatica?" Friedman asked. "Do they get acquired and who would do the buying? This could be a major domino in a chain of acquisitions where lots of data integration vendors get acquired by larger fish."

If Informatica is concerned, it isn't showing it. Company spokesman John Entenmann said the disappearance of Ascential as a standalone player will only bolster Informatica's position.

"A vendor-specific data integration offering may be favored by those customers needing to standardize on a single software provider, but will not address the requirements for open, best-of-breed software from the broader marketplace," Entenmann said in a statement.

Deal Could Broaden IBM's SOA Stance

What IBM is doing is unique because the vendor is trying to make different integration technologies interoperate with each other, Russom said.

"People use integration technology to connect application silos," he added. "But the irony is that integration itself can be a silo. One of the trends in this decade has been to try to get the integration silos to talk to each other."

This daunting task begs for another complex technology paradigm: Service-oriented architectures (SOA) . Russom said one of the most promising technologies to enable information in silos to communicate is an SOA, a distributed computing model that often employs Web services for efficient business transactions.

It stands to reason that IBM will incorporate and improve Ascential's DataStage SOA Edition software.

ZapThink Research analyst Ronald Schmelzer agreed.

"Basically, as companies seek to solve the challenge of integration and reuse in a heterogeneous environment, it's increasingly going to make more sense to solve the data, security, management, and run-time aspects of SOA in a holistic fashion," he said.

"I think IBM realizes this and is starting to put together all the parts of the puzzle for SOA. I think we're seeing just the beginning of consolidation in this space. I would expect to see more around process, management, security, event-driven capabilities, policy and performance. [This year] will be a big year for consolidation. The question remains: is there room for start ups?"