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Informatica cleans up with Similarity Systems acquisition

Informatica, a data integration software provider, today purchased data quality vendor Similarity Systems for approximately $55 million.

The steady convergence of data quality and data integration vendors continued today with the acquisition of Similarity...

Systems Inc. by Informatica Corp. -- no surprise to some analysts.

Informatica, a data integration software provider based in Redwood City, Calif., purchased Dublin-based data quality vendor Similarity Systems in a cash transaction valued at approximately $55 million.

The acquisition will combine Informatica's PowerCenter data integration platform with data quality technology from Similarity. Similarity's technology will be integrated into PowerCenter 8, which is slated for a general availability release in April 2006. Packaging and pricing options will be announced mid-February.

Data quality and data profiling functions are a requirement of data integration tools today, said Aaron Zornes, chief research officer of the CDI Institute, a San Francisco-based consultancy. The acquisition is a "merger of strategy rather than of urgency" and made sense for both companies, Zornes said. Similarity needed a true presence in the U.S. in order to compete in the market, and Informatica needed better data quality functionality, Zornes said.

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"If you're an ETL [extract transform and load] vendor, you need a data quality component and a data profiling component, and Similarity has both," Zornes said. "[Informatica and Similarity] both have good products, they're simply getting together."

Similarity's technology includes patented tools for data profiling, standardization, cleansing, matching and monitoring, as well as data quality scorecards, metrics and reporting tools. Informatica's PowerCenter 8 data integration platform is used by companies to access, transform and integrate data from a large variety of systems.

PowerCenter currently has data profiling and data cleansing functions, which James Markarian, chief technology officer of Informatica, described primarily as original equipment manufactured [OEM] products from Firstlogic Inc., based in La Crosse, Wis., and Trillium Software, based in Billerica, Mass. The Similarity acquisition is a substitute for those OEM partnerships, Markarian said. Informatica will continue to maintain links with those companies in order to support existing customers, he added, but new customers will all use Similarity technology.

Though some have speculated that Informatica would eventually acquire their partner Firstlogic, Markarian said that Similarity's culture as a software company, rather than a service provider, tipped the scales in favor of this acquisition. Similarity offered technology benefits as well, he said, bringing a host of key features as well as data profiling functionality that it acquired from Evoke.

"Nobody offered the complete package that Similarity does," Markarian said. "They have a metadata-driven architecture, support for more than just name and address cleansing, full international support and support for a full information quality lifecycle." Ease of use for business users and analysts was also a big factor -- one noted by several of Similarity's customers as an important differentiator, Markarian added.

Integrating the two products by April will not be a problem, Markarian said. Some integration is already in place, made simpler because both products are fairly open. Similarity is about as well integrated with PowerCenter today as FirstLogic and Trillium are, he said, and the short-term integration will put Similarity ahead of where those existing partners are now. The short-term integration for the April release will focus on metadata and better integration of Similarity user interfaces into PowerCenter. Longer-term integration plans include tighter integration between the two products and more emphasis on functions for business users, Markarian said.

"For Informatica customers, this is good news," said Mark Smith, CEO and senior vice president of San Mateo, Calif.-based Ventana Research. "Instead of having to source from different vendors, they have a single shop to bring these capabilities together, a single service organization and deeper technology. In general, it's a positive thing and expands the capabilities for both customer sets."

The acquisition was critical for Informatica to compete with IBM, added Eric Rogge, Ventana's vice president and research director. Rogge sees IBM as Informatica's most formidable competitor.

"If [data quality] is something that's outsourced to a best-of-breed partner, [Informatica] is just not going to have the same kind of credibility that IBM has, so this was a must-do thing for them," Rogge said. "We'll see further consolidation and additions to their product portfolio going forward."

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