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IBM to acquire MDM vendor Initiate Systems

IBM said today it plans to acquire Initiate Systems, one of the few remaining independent master data management vendors.

IBM said today that it plans to acquire Initiate Systems, one of the few remaining independent master data management...

(MDM) vendors.

Initiate Systems, based in Chicago, specializes in MDM and data integration software for healthcare and government agencies. The proposed acquisition confirms rumors that IBM would make a play in the MDM market and comes just days after Informatica announced its purchase of Initiate competitor Siperian.

"With the addition of Initiate's software and its industry expertise, IBM will offer clients a comprehensive solution for delivering the information they need to improve the well-being of patients at a lower cost," Arvind Krishna, general manager of information management at IBM, said in a statement. "Similarly, our government clients will now have even more capabilities for gathering and making use of information to serve citizens in a timely and efficient manner."

More on master data management
Read about Informatica's acquisition of Siperian

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Check out our expert predictions for MDM in 2010
The goal of MDM is to create a single view of master data -- most commonly customer and product data -- for use throughout an organization's operational, transactional and analytical applications.

IBM has invested heavily in its data management and analytics stack over the last several years, and the acquisition of Initiate will continue that trend. IBM competes with Oracle, SAP and now Informatica in the quickly consolidating MDM market.

IBM is also likely looking to capitalize on the expected increase in adoption of electronic medical records, which Initiate's MDM technology supports by helping healthcare organizations consolidate patient data.

Rob Karel, an analyst with Cambridge, Mass.-based Forrester Research, said that both Siperian and Initiate Systems have struggled to expand their customer bases as independent vendors, making the recent acquisitions a logical move for the two.

"We reached an inflection point," said Bill Conroy, Initiate's president and CEO, in a joint conference call with IBM. "Could we as a small company keep up with the demands of our customers [for a more complete data management stack]?" The answer, apparently, was no.

The proposed acquisition should benefit IBM in a number of ways, wrote Ray Wang, an analyst with Altimeter Group in San Mateo, Calif., in a blog post following the announcement. IBM will inherit Initiate's "strong" data integration platform and "deep healthcare and public sector experience."

The acquisition should also help IBM differentiate its MDM offering from rival Oracle, according to Wang -- but not before IBM does the hard work of harmonizing its multiple MDM technologies.

"Today, IBM offers Infosphere MDM Server for PIM based on Trigo product information management [PIM] and Infosphere MDM Server 9 based on DWL for customer data integration [CDI]," Wang wrote. "Initiate Systems adds a third and capable product into the lineup that's optimized for customer data."

Arvind Krishna, GM of IBM's information management business, said IBM plans to offer both product data and customer data MDM as separate offerings.

Initiate has 347 employees and counts CVS/Caremark, Humana, and the North Dakota Department of Human Services among its customers. Neither company revealed terms of the deal, which is expected to close in the first quarter.

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